The solar farms at the centre of the ruinous investments that led to the collapse of Thurrock council will be sold at a loss to the taxpayer of around £200m.
A buyer has agreed to pay approximately £700m for the 53 farms that the council financed through a series of secretive deals before the company that owned them went bust.
Thurrock said the sale will help reduce its debt by “in excess of £500m” and would be the “single biggest contributor” towards its financial recovery. Thurrock’s effective bankruptcy, declared in December 2022, has already resulted in tax hikes and dire warnings about cuts to local services.
While the exact figures are not yet clear, the loss of public money caused by the investments is likely to be colossal. The amount recouped by the sale of the solar farms is nearly £200m less than the total owed to the Conservative-run council.
John Kent, leader of Thurrock’s Labour group, said the council had lost the money as a result of “chronic mismanagement” and a “reckless gamble”.
Between 2016 and 2020, Thurrock poured £655m, borrowed from other local authorities, into bonds issued by companies owned by businessman Liam Kavanagh. The deals were made largely in secret by the council’s finance director, Sean Clark, and the money was used to buy solar farms across the UK.
A three-year investigation by the Bureau of Investigative Journalism (TBIJ) uncovered evidence that Kavanagh appeared to have cheated the council out of as much as £130m and spent the money on a life of luxury.
Kavanagh convinced Thurrock to hand over the equivalent of almost its entire annual budget while inflating the value of the solar farms it had invested in. Financial records show the money was spent on a country estate, private jet and luxury yacht. Kavanagh denies ever misleading the council and the allegation of fraud.
His company, Toucan Energy Holdings 1, went into administration in November 2022 and the amount owed to Thurrock eventually swelled to just below £700m. The scandal led to urgent government intervention; the resignation of Clark, the council leader and its chief executive; and the effective bankruptcy of the local authority.
It was announced on Thursday that the solar farms had been acquired by an investment fund managed by Schroders Greencoat. In an ironic twist, the financing behind the deal includes six local government pension funds.
The total figure recouped by Thurrock will be reduced by the £50m in administrator and consultancy fees accrued over the last year.
Andrew Jefferies, leader of Thurrock council, welcomed news of the sale after a “complex and time-consuming process”.
He said: “While it’s good news that this asset has now been sold, there is no denying the scale of the challenge we face and the ongoing efforts that are required to stabilise the council in the years ahead.”
The solar farm deals were among a number of investment schemes overseen by Clark that went disastrously wrong. The council also poured £94m into alternative lender Just Loans Group, which also went bust, resulting in an expected loss to the taxpayer of more than £60m.
Earlier this month, the UK watchdog confirmed it had launched an investigation into an accountant regarding activities at Thurrock.
Kent said: “The fact remains the council is still hundreds of millions in debt, council taxpayers will still be paying more and more for fewer and fewer services, and vital community assets are set to be sold off at knockdown prices.”
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