Probe into council backed by £60m loans
A TOTAL of £60 million in taxpayer cash and pension payments from Derbyshire residents and workers has been pumped into a council now under investigation by the Government.
Research from the Local Democracy Reporting Service and The Bureau of Investigative Journalism has revealed that £60 million has been invested in Thurrock Council, in Essex, by Derbyshire County Council and the Derbyshire Pension Fund.
On Friday, September 2, outgoing Local Government Secretary Greg Clark announced the Government would be intervening with Thurrock “to address serious concerns about the financial management of the council and the risk this poses to local services”.
His department said the move came after “grave concerns about the exceptional level of financial risk and debt incurred by the council”.
This follows a three-year TBIJ investigation which found that Thurrock has, over the course of four years, invested £655 million in companies owned by private business owner Liam Kavanagh, used to develop dozens of solar farms.
However, it found that £138 million in taxpayer money invested with Kavanagh was unaccounted for.
Thurrock is still unable to receive a substantial proportion of the interest from its investments connected to Kavanagh’s companies, with £12.5 million due last February still outstanding. The council is reliant on that income to balance its books.
Thurrock’s investment scheme has been backed by hundreds of local authorities, seeking to make returns to fund their own budgets and pension funds. Among these is Derbyshire County Council and the pensions fund it administers.
The council itself has invested a combined £30 million in loans to Thurrock all transferred to the Essex authority in April this year, and due to provide returns in April 2023.
Meanwhile, the Derbyshire Pension Fund has transferred loans totalling a further £30 million to Thurrock, with some due to mature later this year and into early 2023.
The Derbyshire Pension Fund, valued at more than £6 billion, provides current and future pension payments for more than 100,000 workers. This includes council staff, teachers, police officers and firefighters, with more than 330 employers paying into the fund.
To date, there are around 34,000 members who are drawing down their pensions from the fund, while the rest of the membership is made up of people still paying in.
Essex County Council has been appointed by Government as commissioner and best value inspector, giving it full control of the financial functions of Thurrock Council and powers to assess whether there are “failures in other functions to mitigate any further risk to services”.
A spokesperson for the county council said they will “continue to monitor the situation as part of our ongoing treasury management activities”.
Mr Clark, who has now been replaced as Local Government Secretary by Simon Clarke, under a reshuffle from Prime Minister Liz Truss, had said: “Given the serious financial situation at Thurrock Council and its potential impact on local services, I believe it is necessary for Government to intervene.
“I strongly believe that when a council gets into difficulties, its local government neighbours should be the preferred source of help in turning it around.”
A spokesperson for Thurrock Council said: “Thurrock Council is treating this situation extremely seriously and has been working with the Government, as well as independent financial and legal experts, to fully understand how the situation has arisen and establish a comprehensive resolution plan to safeguard the council’s financial position.
“We are grateful to the Government for the support they have given us and welcome the action to instigate intervention and provide additional assistance.
“We will cooperate fully with the appointed commissioners to work to protect the interests and services of the people of Thurrock.”
Thurrock Council’s leader, Cllr Rob Gledhill, resigned after the news that the Government was stepping in.
He said: “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.”