There Goes the Council Tax You've Paid

Letter from Margaret Eaton, Chairman of the Local Government Association, to the Chancellor

Local authorities deposits with banks

The LGA welcomes the action that the Government has taken to freeze the UK assets of Landsbanki. We are aware that a number of local authorities have, as part of their normal day to day management of surplus funds, placed money on deposit with Icelandic banks. We would strongly urge you to take whatever further action is needed to safeguard and support the position of local authorities and the communities they serve.

As the Audit Commission’s Use of Resources reports have confirmed, councils have demonstrated consistent and high performance in management of public money. They deposit funds after taking independent financial advice, following carefully considered and agreed strategies. Deposits are place across a range of financial institutions, to spread risk. Any difficulties any council might face will be as a result of wholly exceptional circumstances.

The LGA therefore calls on the Government to extend to local authorities, who have prudently managed council tax payers’ money, the same assurances [as proffered to private investors] that money that has been invested in accordance with the law, and the Government’s own guidance, will be fully protected. I would welcome an early meeting with you to discuss how this might be achieved, and what further short-term actions might assist the efficient delivery of local public services.

In the meantime, local authorities will be taking all necessary steps to continue to serve the interests of their communities and deliver value for council tax payers and local businesses.

[Though if your pension fund was 'invested' in Iceland, you may have cause for concern].