AN investigation has found Renfrewshire Council loaned £9million to a local authority in England that invested huge sums of cash in solar energy.

The money was part of short-term lending deals between councils throughout the UK that are now commonplace to manage debt and invest in large projects.

Working with The Bureau of Investigative Journalism (The Bureau), The Gazette has looked at local authority debt across the UK.

The probe found that Thurrock Council, in Essex, borrowed more than £1billion, including cash from Renfrewshire, and invested more than £600m in the solar power industry.

Although The Bureau did not ask Renfrewshire directly for loan information, the council showed up on £35m in loans to other UK local authorities.

These include West Dunbartonshire Council, which borrowed £5m from Renfrewshire.

According to government data, Renfrewshire Council is one of the country’s big lenders, with £123m in loans to other local authorities as of the third quarter of 2019/20.

Council officials said the lending is a well-established practice and managed prudently, adding that Renfrewshire currently has £83m deposited with other councils around the UK.

Local authority finances are constantly in flux, with money paid out to employees and funding coming in from council tax, rates, rents and government grants.

Those changes, along with historically-low interest rates, allow councils to borrow and lend as they need.

An investigation, supported by the Financial Times, focused on Thurrock Council, which was found to have borrowed £1bn from other local authorities to then invest in a solar energy farm 120 miles away in Swindon.

Renfrewshire was one of 150 councils across the UK to earn interest on loans to Thurrock between April 2016 and September 2019.

In total, Thurrock borrowed £9m from Renfrewshire Council in that period and paid interest of £112,405.

Renfrewshire earned the most interest out of any Scottish local authority from Thurrock’s borrowing.

The Bureau described Thurrock’s cycle of borrowing, detailing how it banked cash from one council, invested the money and then paid the council back by borrowing from another.

Tory MSP Maurice Golden, who represents Renfrewshire as part of his West of Scotland remit, described the amount of money being loaned and borrowed between councils as “startling.”

However, a spokesman for Renfrewshire Council said borrowing and lending between local authorities is “a recognised Treasury management mechanism.”

He added: “It provides a mutually-supportive route for managing each council’s short-term cash position, whilst at the same time providing an option for short-term borrowing as part of an individual council’s management of their overall borrowing portfolio to support their capital investment activities.

“Any investment or deposit arranged by Renfrewshire Council is undertaken in accordance with our Prudential Framework and Treasury Management strategy, which is approved annually by the council, and follows the financial codes of practice, based on the key principles of security and liquidity.

“Any deposits we have made with other local authorities are undertaken on a short-term basis and all have been repaid in line with the agreed terms of the deposit.”

Read all the latest from Renfrewshire and beyond

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