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Councils seeking Darling meeting Councils seeking Darling meeting
(40 minutes later)
Local authority leaders are seeking an urgent meeting with the chancellor after it emerged at least 20 councils have cash in troubled Icelandic banks.Local authority leaders are seeking an urgent meeting with the chancellor after it emerged at least 20 councils have cash in troubled Icelandic banks.
Their overall investment is hundreds of millions of pounds and they are asking the UK government for the protection it has promised to personal savers.Their overall investment is hundreds of millions of pounds and they are asking the UK government for the protection it has promised to personal savers.
The Conservatives have warned that up to £1bn in council funding could potentially be in danger.The Conservatives have warned that up to £1bn in council funding could potentially be in danger.
But the Local Government Association (LGA) said services were not at risk.But the Local Government Association (LGA) said services were not at risk.
The Treasury said it was looking into the issue of protection for councils but has, so far, given no guarantees over the money.The Treasury said it was looking into the issue of protection for councils but has, so far, given no guarantees over the money.
Council investmentsCouncil investments
The LGA, which represents councils in England and Wales, says it has identified more than 20 councils which are believed to have deposits in the collapsed Icelandic bank Landbanksi or its UK arm Heritable. The LGA, which represents councils in England and Wales, says it has identified more than 20 councils which are believed to have deposits in the collapsed Icelandic bank Landsbanki or its UK arm Heritable.
CONFIRMED DEPOSITS IN ICELANDIC BANKS Kent County Council, £50mTransport for London, £40mWestminster City Council, £17mHertfordshire County Council, £17mHavering Council, £12.5mCheltenham Council, £11mNorth Lincolnshire Council: Sutton Council, £5.5m Buckinghamshire County Council: Cornwall County Council, £5mPowys Council, £4mFlintshire Council, £3.7mRhondda Council, £3mNorth East Lincolnshire Council, £2.5mGloucester Council, £2mMonmouthshire Council, £1.2mTewkesbury Council, £1mCONFIRMED DEPOSITS IN ICELANDIC BANKS Kent County Council, £50mTransport for London, £40mWestminster City Council, £17mHertfordshire County Council, £17mHavering Council, £12.5mCheltenham Council, £11mNorth Lincolnshire Council: Sutton Council, £5.5m Buckinghamshire County Council: Cornwall County Council, £5mPowys Council, £4mFlintshire Council, £3.7mRhondda Council, £3mNorth East Lincolnshire Council, £2.5mGloucester Council, £2mMonmouthshire Council, £1.2mTewkesbury Council, £1m
They include Kent County Council, which has £50m invested with Iceland-based banks.They include Kent County Council, which has £50m invested with Iceland-based banks.
The LGA is still trying to work out the total sums involved but believes that, Kent aside, many of the councils had investments in the "single figure millions of pounds" but others had deposits "running into the low tens of millions".The LGA is still trying to work out the total sums involved but believes that, Kent aside, many of the councils had investments in the "single figure millions of pounds" but others had deposits "running into the low tens of millions".
The LGA's deputy chief executive John Ransford disputed the Conservative claims of the amount of money at risk.The LGA's deputy chief executive John Ransford disputed the Conservative claims of the amount of money at risk.
But he said that "significant" amounts of public money were at stake which must be protected.But he said that "significant" amounts of public money were at stake which must be protected.
"This is public money and we need to treat this in exactly the same way as individual investments in these banks," he told the BBC."This is public money and we need to treat this in exactly the same way as individual investments in these banks," he told the BBC.
Westminster City Council has revealed it had deposits totalling £17m while Sutton and Havering Councils in London have investments worth £5.5m and £12.5m respectively.Westminster City Council has revealed it had deposits totalling £17m while Sutton and Havering Councils in London have investments worth £5.5m and £12.5m respectively.
North Lincolnshire Council has £2m deposited with Landsbanki and £3.5m in Heritable. North East Lincolnshire Council said it had £2.5m on deposit with Landsbanki.North Lincolnshire Council has £2m deposited with Landsbanki and £3.5m in Heritable. North East Lincolnshire Council said it had £2.5m on deposit with Landsbanki.
Hertfordshire County Council has £17m invested, while Buckinghamshire has £5m, as has Cornwall County Council.Hertfordshire County Council has £17m invested, while Buckinghamshire has £5m, as has Cornwall County Council.
Boris Johnson, the Mayor of London, has also revealed that Transport for London had £40m deposited in one of the affected banks.Boris Johnson, the Mayor of London, has also revealed that Transport for London had £40m deposited in one of the affected banks.
"We are looking to see what redress we can find," he said."We are looking to see what redress we can find," he said.
'Massive shock''Massive shock'
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.
"They are not going to find it easy in the short term," Eric Pickles, the party's shadow communities secretary, said."They are not going to find it easy in the short term," Eric Pickles, the party's shadow communities secretary, 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."
We will fight to get every single penny back Nick Chard, Kent County CouncilWe will fight to get every single penny back Nick Chard, Kent County Council
The LGA insisted that all the councils involved had enough money to ensure that frontline services should not be affected.The LGA insisted that all the councils involved had enough money to ensure that 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.
Nick Chard, cabinet member for finance on Kent County Council, said the local authority would "fight to get every single penny back".Nick Chard, cabinet member for finance on Kent County Council, said the local authority would "fight to get every single penny back".
He defended the local authority's decision to invest in Icelandic banks despite concerns about their indebtedness, saying its investments were made on the basis on sound professional advice.He defended the local authority's decision to invest in Icelandic banks despite concerns about their indebtedness, saying its investments were made on the basis on sound professional advice.
"We have followed the protocols exactly to the letter," he told the BBC, adding that it had spread its investments as widely as possible."We have followed the protocols exactly to the letter," he told the BBC, adding that it had spread its investments as widely as possible.
AngerAnger
Local government correspondent John Andrew said there was growing anger among councils, which say they followed Treasury advice by investing surplus money in a way that would deliver the highest return for taxpayers.Local government correspondent John Andrew said there was growing anger among councils, which say they followed Treasury advice by investing surplus money in a way that would deliver the highest return for taxpayers.
LGA spokesman Edward Welsh: 'No one knew this was coming'LGA spokesman Edward Welsh: 'No one knew this was coming'
He said the councils had been told by the government that the Icelandic banks had been given a "double A" rating.He said the councils had been told by the government that the Icelandic banks had been given a "double A" rating.
"The government is now going to have to decide how hard a hard ball it's going to play with them," he said."The government is now going to have to decide how hard a hard ball it's going to play with them," he said.
One option, our correspondent added, was to follow the example set during an earlier investment crisis suffered by councils and offer not a total bail-out but a softening of the blow through measures such as reductions business rates payments.One option, our correspondent added, was to follow the example set during an earlier investment crisis suffered by councils and offer not a total bail-out but a softening of the blow through measures such as reductions business rates payments.
Gordon Brown has said legal action will be taken over Iceland's failure to guarantee compensation for UK customers in its banks.Gordon Brown has said legal action will be taken over Iceland's failure to guarantee compensation for UK customers in its banks.
Iceland Prime Minister Geir Haarde said his government was working to repair relations with Britain amid the crisis.Iceland Prime Minister Geir Haarde said his government was working to repair relations with Britain amid the crisis.