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Herefordshire Council has borrowed nearly £23 million in past four months
CASH-strapped Herefordshire Council has borrowed nearly £23 million from other councils since May this year with much of the money going towards making ends meet.
But £6m borrowed over August-September alone was to fund capital spending, including the Rockfield purchase for Hereford’s proposed link road project.
A new treasury management report prepared for the council shows the total interest paid on all these loans to the end of September as topping £4m.
The council borrowed between £2m and £3.97m each time, from councils including Worcestershire, Rhondda, Coventry, Leicester and East Renfrewshire.
Repayments were due between seven and 52 days after borrowing at interest rates ranging from 0.26 per cent to 0.29 per cent.
In addition to the interest the council also pays broker commission at 0.1 per cent per annum.
The report says the short-term loans taken out in May were to “provide additional liquidity at a time when balances were relatively low”.
Borrowing over August to September was, the report says, to fund capital expenditure including the Rockfield purchase completed in August.
The council refers only to an “undisclosed sum” paid out over Rockfield and reached after several years of negotiation.
In July this year the Hereford Times revealed that the council’s overall borrowing debt was £173m and would have been much higher had the council not used reserve funds to meet its needs.
Figures for the end of the last financial year show that to keep up with its ongoing capital scheme the council needed to borrow as much as £208m and it was only by using reserves that the council could borrow around £34m less.