FINANCIAL chiefs at South Lakeland District Council have defended the council's investment record following accusations it was "bailing out" other councils.

The Westmorland Conservative group said SLDC had made a number of loans to other councils and was "playing banker" instead of addressing problems in its own area.

But a council spokesperson pointed out that not only had all its investments had been fully approved by the relevant bodies, but returns from these investments were expected to be £140,000 higher than if the money was merely banked.

The Conservative group's move was sparked by an SLDC reply to a Freedom of Information request which revealed that it had made 10 loans to other local authorities within the last four years.

Cllr Tom Harvey, deputy leader of the SLDC Conservative Group, expressed concern that the body may be prioritising the needs of other councils above their own and called for more transparency from the council on this matter.

“Residents quite rightly expect money they have paid in council tax to be used for services in South Lakeland, not bailing out other councils in the rest of the UK," he said.

“The council is playing banker instead of starting to fix the problems that residents in South Lakeland are facing."

However, the council spokesperson said all investment activities were fully in keeping with agreed strategy and were all fully documented in line with legal requirements.

“In common with most local authorities South Lakeland District Council follows an investment strategy that includes using some of its balances to invest with and lend to organisations considered as ‘low risk’, which includes banks, building societies and other local authorities," said the spokesperson.

“This has been standard accounting practice for years and all investment is in accordance with the council’s treasury management strategy, which has been approved by the council’s overview and scrutiny committee, cabinet and full council."

The spokesperson said that at the end of September 2018, SLDC had investments with two local authorities, Lancashire County Council and Surrey Heath Borough Council, and details of other investments were readily available.

"A full list of investments is also included in the financial monitoring report that goes to all these committees and full council each quarter, so is routinely made public and regularly reported to all councillors," said the spokesperson.

“The council collects income from a number of sources, such as council tax payments and business rates, and balances vary from week to week depending on when income is received and balances are only temporary.

"Our priority with any investment is always on security first, then liquidity (ie we can get it back if needed) then how much return it will generate.

“As a result of this policy the council is budgeted to earn £175,500 this year from investing its balances, which is all money that can be re-invested in services for our residents.

"Had the council simply left these balances in the bank, the interest generated would achieve around £140,000 less return this year."