LABOUR research has shown the policy of lending millions to neighbouring councils is a money-spinner for Wirral.

Last week Conservative councillor Leah Fraser fired a broadside at the administration when she discovered around £35m had been loaned to around a dozen North West councils at interest rates averaging 1%.

She said the money would do more good if it were invested locally and should be used to help Wirral businesses.

She stormed: “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.”

Today it emerged the practice generates more than £690,000 for Wirral annually.

Council leader Cllr Phil Davies said: “Leading from one authority to another is a perfectly normal and legal practise in local government.

“Here in Wirral we lend out of our reserves, which are required to keep as a result of legislation, to ensure the tax-payers of Wirral get the best possible deal from the council.

“I make no apologies for this practise which, the records show, has full support from all three parties on Wirral and generates a significant sum of money for Wirral, £694,000 – as revealed in figures today.

“I challenge Cllr Fraser to find a further £694,000 of cuts that cancelling this practise would require on top of the £133m her Government has already slashed from the Wirral budget.”

He continued: “It seems to me this is yet another attempt from a small group of Tory councillors to deflect attention from the disproportionately brutal cuts being made here and the wider Merseyside region by their party.

“As well as this they seem determined to drag the council off- track from our improvement agenda that has won national praise from some of the leading figures in the Local Government arena.

“Both I and the Labour party on Wirral are determined to improve the services we offer and finish our journey of council improvement.

"There is still a lot of work to be done and small distractions like this, from a group of Tory back-benchers seemingly restless with their leadership, will not stop us.”