Iceland cash latest
PUBLISHED: 09:36 29 October 2008 | UPDATED: 12:07 03 July 2010
NORFOLK County Council which has millions caught up in the Icelandic banking crises has vowed to “bank British” in future as politicians pledge to keep a closer eye on our cash - after revealing that lost interest payments will total £2.
NORFOLK County Council which has millions caught up in the Icelandic banking crises has vowed to “bank British” in future as politicians pledge to keep a closer eye on our cash - after revealing that lost interest payments will total £2.1m or around 1pc on council tax bills.
The council, which has £32.5m tied up in Iceland's failed banks, said it was facing a long haul in getting the money back after three banks went into administration.
Yesterday it emerged the authority stands to lose around £2.1m in interest payments alone if it cannot recover the cash - around 1pc on the council tax, which could have helped peg bills for householders or bail out under pressure departments such as children's and adult social services.
This week County Hall, which is among more than 100 councils including Breckland and Great Yarmouth caught out by the banking crisis, pulled £20m held in Irish banks back to the UK as finance chiefs said that future investments would be concentrated solely in this country and based on short-term deposits.
While crisis-hit Iceland yesterday raised its key interest rate by a huge six percent to a record 18pc to meet the requirements of a $2m rescue loan from the International Monetary Fund - with little sign of how councils will get their money back.
Members of the council's scrutiny committee demanded a full list of where all the investments are made and called for an investment committee to be re-established to monitor how the council plays the financial markets. Questions were also raised about the role of cabinet members in the investment process and what steps were being taken to lobby government.
The meeting heard that an earlier committee had fallen into disuse in favour of an annual rubber stamping exercise at the budget meeting following national changes to council accounting rules.
Members were not previously told when a “negative watch” warning had been issued on a bank either, while it also emerged the authority was paying £25,000 a year to financial advisors Butlers.
The authority also did not currently have its own ethical investment policy - though most of its day to day banking was done with the Co-operative Bank, which does.
Paul Brittain, head of finance at Norfolk County Council, told councillors that the banking crises and a predicted fall in interest rates could reduce the council kitty - and put more pressure on already tight service budgets.
But there is no short-term impact on services and no difficulty in meeting our financial commitments.