Wirral Council has emerged as a shock benefactor to other cash-strapped northern authorities, loaning them millions of pounds at bargain-basement rates.

The deals include £2m to Labour Party leader Ed Milliband’s constituency council in Doncaster - at an interest rate of just 0.8%.

An investigation by Tory councillor Leah Fraser has revealed that Wirral has negotiated deals to lend cash to at least a dozen councils involving £35.5m.

Council leader Cllr Phil Davies said there was nothing unusual about local authorities lending each other money and scorned the Conservatives for trying to score "cheap political points."

Councillor Fraser said: "While the town hall is preaching austerity to the taxpayers of Wirral, they are trying to be the new 'Wonga' to other councils around the UK.”

"Wirral Council has become the equivalent of a pay-day lender to other councils who are finding it difficult to make ends meet.”

She continued: “I want an explanation about why this is going on.

"If the council is awash with money why can’t it be deposited nearer to home in Wirral, helping local businesses for instance?

“I believe it is part of my job to ask these questions and it is that of the Labour administration to provide answers.

“With all this talk about austerity I started to ask a few probing questions and I was absolutely staggered when I saw this information.

“I just couldn’t believe it.

"It is quite offensive to local tax payers when people are having to cut back on everything.

"It seems Wirral's 'Wonga' council is happy to bring in a bin tax for residents while lending their cash to councils elsewhere.”

Councillor Davies said: “This is Leah Fraser and the Tory group trying to score cheap political points.

"It is common practice for councils to lend and borrow money from other councils on a short-term basis in order to generate additional funding.

“It is nothing out of the ordinary as all councils do this and as for the cheap shot about Doncaster council, if you look at some of the others then you see that Stockport for example is a Tory and Lib Dem coalition – they’re not just Labour councils.

“The interest rates are above the Bank of England base rate so we actually make money.

"I am reliably informed that all councils have an approved list of organisations that they lend and borrow from at market rates.

“I would also like to point out that while Leah Fraser mentions the ‘bin tax,’ the Tories actually supported it in the budget but they conveniently forget that.”

One of the beneficiaries of the Wirral loans, Doncaster Council, last week became the first - and only - local authority in the country to be stripped of control of its children's services following a "legacy of failure".

The education secretary, Michael Gove, said an independent trust would run services - which have been supervised by Government since 2009 - from next year.

A report said a "decisive break" was needed to move on from failings that saw seven children die in five years.

The Mayor of Doncaster, Ros Jones, said she was "deeply disappointed".