It has been revealed that Hampshire County Council has been lending millions of pounds to other councils.

An investigation into Warrington Borough Council's £274.8 million worth of debt has found that it includes a £5 million loan from Hampshire County Council. The loan was made with a with a 2.35 per cent interest rate.

When the Chronicle asked to Hampshire County Council explain whether this was usual practice for the Council a spokesperson for the council responded : “It’s not unusual for local authorities to occasionally provide loans to one other, in line with normal market rates - as local authorities are effectively backed by central Government. While such loans are part of everyday financial management practices, before deciding whether or not to lend to another council, a thorough and careful financial assessment would always need to be made to assess credit worthiness – as would be the case for any similar bank investment.

The spokesperson added: “Because of Hampshire County Council’s size and capacity as a large local authority, and our strong track record of prudent financial management and careful use of reserves, we were able to take this approach in the case of Warrington Borough Council in 2013 - offering a five year loan at a competitive rate. The loan was part of normal treasury management arrangements of each organisation, and represented a good deal for both parties. It enabled Warrington Borough Council to raise affordable finance at the time, and continues to provide Hampshire County Council with a reasonable rate of interest through a good, secure investment.