- Leigh residents call for one-way system on ‘rat run’ due to speeding traffic - 23/10/2020
- County council using Christmas as an inducement to influence public opinion on Covid restrictions say Southend councillors - 23/10/2020
- Council could step up support for those involved in street prostitution by recognising it as exploitation - 22/10/2020
A major investigation into borrowing by local authorities has revealed how Thurrock Council got into more that £1billion in debt and where that money is being invested.
It has been revealed the vast majority of the council’s £1.32billion in short term loans has been borrowed from around 150 local authorities across the country, with limited public scrutiny.
But rather than be used to directly fund council services, it is being invested in the renewable energy sector with at least £604million going specifically to solar farms located outside of the borough.
The Financial Times and the Bureau of Investigative Journalism, which are behind the investigation, said the investments have been made under the direction of Sean Clark, Thurrock’s director of finance.
In an interview with Mr Clark, the senior officer questioned whether the borrowing and investments have gone too far.
“I have an internal conversation on this,” he said.
“Sometimes I look at it and go, ‘We’ve done an awful lot here. Should I have done that amount? Should we be doing this?’ But then I come back and go actually, ‘local authorities have always done this.’
“All we’ve done is upped the amounts we’re talking about.”
However, he refused to disclose which local authorities he borrowed from or what companies he invested in due to a fear that doing so will put off other lenders.
The investigation found that one company the authority is known to have invested at least £74million into, and possibly hundreds of millions more, is Rockfire Capital.
The bureau claims there are “serious questions” over the degree of security of the investments and the company’s financial model makes it unclear how likely it is that public money would be recovered if the business failed.
Rockfire has not filed accounts covering the period when the payments were made.
Furthermore, during an ongoing civil legal dispute, Rockfire has alleged that 15 of its solar farms bought money from councils across the country were riddled with “defects”.
As much as £40million from Thurrock was used to buy the sites at the centre of the case. A trial is expected to take place later this year.
When asked, the council refused to confirm how much money it had invested in Rockfire.
However, information given on the record by Rockfire and every other council to invest in the company suggests that Thurrock may have invested as much as £420million in bonds connected to the business.
What is not in question is the money that Liam Kavanagh, the founder of Rockfire Capital and its chief executive, has received from the business while his company pulled in hundreds of millions of pounds of public money – £7.7million in dividends since 2015.
It has also been revealed that the investments took place after the authority sidelined treasury advisers, Arlingclose.
“When we did this our due diligence wasn’t through our treasury advisers,” the council’s director of finance told the Bureau of Investigative Journalism.
“It was more through professional organisations like some of the big accounting firms, some of the big legal firms and valuation type firms.”
Mr Clark added that Arlingclose had ceased to be the council’s advisers as of March 31, 2019.
Asked why, he cited “differences of opinion”, adding “let’s just say that Arlingclose have views on certain investments that they’re close to and views on others that they’re not.”
Thurrock Council has defended the investments claiming that it has received over £31million in income from the investments and in the coming year expects to get £33million.
It said the returns have helped invest “£1million towards new police officers, £670,000 to tackle anti-social behaviour, £500,000 for mental health support in local schools and £1.5million into visible environmental improvements over and above the traditional level of services”.
Councillor Shane Hebb (Con), who oversees finance, said: “Thurrock Council is in one of the best financial situations of any unitary authority.
“The simple facts are that Thurrock currently has a balanced budget up to 2022-23 and a published surplus of £11million over the same period with no cuts to services, thus ensuring that the services that residents use, depend on and want are in place for years to come.”
Labour leader, Councillor John Kent has called on the administration to come clean over its investments.
“People absolutely need to be aware that the council has borrowed £1bn – that’s billion with a B.”