Talk of the town hall - We'll fight to get our money back

Oct 17 2008

By Cllr Marcus Jones, leader of Nuneaton and Bedworth Borough Council

WE HAVEN'T put any money into that bank in Iceland, have we? Thats a question Ive heard a lot from people across Nuneaton and Bedworth in the last week. The collapse of banks in the UK and abroad has come as a shock and, at the moment, all of us are facing quite uncertain and financially challenging times. Even people with substantial savings and investments, who usually dont need to worry as much as most in tough financial times, are concerned about where they should invest their money. This is no different for the council. Several years ago the council was directed by Government that it must make the maximum use of its assets and invest them to provide an investment return to fund services. Because of this the council has made a number of investments in recent years with some degree of success. Before making any decision to invest money, whether at home or abroad, the councils treasury officers have followed stringent procedures to try and minimise any risk to those investments. These procedures take into account factors such as credit rating of the company, the amount of the investment and the duration of the deposit. As part of our investment portfolio the council over a period from April this year had made three deposits in Landsbanki of Iceland totalling s3 million. This investment was not just made because of the high interest rate offered by the particular bank. One of the overriding factors was that, according to the Governments credit rating scheme, which council's follow when investing, Landsbanki were rated as one of the safest short-term investments available. Unfortunately the Government withdrew the investment rating of Landsbanki on October 1. Council officers immediately attempted to withdraw the funds but this was not possible and we subsequently learned of the collapse of the Icelandic banking system and economy.   So the answer to the question I began with is, yes, the council has money invested in Iceland for the reasons Ive given. So, what are we doing about it? I can assure everyone that all of us at the council are very concerned at this potential loss, and, at this stage, we are very hopeful that this will not impact on council services. Our argument is that the Government told us to invest money to help pay for the services the council provides. The Government told us the bank in Iceland was a safe place to invest the money, so the Government should make sure the people of Nuneaton and Bedworth dont lose out because of what has happened. We are working with more than 100 other councils around the country who have money invested in Iceland and we are talking with the Government to see if and how our money can be recovered. The Government is more likely to pay attention to the complaint of a large group of councils and I promise I will let you know as soon as I have any news.