Published: Monday, 13th October, 2008 10:00
Banking collapse losses 'will not hit' frontline cops
By Adam Hewitt
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FRONTLINE policing will not be hit despite the loss of £5m belonging to Thames Valley Police in the Icelandic banking crash.
That is the pledge from the Thames Valley Police Authority which is one of the 111 British councils and local bodies that had cash lodged with Landsbanki, rescued by the Icelandic government last week.
Wokingham Borough Council had £5m deposited with two Icelandic banks and South Oxfordshire District Council £2.5m with the Kaupthing SF bank, but neither Reading borough and West Berkshire councils are affected.
Police spokesman David Paull said the deposit was made in accordance with the Authority’s approved investment strategy.
He said: “In the immediate short term, we do not expect any impact on front-line policing, and discussions between the Association of Police Authorities, the Local Government Association and central government are continuing to seek a solution to protect public sector services in the long term.”
Prime Minister Gordon Brown is threatening to seize the assets of Icelandic companies in Britain, unless the £20 billion belonging to British savers, businesses and public authorities invested in Landsbanki and its savings offshoot Icebank is returned.
Initially the Government pledged to protect private depositors in the failing Icelandic banks, but Chancellor Alistair Darling told the House of Commons on Thursday that local authorities and Transport for London were “well-informed investors” and not covered by the guarantee. Since then the Government has agreed to help any local authority or police force in serious trouble.
Wokingham Borough Council has £3m invested in Heritable and £2m in Landsbanki.
Spokesman David Allen said: “At the time of the investments, the borough council’s policy was to only invest in highly secure organisations and both banks concerned had high financial security ratings. Since the onset of the recent international financial problems, the council has further tightened its policy and is now only investing in the safest AAA rated companies and Government-backed organisations.
“The council is doing everything in its power to ensure it recovers its investment and is backing the Local Government Association’s lobbying of central government on behalf of a substantial number of authorities to extend the protection being given to retail investors to cover local authorities as well.
“The council could not have foreseen the extent of this current financial crisis. However we can assure residents that we will continue to strive to ensure that local residents do not lose out in the current situation.”
A statement from South Oxfordshire District Council said: "We are hopeful that the banking receivers will ensure all investors will be repaid in full in due course.
"However, until this is confirmed there is obviously a risk that we will face a financial loss. Either way, there will be no impact on our ability to provide frontline services.
Margaret Eaton, chairwoman of the Local Government Association, said: “In the short term, these councils are confident that they will have sufficient funds to tide them over for a considerable period of time.
”Whilst this may affect some councils financially, we do not expect it to have any impact on local services.”
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