'Plymouth City Council continues to work with Ministry of Housing, Communities and Local Government to finalise matters'
Plymouth City Council has still not received an official Government thumbs up after its controversial shares and pension deal and is in talks with a minister. The authority is still waiting for a capitalisation direction needed after it borrowed £72m from the Government to buy shares in a company and then use it to wipe out a pension deficit.
In March, the council said a minister had written to the council to say he was “minded” to grant a capitalisation direction, allowing the 2025/26 budget to be approved. But first, Jim McMahon, minister of state for local government and English devolution, wanted to know about £1.2m that was paid to cover what the council described as “governance arrangements, filing fees, tax expertise and legal advice” as part of the shares/pension deal.
Now, three months on, and the council is still waiting for the capitalisation direction to arrive, although it stressed it had set a budget for 2025/26 in February.
A council spokesperson this week told PlymouthLive: “The capitalisation direction has not yet been issued; however PCC (Plymouth City Council) continues to work with MHCLG (Ministry of Housing, Communities and Local Government) to finalise matters.”
In March, a report by the independent professional body Chartered Institute of Public Finance and Accountancy (CIPFA) was published. CIPFA had been called on to carry out a review into the council’s financial position after the authority asked ministers for the capitalisation direction.
CIPFA’s report explained that the council used the loaned money to invest in an “independent investment company” called Miel Solutions Ltd which then used the cash to completely pay off the council's pension deficit. The transaction should have been classed as a capital spend and the council’s auditor flagged it as “an issue” and said it had used the borrowing to fund “a revenue pressure”.
The council has always maintained it was a good deal and has saved it £9m. After studying numerous documents and interviewing key councillors and council staff CIPFA concluded that the deal was a “one-off” and the council would not need to ask the Government for a future capitalisation direction, after the current one. CIPFA called it a “novel” transaction.
Meanwhile, the council’s finance chief has to publish a draft statement of the 2024/25 accounts by June 30, or “give an explanation to the public of any delay”, council documents say. A council spokesperson today said: “The statement of accounts will be issued by June 30, there is no dependency on the capitalisation direction being issued.
“They will be prepared and published on the same basis as the prior year accounts, which have been subject to audit and are approved. The prior year accounts are available on our website.”
