ICELANDIC BANKING CRISIS (Somerset Liberal Democrat Group)

Somerset Liberal Democrat Group <info@somersetlibdems.org.uk>

ICELANDIC BANKING CRISIS

October 10, 2008 5:00 PM

The Liberal Democrats are appalled by the way the Somerset Conservative County Group leadership are politicising this international situation two days late - once again trying to blame the Liberal Democrat administration in the usual knee jerk negative way that we have come to expect from them.

Sam Crabb - the Portfolio Holder for Strategic Resources and Finance said today "It is disgraceful that the conservative leader and the finance spokesperson clearly do not want to understand the situation affecting many councils in the UK. They appear to have not bothered finding out the real circumstances before sending out another daft press release, that could mislead and confuse the public".

He added "The Liberal Democrats are certainly not going to waste public money by having a emergency Full Council meeting to discuss this situation. Members have plenty of opportunities of speaking to officers and can easily establish the true facts. Ken and his friends may like to contact any of their colleagues in the other 107 Councils affected by this collapse in Iceland, like Kent County Council."

ENDS

Notes for Editors.

You probably know by now that Somerset County Council had invested £25m spread across 3 Icelandic banks. This money was a relatively small percentage of our available funds. I would emphasise that at this point this money is not lost.

There is expected to be no impact upon the council tax-payer. Clearly, the money is at risk, but it is not lost and we are determined that all monies will be recovered. In the case of the BCCI bank collapse many years ago, around 96% of the money allegedly "lost" then by other councils was indeed recovered.

The Conservative Chair of the Local Government Association Cllr Margaret Eaton issued a statement yesterday:-

"You will all have heard about the crisis affecting several Icelandic banks, including Landsbanki, Heritable, Glitner and Kaupthing Singer & Friedlander and from breaking news today many of you will also know that many councils have money invested with these banks. At close of play today 108 councils reported deposits of around £800 million with these banks.

There is no evidence to suggest any council has been imprudent in its management of these funds and Government has agreed with us on that. This is an unfortunate fall out from the global financial crisis."

Indeed the Prime Minister Gordon Brown blamed the Icelandic Banking collapse upon the Icelandic Government and Treasury officials are discussing a way forward with them now.