Tuesday, May 28, 2024

Mr. Perrin’s blog: “Loadsamoney at Thurrock Council

Mr. Perrin’s blog: “A Word in Your Ear”.

“Loadsa money”.

AT the 26 January 2022 Council meeting, as a member of the public, I asked the Deputy Leader and Cabinet Member for Finance, Cllr Shane Hebb, a question regarding £1.58 billion borrowed from outside sources such as other Councils.

The following is a transcript of my question and Cllr Hebb’s reply. I leave it to readers to judge whether or not Cllr Hebb’s answers were reassuring as to the future solvency of the Council or an exercise in obfuscation.

From Mr Perrin to Councillor Hebb
Can you tell me the full amount the Council has borrowed from outside sources, for example other Councils, over the past 5 years i.e. the “financial years 2016 to 2021”?
Councillor Hebb

Thank you Madam Mayor and thank you Mr Perrin and happy new year.

So all councils borrow and lend for many reasons and borrowing funds as capital projects as well as investments and also refinancing some hard and historic debt. Capital projects are for things like school building, school expansion, road infrastructure and so on and that obviously speaks for itself. There are capital projects that are deemed invest to save so for example when you invest in upgrading the light circuits up to LED lighting and so forth, that is deemed a invest to save initiative. It produces electricity use and so forth.

Council borrowing is all repayable and are all paid when expected and as is expected. In 2016/17, all 49 Members, Conservatives, Labour and UKIP groups who later became the Thurrock Independents, consented to borrow £453.7m and Thurrock subsequently received £3.6m worth of income into Thurrock and £1m of income from lender bodies. In 2017/18, all 49 Members of Conservatives, Labour and UKIP groups consented to increase the Council’s borrowing up to £509.3m so an increase of £55.6m and Thurrock received £10.2m of income into Thurrock and £2m in income to the lender.

In the extraordinary paper in October 2017, all 49 Members of Conservatives, Labour and UKIP groups consented to an expansion of the investment approach to increasing the consented borrowing level of up to £859.3m which was an increase of £350m. In 2018/19 all 49 Members of Conservatives, Labour and Thurrock Independent groups consented to increase the council’s borrowing envelope up to £887.12m, an increase of £27.8m. Thurrock was then received £28m of income into Thurrock and £6.5m to the lenders. This reflects the uplift of the investment approach. In 2019/20, all 49 Members of Conservatives, Labour and Thurrock Independent groups consented to increase the council’s borrowing envelope up to £1.353b, an increase of £466.2m or up to £2b up to 3 years later over the life of the paper. That’s what all Members voted for. Thurrock then received £39m in terms of income into Thurrock and £10.8m in terms of income for the lenders. In 2020/21, the
divergence began. The Council consented to the Council borrowing £1.58b and Thurrock received £35m worth of income into Thurrock and £8.5m income to the lender. In 2021/22 all 49 Members of the Conservatives, Labour and Thurrock Independent groups voted to cut borrowing down to £1.5b thus ending the beginning of the investment approach. The economic approach that the Conservatives, Labour, UKIP/Thurrock Independent groups that all supported has helped earn over £144m over the last half decade. That’s how long the investment activity has been going on. This isn’t new. That’s £115m for Thurrock, that’s £29m for other external sources. And that helps all other areas and we live in a place that we’re proud of.
So, now whilst borrowing will go down, the income that we received from the approach that we all voted for will drop off over a period of time, over the next few years as the investments become less and less as they mature. This means that the council will now have to cut the size of its cloth and become a leaner council.

Mayor
Mr Perrin, do you wish to pose a supplementary question?

Yes Madam Mayor.

Councillor Hebb, I admit I find this a bit mind boggling for a member of the public and I’m not dealing with money of this kind. We’re talking about a colossal amount of money. Can you assure me that if creditors suddenly requested loans to be paid back with interest, that the Council would remain solvent and capable of fulfilling its statutory liabilities without imposing punitive cuts, financial increases or worse going into administration as a bankrupt council?

Councillor Hebb
Thank you Madam Mayor and Mr Perrin for your question. This is a complicated matter and that’s why we have produced a new website page to consolidate this for anyone who wants to have a read and doesn’t want to go through various documents and public papers and so forth. It’s meant to consolidate it to make it simpler to understand. But even then, it’s still complicated. In terms of the interest, the answer to that question is yes, everything has been repaid will be repaid. The interest that you mention, that figure that I just gave you – the £115m and the £29m is actually after interest. So after everything that is said and done, after all borrowing is taken out and repaid and interest paid to those who are owed it, this scheme has earned £144m.
And the other thing, what it did allow us to do, is to increase our reserves position by 300% from what we inherited in 2016. We were an £8m reserve level and we went up to £24m. We’ve just gone through a 22 month adult centric health pandemic of epic proportions that nothing or any of us could have ever foreseen. We’ve been able to use that without then having to go into reserves without being one of those councils that you refer to. So yes, we are in good stead and it continues to perform estimated about £30.1m of income this year but like I said, it will start tapering out subsequently.

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