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Thurrock Council compared to Sky Poker
This story has been mentioned before in relation to Thurrock Council. But I feel it deserves its own thread.
This is the latest:-
https://www.bbc.co.uk/news/uk-england-essex-63979197
In short, a small Council with a £150million annual budget to run all its services, decided to lend £469million to a guy with a business idea relating to solar panels. Not a local man. And it got a lot of this money from other Tory-run Councils, who decided to lend taxpayer money to their mates in Thurrock.
Man hasn't technically gone bust-but he did funnel various monies through other businesses he owned. And when he needed yet more money later on (while Thurrock were still financing him) he borrowed money from a bank, who have securities over the property, and are the only 1 who is going to get paid.
Suppose this happened at Sky Poker. A guy, "X", earns £30,000 a year, all of which is needed to keep, house and feed his family. He believes a poker player, who he barely knows, is going to make money. So he lends him £100,000 to finance his poker, and lots of other friends lend him this money. There is no security taken for this money, and he didn't tell his family what he was doing.
Anyone think it is X who would choose to leave Sky Poker, rather than Sky acting first? Anyone believe that his wife, or his friend's wives, would continue to trust the people who lent all this money?
All of the people involved are still in the Conservative Party. And a lot of them are still in charge of Finances at Local Authorities. Collectively, in charge of £billions of taxpayer money. Despite having already lost rather a lot of it.
This is the latest:-
https://www.bbc.co.uk/news/uk-england-essex-63979197
In short, a small Council with a £150million annual budget to run all its services, decided to lend £469million to a guy with a business idea relating to solar panels. Not a local man. And it got a lot of this money from other Tory-run Councils, who decided to lend taxpayer money to their mates in Thurrock.
Man hasn't technically gone bust-but he did funnel various monies through other businesses he owned. And when he needed yet more money later on (while Thurrock were still financing him) he borrowed money from a bank, who have securities over the property, and are the only 1 who is going to get paid.
Suppose this happened at Sky Poker. A guy, "X", earns £30,000 a year, all of which is needed to keep, house and feed his family. He believes a poker player, who he barely knows, is going to make money. So he lends him £100,000 to finance his poker, and lots of other friends lend him this money. There is no security taken for this money, and he didn't tell his family what he was doing.
Anyone think it is X who would choose to leave Sky Poker, rather than Sky acting first? Anyone believe that his wife, or his friend's wives, would continue to trust the people who lent all this money?
All of the people involved are still in the Conservative Party. And a lot of them are still in charge of Finances at Local Authorities. Collectively, in charge of £billions of taxpayer money. Despite having already lost rather a lot of it.
Comments
The acting leader of a Tory-run council that has debts of £1.5bn has insisted he has said "sorry to the people" over its financial problems.
Mark Coxshall also said he was "confident we can make a recovery plan" to ensure Thurrock Council, in Essex, would continue to exist.
The council leader has given his first interview, to the BBC, since the government took control of the local authority's finances in September.
The Labour opposition said the investments had already "come back to bite the community".
An independent report into Thurrock Council's finances is due to be published in January 2023
"I've said sorry to the people," said Mr Coxshall.
"I say sorry day in, and day in. I say it to all the members. Sorry we got in this position."
An investigation by the Bureau of Investigative Journalism revealed in July that Thurrock Council had borrowed about £1bn, external from other local authorities to fund investments.
The Bureau reported the council helped buy 53 solar farms.
The government announced on 2 September that it was appointing Essex County Council as a commissioner to lead on big decisions at Thurrock
Among its responsibilities was to work out the value of the investments.
Conservative Rob Gledhill resigned as Thurrock's leader, and Shane Hebb, who held the finance portfolio for many years, resigned from cabinet.
The chief executive, Lyn Carpenter, is on extended leave and the finance director, Sean Clark, was suspended.
The council held its first cabinet meeting since the government intervention in public on Wednesday night.
Conservative councillor Luke Spillman said it appeared many of the budgetary briefings he was given since he joined cabinet in 2021 "were complete and utter fancy" and warned it was possible he and others were "wilfully misled over several key financial indicators".
This should not have fooled a moron in a hurry.
The Council appears to have debts of 10 times its annual income. On a pure gamble. With no security whatsoever.
Now some of these eejits are just stupid and/or naive. And should never hold public office again.
But others will have been getting kickbacks. And need to go to prison.
At exactly what stage did this Council decide it was going into the world of finance-with other people's money. And other Councils lend them other taxpayers' money.
