Councils slammed over deposits risk (10)

from msn news;

Local authorities came under fire after it emerged that millions of pounds of taxpayers' money invested in Icelandic banks was at risk.

Critics branded the investments an "absolute disgrace" and said those responsible should consider their positions.

One authority - Kent County Council - has £50 million deposited in Icelandic banks while more than 20 others are thought to have exposure running into millions of pounds.

Barnet Council in north London is thought to have in the region of £27 million deposited and Westminster Council said it had £17 million with Icelandic institutions. Transport for London said it has a £40 million deposit with Kaupthing Singer & Friedlander, which has been placed into administration.

Mark Wallace, campaign director at the TaxPayers' Alliance, said: "People will be shocked that the councils had this money stashed away in the first place. Every year we hear that councils don't have enough money and need to raise taxes but it seems they have had sufficient excess tax to salt tens of millions of pounds away.

"The fact that they have invested this money and seem to have lost it is even more shocking and is sadly yet another reminder of the poor financial management in local councils. In short, they should not have stashed this money in the first place and they simply weren't equipped to try to be clever in the markets with it."

He continued: "It's an absolute disgrace. If the councils can't get their money back, the people who took these excesses should seriously consider their positions as councillors."

Edward Welsh, of the Local Government Association (LGA), insisted councils acted along "prudent lines" by spreading their money across several financial institutions at home and abroad. But he admitted the money was now "at risk".

Mr Welsh told BBC Breakfast: "Councils are large employers, they have large wage bills to pay off, they collect large amounts of money in council tax. The reason why this money has been put in these banks is to try to reduce risk by putting their money in as many banks as possible."

He said of the money: "We don't know it's lost, we know it's at risk. That's why we are speaking to the Treasury, that's why we want to find out what we can do to try and get that money back."

Dunno Tina, maybe they did cant be sure of anything at the moment and as Mike says above, they also have lots invested successfully in other places. My gripe, and call me nieve all you like but I had no idea that they were taking such risks with what is essentially our money - I dont remember this being voted on or even ever being mentioned in the press - furthermore, as individual councils are run by various parties, this fiasco cant be blamed on any particular one of them - I dont know which one of them allowed this to start happening - i will research that in a min.

below is taken from a BBC interview with Mark Wallace, campaign director at the TaxPayers’ Alliance.

Every year we hear that councils don’t have enough money and need to raise taxes but it seems they have had sufficient excess tax to salt tens of millions of pounds away. The fact that they have invested this money and seem to have lost it is even more shocking and is sadly yet another reminder of the poor financial management in local councils.

“In short, they should not have stashed this money in the first place and they simply weren’t equipped to try to be clever in the markets with it.”

Thanks for that correct spelling of 'naive' - Im dyslexic and was too het up to spell check

Like yourself, I had no problem thinking our money was ok earning interest in the bank but surely, if they were investing in these mega portfolios, they have a duty to inform us of the progress or otherwise of these investments?


This whole fiasco totally disgusts me and its getting worse by the hour, peoples pensions and homes are threatened and all the money thats "salted away" could make things so much easier on people.

If the root cause of all this is the mis-selling of mortgages then surely, the people who allowed for this falsification of the economy should be paying the price and not people who have worked all their lives for a bit of security in their old age.........

I really does make me wonder what the hell they are doing with the other taxes they get from us - is that gonna be next? they will let us know next week that the health service cant pay their wages next month cos all the dosh was invested in the collapsed stock market too...........

And what of road taxes, what are they doing with the funds from those payments - lets not forget VAT either...........

I remember wondering a few years ago about what the outcome of such practices would be, Id heard that people on very low incomes were being given mortgages well in excess of their earnings and that the brokers werent even checking details of claims anyway - that was vastly different practice to what went on when I once worked in a building society.