At this month’s council meeting, councillors discussed the annual report on the management of the council’s finances (pdf).
One item that’s been in the news recently and picked up by councillors are loans to Thurrock Council in Essex.
A Bureau of Investigative Journalism probe revealed that Thurrock Council had more than £900million in outstanding short-term loans received from local authorities across the UK. This was built up over several years, seemingly to invest in solar farms.
£655million of this went to a string of companies run by a single businessman, with £138million now unaccounted for. Many of the loans were due to be paid back this year, leaving Thurrock Council’s finances in disarray. The UK Government has since stepped in to take over the council.
Morality of investing in another council during a time of cuts questioned
Despite the discussion being about general treasury management, several councillors focused on the Thurrock story.
Cllr. Jonathan Pratt (Con, Newton) asked whether there was a need to review the council’s investment strategies?
Both Cllr. Freya Bletsoe (Ind, Oldcastle) and Cllr. Martin Williams (Ind, Coity Higher) wanted to know whether the money the council had invested in Thurrock was at risk?
Cllr. Tim Thomas (Ind, St. Bride’s Minor & Ynysawdre) asked for more detail on the amount of money loaned to Thurrock. Cllr. Paul Davies (Lab, Caerau) later added that he hoped this wasn’t money that was “being gambled” for the sake of it.
Cllr. Steven Bletsoe (Ind, Bridgend Central) raised a more general point about inter-council lending; it’s been considered a safe investment (albeit with low returns) in the past.
He wanted assurances these kinds of investment decisions won’t prevent the council from acting quickly to protect services in Bridgend given the dire state of public finances at the moment.
Cllr. Phil Jenkins (Ind, Maesteg East) didn’t believe there was any impropriety on the council’s part. However, the council has had to make cuts to services for the last decade and he thought it was “morally questionable” for Bridgend taxpayers to lend money to another council when they faced cuts at home.
Council loaned £8million to Thurrock; “money not at risk”
Bridgend Council’s Finance Officer, Carys Lord, confirmed that Bridgend loaned £8million to Thurrock across two separate investments worth £3million and £5million.
Investments were in line with external advice and the council’s investment strategy. Investments in Thurrock stopped when the advice changed and there were no plans to review the council’s investment strategy – which is updated and approved annually.
She rejected the notion that this was “gambling” with council funds. She further clarified that the money is capital funding that hasn’t yet been spent. It’s invested to get a better return on it.
None of the money has come out of funding for day-to-day services and it wasn’t “at risk”.
Thurrock Council has offered assurances that Bridgend will be repaid, with repayments underwritten by the Public Works Loan Board – which Thurrock Council has applied to for funding.
