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09/10/2008
Councils Call For Icelandic Banks Guarantees
Council leaders are seeking an urgent meeting with the Chancellor this afternoon to discuss the potential repercussions of the collapse of Icelandic banks.
The Local Government Association (LGA), which represents over 400 councils in England and Wales, is due to meet with Ministers from the Treasury and the communities department to discuss the possible risk of losing hundreds of millions of pounds after the crisis.
The Tories today warned the total money deposited in Icelandic banks could reach in excess of £1bn.
During the emergency meeting, council leaders will appeal to the Chancellor Alistair Darling to offer the same guarantees given to individual savers on Wednesday.
Cllr Margaret Eaton, Chairman of the LGA, said: "We are today seeking an assurance from the Chancellor that councils' assets will be protected in the same way as personal assets. Town halls invested in Landsbanki as a reputable bank with a solid credit rating.
"In the short term, these councils are confident that they will have sufficient funds to tide them over for a considerable period of time."
Of the councils that are at risk, Kent County Council has been identified as the authority that has invested the most in Icelandic-based banks, with a confirmed deposit of £50m. Meanwhile Dorset Council has temporary loans totalling £28.1m and Barnet Council has £27m.
Today the Prime Minister's official spokesman said the government was prepared to discuss the issues with the authorities "to see if we can find a way through".
He added: "The government does understand the situation that they are in. We have had difficulties getting complete clarity from the Icelandic authorities for all UK depositors."
The Local Government Association is calling for a full guarantee of the councils' funds, and is saying the authorities have stuck to Whitehall rules encouraging them to invest their money across a number of financial institutions to spread risk.
However, the Chancellor has argued councils are not covered by the same guarantees domestic savers have as they are more informed to make financial decisions than individuals.
(JM/KMcA)
The Local Government Association (LGA), which represents over 400 councils in England and Wales, is due to meet with Ministers from the Treasury and the communities department to discuss the possible risk of losing hundreds of millions of pounds after the crisis.
The Tories today warned the total money deposited in Icelandic banks could reach in excess of £1bn.
During the emergency meeting, council leaders will appeal to the Chancellor Alistair Darling to offer the same guarantees given to individual savers on Wednesday.
Cllr Margaret Eaton, Chairman of the LGA, said: "We are today seeking an assurance from the Chancellor that councils' assets will be protected in the same way as personal assets. Town halls invested in Landsbanki as a reputable bank with a solid credit rating.
"In the short term, these councils are confident that they will have sufficient funds to tide them over for a considerable period of time."
Of the councils that are at risk, Kent County Council has been identified as the authority that has invested the most in Icelandic-based banks, with a confirmed deposit of £50m. Meanwhile Dorset Council has temporary loans totalling £28.1m and Barnet Council has £27m.
Today the Prime Minister's official spokesman said the government was prepared to discuss the issues with the authorities "to see if we can find a way through".
He added: "The government does understand the situation that they are in. We have had difficulties getting complete clarity from the Icelandic authorities for all UK depositors."
The Local Government Association is calling for a full guarantee of the councils' funds, and is saying the authorities have stuck to Whitehall rules encouraging them to invest their money across a number of financial institutions to spread risk.
However, the Chancellor has argued councils are not covered by the same guarantees domestic savers have as they are more informed to make financial decisions than individuals.
(JM/KMcA)
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