ST HELENS Borough Council took out a £5 million loan from a local authority in Worcestershire just two days before Christmas, official documents have revealed.

The council ran into cash flow issues over the festive period and turned to Wychavon District Council, which has been controlled by the Conservatives for more than two decades.

Details of the loan have been published in the council’s Treasury Management Outturn Report 2019-20, which went before the council’s audit and governance committee on Monday.

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The report says the 14-day loan was secured with Wychavon District Council as a “short-term borrowing solution to meet cash flow obligations over the Christmas and New Year period”.

A council spokesman said: “The council required some funds, in the very short term, for cash flow purposes and accessing these from another local authority, at that specific time, represented the most efficient and cost effective means for us to do so.

“This was paid back almost immediately.”

According to the Treasury Management Outturn Report 2019-20, the council’s debt totalled £124.665 million, as of March 31.

It says this comprises of loans taken out through the Public Works Loan Board (PWLB), an Executive Agency of HM Treasury, and “market debt”.

This also includes a £25million loan that was secured with PWLB during the third quarter of 2019, which was taken out to finance the costs of historic expenditure within the council’s capital programme.

As previously reported, officers took out the loan due to historic low rates and did so prior to the Government increasing PWLB interest rates by 1 per cent last October.

In March, the bank rate dropped to a record low-level of 0.10 per cent, in response to the COVID-19 pandemic.

But the treasury management report says that despite PWLB borrowing attracting low rates of interest for a significant part of the year, no debt rescheduling was undertaken as it was deemed “unviable”.

The report also shows that, as of March 31, the number of ‘investments’ held by banks, building societies and local authorities, something that is standard practice among councils, amounted to £118.5 million

These include those managed on behalf of schools (balances of circa £7.1 million) and Merseyside Recycling and Waste Authority (MRWA) (cash of circa £7.8 million).

Speaking at its meeting on Monday, Caroline Barlow, deputy director for finance and HR, told councillors that an effective rate of return on investments has been achieved in 2019-20.

Some of the investments include £5 million in Barking Council, with an interest rate of 0.9 per cent, and a £5 million sum in Croydon Council, with an interest rate of 0.89 per cent.

The £5 million to Barking Council matured at the end of April, with the Croydon investment due to mature this month.

St Helens Star: St Helens Borough Council has a number of 'investments' held in various organisationsSt Helens Borough Council has a number of 'investments' held in various organisations

A number of investments are also held in various banks, including a £15 sum in Dankse Bank, the largest bank in Denmark, and £10 million in Australia and New Zealand Banking Group.

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The report notes that, for a number of years, the council has, where possible, taken advantage of favourable interest rates and locked into investment deals for longer periods.

The Treasury Management Outturn Report shows there was an investment income in 2019-20 of £1.577 million.

The report says the council complied with its legislative and regulatory requirements.