When Labour took over the leadership of Thanet District Council in December 2011, we were advised of a commercially confidential arrangement that the previous Conservative regime had entered into in March that year with Transeuropa Ferries.
The company was struggling financially and Conservative-controlled TDC, together with the authorities at Ostend, had agreed to special payment terms in order to assist its survival.
In Thanet’s case this meant deferring the fees Transeuropa paid to berth at Ramsgate, initially for three months but subsequently for longer, and putting in place a payment plan that would have seen the outstanding debt recovered in full by 2014.
The purpose of this arrangement was to give every possible chance for the continuation of the ferry service at the port, and to protect both the jobs that depended on it and an important source of ongoing income for the council taxpayers of Thanet.
By the time Labour took over from the Conservatives, the ferry company already owed the council £1.7m, and the risk attached to this debt had become an additional consideration.
The council was in constant contact with the company and there were regular discussions internally about the potential financial implications of it going under.
If we had taken action to recover the money at that stage, for example by denying Transeuropa facilities at Ramsgate, this may well have tipped the firm into administration, leaving the existing debt unpaid and the port without its major customer.
It was also important that the council said nothing publicly that had potential to undermine commercial confidence in the company, as this may have had the same outcome.
Developments over the next year gave some cause for encouragement. In July 2012 the firm began making debt repayments. In November last year it reached agreement with an Italian investment company. And early in 2013 it added a third ship to the Ramsgate-Ostend service.
During this time the amount outstanding to the council increased to £3.3m, but the risk of the firm becoming insolvent appeared to be reducing.
It should be understood that if the council had adopted a hard line at any point then in all likelihood the ferry service would simply have ended earlier. The council would still not have had the £3.3m, as that level of debt would never have been incurred in the first place.
It is true that the council would have been able to make some savings at the port if the ferry company had failed earlier, but these are a fraction of the overall amount.
We take responsibility for the actions of the council since December 2011, but in our view, officers and elected members have done what they could to protect the best interests of the district in a very difficult situation.
The council will take whatever action is available to recover as much money as possible, but in the meantime we have to show in the 2012/13 accounts that we are able to cover the shortfall from existing resources and that is the purpose of the report to cabinet next week.
Cllr Clive Hart - Leader
Cllr Alan Poole - Deputy Leader &
Cabinet Member for Operational Services
Cllr Rick Everitt - Cabinet Member for Finance
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