Council confirm they have no investments in troubled Icelandic banks
Hammersmith and Fulham Council have confirmed that they have no current investments with either the troubled Icelandic bank Landsbanki or its subsidiary Heritable.
The Local Government Association, which represents over 400 councils in England and Wales, says a number of local authorities had deposited substantial sums of money in Landsbanki, which collapsed on Tuesday.
"As of 6pm on Thursday 9 October, the Local Government Association has reports from its member authorities that 108 councils have deposited £798.95m in Icelandic banks," the LGA said in a statement.
Town hall leaders have sought urgent reassurance from the Chancellor that he would protect local authority deposits in the Icelandic banks.
But following an emergey meeting today between the Government and Local Government Association, the LGA issued a statement, saying:
"For those local authorities who are facing severe short term difficulties Government and the LGA will agree an appropriate set of ways to assist. We will judge what is appropriate on a case by case basis."
"The LGA will be seeking to open discussions with administrators of the UK subsidiaries (of Landsbanki)," the statement said.
One authority alone - Kent County Council - has £50 million deposited in Landsbanki and its UK subsidiary Heritable, as well as Glitnir Bank.
Dozens more, as well as Transport for London and the Metropolitan Police Authority, have assets in the banks, estimated by the Tories to be worth in excess of £1 billion.
Kent said its local services were not at risk but smaller authorities, with a larger proportion of their cash in the banks, faced potential cuts.
The LGA said councils had stuck to Whitehall rules encouraging them to get the best return and to invest their money across a number of financial institutions to spread risk. Councils took professional advice and were only allowed to lend it to banks with the top credit ratings, they pointed out.
Mark Wallace, campaign director at the TaxPayers' Alliance, said: "Every year we hear that councils don't have enough money and need to raise taxes but it seems they have had sufficient excess tax to salt tens of millions of pounds away.
"The fact that they have invested this money and seem to have lost it is even more shocking and is sadly yet another reminder of the poor financial management in local councils.
"It's an absolute disgrace. If the councils can't get their money back, the people who took these excesses should seriously consider their positions as councillors."
Chancellor Alistair Darling announced yesterday that he would protect the savings of private investors in Icelandic banks but said local authorities were "more of an informed investor".
October 9, 2008
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