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Councils 'not reckless with cash' Councils 'not reckless with cash'
(10 minutes later)
Local authorities have not been "reckless" in investing more than £720m with failed Icelandic banks, the government has said.Local authorities have not been "reckless" in investing more than £720m with failed Icelandic banks, the government has said.
Deposits from almost 100 councils could be at risk, the BBC has learned.Deposits from almost 100 councils could be at risk, the BBC has learned.
Ministers have met council leaders and are promising "appropriate" help on a "case-by-case basis".Ministers have met council leaders and are promising "appropriate" help on a "case-by-case basis".
Gordon Brown said he was considering "further action", but the government is not offering to guarantee authorities' deposits with Icelandic banks.Gordon Brown said he was considering "further action", but the government is not offering to guarantee authorities' deposits with Icelandic banks.
'Not pleasant'
The prime minister told the BBC that the Icelandic authorities' handling of accounts had been "effectively illegal" and "completely unacceptable".
The government has frozen the UK assets of Icelandic bank Landsbanki, saying local authorities will benefit from this.
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 affectedImpact on North of England councilsKent vow over £50m investmentWorries in Somerset over deposits
But the country's prime minister, Geir Haarde said it was "not very pleasant" to have laws designed to deal with terrorists used against his country.
BBC News has so far learned that local authorities across England, Wales and Scotland hold deposits worth £724.8m in total.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 Liberal Democrats 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 investments
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 affectedImpact on North of England councilsKent vow over £50m investmentWorries in Somerset over deposits
Treasury Ministers Stephen Timms and Ian Pearson and Local Government Minister John Healy held talks with the Local Government Association.Treasury Ministers Stephen Timms and Ian Pearson and Local Government Minister John Healy held talks with the Local Government Association.
In a joint statement afterwards they said: "Government and the LGA agreed that there is no evidence of recklessness by local authorities."In a joint statement afterwards they said: "Government and the LGA agreed that there is no evidence of recklessness by local authorities."
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."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."
The government has frozen the assets held in the UK by the Icelandic bank Landsbanki. Councils say they followed Treasury advice by investing surplus money in a way that would deliver the highest return for taxpayers.
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.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 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'
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.
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."
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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