More than £300m paid out by Edinburgh Council in loans to other local authorities over the past year

In the past year Edinburgh City Council has paid out more than £300 million in loans to local authorities across England, Scotland and Wales, according to new figures.

Edinburgh City Council has paid out more than £300 million in loans to local authorities across England, Scotland and Wales in the last year, according to new figures.

Meanwhile, the council itself has not borrowed funds from any other UK local authority in the past six months.

Loans dating back to 2017 among 27 different local councils total £332,100,000.

Between November 2019 and April this year Birmingham City Council was loaned £40 million from Edinburgh Council.

During the same time frame Lancashire City Council was loaned £30 million, while since October last year Cornwall Council and Leeds City Council have been paid £20 million and £25 million in loans respectively.

There is currently £105 million out on loan to at least seven local authorities including Aberdeenshire Council, West Dunbartonshire Council, East Dunbartonshire Council, the London Borough of Enfield, Dundee City Council, The Highland Council and Lancashire Council.

Loans distributed by Edinburgh City Council come from reserves or ringfenced but not yet usable funds for larger capital projects such as new schools.

The loans are supposed to be short term, with the council making thousands of pounds in interest from the practice.

Interest rates on loans distributed between over the past year vary between 0.5 and 1.25 per cent.

If for any reason a loan was not to be repaid to Edinburgh City Council on its due date, the council would pursue the borrower for interest at an overdraft interest rate.

Conservative Cllr Andrew Johnston said: “The council faced vast financial challenges before the coronavirus crisis and the situation is now even more alarming.

“These figures show that the Council has lent in excess of £0.3 billion to other local authorities, including £100 million in the last six months to authorities such as Perth and Aberdeen.

“Given the financial problems all local authorities face, the SNP-Labour administration need to consider whether they are once again taking a high-risk approach to finances, as we are already witnessing the problems caused by the Edinburgh Trams extension funding model.

“At this time caution is by far the best policy.”

A council spokesperson said: “The council’s cash investments represent the prudent temporary investment of earmarked reserves and other council funds to gain an investment return on them, until they are utilised for their intended purpose.

“The monies are therefore not available to fund general revenue expenditure on local services with the city.

“The council seeks to generate monies from the investment return to support services for the city but within a robust risk management framework in which the security of the loans is always the council’s highest priority.”