Brighton and Hove lend £15m to other councils

Brighton and Hove City Council has lent £15 million to other councils nationwide.

The data in a Freedom of Information (FoI) request to the council comes despite warnings it faced a financial deficit nearly double that.

Four councils - Broxbourne, Blackpool, Powys and Cambridgeshire - were listed in the FoI request.

Blackpool Borough Council has borrowed £5 million for one year from 13 March 2023 at an interest rate of 4.6 per cent.

Powys County Council has borrowed £5 million for five years from 20 December 2019 at an interest rate of 2.05 per cent.

Cambridgeshire County Council has borrowed £5 million over three years from 8 February 2021 at an interest rate of 1 per cent.

Broxbourne Borough Council also borrowed £9 million for one year from 31 August 2022 at an interest rate of 1.6 per cent - this was paid back at the end of last month (August 2023).

The FoI request followed Thurrock Council repaying loans totalling £15 million from Brighton and Hove – most of it borrowed when the Conservative-run Essex authority was £1.5bn in debt.

Brighton and Hove City Council responded to the FoI request by saying all the loans to other councils were for “treasury management purposes” to manage cash flow.

It said that “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.”

The lead councillor for finance, Labour's Jacob Taylor, added that “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."

He says that “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.”