Anglesey Council has defended a decision to lend £5m to a council based almost 200 miles away.

Cheltenham Borough Council has borrowed nearly £40 million to purchase land for a new cyber business park and housing development.

But a freedom of information request by the Local Democracy Reporting Service has found Anglesey to be one of several local authorities to have loaned cash towards the project.

The borough council announced it bought 45-hectares of land near cyber intelligence centre GCHQ for £37.5m in August with taxpayers’ money, but until now had refused to release further details of which local authorities the money came from.

But in response to the LDRS, a spokesman for Anglesey Council has defended the loan, noting that the repayment – with interest – is due next week.

According to Cheltenham Borough Council, it will look at a range of options to pay back the money, including taking out further loans with local authorities, the public work loans board or other institutions.

Anglesey’s Director of Function (Resources), Marc Jones, said: “We did not invest in the Cyber Park project itself, but rather provided Cheltenham with a loan.

“Lending to other authorities is a recognised, routine and prudent way of securing a good amount of interest on the investment.

“The amount of repaid interest is usually greater than what we would receive by just putting the money in one of our bank accounts.

“The loan provided to Cheltenham will be repaid in the coming days – with interest – in accordance with the terms of the loan agreement.”

In all, as well as Anglesey’s £5m, Derby City Council loaned them £4m, Powys County Council paid £5m, South Lanarkshire paid two instalments of £5m, and Middlesbrough Borough Council three instalments of £5m.

A separate freedom of information request found that over five years, north Wales’ cash-strapped councils ‘propped up’ other authorities with up to £366m of loans at rock-bottom interest rates.

However the returns on some of the loans have been as low as  0.15 per cent, with Gwynedd council loaning out £91m over five years but only making a profit of £128,000.

A Gwynedd council spokesperson added that the authority had to adhere to Welsh Government guidance in regards to the security of its financial investments, which were described as “low risk” and helping to bolster the pension fund it operates on behalf of Anglesey and Conwy councils.