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I can shed some light on Folkestone Town Council's apparent £350,000 loan to Shepway District Council. It is not as exciting as Colin Tearle suspects - it is a simple accounting tool.

Folkestone Town Council (FTC) piggy-backs on Shepway District Council's investment scheme, which is primarily held with Investec. The greater size of the investment enables us to obtain a better rate of return on the unspent portions of Council Taxpayers' money. It has proved a very good decision, with FTC's investment income outstripping the budgeted figure by some margin.

The £350,000 fluctuates quite widely, as it is made up of two main components. One is reserves brought forward from previous years (this is sub-divided into various different reserve accounts). The other element is thie year's precept receipts, which the Town Council receives quarterly. Our spending does not normally fall at the same time as we receive the money, so there will be times when a significant sum of money is sitting in our accounts pending payment. It makes sense to invest this in the way which will provide the best return, rather than leaving it to fester in a bank account.

As the £350,000 is in Shepway's investment account, it appears as an asset on their balance sheet. Clearly, it is not their money, so a balancing item must be placed as a liability. The loan referred to is that balancing item. The two figures cancel each other out to present a true picture of Shepway's net assets.

I hope that clarifies the position. If not, I would be happy to further explain the situation.

Cllr Dan Hassett

Folkestone Morehall (Conservative)

Chairman, Finance & General Purposes Committee of Folkestone Town Council.

danhassett.blogspot.com