Tory council slammed for ‘hugely unfair’ plan to make residents foot bill for investment scandal
A Conservative-run local authority has been heavily criticised over plans to impose “unjust” tax increases on residents in response to its unprecedented financial crisis.
Thurrock Council effectively declared bankruptcy last month as the result of a failed investment policy which has left it with a deficit of nearly £500m — the largest funding gap ever reported by a UK local authority.
The council’s recovery plans include asking the government for permission to increase council tax by more than the 5% limit which would usually require a local referendum.
At a public meeting on Monday night, opposition councillors lined up to voice their opposition to the proposal.
“The residents of Thurrock were not responsible for this disaster,” said John Kent, leader of the Labour group.
“They will already be paying more for less and we have a duty to protect residents, especially in a cost of living crisis.”
John Allen, an independent councillor, said: “This will undoubtedly put costly mistakes onto our residents at a time when the council has lost hundreds of millions of pounds of taxpayers’ money.
“It’s hugely unfair to expect Thurrock residents to bear the heavy burden of these mistakes.”
Thurrock Council’s half-a-billion-pound funding gap is the result of a series of failed investments made since 2016 using vast sums of public money. The council told residents very little about the secretive deals, at the time they were made or since.
However, a three-year investigation by the Bureau of Investigative Journalism uncovered alarming details about the investments which have resulted in the loss of hundreds of millions of pounds of taxpayers’ money. In November the council, which spent years dismissing the Bureau’s findings, finally admitted that four of the deals had lost a total of £275m.
A few days before Christmas Thurrock issued a Section 114 notice — a formal declaration that it is unable to balance its books and must urgently cut costs by prohibiting all but essential spending. Monday’s meeting was the first chance for councillors to publicly discuss that notice and the recovery plan outlined in response.
The council is in discussions with the government over an emergency financial support package. In exchange it will be expected to significantly reduce its expenditure for years to come — with potentially devastating consequences for local services.
In his report, acting chief executive Ian Wake said: “We will no longer be able to afford to deliver the current range of services or maintain some services at existing levels.” Services, he added, would have to be “significantly rationalised” to exist within a “substantially reduced envelope”.
Addressing the chamber on Monday, Wake said: “This is a report that no officer ever wants to have to write or present, and I’m sure no member ever wants to have to hear.
“I want to be completely honest with you: we should be under no illusion about some of the extremely difficult decisions that you as members will need to make and we as officers will need to deliver over the coming months and years.”
Mark Coxshall, leader of the council, and a cabinet member at the time the investments were made, sought to head off criticism of the Conservative administration by calling for cross-party unity.
“It’s important we try to restore confidence with the public and do not use today for personal or political point-scoring,” he said.
“This report is the final acknowledgement of our financial problems and today we start the transition into our recovery.
“The discussion tonight is not about how we got here. That time will come when the Best Value Inspection is published. I can say for my part I am sorry we are in this position.”
However, having grown increasingly frustrated at the apparent attempts by Conservative members to distance themselves and the party from the scandal, opposition councillors did not pull their punches.
Kent said: “This meeting shames Thurrock. The stain of failure will remain with Thurrock for evermore.
“This evening we see, laid bare, the cost of six-and-a-half years of Conservative leadership.
“The council is bankrupt. The greatest financial crash of any British council — ever.”
The Labour group leader slammed “toxic Tory debt”, losses on “dodgy investments” and the council having to “go, cap in hand, to government to beg for a bailout”.
He also criticised the “wall of secrecy” surrounding the deals after the Bureau fought for three years to obtain details about them under the Freedom of Information Act.
Turning to plans to increase council tax beyond the 5% threshold, he said: “I want to be very clear, the Labour group will not be supporting that recommendation.”
“The cap was put in place for good reason — as a safeguard against an out-of-control council implementing punishing council tax increases on its residents.
“Frankly, one of the reasons we have ended in this mess is the administration has sought to get around safeguards and ignore good governance. Further ignoring safeguards shouldn’t play a part in our recovery.”
Gary Byrne, of Thurrock Independents, used to be a supporter of the investment policy, telling a council meeting in June 2020: “The beautiful thing about this plan is that it’s someone else’s money. I think it’s great — borrow more.”
This week he told the chamber: “Why should residents trust any of us? Recent history begs the question — should any councillor be trusted ever again with residents’ money? The track record is appalling.”
Martin Kerin, a Labour councillor, said “Tory incompetence” had saddled residents with debt for “decades to come”.
“The real tragedy is they were warned many times about this, but refused to heed the warnings — a mixture of farce, hubris and downright arrogance,” he said.
The biggest applause of the night followed a speech by Labour’s Victoria Holloway.
“We knew something wasn’t right with the council’s finances and it gives me no pleasure that we were vindicated,” she said.
“If I sound angry, it’s because I am. I’m outraged, and it doesn’t get any less the more I find out, the more information and reports that we read.
“Our calls for transparency fell on deaf ears. The more secretive you became the worse we thought it must be — and we were right.”
Holloway added: “You will no doubt try to drag us into a narrative that we were aware of the fiasco.
“We had an idea it was bad, so did the media.
“What did you do? You purposefully and continuously blocked us as an opposition and the press.
“You slandered us, calling us liars and scaremongerers and quoted your good financial policy.
“When outside organisations tried to find the truth through Freedom of Information requests and legal means you blocked them, spending tens of thousands of pounds of taxpayers’ money to shore up your failing reputation.
“You didn’t know — that’s the line we keep hearing now. Shame on you, shame on all of you, because we knew something was wrong and so did the press.
“You’ve betrayed the electorate who voted for you, who trusted you to administrate the council on their behalf.
“Residents trusted you and voted for you, and what did you do? You - Thurrock Conservatives, Conservative leaders, the Conservative administration — you bankrupted our council.”
Inspectors investigating the events leading to the council’s financial collapse have asked for more time to finish their work. They are now expected to submit their findings to the government on February 17.
The council’s discussions with the government over the financial support it may receive are not likely to have been concluded before it agrees next years’ budget, including the council tax increase, also in February.