IT could take 40 years for Thurrock Council to pay back its debts, with fears it will burden future generations with a “catastrophic situation”.
The council has been forced to take out an £836 million loan from the Public Works Loan Board to service millions of pounds of debt to local authorities across the country.
The loan was agreed to save the council from defaulting on repayments.
These include £3 million to Castle Point Council which was due in May next year following investments made in failed “green energy” companies.
It comes in the wake of the resignation of council leader Rob Gledhill, chief executive Lyn Carpenter being put on leave, and the Government appointing an Essex County Council commissioner to carry out an investigation.
Speaking at a Thurrock corporate overview and scrutiny committee meeting on Thursday, Labour group leader John Kent said: “I’m horrified that we’ve got here.
“We shouldn’t have got here and it was avoidable. I accept that Councillor Gledhill did the honourable thing but what I’m not getting is a sense from some elected members is an understanding of just how catastrophic this situation actually is.
“What I’m not picking up is any kind of contrition about what’s happening, any kind of apology to the people of Thurrock, any kind of apology to those of us who have been raising red flags about this for the last two or three years.”
The council will have to pay an increased interest rate on its debt, up from between 0.5 per cent to three per cent prior to the potential default, to 4.5 per cent currently.
Sara Muldowney, Labour councillor for Chadwell St Mary, said: “This is not paying off any debt, it’s merely refinancing and unfortunately at a much higher rate of interest so it’s actually going to add to the overall debt.
“We are talking in terms of these loans to the best part of £1 billion. How did we get to this position where we owed so much money?”
Questioning Jonathan Wilson, deputy finance officer, after he gave a report to councillors, Ms Muldowney said: “You say 20 years may not be long enough to actually resolve this situation are we looking at 30, 40 years or more?”
Mr Wilson said it needed to be “a sustainable solution” whatever period is attached to it.”