Ceredigion County Council has defended its use of investments and loans to other councils, saying the money it returns has helped protect services during a time of cuts forced by austerity.

While the authority has agreed to raise its share of council tax by seven per cent for 2019/20, a council spokesperson confirmed that the council had £24m invested in January this year, including £4m to other councils.

But the spokesperson said the investments were planned to help bring in money to the authority with the aim of using it to help continue providing services which would be under threat otherwise.

They said: “The council lends to institutions as a part of the council’s investment strategy.

“This entails taking a very low and managed risk approach to investing while obtaining interest, which is a benefit to the council’s budget, not a cost.

“The council has invested, as of January, a total of £24m, including approximate £4m to other councils.

“By doing this, the council has raised money that has gone into protecting services.

“This reduces the amount of cuts we need to make to council budgets.”

The council altered its investment strategy after £5.5m invested in three Icelandic banks in 2008 was frozen as the banks collapsed during the financial crisis.

While the vast majority of that money has been recouped, it led to a change in how the council decided to invest its money, by taking a more cautious approach.

It had been anticipated the council would increase council tax this year by five per cent, but that was increased to seven per cent, with the authority hearing that the extra money raised by the additional two per cent increase would go to help schools in the county who had warned that their budgets were under significant pressure.