PLANS to set up a new 'bank' to help Worcestershire County Council tackle debts and draw down money at better rates have been overwhelmingly backed.

Politicians united yesterday to vote through a move to invest taxpayers' cash in a new agency aimed to saving millions in interest payments and ensure key projects can get off the ground.

The so-called 'municipal bonds agency' will see £125,000 invested by the county council, helping it launch in March 2015 with funds from more than 20 other town halls nationwide.

The council is still trying to push ahead with a raft of major projects over the next few years, like the Worcester Technology Park and dualling most of the A4440 Southern Link Road, but does not want to lumber taxpayers with growing repayments costs.

It already owes third parties £240 million, but needs to get hold of another £47 million to fund all of its key projects over the coming years.

The new agency, first revealed by your Worcester News earlier this month, will allow the council to borrow at super-low interest rates as tiny as 0.02 per cent.

It was backed by the Tories, Labour, Liberal Democrats, Green Party, UKIP and independents during a full council meeting yesterday.

Councillor Adrian Hardman, the leader, said: "I've been a strong supporter of this scheme from the start.

"If we can save money by finding alternative ways of financing our capital programme we should welcome it."

Councillor Robin Lunn, from Labour, said: "Back in May during full council (a meeting) I asked a question about this when the idea of the 'municipal bonds agency' was first raised.

"Hopefully the agency will get an AAA rating, and if you look at bodies which get that rating the incidents of defaults are very, very low.

"If we can save money this way, it frees up more cash to invest in front line services."

Crucially, it will mean bosses do not need to turn to the banks, and provide competition for the Government-backed Public Works Loan Board (PWLB), which borrows at low rates to town halls and is the traditional lender to councils like Worcestershire.

In recent weeks the PWLB has upped its repayment rates, leading to concern about the impact on councils.

Experts at County Hall say it will save at least £350,000 a year once up and running.