Thurrock Council must borrow an additional £26.5m from the government to balance its 2023/24 budget.
A Provisional Financial Outturn 2023/24 report to Cabinet states that after considering movements to and from reserves, without £206.7m in exceptional financial support (EFS), the authority’s 2023/24 expenditure cannot be funded.
EFS – which takes the form of a capitalisation direction – of £180.2m was originally agreed. However, the report notes that the secretary of state “is minded to approve a capitalisation direction of a total not exceeding £234.5m for 2023/24”.
In the report, Thurrock’s government-appointed commissioners noted that while the new £206.7m capitalisation request for 2023/24 is “clearly very significant”, it therefore “remains within the amount sought from the secretary of state”.
The council’s final position for 2023/24 includes all known impacts of the investment portfolio on interest, borrowing and Minimum Revenue Provision charges.
The team of commissioners, which is led by Gavin Jones, chief executive of Essex County Council and features Nicole Wood, section 151 officer at the same authority, said Thurrock had also delivered on its savings plans and controlled its core directorate expenditure within budget during 2023/24.
The “significant overspends” are “directly as a result of the investment portfolio legacy impact on interest, borrowing and Minimum Revenue Provision”, they stated.
Despite raising council tax to 9.99% in 2023/24, Thurrock has retained high collection rates at 98.24%, and slightly exceeded the council tax collection budget, the commissioners added.
“Clearly, continuing to sustain both savings plans and income raising strategies are a cornerstone to future sustainability,” the commissioners said. “There are areas that require immediate focus; [a] slippage on the capital programme is of concern and an action plan should be built and reported into the Finance Recovery Board.
“Likewise, any service areas that have overspent need a focus on recovery to ensure that these do not recur into 2024/25 and are put into sustainable position.”
In September 2022, the government announced measures to intervene in Thurrock due to the authority’s debt position of around £1.5bn. Shortly after intervention in December, the council issued a section 114 notice as a result of an estimated budget deficit for 2023/24 of £452m against a budget of £153m. The intervention was expanded in March 2023.
The authority’s financial problems mainly stem from its failed investment in Toucan Energy Holdings, which entered administration in November 2022, with Thurrock as the primary creditor.
The council sold its portfolio of 53 solar farms for £700m in January.
John Kent, who became leader of the council in May after a Labour victory in local elections, told the Local Democracy Reporting Service that Thurrock’s debt remained at more than £400m as of him taking over the role.
—————
FREE bi-weekly newsletters
Subscribe to Room151 Newsletters
Follow us on LinkedIn
Follow us here
Monthly Online Treasury Briefing
Sign up here with a .gov.uk email address
Room151 Webinars
Visit the Room151 channel
