Brighton and Hove City Council has £15 million on loan to other councils nationwide.
The figure is revealed in a freedom of information (FoI) request to the council.
In addition, until the end of last month, the council also had a £9 million loan to Broxbourne Borough Council. This was paid back at the end of August.
The FoI request followed Thurrock Council’s repayment of loans totalling £15 million from Brighton and Hove – most of it borrowed when the Essex authority’s finances were under scrutiny.
Thurrock Council was effectively made bankrupt after investing £655 million in a solar farm business run by businessman Liam Kavanagh.
The Bureau of Investigative Journalism revealed that he spent £130 million of taxpayer money on a country estate, private jet, luxury yacht and other multimillion-pound purchases, including a Bugatti supercar.
By February this year, the Conservative-run Essex council was £1.5 billion in debt and talks with the government to borrow up to £636 million to help balance its books.
Three outstanding loans as well as the Broxbourne loan are listed in response to the FoI request.
- Broxbourne Borough Council borrowed £9 million for one year from 31 August 2022 at an interest rate of 1.6 per cent
- Blackpool Borough Council borrowed £5 million for one year from 13 March 2023 at an interest rate of 4.6 per cent
- Powys County Council borrowed £5 million for five years from 20 December 2019 at an interest rate of 2.05 per cent
- Cambridgeshire County Council borrowed £5 million over three years from 8 February 2021 at an interest rate of 1 per cent
The response to the request said that all the loans to other councils were for “treasury management purposes” to manage cash flow.
It said: “As a result, there has been and can be no impact on council services in order to undertake these loans.
“Each loan was undertaken by the treasury management team on behalf of the chief finance officer, who has delegated powers from full council to undertake investment activities within the parameters and limits set and approved by the full council.”
Labour councillor Jacob Taylor, the lead councillor for finance, said: “Councils routinely lend money to other councils because it’s an excellent way of managing cash flow and maximising resources.
“There are often differences in timing between us receiving income and being able to spend it. This results in the council regularly having positive cash balances.
“The government recognises that using cash balances in this way is an entirely appropriate and legitimate way to optimise council finances.
“Lending some of it to other councils is not only very secure, it also enables us to charge interest and thus generate income until the cash is needed for its intended purpose.
“Cashflow surpluses arise from all income to the council – not just council tax which is a relatively small proportion of our overall income.”
BHCC – always claiming to be impoverished, but in truth not being short of a bob or two!
And then….there’s the property portfolio….
Just a farce. How is this even legal? Taxpayers monies being ‘loaned out’ to other Local Authorities? What’s the criteria? How long they have been chums for?
It is pretty standard practice for safe investments like the ones described here. This will be a shock to many, for sure, but the practice is nothing new. There’s a lot to learn about the practice, and I am no expert.
Benjamin If you are no expert, surely you should not be saying any thing on the subject….and just zip it up
Delboy, are you an expert on who is entitled to comment? If not…
No Frazer, I’m not, but then again, nor are you. No one is above criticism.
Do you really need me to explain the difference between articulating one doesn’t know everything about a subject and open to hearing more about it one who does, but knows enough to get the basic concept?
Advocating ignorance is not a very intelligent comment, even by your usual standard, Del.
So other councils then pay interest on tax payer money. Seems a very Tory way to run a country. Id argue surplus money should go back to the government until such time as needed this reducing national dept
You’ve never worked in a government department, have you. If money is not used and sent back, the government assumes that you do not need it and reduces your following year’s budget by the same amount, leaving you poorer next year.
Loaning money to other councils is not “Tory”, it’s a sensible commercial way to use the funds and gain further income (interest) until the funds are required to pay other bills within the council.
A lot of this is overnight lending and is standard practice. It is not a news story just information
Unless B&HN can find some kind of irregularity this is a complete non-story. Some people might be surprised that money doesn’t sit in a big Scrooge McDuck vault until the council needs new road gritters. Anyone who’s spent any time in business (public or private sector) knows there’s a lot more to it than that.
It would be more of a story if there were irregularities, but many of us are not aware this is what happens to our money. Well done for giving us this insight.
Dear Blond, please post your bank statements here, and if you have spare money you should follow sound advice and donate it to the Government to reduce the national debt
Is the i360 paying its way yet? Remember the massive conflict of interest when Jason Kitcat was on the board of Coast to Capital and council leader and voted to loan Marks Barfield £££millions which the were supposed to pay back with interest? Is Brighton the next city to follow Birmingham into insolvency?
I wouldn’t trust the council with my sons pocket money. Don’t forget the i360, what a total cock up!!!