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Leaders meet over banks collapse Leaders meet over banks collapse
(10 minutes later)
Scottish council leaders are due to meet in Edinburgh to discuss the collapse of the banking system in Iceland.Scottish council leaders are due to meet in Edinburgh to discuss the collapse of the banking system in Iceland.
Seven councils have more than £45m invested in Icelandic banks.Seven councils have more than £45m invested in Icelandic banks.
Another council, Aberdeen, has borrowed cash to fund a schools refurbishment and building programme.Another council, Aberdeen, has borrowed cash to fund a schools refurbishment and building programme.
Finance Secretary John Swinney has sought assurances from the Chancellor that all Scottish council deposits in Icelandic banks will be protected.Finance Secretary John Swinney has sought assurances from the Chancellor that all Scottish council deposits in Icelandic banks will be protected.
The UK Government has agreed that no council acted recklessly.The UK Government has agreed that no council acted recklessly.
The seven Scottish local authorities confirmed they had investments in the country's troubled financial institutions including Lansbanki, Heritable and Glitnir.The seven Scottish local authorities confirmed they had investments in the country's troubled financial institutions including Lansbanki, Heritable and Glitnir.
AFFECTED SCOTTISH COUNCILS North Ayrshire: £15m investedScottish Borders: £10m investedSouth Lanarkshire: £7.5m investedEast Ayrshire: "Potential exposure" of between £3m and £5mSouth Ayrshire: £5m of depositsMoray: £2m of depositsPerth and Kinross: £1m of depositsAberdeen City: "Icelandic involvement" in £120m schools project A Scottish Government spokesman said: "We are in touch with Cosla to clarify the overall sums involved, but we understand they are very significantly less than the hundreds of millions of pounds that councils in England are reported to have on deposit."AFFECTED SCOTTISH COUNCILS North Ayrshire: £15m investedScottish Borders: £10m investedSouth Lanarkshire: £7.5m investedEast Ayrshire: "Potential exposure" of between £3m and £5mSouth Ayrshire: £5m of depositsMoray: £2m of depositsPerth and Kinross: £1m of depositsAberdeen City: "Icelandic involvement" in £120m schools project A Scottish Government spokesman said: "We are in touch with Cosla to clarify the overall sums involved, but we understand they are very significantly less than the hundreds of millions of pounds that councils in England are reported to have on deposit."
He added: "Financial regulation is a reserved matter, and therefore Finance Secretary John Swinney wrote to the Chancellor ... to seek specific reassurance from the UK Government that all deposits by local authorities in all banks, based both in the UK and elsewhere, are afforded the same protection as the safeguards the UK Government put in place in relation to certain Icelandic banks and accounts yesterday." He added that Financial regulation was a reserved matter and Finance Secretary John Swinney had written to the Chancellor to seek specific reassurance that all deposits by local authorities in all banks, based both in the UK and elsewhere, are afforded the same protection as the safeguards the UK Government has already put in place in relation to certain Icelandic banks and accounts.
Labour finance spokesman Andy Kerr urged the UK Government to offer equal support to all councils across the country.Labour finance spokesman Andy Kerr urged the UK Government to offer equal support to all councils across the country.
He said: "Whatever support is offered I expect assurances from the Treasury that there is no disparity between the way that Scottish local authorities are treated and those in the other parts of the UK."He said: "Whatever support is offered I expect assurances from the Treasury that there is no disparity between the way that Scottish local authorities are treated and those in the other parts of the UK."
Following the collapse of the BCCI bank in 1991, councils were obliged to spread their investments around. In that collapse, the Western Isles Council lost £23m.Following the collapse of the BCCI bank in 1991, councils were obliged to spread their investments around. In that collapse, the Western Isles Council lost £23m.
The Scottish Office bailed the council out and the authority has since repaid all the money.The Scottish Office bailed the council out and the authority has since repaid all the money.
The discussion is now between the Scottish Government which has devolved responsibility for local councils, and Westminster which retains responsibility for financial regulation.The discussion is now between the Scottish Government which has devolved responsibility for local councils, and Westminster which retains responsibility for financial regulation.
Scottish councils will urge the two to ensure they do not get caught in the middle of a row similar to that over council tax benefit where Westminster said it would withdraw payments if Holyrood scrapped the tax.Scottish councils will urge the two to ensure they do not get caught in the middle of a row similar to that over council tax benefit where Westminster said it would withdraw payments if Holyrood scrapped the tax.