Thurrock Council repays Newcastle City Council £15m loan with interest

A council said a £15m loan had been repaid from another local authority that is effectively bankrupt.

Thurrock Council in Essex is borrowing nearly £850m from the government so it can pay back other local authorities across the country.

Labour-run Newcastle City Council said the money had been recouped with interest.

An opposition councillor in the city questioned why the money was loaned in the first place.

"It is disappointing that the opposition cannot accept a straight answer when given to them," said Paul Frew, the council's cabinet member responsible for finance, speaking to the Local Democracy Reporting Service.

"The council has received all of the money loaned to Thurrock Council back, with interest. Every local authority in England is ultimately backed by national government.

"The risk of a local authority defaulting on a loan to another remains theoretical."

Liberal Democrat deputy leader Colin Ferguson said the loan "sticks out like a sore thumb" and said it was not clear at the point the money was handed to Thurrock whether government would have underwritten the decision.

"Are cabinet members on top of their brief and stewarding the city's finances safely?" asked Mr Ferguson.

"What did they know and when did they know it? Residents deserve clarity."

Newcastle City Council has been finding savings totalling £347m since 2010 and planned to cut £3.24m from adult social care services in next year's budget.

Conservative-run Thurrock Council issued a section 114 notice on Tuesday, meaning it cannot balance its budget and was effectively bankrupt.

It has admitted a £469m funding black hole, three times larger than its annual budget, following a series of failed investments.

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