Councils were not irresponsible with money

Government officials have recently announced that local authorities who had invested large sums of cash with Icelandic banks had not been reckless with their cash. Many local authorities recently losing millions of pounds after the collapse of Icelandic banks, causing outrage amongst some consumers over why they had invested money into the banks in the first place.

It was thought after the collapse of the banks that deposits from over one hundred councils could be at risk. In England and Wales ministers promised to look at each case on an individual basis to try and provide the help needed. However, although the government did offer to guarantee the deposits of UK consumers this did not extend to councils and charities.

Treasury officials recently stated: “Government and the LGA agreed that there is no evidence of recklessness by local authorities. We will judge what’s appropriate on a case-by-case basis but, in previous situations, support has included helping local authorities restructure their financial priorities, providing additional expertise and capitalisation of expenditure.”

James Purnell, the Minister for Work and Pensions, added: “We met with the Local Government Association and have been discussing this with councils, and we’ve agreed that we want to work together obviously to protect service levels – but this is a complicated situation. We’ve agreed that we will work with them over the next few days, and that is the right way of doing it, making sure we get a proper answer.”