‘Victory for taxpayers’: Bureau wins fight to reveal council investments
Councils across Britain should tell voters about investments made with taxpayers’ money after the Bureau won a year-long battle for the public’s right to know.
The tribunal ruling, hailed by a senior politician as a “victory for taxpayers”, orders Thurrock council in Essex to disclose how it invested huge sums borrowed from hundreds of other local authorities. The council’s controversial investment plan, which involved borrowing £1bn from the public purse for secretive deals in green energy, was first revealed by the Bureau last year.
The Bureau challenged the council’s refusal to release details, which drew on the growing trend of seeking to justify local government secrecy for the reason of “commercial sensitivity”. The ruling rejected the council’s argument that openness could be commercially damaging, saying there was “significant public interest in transparency”.
This could have wide-ranging consequences across local government, increasing the public’s access to information. At a time when many councils are taking greater risks to raise funds after government cuts and Covid-19, the ruling should also empower citizens to better scrutinise council finances and how their money is being spent.
Meg Hillier, chair of the Public Accounts Committee, said: “I applaud the determination of The Bureau for pursuing this and winning a victory for taxpayers.
“As the information rights tribunal judge says – responsibility for holding local authorities to account for their borrowing and spending decisions ultimately falls on voters. Voters must be informed to make those decisions. Let the public judge what level of risk they are content to bear with the money they pay in taxes for essential local services.
“With so many risky investment plans coming home to roost, this ruling is timely in enabling local taxpayers to see what is being spent, and how, in their name.”
Gina Miller, the transparency activist, told the Bureau: “Just as we believe it is a fundamental right for taxpayers to see how their taxes are spent, they also have a fundamental right to know how their taxes are invested and where.
“We believe this level of transparency and public access to information should be mandated across all public sector organisations and local authorities, especially post-Covid when councils may be tempted to take higher risks in the pursuit of higher returns due to funding blackholes resulting from envisaged government cuts.”
The legal challenge
With little democratic or public scrutiny and using delegated powers, Thurrock took out loans from more than 150 local authorities and then poured more than £800m into what it believed to be money-spinning renewable energy ventures in an attempt to become self-sufficient. This may have been a breach of guidelines which state councils should not borrow in an attempt to make a profit. The Bureau attempted to scrutinise this spending but was met by barriers at every turn.
The loans and investments were overseen by the council's finance director, Sean Clark, who was also responsible for dealing with accounts-related requests under the Freedom of Information Act. He rejected The Bureau’s request to reveal which councils Thurrock had borrowed from and what deals that money had financed, arguing that to do so would damage the council’s commercial interests. His decision was then upheld by the Information Commissioner.
In its appeal to the tribunal, The Bureau argued that disclosing the information was overwhelmingly in the public interest due to the sums of money involved, the fragility of local government finances and serious concerns about the investments uncovered through our investigations.
The Bureau found that Thurrock had invested more than £400m of public funds into ventures linked to a single company – Rockfire Capital – which has since gone into liquidation. The council has since borrowed another £325m from a government lending body after some nervous local council lenders began to pull out. More recently, there were concerns that £20m in public funds might be at risk after another of its secretive deals was believed to have turned sour.
But key information relating to hundreds of millions of pounds of loans and investments remains hidden from public view – an increasingly familiar situation for journalists and members of the public trying to hold local councils across the country to account. Successfully appealing the ICO’s decision was the Bureau’s last hope of tracing how Thurrock spent this money.
Ruling that all the information should be disclosed, the tribunal accepted there was “significant public interest in transparency in relation to the actions of councils borrowing for the purposes of making a profit” and said the suggestion Thurrock had breached statutory guidelines by doing so was “plausible”.
“Further we accept that there are plausible concerns in relation to one of the companies through which the council invests in renewable energy.”
An ICO spokesperson said: “The Commissioner has considered the Tribunal’s interim decision and noted the reasons for it, and does not propose to seek permission to appeal the interim decision.”
While Thurrock insists it follows transparency rules and regularly publishes information about its spending, the tribunal said concerns raised by the Bureau about the lack of adequate checks and balances relating to the investments were valid, adding: “We have not seen evidence to suggest there is anywhere near the level of transparency sufficient to allow an informed member of the public to understand the exposure to risk that the council has as a result of borrowing and investment decisions.”
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The tribunal ordered that the council disclose the information to the Bureau by April 12. Although Thurrock can choose to challenge the ruling, John Kent, the council’s Labour opposition leader, called on it to comply.
He said: “This is a very positive ruling, not just for Thurrock, but for open local government across the country.
“Good local governance relies on openness and transparency – this council attempted to keep secret how they were spending hundreds of millions of pounds of public money and that was just wrong.”
The Bureau's fight for transparency was backed by The Times, Reach and Archant, the UK's two largest regional and local newspaper groups, and specialist publications such as the Local Government Chronicle and the Municipal Journal, as well as freedom of speech campaigners, including Index on Censorship. It was helped by Wiggin, a firm of media law experts.
Thurrock council said it was disappointed in the tribunal's decision and did not say whether it would continue to fight to withhold the information.
What this means for you
The tribunal’s ruling could provide a powerful tool for local citizens and reporters to hold local authorities to account – and you can help wield it.
While councils are subject to rules around transparent spending and decision-making, their dealings with the private sector are not. Too often journalists or members of the public hoping to scrutinise these relationships are blocked on the grounds of commercial sensitivity.
But this potentially landmark ruling reaffirms, in the strongest possible terms, that the public interest in transparency can supersede the commercial interests of councils and the companies they do business with – especially when huge sums of money are involved.
It also sends a clear message to local authorities that they can no longer necessarily get away with impeding public understanding of the decisions they take by making them behind closed doors.
You don't have to be a journalist to get involved. If you're concerned about what's happening in your area you can help test this:
- Sign up to the Bureau Local network for updates on this and our wider fight for better access to local information
- Raise questions about key business deals at public meetings or through council press offices
- Challenge situations where the public and press are excluded from access to information
- Submit Freedom of Information requests to councils asking for information about their commercial relationships. Here’s a tool that can help you put in a request.
Each time when taking these actions you can point to the ruling – there are two parts, 1) on investments and 2) on borrowing – as a compelling reason why the council should comply, and the Bureau would love to hear how you get on. Please let us know by emailing [email protected] or by joining the Bureau Local network to take part in our collaborative investigations and help shape the future of journalism in the UK.
Reporter: Gareth Davies
Desk editor: Megan Lucero
Investigations editor: Meirion Jones
Production editor: Frankie Goodway
Legal team: Wiggin, Stephen Shotnes (Simons Muirhead Burton)
Our reporting on jobs is part of our Bureau Local project, which has many funders. None of our funders have any influence over the Bureau’s editorial decisions or output.
Header image: The Thurrock council headquarters in Essex. Credit: Alex Sturrock for The Bureau