New data reveals West Northants Council has £8million invested in bankrupt local authority - will it get the money back?

New data reveals West Northamptonshire Council (WNC) has £8million invested in a council which has recently declared bankruptcy - so will it get the money back?

A freedom of information (FOI) request submitted by this newspaper shows that WNC has £8million worth of short term investments in the Conservative-led Thurrock Council, in Essex.

Thurrock Council has this week become the latest local authority to formally declare effective bankruptcy, as it grapples with a £500m deficit caused by a series of disastrous investments in risky commercial projects, writes the Guardian.

According to the FOI data, WNC made a £5million deposit to Thurrock Council on August 1 and then a £3million deposit on September 16. The maturity dates for the loans are in May and June 2023.

Cllr Malcolm Longley, WNC's cabinet member for finance, said: "WNC's investment in Thurrock Council is in line with our investment policy, as agreed by full council.

"It has been highlighted widely that Thurrock Council will be putting in place arrangements to repay any short-term borrowings it has taken out and we are not aware of any risk of the investment not being repaid to us when it becomes due. Local authorities are essentially underwritten by the Government."

Liberal Democrat councillor Jonathan Harris (Brixworth) says he is 'surprised' WNC invested in Thurrock Council and 'hopes' the £8million is 'secure'.

Councillor Harris said: "WNC's strategy for investment states the following for deciding who the council can invest with: ‘the primary aims of this investment strategy, in order of priority, are the security of its capital, liquidity of its capital and to obtain a return on its capital commensurate with proper levels of security and liquidity’.

"On this basis, it’s surprising to see Conservative-led Thurrock Council on the list of investments as it has been struggling financially for some time, and in fact issued a S114 notice on Monday (December 19) meaning it is on essential spending only. It is effectively bankrupt - with debts of £469 million.

"Chronicle and Echo readers will remember that the old Northamptonshire County Council found itself in the same situation not so long ago leading to the creation of the West Northants unitary council.

"I hope that the £8million invested is secure and will be returned to West Northants although the maturity dates appear to be in May and June next year."