HARD-UP COUN­CILS LEND £366M TO PROP UP OTHER UK TOWN HALLS

Bangor Mail - - NEWS -

NORTH Wales’ cash-strapped coun­cils have been ‘prop­ping up’ other au­thor­i­ties with up to £366m of loans at rock-bot­tom in­ter­est rates.

Fig­ures ob­tained fol­low­ing Free­dom of In­for­ma­tion re­quests by sis­ter pa­per the Daily Post re­veal the au­thor­i­ties have loaned mil­lions of pounds over the last few years to other coun­cils around the UK.

They say the risk to their money is small, but crit­ics said they shouldn’t be us­ing lo­cal tax­pay­ers’ cash to help out other town halls.

The re­turns on some of the loans have been as low as 0.15%. Gwynedd coun­cil loaned out £91m over the last five years, but only made a profit of £128,000 on it.

The Tax­pay­ers Al­liance, says coun­cils should fo­cus on de­liv­er­ing key ser­vices.

Ac­cord­ing to the fig­ures, Ceredi­gion ac­counts for al­most a third of the to­tal, hav­ing loaned out £109m since 2013 – with re­cip­i­ents pay­ing back on in­ter­est rates as low as 0.15%. Over the same pe­riod, Gwynedd loaned out £92m with Flintshire lend­ing £57.3m.

But due to the low in­ter­est rates – all well be­low 1% – au­thor­i­ties have only made a rel­a­tively mod­est profit.

Ac­cord­ing to a Ceredi­gion coun­cil spokesper­son, the loans pol­icy plays a ma­jor role as part of its trea­sury man­age­ment strat­egy.

He said: “Ceredi­gion County Coun­cil has a gross rev­enue bud­get of over £200m and, there­fore, has sig­nif­i­cant cash­flows to man­age at any given point in time dur­ing the course of a year.

“The coun­cil’s un­der­ly­ing in­vest­ment pri­or­i­ties are the se­cu­rity of cap­i­tal and liq­uid­ity; there­fore, plac­ing fixed-term de­posits with other Lo­cal Au­thor­i­ties is con­sis­tent with those prin­ci­ples and forms just one el­e­ment of the coun­cil’s Trea­sury Man­age­ment Strat­egy.”

But Duncan Simp­son, re­search an­a­lyst at the Tax­Pay­ers’ Al­liance, said: “Lo­cal au­thor­i­ties should not be en­gaged in prop­ping up each other. Rather, they should fo­cus on de­liv­er­ing their statu­tory du­ties.

“Whilst these loan rates seem ap­peal­ing, tax­pay­ers all over the coun­try could be left even fur­ther out of pocket if they’re not re­paid.”

A Gwynedd coun­cil spokesper­son added that the au­thor­ity had to ad­here to Welsh Gov­ern­ment guid­ance in re­gards to the se­cu­rity of its fi­nan­cial in­vest­ments which help bol­ster the pen­sion fund it op­er­ates on be­half of Anglesey and Conwy coun­cils.

He said: “In March 2011, Gwynedd coun­cil adopted rules which re­quire the au­thor­ity to ap­prove a trea­sury man­age­ment strat­egy be­fore the start of each fi­nan­cial year.

“Both this code and Welsh Gov­ern­ment Guid­ance re­quire the au­thor­ity to in­vest its funds pru­dently, and to have re­gard to the se­cu­rity and liq­uid­ity of its in­vest­ments be­fore seek­ing the high­est rate of re­turn, or yield.

“Gwynedd coun­cil’s Trea­sury Man­age­ment Strat­egy, which is ap­proved by the full coun­cil ev­ery year, al­lows the Coun­cil to in­vest money with lo­cal au­thor­i­ties as the risk of in­sol­vency is in­signif­i­cant.

“In ac­cor­dance with this strat­egy, when it has funds avail­able for a short pe­riod, the coun­cil de­posits sums of money in banks and with other par­ties in­clud­ing a se­ries of short-term loans to other lo­cal au­thor­i­ties, with a typ­i­cal re­pay­ment pe­riod of one, three or six months.

“The sums noted in the Free­dom of In­for­ma­tion re­quest for Gwynedd coun­cil in­cludes money in­vested by the coun­cil on be­half of the Gwynedd Pen­sion Fund. This fund in­cor­po­rates Gwynedd coun­cil, Conwy coun­cil and the Isle of Anglesey coun­cil as well as ap­prox­i­mately 40 other em­ploy­ers”.

Anglesey loaned out £15m and Wrex­ham loaned £11m.

CEREDI­GION loaned a to­tal of £109.1m since 2013, while Gwynedd, which only started lend­ing in 2015, has let other UK town halls bor­row £91m. Flintshire coun­cil has given loans rang­ing from £4m to £17.8m over the last five years. Conwy coun­cil put £55m out to other au­thor­i­ties, while Den­bighshire has al­lowed other coun­cils to bor­row £26.8m of its cash. Anglesey coun­cil loaned out £15m in 2015/16. And Wrex­ham coun­cil has loaned a to­tal of £11m of its money.

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