Councils' ?43M Loss in Banks Disaster

Daily Mail (London), October 10, 2008 | Go to article overview

Councils' ?43M Loss in Banks Disaster


Byline: John Robertson

SEVEN Scottish councils were last night plunged into a cash crisis as it emerged they have lost ?43million in Iceland's collapsed banks.

The money was invested in three Icelandic banks which failed earlier this month as part of the global financial crisis.

That debacle leaves the councils with multi-million pound holes in their budgets - and no apparent means of recovering the cash.

But their plight is dwarfed by the catastrophe south of the Border, where local authorities had invested more than ?700million in the Icelandic institutions.

Chancellor Alistair Darling has signalled that the Treasury will not bail out the councils. He said that while private individuals with cash in the banks would be protected, councils were 'more of an informed investor'.

All Holyrood Finance Secretary John Swinney could do was write to the Chancellor asking for reassurance that all deposits will be covered.

Meanwhile, Gordon Brown threatened legal action against the Icelandic government as he condemned its response to the country's bank collapses as 'totally unacceptable'.

The local authorities hit by the global economic chaos had invested in troubled Icelandic institutions Landsbanki, Heritable and Glitnir.

North Ayrshire Council appears to be the biggest loser with ?15million invested, followed by Scottish Borders Council which has ?10million tied up in the failed banks.

South Lanarkshire has ?5million invested with Landsbanki and a further ?2.5million with Heritable.

South Ayrshire has ?5million worth of deposits and Moray ?2million.

East Ayrshire puts its liabilities at between ?3million and ?5million, Perth and Kinross ?1million, with Moray facing a loss of up to ?2million. But all that pales in comparison to losses south of the Border, with Kent County Council alone having deposited ?50million.

None of Scotland's eight police forces have invested but 15 forces south of the Border and Transport for London have put more than ?145million into Icelandic banks.

Council tax rises and cuts to services in the worst hit authorities in England and Wales seem inevitable but all of the Scottish authorities involved insisted there would be no impact on public services.

A Scottish Executive spokes- man said: 'We are in touch with [councils' umbrella organisation] 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.

'Financial regulation is a reserved matter and therefore Finance Secretary John Swinney wrote to the Chancellor this morning 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.' Scottish Labour finance spokesman Andy Kerr backed the call on the UK Government to treat affected councils across the UK equally.

He said: 'I understand that at least one Scottish council has written to the Treasury asking for assurances about the safety of its deposits.

'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.' Cosla president Pat Watters, a South Lanarkshire councillor, said: 'A small number of Scottish councils have investments with Icelandic banks.

'Both national government in Scotland and the UK are making every effort to ensure those investments are secured.

We are fully supportive of all the efforts being made.'

j.robertson@dailymail.co.uk

Q & A

Why do councils invest - or gamble with - large sums of taxpayers' cash?

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Councils' ?43M Loss in Banks Disaster
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.