Thurrock owes local councils £11m

A council which was taken over by the government due its level of financial risk and debt owes at least £11million to other local authorities in Essex.

Castle Point, Maldon and Tendring district and borough councils confirmed they had lent £3m, £2m and £6m respectively to Thurrock Council, which lost control of its finances earlier this month.

A three-year investigation by The Bureau of Investigative Journalism revealed Thurrock borrowed more than £1billion and invested hundreds of millions of pounds, particularly in solar energy.

The scale of the financial and commercial risks facing Thurrock Council prompted the government to intervene, according to a statement from the Department for Levelling Up, Housing and Communities.

Essex County Council now controls its financial functions and has powers to assess what action may be needed to limit risks to services.

The councils said in statements that inter-authority lending is a secure and common practice, and the loans are repayable by latest May 2023. Thurrock Council was approached for comment.

According to the councils’ responses, Castle Point is owed £3m, Maldon is owed £2m and Tendring is owed £6m.

This comes after the government appointed Essex County Council as “commissioner and best value inspector” for Thurrock Council on September 2, giving it control over the authority’s financial functions, according to a statement.

Additionally, Colchester and Brentwood borough councils told the local democracy reporting service they had investments in Thurrock Council but did not disclose how much. Basildon Borough Council recommended the LDRS send a freedom of information request to continue with the inquiry. Requests have been sent to these councils.

A spokesperson for Castle Point Borough Council said in a statement: “Castle Point Borough Council has lent £3m to Thurrock Council which is repayable in May 2023. 

“This investment is secured on the revenues of Thurrock Council and not on any specific project. “This investment is secured on the revenues of Thurrock Council and not on any specific project.

“Inter authority loans such as this are secured on the revenue of the borrowing authority and are the most secure form of investment available to Castle Point Borough Council.

“There has never been a case where there has been a default on the inter authority, local authority borrowing.”

Director of resources at Maldon District Council, Chris Leslie, said in a statement: “Maldon District Council has a short term investment with Thurrock Council of £2m which was placed in April 2022 and is due to be returned with interest in October 2022.

“Providing general loans to other local authorities is common practice amongst local government.

“The decision making on how a loan is invested by the receiving authority is not something we are party to.”

Councillor Carlo Guglielmi (Con, Lawford, Manningtree & Mistley), Tendring District Council’s cabinet member for finance, said in a statement the authority had investments in Thurrock Council but nothing was outstanding.

He said: “As part of our regularly-reviewed Treasury Management Plan we currently have £6m invested in Thurrock Council in three separate deals; these are short-term investments, all repayable within the next five months, and represents just over 6 per cent of our total portfolio.”

“We are not aware of any reason why Thurrock cannot meet its obligations, but will of course continue to monitor the situation closely.

“Investing, lending and dealing with other local authorities is a common and long-established practice, which auditors are well aware of.”

Councillor Rob Gledhill (Con, Little Thurrock Rectory) resigned as leader of Thurrock Council on September 2.

He said in an earlier statement: “Whilst I welcome this news and the support from Her Majesty’s Government it has become clear over the past few months that the situation regarding council investments, and subsequently its finances, has not been as reported.

“As leader of the council the political buck stops with me and as such it would only be right, and expected, that I resign as leader of the council. However, I will be remaining as an elected member to support the new leader and the commissioner as required.”

Charlie Ridler

Local Democracy Reporter