To receive additional items that the Chair is of the opinion should be considered as a matter of urgency, in accordance with Section 100B (4) (b) of the Local Government Act 1972. To agree any relevant briefing notes submitted to the Committee.

The Vice-Chair informed the Committee that one item of urgent business had been received, which was a briefing note providing an update on the Council’s borrowing. The Vice-Chair asked if any Members had any comments or feedback on the briefing note. Councillor Muldowney questioned what the interest rates would be from the new Public Works Loan Board (PWLB). The Interim Director of Finance replied that the interest rates for PWLB were currently approximately 4.5%, although this could vary. He stated that PWLB could be cheaper than other loans and provided access to a wider market. Councillor Muldowney questioned what the previous interest rate for PWLB used to be. The Interim Director of Finance stated that interest rates for PWLB used to vary between 0.5% and 3.5%. Councillor Muldowney asked if interest rates could rise further, and if this would present additional risk to the Council. The Interim Director of Finance stated that the Council were currently seeking treasury management advice regarding the longer-term interest rates, as the market was no longer stable and remained subject to change. He added that the debt had been initially replaced with PWLB to create breathing space and this approach formed a key part of the intervention. He commented that further detail on PWLB would be brought to the Committee as part of the Quarter 2 Financial report.

Councillor Kent highlighted that the Chancellor’s mini budget had increased the interest rate for local authorities from 3.96% to 5.36%, and queried if Thurrock’s loans had been taken out at the higher, 5.36% rate. The Interim Director of Finance explained that the loan had been taken out at 3.96% interest rate, but rates fluctuated almost daily, so this was subject to change. Councillor Kent asked if any future loans would be granted to Thurrock at the prevailing rate. He stated that the PWLB rate was linked to government bonds, so was liable to fluctuate. He asked if the finance team had undertaken any modelling to predict the level of interest debt repayment. The Interim Director of Finance agreed that the PWLB interest rate could fluctuate, and the process for monitoring this would be agreed through the Medium-Term Financial Strategy (MTFS). He stated that this could increase the level of debt at Thurrock, as approximately £836million of debt was being recycled into PWLB loans at an average 4.3% interest rate, and the finance team would be considering this differential, which could be approximately £20million. Councillor Kent questioned what the process for agreeing PWLB had been. The Interim Director of Finance explained that Thurrock had sought treasury management advice in response to stories in the local and national press, which had led to limited access on the local authority borrowing market. He stated that the intervention had begun on 2 September 2022, and at this point Thurrock had no access to the local authority borrowing market. He explained that the commissioners had worked with Thurrock to find funding and understand the requirements needed to reduce the debt and how it could be paid. He commented that once the commissioners understood the level of debt and the scale of the issue, they would be issuing a judgement on how the debt could be refinanced and repaid. He added that the commissioners had also been discussing how to reduce the debt level and ensure the Treasury Management Strategy was compliant. The Interim Director of Finance stated that the PWLB provided a short-term replacement market for the local authority borrowing market, and this could be reassessed. He stated that the approach had been agreed by the Treasury, Department of Housing, Levelling Up and Communities (DHLUC), the Commissioners, the Acting Leader, and the Portfolio Holder.

Councillor Carter asked if there was any flexibility in the current approach, particularly regarding interest rate changes. The Interim Director of Finance explained that Thurrock had been in conversation with DHLUC colleagues to address some of the short-term issues and interest rates. He explained that most of the debt was short-term, which would provide Thurrock the opportunity to reset, reconsider its wider options, and manage asset expectation. Councillor Muldowney sought clarification that the debt was not being paid off, but was being refinanced at a higher rate. She queried how the level of debt had reached approximately £1bn and what the Council’s strategy for paying it off would be. The Interim Director of Finance explained that there were currently two workstreams being investigated by the commissioners: the first being forward looking, for example considering the scale of risk; and the second being backwards looking, for example considering the journey to this point. He explained that the Best Value (BV) inspection had begun on Monday with a document review, and would be meeting with Members and senior officers, to examine how the Council got to this stage. He stated that their investigations would conclude on 3 January 2023 when Essex County Council would report to DHLUC, which would explain the journey here.

Councillor Anderson queried if the Council had considered any other alternatives to the PWLB. The Interim Director of Finance explained that the alternative to the PWLB was the local authority borrowing market, which Thurrock did not have wider access too, and which had higher rates than the PWLB. He explained that the PWLB offered the best rate and therefore made it the cheapest option available. The Vice-Chair summarised and stated that Members felt concerned regarding the current financial situation, but felt the briefing note had been useful and informative.