A major investigation has revealed how Thurrock Council got into more than £1billion in debt, borrowing the money from around 150 local authorities across the UK. But instead of funding council services, the council gambled at least £604million in solar farms located outside of the borough.
Among Thurrock’s rundown council estates and neglected public parks, typical of many towns after a decade of austerity, there is nothing to suggest that over the past three years the local council has borrowed and then invested hundreds of millions of pounds of other councils’ money.
Under the direction of a senior council officer Thurrock borrowed from about 150 local authorities across the UK with little public scrutiny. These loans were not for direct funding of council services, or investing in infrastructure – instead they financed solar farms more than a hundred miles away.
Sean Clark, Thurrock’s director of finance, oversaw the investment of £604m in the solar industry, investments he says were prompted entirely by intermediaries approaching him with money-making opportunities. In an extraordinary interview with The Bureau, Clark wondered whether he had gone too far. At last count Thurrock owed other councils an unprecedented £1bn.
What neither Clark nor the council will disclose is which local authorities he borrowed from or what companies he invested in. To do so, they say, would harm Thurrock’s commercial interests and put off potential lenders.
However, an investigation by The Bureau has discovered the council has poured at least £74m, and possibly hundreds of millions more, into a single company, Rockfire Capital, whose financial model raises serious questions over how likely it is that the public money would be recovered in full if the business failed. This revelation comes at a time when many councils’ finances have been hit hard by the coronavirus crisis.
The situation in Thurrock is arguably the most stark example yet of the commercialisation of local councils, with town halls across the country turning to increasingly inventive money-making schemes to replace funding cut by central government. In 2018, the Bureau revealed that Spelthorne council had borrowed £1bn to play the property market, despite having an annual budget of just £22m. These schemes are made possible by easy access to cheap financing, in Thurrock’s case from other councils.
Thurrock, which is in Essex, describes itself as “unashamedly” focused on revenue, and says the returns from its investments have been put back into services. But the Conservative-led council has not been fully open with The Bureau or the wider public about how those profits were made.
John Kent, the former Labour leader of Thurrock council, called on the current administration to come clean. He said: “People absolutely need to be aware that the council has borrowed £1bn – that’s billion with a b.” He claimed that the council had declined to give elected members or the public adequate details of precisely how it invested the money.
Open for business
Thurrock’s investments in the solar industry began in 2016 after brokers used by Warrington council introduced Thurrock council officers to an investment management company, Rockfire Capital.
Warrington had already invested in five solar farm bonds connected to the company when its brokers told Thurrock about an opportunity to invest in a large solar farm near Swindon. It would become the deal that launched Thurrock’s unparalleled borrowing and investments.
But there are serious questions over the degree of security of investments in Rockfire Capital. The company has raised a total of £432m from local authorities, including Newham, Bexley and Havering, using bond schemes. Money raised by Rockfire was then paid to a separate company and, following that, distributed among numerous holding companies connected to each solar farm project.
Rockfire says that these companies do not constitute a group. The various businesses in the network are all controlled by Liam Kavanagh, the founder of Rockfire Capital.
Our investigation found that paperwork for key companies is unavailable for public scrutiny. For example a company Thurrock paid £74m to in a single year – Rockfire Capital Bonds Ltd – has not filed accounts covering the period when the payments were made.