By Richard Whitehouse
Cornwall Council lent £20 million to another local authority which is now under investigation due to its “exceptional level of financial risk and debt.”
The government has appointed commissioners to take over Tory-controlled Thurrock Council’s finances after concerns were raised about commercial investments made by the Essex council.
It has been reported that there are concerns that Thurrock may not be able to repay its borrowing should its investments fail and the impact on the council’s services should it face financial difficulties.
And now it has been revealed that in November last year Cornwall Council gave Thurrock a £20m loan which is due to end in 2023. One councillor has said that rather than lending money to other authorities County Hall should instead be investing in services in Cornwall.
Thurrock has been identified as one of the most in-debt local authorities in the country after racking up £1.5 billion in borrowing which includes £900m in short term loans from other local councils.
An investigation by the Bureau of Investigative Journalism found that hundreds of millions of pounds that Thurrock had borrowed had been invested in solar farm projects. It found that £655m from Thurrock had gone to one company and that £138m of that money is now “missing.”
Last week the then Communities Secretary Greg Clark ordered government appointed commissioners to take over Thurrock’s finances due to “the exceptional level of financial risk and debt incurred by the council”. There are concerns that local services in Thurrock could be affected.
Explaining its loan to Thurrock, Cornwall Council said in a statement: “As part of its treasury management portfolio, Cornwall Council has a £20m loan to Thurrock which started November 2021 and is currently due to mature in November 2023. This is a rollover of previous loans to Thurrock, who have always repaid to the council in line with the agreements made.
“Ultimately local authorities are backed by central government, they cannot go bankrupt in the same way as a private company does and they can only be wound up by Parliament.”
The Local Government Secretary, Greg Clark, introduced new intervention measures to Thurrock Council to ensure delivery of key essential services. This announcement was published by HMG on 2 September 2022. Why did Cornwall Council renew the £20,000,000 loan in November 2022 instead of calling it in?
Cornwall council certainly think very highly of themselves don’t they! Not only do they think they know enough to become “developers” now they think they are clever enough to become financial advisors and money lenders! It beggars belief! Why don’t they stick to services they are employed to do?