Council defends £5 million deal
Powys County Council has defended loaning another authority £5 million – despite reducing its own public services – claiming it will make money in the long run.
A loan of £5 million has been given to Cheltenham Borough Council by Powys County Council.
Powys County Council was one of several local authorities from across the UK that has been named by a Freedom of Information request, which have lent cash to Cheltenham Borough Council. Cheltenham has borrowed nearly £40 million to buy land for a new cyber business park and housing development.
Councillor Mathew Dorrance, Labour group leader on Powys County Council, said: “At a time when austerity is decimating our public services, when the cabinet is 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 £5m shows just how out of touch this Tory/Independent cabinet is.”
“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.”
Finance portfolio holder, councillor Aled Davies, said the loan would help generate income for Powys.
Councillor 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 groupl leader Councillor Elwyn Vaughan 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 – £10 million and Middlesbrough Borough Council £15 million.
Cheltenham Council announced it bought 45-hectares of land near 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.
