I am intrigued to see Richard Kemp's reaction to a report, out today, from the Commons Communities and Local Government Committee that accused councils of taking their eye off the ball and being negligent when it came to their investments in Icelandic banks.
We have been accusing them of this since the crash last October, but the LGA are historically prone to poo-poo us. What intrigued me was Kemp's poo-pooing of a Parliamentary committee. The LGA's worldview that councils are blameless victims of incompetent credit agencies, and that their exposing £1 billion of taxpayers' money to unacceptable risk actually had nothing to do with them is a nonsense and the worst kind of shirking of responsibility. However, it would seem that anyone who doesn't fit in with this view is just plain wrong, according to Mr Kemp. He asked, "what do MPs know about it?" on BBC this morning. Well, quite a lot actually, when you take into account they have been charged with conducting an inquiry.
But, to satisfy Mr Kemp, let's have a wee look at the facts. There were warnings as early as 2006 that Icelandic banks did not have a sound financial footing, and that the high returns were due to a high risk factor. Further concerns were voiced in the House of Commons in June. Most damming of all: many charities, individuals and yes, even councils heeded these warnings and got their money out in time.
For the LGA to pose as organisational little old ladies who simply don't know enough about the banking system (blink, blink) simply doesn't wash. Many councils employ Financial Directors on well over £100,000 a year and they STILL had money invested. The prime example of this is Hertfordshire, whose Finance Director was on our Town Hall Rich List this year, and the council had £17 million tied up in Icelandic banks at the time of the crash. What the hell was he doing? When investing taxpayers' money, safety should be top of the priority list every time, and that guy should have been pulling out Hertfordshire's deposits the minute he even smelt trouble. But don't worry, he still received a package of over £127,000 last year for his trouble.
So it's not merely that some of the people managing taxpayers' money at local government level are incompetent, they are expensive and incompetent.
The correct reaction upon the crash would have been for those responsible for making the investments to put their hands up, say "the buck stops here", lessons learnt and duly receive a swift sacking. Blaming everyone else for your monumental cock-up is neither convincing or, in this case, remotely productive. And until we start seeing a culture of accountability in the public sector as a whole and in councils in particular, taxpayers can expect more of the same.