And this is the Party that is supposed to be seeking to regulate gambling?
Council's auditor admits that controversial solar investments were not checked out!
Audit was simply a 'tick box process' as hundred of millions were borrowed and spent.
Ahead of what is expected to be a bad news week for Thurrock Council as its financial failings continue to be investigated, some councillors have condemned the authority – which is saddled with a debt believed to approach one and a half billion pounds.
The message came after one of the council's senior officers admitted due diligence and checks about where hundreds of millions were spent did not happen
In recent days Thurrock Nub News has reported on the likely outcome of a number of meetings where councillors will be briefed on the extent financial catastrophe due to be reported.
Sources within the council have told Nub News that investigations into the failed 'borrow to invest' policy have shown things are far worse than originally expected.
Having already had to borrow more than £650 million to cover debt to other local authorities and public bodies it is likely they will be going cap-in-hand to the government to meet a shortfall in this year's budget that could be as high as £490 million.
An internal audit progress report was given to councillors on the standards and audit committee whose members were critical, saying it lacked detail at a time when the council's financial dealings should be under great scrutiny.
Conservative councillor Gary Collins chaired the meeting and said: "What I'd like to see in light of recent developments is not just "this is what we do", it needs to be evidenced. I would like to see bank statements showing all the balances of all our accounts. A detailed account of all our incomes and outgoings and any other items relating to investments.
"I think it might be a bit like shutting the stable door after the horse has bolted but if we are going to learn from our mistakes this is probably the best way to go.
"Does anyone go out to see if these investments and see if they actually exist in reality?"
In response the council's chief internal auditor Gary Clifford told the meeting: "No, we wouldn't go out to see if the investment existed. We haven't done any work on the investments. We would only audit the process if the council goes out and does due diligence."
Mr Clifford told the meeting that his auditing team were told not to carry out checks by the council's senior finance team. "I would have assumed this was done by the financial team when the audits were set up," he said, conceding: "We wouldn't go out and check if the investments were a reality."
Asked by Cllr Collins if Mr Clifford's team had carried out the checks that might be expected of a team of auditors, Mr Clifford said: " We audited the process. I don't see what else we could do!"
Cllr Collins responded by saying: "There's got to be a way of checking whether the audit has been done and not just taking it at face value."
A government-appointed commissioner from Essex County Council is overseeing the authority in the aftermath of millions of pounds lost in the ill-judged investments.
The committee deferred signing off the report until the next standards and audit committee so that more detail could be added to it.
However, that deadline may well be massively overtaken by events about to unfold…
https://www.thebureauinvestigates.com/stories/2022-07-15/his-companies-made-a-deal-for-138m-of-taxpayers-money.-where-has-it-gone
Wow, what a staggering story. How was this allowed to happen?
Stunning stuff, I'm aghast.
Thanks @lucy4 & @Essexphil
Here's a Twitter thread on it...
The shocking extent of Thurrock Council's financial situation – and an expected operating loss of £469.6 million at the end of the current financial year in March 2023 – is detailed in a new official report.
Over the past week Thurrock Nub News has exclusively predicted the staggering numbers involved in the council's financial catastrophe, sparked by the failure of its controversial borrow-to-invest' policy.
Our stories have included the consequences of the financial debacle that ordinary staff are experiencing, cost-cutting that saw an ultra-low key Christmas lights switch-on ceremony in Grays and a report on how auditors were instructed not to validate investments.
Today the council has issued a statement on the 'grave situation' it is facing – and the ruling Conservative group were immediately condemned by opposition leader Cllr John Kent.
He said: "It is clear there has been a total lack of robustness in the council's internal processes and it's Thurrock residents that will be paying the price for the Conservatives' catastrophic handling of the council's affairs for decades to come."
A report going to next week's cabinet outlines the council's current financial position and provide details of the challenge it faces.
The report confirms the council now apply to the government for what is known as a capitalisation direction, which allows councils to borrow money for day-to-day running costs.
An unattributed statement from the council says: "The report shows that the council faces a grave financial situation this year (2022/23) with expected investment losses totalling £275.4 million and further £129.2 million being set aside to repay investment debt contributing to a total in year funding gap of £469.6 million, before mitigation.
"It also outlines a budget gap of £184.4 million for 2023/24, which includes money that must be set aside to write down the debt associated with the remaining investment balances and the interest payable on that debt.
