The 'vanity projects' that bankrupted English councilsSeptember 8, 2023
The ‘vanity projects’ that bankrupted English councils: From authority that funded tycoon’s £650m solar farms – only for him to blow millions on a yacht, private jet and Bugatti – to town that wasted £750m on ‘Singapore-style’ skyscraper
The staggering extent of taxpayers’ money wasted by England’s bankrupt councils on ‘vanity projects’ was laid bare today.
Birmingham this week became the seventh local authority to go bust since the turn of the century, having made a series of costly expenditures, including £184m towards last year’s Commonwealth Games.
It came as campaigners slammed the level of wastage and called for a rethinking of priorities at town halls up and down the country.
Conor Holohan, media campaign manager of the TaxPayers’ Alliance, told MailOnline: ‘Taxpayers are sick of picking up the pieces for financial mismanagement.
‘Far too often, town hall bosses blow millions of pounds of taxpayers’ money on vanity projects and silly investments.
‘Councils should stick to delivering key services.’
Here, MailOnline takes a look at some of the remarkable projects that sent local authorities spiralling into the red.
Birmingham is the latest council to declare bankruptcy, following in the footsteps of Hackney, Northampton, Croydon, Thurrock, Woking and Slough
READ MORE: How Labour ‘playing Monopoly’ with public money saddled Croydon with a record 15% tax hike
In one of the most devastating examples, Thurrock Council in Essex borrowed £655million of public money to invest in Liam Kavanagh’s solar farm business.
But leaked documents reveal how the fast-living financier used the council’s funds to go on a spending spree and live a luxury lifestyle.
Mr Kavanagh’s lawyers claim that all the payments made were allowed and approved by his company’s finance team and auditor.
Thurrock hoped the huge investment in 53 solar farms would generate millions in extra income.
The investments were issued through a complex series of bonds and in return, Thurrock would get interest payments worth millions of pounds.
But the interest payments stopped after Mr Kavanagh wound up his companies and the estimated value of the farms is lower than expected, with the council facing a £200million shortfall on the risky investment.
By 2018, Thurrock had already invested more than half a billion pounds in the business. The inflated power prices convinced the council to invest another £130m – which never reached the solar farm.
In one of the most devastating examples, Thurrock Council in Essex borrowed £655million of public money to invest in Liam Kavanagh’s (pictured) solar farm business – only to see him use the funds to go on a spending spree and live a luxury lifestyle
Thurrock hoped the huge investment in 53 solar farms (one pictured in Swindon) would generate millions in extra income
Leaked documents reveal how Mr Kavanagh spent the council’s money on his lavish lifestyle instead. There was a £12million payment which went to a company that bought his private jet.
READ MORE: How a tiny council with just 100,000 residents ran up £1.2billion in debt by trying to become the ‘Singapore of Surrey’
Meanwhile, there were also payments of £2million for his Bugatti Chiron car and £16million for his yacht Heureka. Another staggering £40million went to a bank account called ‘other’.
He also bought a million-dollar diamond-encrusted Hublot watch which cost twice as much as the average home in Grays – the town where Thurrock Council is based.
Elsewhere, Woking in Surrey has spent an eye-watering £750m – more than the cost of the 2012 Olympic Stadium – on Victoria Square: a Singapore-style skyscraper complex containing apartment towers, a Hilton hotel, shopping centre and public plazas.
The original cost was put at £150 million but the bill escalated amid delays and construction problems.
It also made a staggering £36.7m investment in a venture in Milton Keynes, 65 miles and an hour’s drive away, with seemingly no direct benefits to the residents of Woking.
Woking in Surrey has spent an eye-watering £750m – more than the cost of the 2012 Olympic Stadium – on Victoria Square: a Singapore-style skyscraper complex containing apartment towers, a Hilton hotel, shopping centre and public plazas
In Croydon, south London, council chiefs were accused of ‘playing Monopoly’ with public money after a string of failed investments.
These included a £53m retail park – bought in 2018, which it began eyeing up to sell just four years later – and its spend of £114m on a new headquarters in 2013, which cost more per square foot than the Shard.
One of its most notorious failures, however, was the Croydon Park Hotel, a four-star, 200-room establishment which is now due to be demolished and turned into luxury flats, having sold the property to developers for even less than the £30m purchase price.
One notorious failure was the Croydon Park Hotel, a four-star, 200-room establishment which is now due to be demolished and turned into luxury flats, having sold the property to developers for even less than the £30m purchase price
Listed: The English councils that have gone BANKRUPT since 2000
Hackney (2000)- Labour
Northamptonshire (2018) – Conservative
Thurrock (2022) – Conservative
Croydon (2022) – Labour
Woking (2023) – Liberal Democrats
Birmingham (2023) – Labour
Slough (2021) – Labour
Other shocking examples came in Slough, Berkshire, where an accounting error left a £7m black hole in its finances.
An audit revealed that the town hall’s reserves – thought to be £7.5m – were in fact only £500,000 after it emerged they had been used up following a mistake overestimating its income from an urban renewal plan.
The Labour-led Slough authority was also ridiculed for spending £28,000 on 200 indoor plants, which a councillor claimed were ‘dying’.
They were bought to improve the health and wellbeing of staff and to reduce the risk of ‘sick building syndrome’, which causes headaches and respiratory problems.
The town hall even committed to spending a further £20,000 on a gardener to water the plants, but the contract was then cut in a bid to save money.
Bosses were left red-faced after spending £50m on a new HQ, which then had to be sold just three months after it was opened, to great fanfare, by Communities Secretary Sajid Javid.
Officials said a fire sale of assets was the only way to keep the local authority afloat.
READ MORE: How ‘bankrupt’ Birmingham council spent millions on botched IT system, ‘inclusive’ new street signs, and the Commonwealth Games
And in Hackney back in 2000, spending spiralled out of control as a result of managers hiding the true cost of their services, or telling councillors what they thought they wanted to hear instead of the truth.
One such example culminated in a £5m rubbish collection contract ultimately costing double that amount.
The effect of Hackney’s financial woes meant a nursery closed because it couldn’t afford to fix a leak in the roof, parks and gardening vehicles ran out of fuel, and in one bizarre case, a council tenant had a new bath fitted – but was told there wasn’t enough money to provide taps.
The council spent millions on a botched IT system and spent another £184 million on its costly bid to stage the Commonwealth Games.
It raked in close to £90 million from its controversial Clean Air Zone – only to pump more than £50 million back into hydrogen buses and cycle lanes.
Other costs include a £13 million investment in the 2026 European Athletics Championship, as well as unrevealed outlays on a series of ‘inclusive’ street signs and an ambitious ‘Green roads’ plan.
The spending exacerbated financial issues at the council, with one former executive revealing this week he had urged council bosses not to divert attention away from its money woes by bidding for the Commonwealth Games and other ambitious plans.
Both residential and commercial rubbish combined with people leaving black bin bags open on their street is creating a serious rodent issue in Birmingham, according to local business owners
Speaking to MailOnline, locals slammed the council for its spending on ‘vanity projects’, as they hit out at spiralling violence in the city, as well as issues over services such as bin collecting.
The debt-ridden council, the largest in Europe, now faces a huge shortfall of £87million after it saw costs of its troubled Oracle IT system balloon from £13million to up to £100million.
On Tuesday, chiefs were forced to declare the council effectively bankrupt after also being hit by a £760million bill over equal pay claims.
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