20:58 Geoffrey Clifton-Brown (Conservative)

So what exactly are these proposals as laid out in the circulated tactical delivery plan? Well, page 66 states that the council wishes to borrow a total of £76.5 million to finance various projects, at the same time exhausting the council’s general reserve fund. The plan envisages that £49.7 million be borrowed to finance climate change and green energy investment projects. The largest of these projects is to buy five solar farm sites for a total of £46.5 million. There is more than sufficient finance in the market to fund these schemes without the council’s intervention. In addition, there are plans to borrow £25 million for investment in a variety of projects described as investments for economic development and asset usage, although further details on these schemes are currently not available.

We have seen many recent examples of councils losing huge amounts of money in failed investment schemes. For example, Nottingham City Council ultimately lost £30 million of public money in 2015 after it set up and invested in Robin Hood Energy—a localised green energy company that ran into financial difficulties and could not pay its bills. By 2019, the council was forced to bail it out. In 2020, Croydon Council effectively declared itself bankrupt with a £73 million shortfall. It borrowed £545 million during a three-year period to invest in commercial and housing properties. The council invested £30 million in the Croydon Park hotel in 2018-19. A central Government taskforce was sent to oversee an audit in 2020, following these risky property investments and the council ignoring repeated warnings on its dire financial situation, and last year the council had to have a £120 million bailout from the Government.

Although the Government have set some achievable targets under the green agenda, such as bringing all greenhouse gas emissions to net zero by 2050, and securing global net zero by mid-century to limit global warming to 1.5°, there is evidence that, faced with the cost of living, people are asking the Government to help with the squeeze on bills by slowing down the increases in green levies. The same applies to the extreme borrowing that is proposed by Cotswold District Council for solar farms.

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21:12 Kemi Badenoch (Conservative)

My hon. Friend is a tireless campaigner on behalf of his constituents and I applaud him for bringing the issue to the House today for discussion. First, he asked whether the borrowing in question was within the lending rules of the Public Works Loan Board. Under Public Works Loan Board guidance, a project for service delivery includes education, highways and transport, social care, public health, culture, environmental and regulatory services; police, fire and rescue; and central services. I can confirm that projects related to climate change are included in that.

On my hon Friend’s points about the scale of the borrowing that Cotswold District Council intends to do in comparison with its annual income, it goes without saying that disproportionate levels of debt expose councils to financial risk. It is not just the size of the debt that can create issues; some authorities invest in novel activities outside their areas of experience or expertise, which can lead to financial loss when the investment is mismanaged. My hon. Friend will remember what happened with Robin Hood Energy, Bristol Energy and Together Energy. While councils are sometimes very well meaning in trying to tackle important issues such as achieving net zero, we cannot forget that the energy market can be volatile, and councils need to be sure that they are getting the right advice when proceeding with such investments.

That is not to say that local authorities should not undertake borrowing. I want to make it clear that the Government recognise that commercial investments can be necessary and appropriate when made sensibly. Sensible investment can play an important role in helping us to power forward on issues that are central to the Government’s agenda, be they levelling up, net zero or building the homes that the country needs.

I can confirm that my hon. Friend is correct on the first point. The council cannot invest purely for profit, but because its investment has a net zero element, it would qualify under the guidance. However, it remains to be seen exactly how the proposal will manifest itself. I cannot confirm the second point at the Dispatch Box, but I will get officials to write to him formally with a comprehensive answer. He is absolutely right to raise the point that there is guidance out there that should ensure that councils invest prudently.

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