On Thursday 22nd September, Sir Geoffrey Clifton Brown MP of the Cotswolds attended a Public Accounts Committee meeting on the Affordable Housing Programme since 2015. During this meeting Sir Geoffrey was given the opportunity to speak with the Permanent Secretary to the Department for Levelling Up, Housing and Communities, Jeremy Pocklington, where he raised the question of councils borrowing unsustainably large amounts of money for projects.
One example Sir Geoffrey raised was Thurrock Council,which is reported to be over £1 billion in debt due to borrowing money to invest in renewable energy, specifically, solar farms. Sir Geoffrey highlighted Cotswold District Council and the worryingly similar situation, where they are planning to borrow £76.5 million to invest in projects such as buying five solar farm sites.
In his answer the Permanent Secretary highlighted his concerns of “councils borrowing disproportionately” and that a new regime was being developed through the Levelling-up and Regeneration Bill.
Following Sir Geoffrey’s discussion with the Permanent Secretary, he wrote to the Chief Executive of Cotswolds District Council, Rob Weaver, to highlight his concerns. A copy of this email and the transcript between Sir Geoffrey and the Permanent Secretary can be found below for your interest.
Email to Rob Weaver, Chief Executive of Cotswold District Council
Dear Rob,
Please see attached a section of the transcript from the Public Accounts Committee which took place on the 22 September 2022 on the Affordable Housing Programme since 2015.
As you will see from the transcript, Jeremy Pocklington, the Permanent Secretary to the Department for Levelling Up, Housing and Communities completely agreed with me on the matter of council borrowing for projects such as solar farms. He cited the recent situation with Thurrock Council, who have reported debts of over £1bn.
I am copying into this email the council's Monitoring Officer, as I think it is important she can read what the Permanent Secretary said.
As we have discussed this matter before, you know that I remain strongly opposed to the borrowing plan of your council. There is plenty of private investment available for such projects and I believe it is completely wrong to mortgage the council taxpayers of the Cotswolds. I also do not think the council has the experience or expertise to successfully manage such huge financial investment projects.
I will be sharing this email and the PAC transcript with the media, as I think people deserve to fully understand the financial risk the council will be taking.
With kind regards,
Sir Geoffrey Clifton-Brown MP
Public Accounts Committee Oral evidence: the Affordable Homes Programme since 2015, HC 684 Thursday 22 September 2022
Ordered by the House of Commons to be published on 22 September 2022.
Members present: Dame Meg Hillier (Chair); Olivia Blake; Sir Geoffrey CliftonBrown; Kate Green; Sarah Olney. Questions 1-97
Witnesses I: Jeremy Pocklington, Permanent Secretary, Department for Levelling Up, Housing and Communities; Peter Denton, Chief Executive, Homes England; and Emran Mian, Director General, Regeneration, Department for Levelling Up, Housing and Communities.
Q8 Sir Geoffrey Clifton-Brown: Good morning, Mr Pocklington. Can I return to my old chestnut of the Public Works Loan Board? We heard during the summer of the financial problems of Thurrock taking out huge PWLB loans on solar farms. Indeed, my own local authority are about to do this—they are about to take out a loan of £49 million on an annual budget of £10 million. Largely due to my chasing, your Department and the Treasury have now put in place that you cannot take out a PWLB loan purely to make profit. I have to say that that is something my local councillors do not seem to understand. Could I ask you to look at this again? There is no reason at all why a local authority should be applying for a PWLB loan for a solar farm. There is tonnes of commercial money out there to build these farms; not a single one will not be built if a local authority doesn’t do it. They do not have the expertise, it is not their job and it is not their function to be doing this, so I ask you to look at it again, please.
Jeremy Pocklington: Sir Geoffrey, I agree about local authorities investing in solar farms. The situation in Thurrock was that there was a broader issue as well as the solar farm issue. It is very, very concerning for the Department. That is why we went straight to the best-value decision to introduce commissioners and asked Essex County Council to take on that role. Other councils have invested in other energy projects as well. Since November 2020, it has not been possible to access the PWLB if councils intend to invest for yield, and they are required to introduce three-year plans to do that. The rules are very clear and are in place now. I am very happy to look at that specific example in more detail if you would like me to. In the Levelling-up and Regeneration Bill, we are introducing powers to deal with the final element of the jigsaw that we have talked about for many years, which is councils that borrow a potentially disproportionate amount of debt, even if that is for “good things” such as services, housing and regeneration. We still see some councils borrowing disproportionately, so there is a new regime being developed through the Levelling-up and Regeneration Bill.
Q9 Sir Geoffrey Clifton-Brown: Every one of the loans taken out through the PWLB is adding to the Government’s debt. If local authorities are doing that for purposes other than those that they should be doing it for, it is simply increasing the nation’s debt, so this is a serious issue that really needs to be looked at.
Jeremy Pocklington: It is a serious issue and we have taken action. My Department regularly reviews the capital investment plans of local authorities applying for PWLB loans. We work very closely with the Treasury and the PWLB on that. I completely agree with you, Sir Geoffrey.
Link to the full transcript can be found at –
https://committees.parliament.uk/oralevidence/10695/default/