SNP urge Westminster to guarentee council cash

Calls for Westminster to guarantee more than £45 million of council cash in collapsed Icelandic banks were today stepped up by the Scottish Government.

Finance secretary John Swinney urged for Chancellor Alistair Darling to give Scottish councils the same "assurance" given to retail depositors across the UK.

Seven Scots councils have money in troubled Icelandic financial institutions including Landsbanki, Heritable and Glitnir.
North Ayrshire has the biggest investment, with £5 million in Landsbanki and £10 million with Glitnir Bank.

In England, councils have been told by the government that their investments in Icelandic institutions are not being guaranteed as local authorities are in a different position from individual savers.
Senior figures in Scottish local authorities are discussing their Icelandic problems today in Edinburgh.

Mr Swinney told BBC Radio Scotland that Scottish councils had a "significantly lower" level of exposure that local authorities south of the border.

"We have to make sure that we focus on securing the guarantees over
this money," he told Good Morning Scotland.

"That's exactly why I have written to the chancellor to seek his assistance in providing the same assurance to the local authority depositors that has been provided to retail depositors throughout the UK."

Mr Swinney said the Scottish Government was in contact with the affected authorities to establish a complete picture.

"But the focus of what we have to do is to ensure we have the necessary assurance and guarantees in place to support the local authorities whose investments are now in some doubt" he said.

While banking regulation is an area reserved to Westminster, local government finance is devolved.

Mr Swinney insisted: "This has got nothing to do with local authority funding – and everything to do with regulation of financial services."

David Parker, leader of Borders Council, which has £5 million with Landsbanki and £5 million in Heritable, said he was optimistic that the council would eventually get the cash back.

But government help could be needed in a "worst-cast scenario", he told Good Morning Scotland.

"I think there's a realistic possibility that working with the Icelandic authorities and working with the administrators, that this money will come back to Scottish local authorities," he said.

"But in the worst-case scenario, certainly the Treasury needs to look at a similar package for local authorities and other organisations who are affected by this particular crisis, just as they have done for individual savers."

The other Scottish councils affected included South Lanarkshire with £5 million invested with Landsbanki and a further £2.5 million with Heritable.

East Ayrshire said it had identified "potential exposure" of between £3 million and £5 million.

South Ayrshire has £5 million worth of deposits, Moray £2 million and Perth and Kinross £1 million.

Aberdeen City Council said it had no money invested in any Icelandic bank but revealed there was "Landsbanki involvement" in its £120 million project to build or refurbish 10 city schools.