FLINTSHIRE Council is paying ‘horrendously’ high rates of interest on its debt, it has claimed.
With the council unable to rule out cutting frontline services as it looks to make savings of up to £28 million over three years, it has emerged it is saddled with interest rates of almost 10 per cent on some loans.
The council has loans totalling £173 million, the last of which is due in 2058, including one of nearly two-and-a-half million pounds with an interest rate of 9.5 per cent.
Cllr Mike Peers, a member of the council’s audit committee, agreed with other councillors who voted to get more details on the situation.
He said: “They are horrendously high rates. We are looking at debts over 60 years. I am sure we can restructure it and stop paying so much out.
“If I had a loan of 9.5 per cent I would try and get rid of it quickly. We want to have a look at this. We need to look at how much interest we are paying.”
The council has also come under fire over a lower than average return from its investments – an average return of 1.24 per cent.
Cllr Peers said: “I am just wondering if the strategy now needs reviewing. Other counties are getting a higher return.”
The council is looking at setting up a scheme dubbed the Flintshire Futures Programme to oversee cost-cutting.
It will place an emphasis on reducing costs by eliminating waste, raising productivity and cost-effective procurement in a bid to minimise the impact on frontline services after cuts.
Philip Latham, who is in charge of treasury management for Flintshire, said: “In terms of debt reduction it is something we are constantly looking at. We have to pay a premium to restructure. Paying the premium can mean there is no saving.
“The council considers each year whether there is a need to borrow to finance capital expenditure. The interest rate paid reflects the market rate at the time the loan was taken out.
“For example the first long term loan taken out by Flintshire County Council was for £2m in 1997 and will not mature until 2027. It is a Public Works Loan Board loan with a fixed interest rate of 7.75 per cent.
“Although this seems high now given current historically low interest rates, this was the market rate for the loan at the time the loan was taken out in 1997.”