"This also includes the write down of the exceptional financial support that will be sought from central government in respect of the 2022/23 funding gap."
Thurrock Council leader Cllr Mark Coxshall said: "These are shocking numbers but the first stage to creating a good plan for recovery is to understand the full extent of the problem. I know that Thurrock residents will be concerned and rightly so about what this means for local services.
"Please rest assured that this report is the first stage of planning for our recovery.
"Everybody now has a fuller understanding of the gravity of the issues we face. We know the Council cannot find a way to finance its expenditure in-year and will not achieve a balanced budget next year without external support.
"We will have to request exceptional financial support from the government over a number of years to stabilise our financial position and give us time to have balanced budgets.
"Alongside this support we will have to use other levers including asset disposal, efficiency savings, Council Tax increases and funding flexibilities from central government to recover our financial position.
"Although it is impossible for local authorities to go bankrupt, it is clear there will be incredibly difficult decisions to come. These are uncertain and unsettling times but there are no immediate changes to services for residents, and the Council's much valued staff will continue to deliver for Thurrock's residents and be paid.
"I am absolutely determined to break the Council's past culture of secrecy with complete openness, honesty and transparency.
"Simply by publishing this information I am making it clear that this is not how Thurrock Council intends to work going forward and that this takes place in a way that can be scrutinised by all councillors and the public.
"Further reports will come to Cabinet and update the position before setting a budget in February. Thurrock Council continues our work with the Commissioners to develop a plan that addresses the scale of this challenge and takes us towards a stable and sustainable financial position in the medium to longer term."
The government recently intervened to try and stabilise the disastrous financial situation and it established 'commissioners' to take charge of key issues.
Lead commissioner Gavin Jones said: "The financial position the Commissioners have outlined is a grave one; it is also not yet complete as further work is underway. We have made good progress working alongside Thurrock Council's leadership to understand the position and to begin to take positive action to address the situation.
"That support will continue as we ensure that essential services can continue to be delivered. We have to be realistic, however, about changes to the Council's operations which the financial position mean are inevitable."
All the above has failed to impress Labour opposition leader Cllr John Kent.
For the past two years and more he has been a constant critic of the ruling administration and not only frequently questioned the veracity of the council's financial strategy but damned it for its secretive policies.
He told Thurrock Nub News: "This report lays bare the culmination of six years of Conservative leadership of Thurrock Council.
"Thurrock Conservatives' disastrous financial mismanagement has led to debts of £1.5 billion, an in year funding gap of £469 million, failing services and having to go cap in hand to the government for a bail out while they declare bankruptcy.
"It is clear there has been a total lack of robustness in the council's internal processes and it's Thurrock residents that will be paying the price for the Conservative's catastrophic handling of the council's affairs for decades to come.
"Just what were those Conservative councillors who make up the council's cabinet doing? Are we really expected to believe they didn't notice what was going on under their very noses?
"The Tory cabinet is absolutely complicit in this scandal and with every new revelation their position becomes even more indefensible."
The council statement concluded: The position outlined in this report is correct at the time of publication but is not definitive and could change in the future as more is learned about investments and the council's portfolio is managed down.
Further reports will come to Cabinet and update the position before a budget is set in February 2023. Thurrock Council continues its work with the Commissioners to develop a plan that addresses the scale of this challenge and takes the council towards a stable and sustainable financial position in the medium to longer term.
Jackie Doyle-Price has delivered a scathing critique of local Tories' performance, including her partner Cllr Mark Coxshall.
THURROCK MP Jackie Doyle-Price has delivered a damning critique of Thurrock Council, its officers and particularly its leading councillors over the shocking state of its finances.
She does not spare the political rod, criticising fellow Conservatives - nor the domestic one as her long time partner, council leader Cllr Mark Coxshall, is very much in her firing line.
Cllr Coxshall, who works for Ms Doyle-Price as her part time constituency office manager (salary between £35,000.00 to £39,999.99), has been a longstanding member of the council and a leading spokesperson on local policies.
As portfolio for regeneration, and member of the council's general services committee, he has been right at the top tier of the local Tories' decision-making process over recent years. When council leader Rob Gledhill stood down in September, Cllr Coxshall took over in an interim capacity and was then elected leader in October.
Casting a critical eye at local leadership, Ms Doyle-Price says: "Cabinet members are there to give challenge to officers of the Council. They are not there to simply be their spokesmen. That is especially true of the Leader."
