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Finance experts sent to councils Finance experts sent to councils
(about 1 hour later)
Financial experts have been sent into three councils which could face severe problems owing to their share of the £858.3m tied up in Icelandic banks.Financial experts have been sent into three councils which could face severe problems owing to their share of the £858.3m tied up in Icelandic banks.
The Local Government Association and government said 13 councils "may face short term difficulties" but did not think services or wages were at risk.The Local Government Association and government said 13 councils "may face short term difficulties" but did not think services or wages were at risk.
Experts have been sent to three unnamed councils and ten more have "established contact," the LGA said. Experts have been sent to three unnamed councils and ten more have "established contact", the LGA said.
It hopes up to £300m will be recovered from two banks' frozen UK assets.It hopes up to £300m will be recovered from two banks' frozen UK assets.
The government met members of the LGA to discuss the issue earlier - 116 councils in England and Wales had invested money in Icelandic banks. The government met members of the LGA to discuss the issue earlier - 116 authorities, including councils and police authorities in England and Wales, and fire authorities in England had invested money in Icelandic banks.
'Fair deal''Fair deal'
In a joint statement, the two sides said there had been "positive joint working" and the government "continues to work with the Icelandic authorities to ensure a fair deal for all UK depositors".In a joint statement, the two sides said there had been "positive joint working" and the government "continues to work with the Icelandic authorities to ensure a fair deal for all UK depositors".
It added: "Thirteen councils have said that they may face short term difficulties but we have no reason to think that wages will not be paid or that services could be at risk at these authorities.It added: "Thirteen councils have said that they may face short term difficulties but we have no reason to think that wages will not be paid or that services could be at risk at these authorities.
"Financial experts will be working with three of these councils from today and will report interim findings shortly."Financial experts will be working with three of these councils from today and will report interim findings shortly.
In another 10 councils, specialists are establishing contact, fact finding and offering support and will report back to the government and the LGA."In another 10 councils, specialists are establishing contact, fact finding and offering support and will report back to the government and the LGA."
"Additional expertise" would be required if needed, it said."Additional expertise" would be required if needed, it said.
The government has not offered to guarantee the councils' deposits as it has done for individual British savers. Asked to name the affected councils later in the Commons, local government minister John Healey said he would make the information public "as soon as possible" but the LGA had given the information "in confidence" and it would have to be "discussed and cleared with those councils first".
Shadow local government minister Eric Pickles told him: "There comes a point where it is better to release than not. A number of people ... are going to become unduly concerned about cuts in services and reliability."
Frozen assetsFrozen assets
A spokeswoman for the LGA said they were "actively working on how best to release this information".
The government has not offered to guarantee the councils' deposits as it has done for individual British savers.
But Mr Healey told MPs councils which found themselves in trouble would not be "left without support": "That's why for the 13 that have reported they may face short term difficulties, we are stepping in immediately."
On Tuesday the government announced it had set up a "rapid response unit" to deploy finance experts to councils facing "severe short term difficulties" in the aftermath of the Icelandic banks crisis.On Tuesday the government announced it had set up a "rapid response unit" to deploy finance experts to councils facing "severe short term difficulties" in the aftermath of the Icelandic banks crisis.
The BBC understands that a third of the £858.3m invested could be recovered from two of the banks whose UK assets were frozen last week.The BBC understands that a third of the £858.3m invested could be recovered from two of the banks whose UK assets were frozen last week.
SOME COUNCIL INVESTMENTS Kent County Council - £50mNottingham City Council - £42mNorfolk County Council - £32.5mDorset County Council - £28.1m Full list of councils affected
Speaking after the meeting LGA chairwoman Margaret Eaton said: "As far as the administrators in this country are concerned, we've been working closely with them and we're more optimistic than we were this time last week. "Speaking after the meeting LGA chairwoman Margaret Eaton said: "As far as the administrators in this country are concerned, we've been working closely with them and we're more optimistic than we were this time last week. "
It will be mid-November before administrators Ernst & Young can estimate accurately how much money can be recovered from the collapsed UK operations of the Heritable and Kaupthing banks.It will be mid-November before administrators Ernst & Young can estimate accurately how much money can be recovered from the collapsed UK operations of the Heritable and Kaupthing banks.
SOME COUNCIL INVESTMENTS Kent County Council - £50mNottingham City Council - £42mNorfolk County Council - £32.5mDorset County Council - £28.1m Full list of councils affected
The likelihood of getting back the other two thirds of the money, held directly in Icelandic-based institutions, is less certain.The likelihood of getting back the other two thirds of the money, held directly in Icelandic-based institutions, is less certain.
The UK Treasury has said it is working with the Icelandic government to ensure all depositors get their money back as soon as possible.The UK Treasury has said it is working with the Icelandic government to ensure all depositors get their money back as soon as possible.
It has offered Landsbanki - one of banks nationalised by the Icelandic government - a £100m loan to help it repay some of its UK creditors.It has offered Landsbanki - one of banks nationalised by the Icelandic government - a £100m loan to help it repay some of its UK creditors.
'Sensible' advice
Iceland's attractive interest rates had lured many customers from overseas, but last week its biggest banks had to be nationalised.Iceland's attractive interest rates had lured many customers from overseas, but last week its biggest banks had to be nationalised.
On Tuesday, Communities Secretary Hazel Blears defended the government's investment advice to councils, saying it had been "prudent and sensible".
Shadow communities secretary Eric Pickles said the government must give more details of which bodies had been affected by the crisis - and how seriously.
"Local taxpayers have a right to know the threat to their council tax bills and local services," he said.
The LGA is demanding an inquiry into why credit rating agencies continued to rate Icelandic banks relatively highly just days before they collapsed.The LGA is demanding an inquiry into why credit rating agencies continued to rate Icelandic banks relatively highly just days before they collapsed.
Asked about the issue in the Commons later Mr Healey said the government had, in 2004, moved away from a position where central government told local councils which institutions they should invest in.