A weekend of crisis talks was under way today in a bid to win assurances that millions of pounds invested by UK local authorities in collapsed banks in Iceland would be guaranteed.
Powys Council Council is among more than 100 local authorities that invested heavily in Icelandic banks. Some £1 billion of councils’ cash is tied up there.
Billions more from charities and small investors are also affected.
Up to £4 million - about six per cent of Powys council’s cash investments - could have been lost.
Dyfed-Powys Police also confirmed it had £2 million deposited in UK subsidiaries.
A UK Government delegation has arrived in Reykjavik for talks to try to settle the dispute over the Icelandic government’s refusal to guarantee deposits of British savers in the failed banks.
The Local Government Association - which represents councils across England and Wales - is thought to be considering a similar move.
The LGA is campaigning for local authorities to be at the top of the pile when repayments from Iceland are made.
Officials have met the British Government and won a promise that authorities facing severe short term difficulties would be helped. It is expected to hold more talks with the Government next week and has insisted authorities have not been “reckless” by investing in the Icelandic banks.
Powys County Council communications manager John Evans said: “We are naturally concerned at unfolding events and are monitoring the situation closely.”
The talks came as the FTSE 100 share index closed below the 4,000 mark for the first time in five years yesterday and, on Wall Street, the Dow Jones industrials average of blue chips firms completed its worst week ever.
The Chancellor Alistair Darling said it was essential the world’s leading econom- ies took action to stabilise financial markets. “All of us, all over the world, need to step up to the mark and do something about it,” he said.
By Sue Austin
One Comment
Questions were being asked in Parliament back in July about the amount of money being invested in Icelandic banks. It was known back then that there was risk involved.
Now the worst has happened, Councils are wanting the taxpayer to bale them out. Much of the lost money is from pension funds. Perhaps it is time Council workers were brought into line with other workers, and a more modest approach to their pensions was put in place.