03.01.19
Northamptonshire CC repays £5m loan from Leicestershire council
A £5m loan from Leicestershire County Council to its financially struggling neighbour Northamptonshire County Council has been repaid in full after concerns that the UK’s poorest council would not be able to repay the loan.
Leicestershire CC made the unsecured loan to the cash-strapped authority last January, but was criticised due to Northamptonshire’s by-then well-known financial struggles.
Now, the council’s deputy leader Byron Rhodes has confirmed that the loan has been successfully repaid to the authority, on time and with interest.
He commented: “We take very seriously the security of our loans. Our track record is strong and unlike other councils, we did not have any money with Icelandic banks or other high-profile bank failures.
“Making the most of every pound we spend remains vital and lending money enables us to maximise our income.”
The Leicestershire council also made a £35,000 profit from the loan through interest, which it says will be invested back into services.
Opposition councillors had previously said that the one-year loan was made irresponsibly despite assurances that it would be repaid.
The fears worsened when Northamptonshire’s finances descended into chaos in February with the council becoming the first in 20 years to issue a section 114 spending ban, which was followed by a second major spending ban in July.
Commissioners were appointed by the government and sent to Northamptonshire in May to help balance the books, and their first progress report in November set plans to begin rebuilding the council’s “dysfunctional” finances.
But in late November, the government effectively bailed out the county council as it allowed the authority to use £70m worth of capital funding, gained from the sale of its HQ, to tackle its deficit.
Since then, Northamptonshire CC has announced that whilst it still needs to make £43m worth of savings in its draft budget, frontline services will remain largely protected as a balanced budget looks achievable once more.
In August council members voted in favour to scrap the current structure of Northamptonshire County Council, paving the way to become a unitary authority next year.
Image credit - Joe Giddens/PA Wire/PA Images