An Essex council must “undertake a significant and rapid reduction in the scope of local services” as a result of risky investments, a Government-commissioned report has warned.
Councillors and senior officers at Conservative-led Thurrock council are said to have tried to conceal “bad news” and avoid public scrutiny over its strategy, giving rise to “a culture of insularity and complacency”.
A report by Essex County Council, which was first appointed to act as commissioner for Thurrock as part of government intervention in 2022, detailed a catalogue of failings which led to a substantial loss of public money.
Thurrock issued a section 114 notice declaring effective bankruptcy in December 2022 caused by serious flaws in delivering its investment strategy and major infrastructure and regeneration projects.
The report said a “pattern of failure” and the council’s response was enabled by “dereliction in political and managerial leadership, inadequate governance arrangements and serious weaknesses in internal control”.
These factors created “a culture of insularity and complacency”, with internal challenge discouraged and external criticism “routinely dismissed”.
Commissioners added that Thurrock’s lack of openness and transparency placed the council in a state of “unconscious incompetence” which undermined its ability to improve.
The report, which was finalised in May, said: “The scale of the financial challenge now facing the council means it is inevitable that, in addition to making extensive efficiency savings, the council will have to undertake a significant and rapid reduction in the scope of local services.
“Many services, which have been relatively well funded over the past decade may, as a consequence, be equipped to do little more than the statutory minimum for the foreseeable future.”
It added Thurrock’s challenges “stem from a series of self-sustaining, systemic weaknesses which have allowed for repeated failure over many years”.
Commissioners said the council’s poor performance on delivering major projects meant recovery would be “a hugely difficult task”, with a risk of “serious operational failures” without effective management.
The report added Communities Secretary Michael Gove has indicated he is “minded” to issue further directions to the council.
Both Thurrock’s former chief executive, Lyn Carpenter, and finance director, Sean Clark, resigned after commissioners were appointed.
The report found Mr Clark made investments of over £500 million “without meaningful reference to elected members”.
This was on the basis that individual transactions were below £10 million in value or were with organisations that the council had already worked alongside.
“Unbeknown to anyone beyond the [finance director] and staff in the treasury management function, the council built up substantial investments with particular organisations without any member or executive oversight,” commissioners added.
In a written statement, local government minister Lee Rowley said the “broken systems” within the council are “in urgent need of reform and improvement”.
He added: “The report clearly sets out the events which led to the collapse of the council’s commercial investment strategy last year, after that strategy was allowed to operate in an environment with wholly inadequate scrutiny and governance arrangements.
“That failure has had profound consequences for the Council’s financial sustainability, and the inspection report confirms that Thurrock is unable to balance its budget without exceptional financial support from Government, which has now been granted in principle for the financial year 2022/23.”
Among a series of recommendations, commissioners said the council must expand the scope of its improvement and recovery plan and bolster leadership and councillor development to improve capacity.
It added the council should move from electing a third of members at elections to an “all-out” voting system to instil political stability.
The report details a steady growth in Thurrock’s investments from 2017.
By early 2020, the value of the investments was approaching £1 billion, with plans to increase this to £2 billion in further years.
Thurrock’s new Conservative leader Andrew Jeffries apologised for the failings under the previous leadership and pledged mistakes would not be repeated.
He said: “There is no escaping the fact that councillors from across the council must accept responsibility for what has happened, and we must work collaboratively to put things right.
“We have a duty to both residents and the borough that we too call home. Under my leadership, the drive to recover the council’s finances and transform the way we operate will be the number one priority.”
Dave Smith, Thurrock’s chief executive and commissioner, added: “As we look at the report and the impact of the findings, it is clear there is a long road ahead to recover from this grave position.
“We will recover and I am committed to working with staff, members and partners on the improvement journey.”
