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Cash strapped Powys lends £5m to another council

 
Created on 18/10/2019 @ 11:12
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A loan of £5 million has been given to Cheltenham Borough Council by Powys County Council (PCC), it has been revealed.

PCC is one of several local authorities from across the UK which have been named by a FOI (Freedom of Information) request by the Local Democracy Service in Gloucestershire.

Cheltenham Borough Council has borrowed nearly £40 million to buy land for a new cyber business park and housing development.

The loan has drawn sharp criticism from the council’s Labour group leader, Cllr Mathew Dorrance, who blasted: “At a time when austerity is decimating our public services. When the Cabinet are underfunding our schools, shutting down youth centres, threatening libraries with closure and asking Powys residents to pay an extra 9.5 per cent in Council Tax, loaning Cheltenham Borough Council £5 million shows just how out of touch this Tory/Independent Cabinet are.

“The Council’s leadership must urgently explain how they can afford to lend Cheltenham Borough Council £5 million and why they thought it was more important than funding local services here in Powys.”

But Finance portfolio holder Cllr Aled Davies, says that loan helps generate income for Powys.

Cllr Davies, said: “Powys operates a ‘Treasury Management Policy’, under a CIPFA (Chartered Institute of Public Finance) code of practice, to manage the authority’s finances.

“It ensures the council has sufficient liquidity to meet its cash flow and achieves the optimum performance of funds. Providing a short-term loan to generate income is part of the council’s normal treasury management work.”

Plaid Cymru group leader Cllr Elwyn Vaughan (Glantwymyn) added: “Having enquired about the matter it seems it’s a standard procedure between local authorities, an inter-agency transaction used to facilitate cash flow or to receive interest income.”

Powys was named along with Derby City Council which paid £4 million, Ynys Môn County Council – £5million, South Lanarkshire – £10million and Middlesbrough Borough Council - £15m.

Cheltenham Council announced it bought 45 hectares of land near the cyber intelligence centre GCHQ for £37.5 million in August with taxpayers’ money, but refused to release further details of which local authorities the money came from until now.

The land will see a new cyber business park and up to 3,000 homes built on the western edge of Cheltenham.

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