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Thurrock Council set to borrow nearly £850m to repay solar farm debts

October 6, 2022

By Paul Homewood

 

h/t Joe Public

 

 

This scandal has been brewing up for years:

 

 image

A council has been given permission to borrow nearly £850m from the government so it can pay back loans to other local authorities.

Thurrock Council’s investments were meant to make money to pay for services but it has been reported recently that they made losses.

It will borrow £836m in weekly instalments from the Public Works Loan Board (PWLB) up until 16 March, 2023.

Of this, £678.5m will be repaid to other local authorities.

Last month, the government appointed a commissioner to take over the Tory-run unitary council due to its level of financial risk and debt.

The Bureau of Investigative Journalism had been looking into the council’s finances for three years and found Thurrock had borrowed more than £1bn and invested hundreds of millions of pounds largely in solar energy.

Rob Gledhill

The council’s Conservative leader Rob Gledhill resigned and said the "political buck stops with me"

An investigation was announced by Greg Clark last month, the Conservative local government secretary at the time, and following this, council leader Rob Gledhill resigned.

The council’s chief executive Lyn Carpenter has also taken leave from her role.

An update on council borrowing report, which will go before the authority’s cabinet next week, confirmed that a total £836m in short-term funding was needed to meet forthcoming cashflow requirements, including £687.5m to replace existing loans from other authorities.

It said £177.5m had already been repaid. There is no mention of interest rates in the report.

John Kent, leader of the Labour opposition on Thurrock Council, said on Wednesday: "By borrowing lots and lots of money from lots and lots of different other local authorities, at some point the music was going to stop and you’d have to pay it back.

"They were borrowing from Peter to pay Paul. Now the music’s stopped, I’m glad the government has stepped in, and given them permission to borrow a total of close to £850m."

Mr Kent said he is worried some services in the district, such as the maintenance of parks and youth services, would suffer because of the financial problems.

The Conservative acting leader, Mark Coxshall, said last month: "I am working alongside everyone at Thurrock Council to make sure that services are delivered and we continue to make Thurrock the best it can be."

https://www.bbc.co.uk/news/uk-england-essex-63144314

I find it very strange!

The renewable lobby has been telling us for years that wind and solar power are the cheapest form of generation. Surely these solar energy investments should have been turning a huge profit?

15 Comments
  1. October 6, 2022 12:32 pm

    1 more on the “told you so” list?

  2. Phil O'Sophical permalink
    October 6, 2022 12:44 pm

    O/T (wind not solar) but I would appreciate Paul’s comments on this. It destroys the myth in under 7mins. Are the assumptions valid for the exercise and are the figures produced realistic?

  3. Gordon Hughes permalink
    October 6, 2022 12:49 pm

    Paul. There are two separate things going on here. Thurrock have invested heavily in solar projects, but even worse they have financed the investment in a classically stupid way by relying on short term borrowing. They have been acting like a bank, borrowing short term and investing/lending long, with no reserves to handle a drying up in the short term market. A local authority version of Northern Rock.

    I suspect that the return on their solar investments has been much lower than they expected – a report that I saw indicated that they were paying quite large management and other fees. The real return on solar investments is much lower than is usually claimed. Many of the developers are in the business of building plants and selling them on to gullible investors who want to demonstrate their green credentials. Thurrock would undoubtedly fall in that category, but it was doubly stupid to borrow short-term for that purpose.

  4. John H permalink
    October 6, 2022 12:50 pm

    Local authorities must be made to hire professionals to run them, and I mean professionals, not wastrels that have been thrown out of other councils, but proper professionals from industry or commerce that have a good track record.
    Also, what about the LAs that lent the money, they are as much to blame, lending taxpayers’ money to doubtful ventures by another LA is irresponsible and they are lucky to get their money back.

