Fundraising effort sees St Helens Council lend millions to other authorities

Using its reserves, the authority has embarked on a prudent campaign of lending to councils and a host of financial institutions.

In January, the council issued a £7 million, 65-day loan to Islington Council, at an interest rate of 0.35 per cent.

The following month it lent a six-day, £5 million loan to Eastleigh Borough Council.

The figures were obtained following a Freedom of Information Request by the Local Democracy Service.

Back in June 2015, the council issued an 11-day, £10 million loan to Merseyside police and crime commissioner Jane Kennedy, at an interest rate of 0.4 per cent.

Later that year the council lent a two-year, £5 million to the Swedish financial group, Skandinaviska Enskilda Banken AB.

A council spokesman said the investments have been made to reduce the “impact” of central government funding cuts, which will total £90 million over the last decade by 2020.

“Like every council, St Helens is required to keep significant reserves to cover for unexpected spending or major projects,” the spokesman said.

“Through careful investments, the council has secured an average return of 25 per cent higher than the national standard.

“This is another example of how we are working to reduce the impact of the 40 per cent cuts central government is making on residents’ services.”

The council spokesman said reserves invested in one period are regularly reinvested to ensure the best returns for the authority.

“The aggregate total of loans and investments over five years does not represent the council’s total cash balance in that time,” the spokesman said.

“This total will include sums that have been invested in one period, and then reinvested the following period.

“As a simple example, if the same £10 million is invested every year for five years, it is misleading to say £50 million has been invested.”

Other investments made by the council include a £9 million, two-year loan to Greater London Authority in January 2014.

A further £10 million, two-year loan was issued to Glasgow City Council.

The authority lent another short-term, 17-day, £5 million loan to Cheshire East Council in December 2016 and a further £4 million, 90-day loan to Salford City Council just two days later.

Both loans were issued at an interest rate of 0.3 per cent.

Over the past five years, the council also issued 71 loans to a variety of financial institutions including Lloyds, Barclays, Santander UK and Ulster Bank.

In 2013-14 the council issued loans totalling £100 million to financial institutions. These included a £10 million, 92-day loan to the National bank of Australia.

The council invested £80 million in 2014-15, including two separate two-year, £10 million loans to the Royal Bank of Scotland.

The council again invested £80 million in 2015-16. This time, the council issued only £5 million loans.

This trend continued in 2016-17 and 2017-18, with £5 million loans issued totalling £80 million and £50 million respectively.

The vast majority of loans issued to financial institutions over the past five years were to be repaid within one year.

Interest rates have ranged from 0.45 per cent to 1.55 per cent.

The council spokesman said the interest rates it sets for transactions are considered “comparatively high”, since they consistently outperform the national accepted benchmark return of the London Interbank Bid Rate (LIBID).

It said the returns achieved on fixed term investments in 2017-2018 (0.76 per cent) were higher than the same year’s benchmark returns for LIBID (0.61 per cent).

“St Helens Council’s investment performance is scrutinised and reported every year,” the spokesman said.

“It routinely out-performs the agreed nation benchmark.

“Our approach and good performance has been discussed in meetings that local journalists attend.”