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Finance experts sent to councils Finance experts sent to councils
(10 minutes later)
Financial experts have been sent into three councils which could face short term 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 short term problems owing to their share of the £858.3m tied up in Icelandic banks.
Ten more are in touch with the government's special "rapid response unit" to help them "assess their position," minister John Healey said.Ten more are in touch with the government's special "rapid response unit" to help them "assess their position," minister John Healey said.
He said the councils had asked for help "in confidence" and before naming them it had to be discussed with them first.He said the councils had asked for help "in confidence" and before naming them it had to be discussed with them first.
There was "no reason" to think services or wages are at risk, he said.There was "no reason" to think services or wages are at risk, he said.
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.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".
The government has 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 government has 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.
In the Commons later, local government minister John Healey was asked to name the councils which had been contacted.In the Commons later, local government minister John Healey was asked to name the councils which had been contacted.
He said he would make the information public "as soon as possible" but the councils had given the information to the LGA "in confidence" and it would have to be "discussed and cleared with those councils first".He said he would make the information public "as soon as possible" but the councils had given the information to the LGA "in confidence" and it would have to be "discussed and cleared with those councils first".
Why are these councils investing taxpayers money in an Icelandic bank? Daniel KawczynskiConservative MPWhy are these councils investing taxpayers money in an Icelandic bank? Daniel KawczynskiConservative MP
Shadow local government minister Eric Pickles told him: "There comes to a point where it is better to release than not. I think a number of people who don't understand the nature of local government finance are going to become unduly concerned and worried about cuts in services and reliability. I think it would be better for it to be out in the open."Shadow local government minister Eric Pickles told him: "There comes to a point where it is better to release than not. I think a number of people who don't understand the nature of local government finance are going to become unduly concerned and worried about cuts in services and reliability. I think it would be better for it to be out in the open."
For the Lib Dems, Julia Goldsworthy also urged him to name the councils adding: "I think people will be very concerned that initially we were told that no council had done anything reckless and no one would suffer short term problems and now we are being told that some people might."For the Lib Dems, Julia Goldsworthy also urged him to name the councils adding: "I think people will be very concerned that initially we were told that no council had done anything reckless and no one would suffer short term problems and now we are being told that some people might."
A spokeswoman for the LGA said they were "actively working on how best to release this information".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.The government has not offered to guarantee the councils' deposits as it has done for individual British savers.
'Maximise return''Maximise return'
But Mr Healey told MPs that 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."But Mr Healey told MPs that 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."
Reports on the position of the three councils who have called in the financial experts are expected back by the end of the day and experts would continue to work with them, while ten other councils had been contacted by the teams "offering to help them assess their position and other options".Reports on the position of the three councils who have called in the financial experts are expected back by the end of the day and experts would continue to work with them, while ten other councils had been contacted by the teams "offering to help them assess their position and other options".
Harriet Harman on support for charities affected by failing Icelandic banks
Conservative MP Daniel Kawczynski asked: "Why are these councils investing taxpayers money in an Icelandic bank?"Conservative MP Daniel Kawczynski asked: "Why are these councils investing taxpayers money in an Icelandic bank?"
He said his own local councils had not despite being "under the same pressures to maximise return on investments" and suggested councils were not getting enough money from the government.He said his own local councils had not despite being "under the same pressures to maximise return on investments" and suggested councils were not getting enough money from the government.
Mr Healey said it was not true councils had been under pressure to "maximise investments" and had simply been "required to make investments prudently" and to prioritise "security and liquidity".Mr Healey said it was not true councils had been under pressure to "maximise investments" and had simply been "required to make investments prudently" and to prioritise "security and liquidity".
'More optimistic''More optimistic'
Asked how many councils had not yet replied to questions about Icelandic investments, he said the LGA was "pretty confident that they have the full picture" but that might change as the nature of investments became clearer.Asked how many councils had not yet replied to questions about Icelandic investments, he said the LGA was "pretty confident that they have the full picture" but that might change as the nature of investments became clearer.
The BBC understands 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 a third of the £858.3m invested could be recovered from two of the banks whose UK assets were frozen last week.
Speaking after the meeting with ministers 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 with ministers 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. "
SOME COUNCIL INVESTMENTS Kent County Council - £50mNottingham City Council - £42mNorfolk County Council - £32.5mDorset County Council - £28.1m Full list of councils affectedSOME COUNCIL INVESTMENTS Kent County Council - £50mNottingham City Council - £42mNorfolk County Council - £32.5mDorset County Council - £28.1m Full list of councils affected
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.
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.
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.
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 it told local councils which institutions they should invest in.Asked about the issue in the Commons later Mr Healey said the government had, in 2004, moved away from a position where it told local councils which institutions they should invest in.