  5. Eddie P permalink
    October 6, 2022 1:03 pm

    My father must be spinning in his grave. For many years in the 1950’s he was Chairman of the Finance Committee of Thurrock UDC as it was then. He even managed to salt away a hidden reserve of funds so that when a new theatre, civic hall and swimming pool were planned but the Council failed to raise sufficient funds to build them, he produced the funding from this reserve to bridge the gap so that all the projects could be completed.

    • tomo permalink
      October 7, 2022 2:01 am

      Wasn’t it one of Tony Blair’s first moves to end the surcharging of councillors for irresponsible spending?

      Bankrupting the perps would’ve been a great spectacle.

      Pour encourager les autres eh?

      We need more Admiral Byng moments

    • Penda100 permalink
      October 7, 2022 3:31 pm

      I believe these problems really stem from the Localism Act 2011 that gave local authorities a general power of competence to do anything that a person can do that is not specifically prohibited. While this change was made with no doubt the best of intentions, we are know where that particular road leads. This seriously modified the long established doctrine of Ultra Vires. This doctrine meant that local authorities could do only those things that they were empowered to do by explicit statutory authority. More significantly, any council carrying acting without powers risked having the costs of its actions surcharged against the elected members personally. This was a very effective sanction and stopped many of the wilder excesses such as the Thurrock fiasco ever seeing the light of day. It really is time the 2011 Act was amended and the general power of competence abolished. After all, this case demonstrates that local councils are fundamentally incompetent.

  6. October 6, 2022 1:17 pm

    Note that’s the BBC deliberately omit the reason for the most of the loans.

  7. October 6, 2022 1:31 pm

    The Bureau of Investigative Journalism…found Thurrock had borrowed more than £1bn and invested hundreds of millions of pounds largely in solar energy.

    But the sun’s still shining at about the same rate as ever. ‘Invested’? 🤣

  8. October 6, 2022 4:27 pm

    Investment is used too often by all levels of government. Any announcement on any project will include “investment” when what should be said this money is at risk and probably will be written off, but the taxpayers cannot be told as is demonstrates incompetence.

    • October 6, 2022 5:19 pm

      It does beg the question why councils ‘invest’ such huge sums using rate-payers money (it’s NOT the council’s money), into projects they are not responsible for, unless they are building ‘rainy day’ savings, in which case the savings should not risk the capital. It seems councils have lost sight of their core purpose.

  9. Mikehig permalink
    October 6, 2022 5:48 pm

    This sort of incompetence/malfeasance is rife. In this case the funds were largely used for solar projects. Other councils have invested heavily in commercial property.
    The Public Works Loan Board is usually the source of the funds (directly or via other councils). The board is supposed to lend money for things like local infrastructure, as its name suggests.
    Its supervisory and auditing functions must be extraordinarily weak for this sort of thing to have gone on for so long across the country. There’s a council near me in Surrey which has invested around £1 bn into commercial property which has since sunk in value. The council’s annual budget is around £200 million…

    The Bureau of Investigative Journalism’s work featured in an article in the FT some time back. Iirc, Thurrock is one of many councils that have been sold schemes by a particular promoter who (at that time) had over a hundred such schemes to his name.

  10. Micky R permalink
    October 6, 2022 6:22 pm

    Unfortunately, Thurrock’s incompetence doesn’t defy belief.

  11. Gamecock permalink
    October 6, 2022 9:35 pm

    How come all the other councils aren’t told they made a bad investment, and their money is LOST! Why would one council borrow money to pay back others’ bad gamble? ALL should lose.

    Giving money to other councils for a vanity project isn’t an investment. It’s a gift.

    ‘It will borrow £836m in weekly instalments from the Public Works Loan Board’

    “The board is supposed to lend money for things like local infrastructure, as its name suggests.”

    Giving money to Thurrock to pay off other loans is a criminal violation of their charter. Paying other creditors is not “local infrastructure.”

  12. Gerry, England permalink
    October 7, 2022 11:31 am

    When I was at the City of London they were all excited about some deal with a sun temple in the West Country to supply them.

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