Concerns over £148m of loans from other councils are 'unfounded' claims county council

Northamptonshire County Council has been loaned 148million by other local councils
Northamptonshire County Council has been loaned 148million by other local councils

Northamptonshire County Council has assured other authorities that it has no concerns over repayment of loans they have granted to them.

As of the end of the second quarter of the current financial year, the county council had been loaned £148million by 23 other councils from across England and Scotland.

Although loaning between authorities is routine, due to the county council’s financial issues the latest treasury report revealed that other councils have ‘expressed concern’ about whether loans will be repaid.

But the county council has assured its counterparts that this concern is ‘unfounded’ as while there are difficulties setting a budget, this does not mean it has a cash shortage.

The report says that the council’s cash position has also benefited from the sale of One Angel Square.

The largest loans it must pay back include the City of London Corporation (£20million), the Greater Manchester Pension Fund (£18million) and West Sussex County Council (£15million).

A spokesman for Northamptonshire County Council said: “It is normal practice for councils to lend to each other for cash-flow purposes. However local authorities cannot borrow balance revenue budgets and have to live within their own means. The money borrowed is used to support the council’s capital funding requirements.”

The treasury report, which was presented by cabinet member for finance Malcolm Longley at full council last Thursday (November 22), adds: “It is common for councils to borrow from and lend to each other. Some may find themselves with positive cash balances available to invest short-term. Others, like Northamptonshire, with a borrowing requirement, may borrow short-term for some of their debt at low rates, an average of 0.75-1.00 per cent currently.

“If on the repayment of these loans the council has to replace this with borrowing from HM Treasury, at its short term fixed rates of 1.58 per cent for one year and 1.94 per cent for five years, this would cost between £1.2m and £2.9m more in interest costs per year.

“The council is therefore keen to continue with these arrangements, and make it clear to local authorities that it represents no greater risk than others because of its current budgetary position and continues to be a going concern.

A full list of the loans Northamptonshire County Council has received from other councils can be found below:

Barnsley Metropolitan Borough Council (£10,000,000)

Brentwood Borough Council (£1,000,000)

Brighton and Hove City Council (£5,000,000)

City of London Corporation (£20,000,000)

Cornwall Council (£10,000,000)

Crawley Borough Council (£5,000,000)

Derbyshire County Council (£10,000,000)

Derbyshire Pension Fund (£5,000,000)

Greater Manchester Pension Fund (£18,000,000)

Hertsmere Borough Council (£5,000,000)

King’s Lynn and West Norfolk Borough Council (£3,000,000)

Lancaster City Council (£1,000,000)

Leicester City Council (£5,000,000)

London Borough of Barking and Dagenham (£5,000,000)

London Borough of Hackney (£3,000,000)

Northumberland County Council (£5,000,000)

Portsmouth City Council (£5,000,000)

Renfrewshire Council (£5,000,000)

South Kesteven District Council (£2,000,000)

South Northamptonshire Council (£2,000,000)

Wakefield Council (£3,000,000)

West of England Combined Authority (£5,000,000)

West Sussex County Council (£15,000,000)

Total: £148,000,000