Cornwall Live published an article at the start of the year regarding loans made and received by Cornwall Council. The article was written after Cornwall Live acquired data from a Freedom of Information request.
Included in the data was a £3million loan made by Scarborough Borough Council (SBC). The article raised a few eyebrows and local councillors were contacted to find out why SBC were loaning out local taxpayer’s money.
Eastfield Labour Councillor Tony Randerson, who was the Cabinet Member for Legal, Democratic & Governance at the time of the £3million loan, decided to set the record straight that the loan was just Fake News.
Randerson is quite clearly the fountain of knowledge. To get to the bottom of the £3million loan mystery it is time to ask someone with a clue. To that end Nick Edwards, SBC’s Finance Director and S151 Officer, was duly engaged.
The Council receives funds from various sources, such as government grants, council tax, business rates, operational services, which is required to meet future expenditure. There may be a time period between receipt of the funds and the expenditure; and therefore the Council invests these cash flow derived surpluses to generate an investment return and manage counterparty risk.
This activity is detailed within the Council’s Treasury Management Strategy which is approved annually by Full Council. Lending cash to other Local Authorities and financial institutions has been an approved treasury management activity for many years.
The Treasury Management Strategy establishes the framework for investments, including the minimum creditworthiness of an institution, the maximum limit of investment and the duration. Officers operate within the parameters of that framework, taking cognisance of both the receipt and expenditure profiles.
The Council’s treasury management activities are subject to scrutiny by the Audit Committee; as well as reported to Cabinet and as detailed above the Strategy itself is approved annually by Full Council.
It is important for all Members, not just those on Audit Committee, to have an understanding of the types of treasury activities undertaken and therefore Member training was provided in February 2020.
Turning now to the specifics of the transaction detailed within the article. This Council invested £3 million with Cornwall County Council on a short term basis; from 19 June 2019 until 19 July 2019. This was in accordance with the Treasury Management Strategy.
This transaction, and others like it, are investments where the principal and interest accrued are paid on maturity, and not the Council incurring expenditure.
With kind regards
As detailed in article The £30million Blank Cheque, and now from their own mouths, we know that Councillors know next to nothing about multimillion pound transactions made by SBC Officers in their name.
Officers are ’empowered’ by Councillors to make multimillion pound transactions without any Councillor oversight whatsoever. In the case of the £3million Cornwall Council
loan investment , the training to understand ‘treasury activities’ undertaken by SBC Officers was delivered to Councillors six months after the loan was taken out.
Basically, Council Officers are gambling with local taxpayer’s money with no Councillor scrutiny. If any transaction goes wrong, as the £14million purchase of the St Nicholas Hotel did, the Officers will claim Councillors have signed off their overarching strategy and the Officers are therefore blameless.