BBCFinancially troubled Thurrock Council is considering legal claims against more than 20 other local authorities.
The unitary council in south Essex became effectively bankrupt two years ago after it borrowed and invested hundreds of millions and racked up a £1.5bn debt.
It received valuations for its solar investments from the Association for Public Service Excellence (APSE), which is owned by local councils.
Thurrock “believes that valuations of the solar assets undertaken by APSE, which they allowed the council to rely on, were negligent and overvalued those assets”. APSE said it “entirely rejected” Thurrock’s statement that valuations “led to significant financial losses to Thurrock with negative impact on taxpayers”.
The councils that face being sued include Luton, Southampton, Cardiff, South Tyneside, Preston, Wolverhampton and Hertfordshire, according to the Bureau of Investigative Journalism (full list at the bottom of this story).
Mo Baines, chief executive of APSE, said this would lead to “significant legal costs on other councils which we believe has no merit”.
APSE provides advice to local authorities and warned if Thurrock proceeded it could end up affecting all 250 councils in the UK as co-defendants. Seeking independent legal advice could cost each council around £25,000, according to APSE.
Ms Baines said she “remains hopeful there is a positive resolution” but told the BBC that Thurrock’s action would mean “other councils become embroiled” in paying for their financial failure.
She questioned whether “council taxpayers of Norwich to Northumberland take a hit for the losses of a council they have had nothing to do with?”.
Recovering money
Thurrock Council told the BBC the claim was “against a representative group” of councils who are APSE members “to reduce the impact and cost of the legal action for all the councils involved”.
“Under the court procedure, the presumption is that a claim against the representative councils will be binding against all 250 APSE member councils,” a Thurrock spokesperson said.
High Court proceedings have begun against businessman Liam Kavanagh and Rockfire Group, who Thurrock invested hundreds of millions with.
Last year, a government commissioned report concluded Thurrock, which at the time was run by a Conservative administration, lost “substantial sums of public money” because of systemic weaknesses and a “dereliction” in leadership.
John Kent, who has been the leader of the council since Labour resumed control in May 2024, said “we have a duty to consider all lines of recovery”.
Thurrock Council managed to claw black £513m last year from divestments which was used to pay back loans.
A further £90m is expected to be recouped this year.
Its current debt level is understood to be about £1bn. The council’s annual budget for 2024-25 was set at £172.4m.
The full list of councils facing possible legal action:
- Bolsover, Derbyshire
- Bournemouth, Christchurch and Poole
- Bristol
- Cardiff
- Derby
- East Riding of Yorkshire
- Eastleigh, Hampshire
- Flintshire
- Gedling, Nottinghamshire
- Hertfordshire
- Isle of Wight
- Luton
- Oxfordshire
- Preston
- South Oxfordshire
- South Tyneside
- Southampton
- Stockton-on-Tees
- Swansea
- Vale of Glamorgan
- Warrington, Cheshire
- West Lindsey, Lincolnshire
- Wolverhampton
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