Council leaders in Thurrock have patted themselves on the back for their handling of the budget while ignoring that the council has fallen into more than £1billion of debt.

Thurrock Council’s cabinet met on Wednesday night to discuss the financial position and praised their “projected surplus” which will run into 2022 and said a “modest” council tax increase was the result of their ability to handle the economy.

What they failed to mention is a council report which revealed at the end of September 2019, the council had run up debt of £1.26billion.

It has spent £961.2 million of that money in schemes which are intended to bring in positive financial returns, while £160.8million is allocated to the council’s housing budget and £142.4million relates to “historic capital funding”.

The debt has been rapidly increasing, with council documents showing that almost £1billion of the current borrowing took place over just a five year period. It will all eventually need to be paid back.

The council documents do not give any details on what the investments are, the reasons behind them or how financially secure they are.

The growing debt is in addition to several historic loans borrowed through controversial LOBO schemes, which allow lenders to impose new interest rates of their choosing, leaving the borrower having to either accept or repay the entire loan.

An investigation by the group Debt Resistance UK found that councils taking out these loans can face interest rates which are more than twice as high as the lending rate from the government’s Public Works Loan Board.

Speaking at Wednesday's meeting, Conservative Councillor Shane Hebb said the “financial health of the council remains strong” and said this year council tax would increase by a “modest” 3.49 per cent.

He continued: “We will deliver on our long standing Conservative campaign promise that we will be using funding secured for the local economy for extra police officers who will be based on the streets of Thurrock over the next four years, policing our towns and communities.”

Shane Hebb, councillor for finance, said: “In October 2017, Thurrock’s elected councillors all voted to drive forward with the Cabinet’s proposed investment strategy. In short, that strategy leads to money being borrowed and invested with the returns enabling services to be safe for funding until at least 2023; services being invested in further than statutorily required in our key priority areas, such as environment and anti-social behaviour; and enables general Council Tax levels not being increased by the maximum over the last four years, as well as enabling a tax freeze last year - something that 95% of other councils in the UK have not being able to do.

“Three quarters of our council’s prudential borrowing supports that innovative investment strategy. It has allowed us to put £13m into our environment team and £1m of extra police on our streets. 

“This investment strategy, along with in house reforms, have also led to us reducing a £40m deficit of how we afford to pay for services, to a £15m surplus in under four years. Our rainy-day fund - the so-called General Fund Reserves - have also been increased by nearly 40% to £11m. Furthermore two external auditors have assessed the strategy and issued Value for Money statements, underpinning the integrity of the strategy.

“All borrowing for investments will be repaid by the council and reduce debt over the coming years. 

“Our debt is well managed, within limits agreed by councillors at Full Council in February 2019, with political leadership being engaged through the year and when specific and significant activity is completed. The borrowing does not present a significant risk to Thurrock Council or the borough’s residents.”