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Councils fear for Icelandic cash Councils 'not reckless with cash'
(30 minutes later)
The amount of local authority cash at risk after being deposited in Icelandic banks has now risen to more than £720m. Local authorities have not been "reckless" in investing more than £720m with failed Icelandic banks, the government has said.
Council leaders are meeting ministers to push their case that the funds belonging to almost 100 authorities must be guaranteed. Deposits from almost 100 councils could be at risk, the BBC has learned.
Gordon Brown said "further action" against Icelandic banks was being considered, but the government has so far declined to guarantee the money. Ministers have met council leaders and are promising "appropriate" help on a "case-by-case basis".
The Local Government Association said frontline services were not at risk. Gordon Brown said he was considering "further action", but the government is not offering to guarantee authorities' deposits with Icelandic banks.
BBC News has so far learned that local authorities across England, Wales and Scotland hold deposits worth £724.8m in total with Icelandic banks. BBC News has so far learned that local authorities across England, Wales and Scotland hold deposits worth £724.8m in total.
The figure reaches £860.5m when investments by 15 police authorities and Transport for London are added.The figure reaches £860.5m when investments by 15 police authorities and Transport for London are added.
The Conservatives said the total could reach £1bn once all investments are known. The Lib Dems said a third of councils may be affected. The Conservatives said the total could reach £1bn once all investments are known. The Liberal Democrats said a third of councils may be affected.
Council investmentsCouncil investments
The Treasury, which has given no guarantees over the money, said it wanted to "establish the facts" about financial exposure and was prepared to have discussions about a "way forward". The government said it wanted to "establish the facts" about financial exposure and was prepared to have discussions about a "way forward".
SOME CONFIRMED DEPOSITS Kent County Council, £50mNottingham City Council, £42m Transport for London, £40mNorfolk County Council, £32.5mDorset County Council, Hertfordshire County Council, £28mBarnet Council, £27mSomerset County Council, £25mHillingdon Council, £20mWestminster City Council, £17mHertfordshire County Council, £17mBrent Council, £15mHavering Council, £12.5mCheltenham Council, £11mNorth Lincolnshire Council: Sutton Council, £5.5m Buckinghamshire County Council: Cornwall County Council, £5m Q&A: Council funds at riskWelsh councils concernedScottish impactFull list of councils affectedSOME CONFIRMED DEPOSITS Kent County Council, £50mNottingham City Council, £42m Transport for London, £40mNorfolk County Council, £32.5mDorset County Council, Hertfordshire County Council, £28mBarnet Council, £27mSomerset County Council, £25mHillingdon Council, £20mWestminster City Council, £17mHertfordshire County Council, £17mBrent Council, £15mHavering Council, £12.5mCheltenham Council, £11mNorth Lincolnshire Council: Sutton Council, £5.5m Buckinghamshire County Council: Cornwall County Council, £5m Q&A: Council funds at riskWelsh councils concernedScottish impactFull list of councils affected
Of the councils identified by the LGA, which represents authorities in England and Wales, Kent County Council has the most invested in Iceland-based banks, with £50m. Treasury Ministers Stephen Timms and Ian Pearson and Local Government Minister John Healy held talks with the Local Government Association.
Nick Chard, cabinet member for finance, promised to "fight to get every single penny back". In a joint statement afterwards they said: "Government and the LGA agreed that there is no evidence of recklessness by local authorities."
The LGA is still trying to work out the total sums involved but deputy chief executive John Ransford disputed the Conservative claims of the amount of money at risk. They added: "We will judge what's appropriate on a case-by-case basis but in previous situations support has included helping local authorities restructure their financial priorities, providing additional expertise and capitalisation of expenditure."
"This is public money and we need to treat this in exactly the same way as individual investors in these banks," he told the BBC. The government has frozen the assets held in the UK by the Icelandic bank Landsbanki.
BBC local government correspondent John Andrew said there was growing anger among local authorities, which said they had followed Treasury advice by investing surplus money in a way that would deliver the highest return for taxpayers.
He said the councils had been told by the government that the Icelandic banks had been given a "double A" rating.
According to figures acquired so far for local authorities, Kent County Council has the largest deposit, worth £50m.
Nottingham City Council has invested £42m, while Transport for London has £40m deposited in one of the affected banks.Nottingham City Council has invested £42m, while Transport for London has £40m deposited in one of the affected banks.
The next biggest known investments are Norfolk County Council's £32.5m, £30m by the Metropolitan Police, Dorset County Council's £28.1m and Hertfordshire County Council's £28m.The next biggest known investments are Norfolk County Council's £32.5m, £30m by the Metropolitan Police, Dorset County Council's £28.1m and Hertfordshire County Council's £28m.
Treasury Ministers Stephen Timms and Ian Pearson and Local Government Minister John Healy are holding talks with the LGA.
The Conservatives have warned that town halls could face a "massive financial shock" and be forced into council tax hikes or cuts in local services.The Conservatives have warned that town halls could face a "massive financial shock" and be forced into council tax hikes or cuts in local services.
PayrollsPayrolls
"They are not going to find it easy in the short term," shadow communities secretary Eric Pickles said."They are not going to find it easy in the short term," shadow communities secretary Eric Pickles said.
He added: "We need to look at the number of authorities that will be facing a cash-flow problem - some have their payroll on this, for others it's in terms of long-term investment."He added: "We need to look at the number of authorities that will be facing a cash-flow problem - some have their payroll on this, for others it's in terms of long-term investment."
The Lib Dems said the money at stake was "essential" for delivering local services and urged ministers to "make clear" how such funding would be protected.The Lib Dems said the money at stake was "essential" for delivering local services and urged ministers to "make clear" how such funding would be protected.
Local government minister John Healey: 'This isn't money that's lost'Local government minister John Healey: 'This isn't money that's lost'
House of Commons leader Harriet Harman said it was important to remember "the resources that have been going into local government from central government have been increasing year on year".
She added that "government services are very important indeed. We want to ensure they are protected."
The LGA insisted all the councils involved had enough money to ensure frontline services should not be affected.The LGA insisted all the councils involved had enough money to ensure frontline services should not be affected.
But it wants the same protection for councils as has been given to personal customers of IceSave and other failed Icelandic banks.But it wants the same protection for councils as has been given to personal customers of IceSave and other failed Icelandic banks.
BBC local government correspondent John Andrew said there was growing anger among local authorities, which said they had followed Treasury advice by investing surplus money in a way that would deliver the highest return for taxpayers.
He said the councils had been told by the government that the Icelandic banks had been given a "double A" rating.
The prime minister said: "We are freezing the assets of Icelandic companies in the United Kingdom where we can.The prime minister said: "We are freezing the assets of Icelandic companies in the United Kingdom where we can.
"We will take further action against the Icelandic authorities wherever that is necessary to recover the money. At the moment we are talking with the local authorities... to see what we can do to help.""We will take further action against the Icelandic authorities wherever that is necessary to recover the money. At the moment we are talking with the local authorities... to see what we can do to help."
Icelandic Prime Minister Geir Haarde said his government was working to repair relations with Britain amid the crisis.Icelandic Prime Minister Geir Haarde said his government was working to repair relations with Britain amid the crisis.
Do you work, or have you previously worked, for a local council? Are you concerned about local council investments in Icelandic banks? Send us your comments using the form below:
Do you work, or have you previously worked, for a local council? Are you concerned about local council investments in Icelandic banks? Send us your comments using the form below:
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