In a statement released today - Ms Doyle-Price's second commentary on the financial situation and failed 'borrow to invest policy' that has brought the council to the point where it is about to declare itself bankrupt - she says: "Thurrock Council has now come clean about the extent of the financial damage caused by the flawed investment strategy.
"As a Conservative I am utterly opposed to taking unnecessary risk with taxpayers' money. When I challenged the council on the wisdom of this strategy I was advised that it was bringing in revenue of £30m a year - £30m which would have had to be raised through council tax rises
"What we have now discovered is that the investments have lost £275m.
"Since the Government intervention there has been a forensic accounting exercise to establish how these losses materialised and who is responsible. The outcome of those investigations is due in January.
"What is very clear is that Thurrock Council embarked on a financial strategy it did not have the expertise to manage. And in that regard it took an unacceptable level of risk. Furthermore, it is clear that members failed to appreciate the risks associated with this strategy. It feels like some of them still do not.
"There were many warnings given to Thurrock Council over the last two and a half years. They were warned that the strategy breached prudential rules for the management of public finances by CIPFA. They were warned by Government Ministers that the strategy had an unacceptable level of risk. And they were warned by the NAO that the borrowing strategy was fraught with risk. In the end it was this that crystallised when councils refused to lend and Thurrock Council found itself in a Northern Rock situation.
"We now await the full assessment of how this situation developed unchecked. But there are clear issues of cultural behaviour at Thurrock Council which has allowed this situation to develop. Cabinet members are there to give challenge to officers of the Council. They are not there to simply be their spokesmen. That is especially true of the Leader. Whatever happens next these cultural issues must be addressed. The openness with which the Council is communicating regarding the financial position suggests they are.
The council’s Acting Director of Finance and Section 151 Officer has issued a “Section 114 Notice” to the council which indicates that the authority will not be able to deliver a balanced budget from within existing resources this year and into next.
A Section 114 Notice means the council has to stop all but the essential spending needed to provide vital services to residents, pay staff and meet its legal duties. The Notice follows publication of the council’s latest financial position earlier this month.
A special meeting of Full Council will take place on Monday 9 January 2023 to discuss the notice, the council’s response and the proposed plan to meet the financial challenge it faces.
Cllr Graham Snell, Cabinet Member for Finance, said: “The issuing of the S114 notice by our most senior financial officer has our full backing and is the next important procedural step in our journey to financial recovery.
“Among other things it will help pave the way for a formal request for additional bespoke financial assistance from the Government.”
Cllr Mark Coxshall, Leader of Thurrock Council, said: “Residents and staff should feel safe knowing that our streetlights are still shining, our roads are continuing to be gritted during bad weather, and our most vulnerable friends and family are being looked after.
“They can also be reassured that under my leadership we have started to grip our situation and have a clear sight of what needs to be done. The section 114 notice is a clear indication we are on the road to recovery.
“I have already made it clear as the incoming Leader that I have been shocked by the position the council is in and we do not take lightly the seriousness of the step we are being asked to take today
“I am proud to say that Thurrock is my home, and I will fight hard to do the right thing for local people and build a future for this council, however difficult that will be.”
A spokesperson for the Thurrock Commissioners said: “The issuing of a Section 114 notice is a necessary next step for Thurrock Council to take to address its overall financial position, alongside seeking further financial support from the Government.
“The Section 114 notice will limit non-essential spending, which is an important element contributing to the stabilising of the Council’s finances. Our work with Thurrock to address wider structural budget issues continues in tandem with work on their day-to-day spending.”
The formal issuing of Thurrock Council’s Section 114 notice – the local government equivalent of bankruptcy was, sadly, inevitable says Thurrock Labour leader John Kent.
Cllr Kent said: “For years, we have been warning about the possible consequences of the Conservative’s disastrous financial mismanagement, but time and again we were laughed at, fobbed off and misled.
The suggestion that a Section 114 notice is somehow good news – “a clear indication that we are on the road to recovery” or merely a procedural step – is frankly insulting to the many council staff who will be fearing for their jobs, to vulnerable people fearing for the services they rely on and to all of us who will be paying the price for the Conservative’s disastrous financial mismanagement of Thurrock Council for decades to come.
The Leader of the Council claims he was “shocked” to learn of the scale of the financial catastrophe. That is just ridiculous. He has sat in the Cabinet for all of the last six and a half years – just what have he and his cronies been doing for all that time?
This disaster has been made and delivered by Thurrock Conservatives and it’s high time they accept responsibility for their actions and resign.