KIRKLEES has been branded one of the worst local authorities for borrowing money from private banks.
Debt Resistance UK named the council as one of around 70 authorities across the country that owe banks more than £50m.
The campaign group says councils are pushing public debt off the government’s balance sheets by using private borrowing facilities. On its website it says: “Bankers, brokers and advisors have tricked councils into taking out expensive, risky loans, endangering our essential services.”
But Kirklees has hit back at the claims, stating that its private borrowing is actually cheaper than the public sector loans it currently has. It has confirmed it pays off any private loans if rates are suddenly increased. A Kirklees spokesman said: “At the end of March 2016, the council had total borrowing of £429.3m. This borrowing has been used to help purchase, construct and refurbish the assets we use to provide services including schools, crematoria, sports centres, council houses, parks, markets and vehicles.
“Our capital spend and treasury activities are subject to regular scrutiny and approval by councillors, and to review by independent auditors.
“The council currently has eight loans with various UK and foreign banks, totalling £75m. They were all taken between 1997 and 2008 and their average interest rate equates to 4.6% compared to the council’s public loan average interest rate of 4.8%. All the loans are on their original terms; however, if the lender chose to increase the interest rate on an option date, we would look to repay the loan.
“This has happened on one occasion so far, where a bank proposed to increase an interest rate from 3.36% to 4.20%. The council decided to immediately repay that loan.”