Welsh £6m loan to cash-strapped English council ‘will be recouped’
Elgan Hearn, Local Democracy Reporter
Assurances have been given by a Blaenau Gwent financial chief that £6 million loaned to a crisis-hit council in England will be recouped in full.
At a meeting of Blaenau Gwent County Borough Council’s People scrutiny committee on Tuesday, October 18, councillors looked at the Treasury Management annual review report for the 2021/22 financial year.
Blaenau Gwent’s resources chief officer Rhian Hayden said that by the end of March, the council has £165.462 million worth of long-term debt and £62.365 million short-term debt.
During the 2021/22 financial year the council had made investments totalling just over £1 billion. This figure is a cumulative one with Blaenau Gwent investing small sums, several times over, for short periods of time.
Amongst the list of council’s and public bodies that that Blaenau Gwent has moved money to and from in 2021/22 is one that sets alarm bells ringing – Thurrock Council.
Blaenau Gwent has loaned £6 million to Thurrock, with a repayment expected at the end of November.
‘Drowning in debt’
But over the summer it was revealed that Thurrock is drowning in £1.5 billion worth of debt, after failed investments in energy schemes.
In September, the UK Government appointed Essex County Council as commissioners to effectively run Thurrock.
Cllr Ross Leadbeater said: “I notice there’s £6 million outstanding, which is a concern, is there any update on that?”
Ms Hayden said: “We have received notification from that council as they have the regulators in at the moment.
“We have had written confirmation from them that any loans we have given them will be fully repaid in line with the agreements we made.
“They have confirmed that to us.”
Ms Hayden added that Blaenau Gwent had “effectively managed its credit risk” throughout the year and had been “very risk averse” when it came to investments.
Committee chairwoman, Cllr Joanna Wilkins said: “This is a constant juggling act reviewing what’s coming in and going out.”
Ms Hayden explained that the need to invest is due in part to the agreement the council has with Barclays bank and that it can only keep a “maximum” of £6 million in the bank account overnight.
Ms Hayden said: “We have to move it out to elsewhere or we breach our contract, and they will start charging us – it’s cheaper to move it and earn a little bit of interest.”
The report was approved by the committee and will go on to be discussed at a full council meeting next month.
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Premonition of how things might work out with the UK if we achieved independence. Bailing out the English Treasury from time to time!
Seriously how can an impoverished area like Blaenau Gwent be sending loans to England when there are a raft of glaring defects that need addressing within the authority?
As an independent nation, it would be our choice if we make a loan to the English Treasury, but it will have to be on international commercial rates of interest.
I’d like to understand what is meant by £1bn “investments”. Is CBG playing the stock market? Is this their growth strategy? Are they buying scratchcards and lottery tickets?
With interest I hope!!!
We not only give our water to England, but now loan them money? Not that I’m against helping anyone, but what the hell is going on?
We have one of the most impoverished areas not only in Wales, Britain but Europe in Blaenau Gwent bailing out failing Conservative-run Thurrock Council in Essex with £6 million? I’m truly lost for words. 🤔 💸
My sentiments exactly, and as aLabour leaning area they’ll have no compunction about going back to Drakeford and asking for more !
This could be one of the reasons why Blaenau Gwent voted so strongly in favour of Brexit – they already have enough cash of their own! There again the EU have already rebuilt their college, Ebbw Vale town centre regeneration and the Heads of the Valley road.
Council in country that supposedly isn’t financially solvent loaning money to council in the country that props it up? What’s even going on here?