Thurrock Council has admitted that a series of failed investments has led to what amounts to a £469 million budget black hole.
The Conservative-run council revealed in a report that £275 million of taxpayers money has been effectively lost as a direct result of the mistakes.
It has also set aside another £130 million to pay back investment debts.
The budget hole is equivalent to three years budget, and the council is now asking for a government bailout.
The interim head of finance, Jonathan Wilson has described the council’s financial position as ‘grave’.
CIPFA CEO Rob Whiteman, said: “The Prudential Code clearly sets out that the prime policy objective of a local authority’s treasury management investment activities is the security of funds. Local authorities should avoid exposing public funds to unnecessary or unquantified risk.
“CIPFA strongly reinforces its message to local authorities that their investment powers are for purposes relevant to their functions and need to reflect a prudent approach. Local authority powers must be used reasonably and should reflect the fact that an authority’s primary function is as a service provider. Most Local authorities operate within this framework, but those that don’t put the reputation of the sector at risk.
“Understanding the risk exposure of any organisation is a vital part of good financial management. There is also a need for good governance and strong decision making, as well as accountability and transparency. If a local authority fails to appreciate the level of risk, ignores warnings, and does not have in place effective mitigation, it has fallen short of the very fundamentals CIPFA would expect.”
