Aberdeen council bosses have taken out two new loans totalling £40million this year- with more than £1billion debt in total.
The Press and Journal has seen documents relating to the local authority’s borrowing from the Public Works Loan Board – a body run by the Treasury.
In April, the first £20million loan was taken out and was followed by another in June, with the document revealing total debt to the treasure is now over £400million.
The Public Works Loan Board is used by local authorities for borrowing across the country and the loans don’t need to be fully paid back for nearly 50 years.
Last night, a city council spokeswoman said that the loans were “effectively replacing long-term debt” and that it was “standard practice”.
Council bosses have said spending will have to be dramatically cut in coming years – with more than £40million shaved off the budget this year alone.
Aberdeen faces more scrutiny than most other councils due to the 2016 issuing of a bond on the London Stock Exchange and the awarding of a credit rating.
Opposition Liberal Democrat group leader Ian Yuill said: “Long term, the council does have to borrow money to finance major capital projects and that is understandable.
“But it is also important that the council only borrows what it can afford to pay back.
“Over the past few years we have seen very large projects planned by the council and the council needs to live within its means.”
An Aberdeen City Council spokeswoman said: “The two new Public Works Loan Board loans, each for £20m were taken out in this financial year with the first loan taken out over 48 years at a rate of 2.24%, and the other was for a period of 50 years at 2.11%.
“These loans are effectively replacing long-term debt which had matured during the previous two financial years (£33.5m). This is standard practice across every local authority in the UK.
“The loans were not borrowed for a specific purpose, and form part of the council’s standard treasury management practices. The council currently has £400.4m of PWLB debt however its assets are worth £2.8billion.”
