Council to make profit from loans

News story
News story

WIGAN Council is expecting to make a six-figure profit after making loans to other cash-strapped local authorities of £50m.

Latest figures show that 10 different councils were lent a sum of £5m towards the end of last year with many already paying back the full amount.

The most up-to-date financial results show no interest has yet been received but with rates ranging from 0.27 per cent to 0.45 the expected profit from the investments stands at £162,000.

The cash being lent out comes from council reserves and is money that is currently surplus to budgetary requirements.

Council director of finance Paul McKevitt said: “The council regularly invests money it does not need immediately with banks, building societies and other local authorities.

“The money is invested for short periods of time and is then paid back to the council along with agreed interest.

“This cash comes from the council’s reserves and balances and is perfectly normal. The district auditor examines our accounts each year and is content with these activities and has even praised the council for its financial management on a number of occasions. Investing this cash is good practice to help us maximising the return on our assets.

“The activity is reported to the audit committee, cabinet and council on four occasions each year including a final report each year.”

Other investments show that the council invested £45m across five different banks with £39.3m paid back by the end of September.

Interest rates from these loans range from 0.25 per cent up to just shy of one per cent so the overall income will greatly outweigh what has been paid out.

The council has attracted some opposition to this use of town hall resources, however.

Hindley Green Councillor Bob Brierley contacted Mr McKevitt.

He asked how “we the council can cut services, make job cut when we make investment of £50m to other council who are in the same boat as Wigan Council?”

However, Mr McKevitt re-iterated that such loans are normal. He also added that Coun Brierley already knew of such investments.

Mr McKevitt said: “Council agree our treasury management policy each year and as a councillor Coun Brierley is therefore advised of these activities.

“He should also recall during his time on the audit committee he will have seen reports on these activities.

“All the reports are open to the general public and available on our website.”