Council taxpayers' millions still stuck in Icelandic banks

August 15, 2013 10:57 AM

South west taxpayers are still the losers when it comes to the money their councils unwisely invested in Icelandic banks before the crash of 2008. Somerset County Council placed £12m of their taxpayers’ money with the failed banks and is still owed £8.1m. Wiltshire County Council invested £12m and is waiting for £3.6m. In a time of austerity it is an appalling waste of money and reflects badly on the councils as well as the government for not pursuing this money more vigorously.

In Gloucestershire the total investment amounted to £31m, with the County Council still owned £2.8m and Cheltenham Bough Council owed £4.1m. The Borough Council's director of resources claims to have ‘worked worked tirelessly over a period of time to recover this money’ and said it was‘making steady progress’ to recovering the money.

‘We are in the hands of the administrators,’ he said, ‘despite it taking a little bit longer, the likelihood is that we will ultimately recover more of the money back.’ Just more, not all? It is now five years since this money went missing and that means a huge loss in interest payments and there is still no guarantee that the entirety of this money will be returned to local taxpayers.

What is particularly extraordinary is that there were warnings in the financial press about the fundamental unsteadiness and flawed business practices of Icelandic banks. So much so that I warned my cousin about the investment of his life savings in one bank and he removed it in time before the crash. If I could see it coming, how come the highly paid financial advisers of several South West councils did not? What on earth are they paid for if not to protect taxpayers ‘money? Has any one of them lost their jobs over this serious dereliction of public duty or have some of them retired on taxpayer funded pensions?

Other councils in the region still owed money include Bristol City, waiting for £3m on an investment of £8m, North Somerset £1.4m on £3m, and Stroud £600,000 on £2.5m. In total, across the country, more than 100 councils recklessly invested some £1 billion of taxpayers’ money.

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