IT IS “unacceptable” that town halls face losing £200m from the Icelandic banking collapse, the Tories insisted yesterday.
Shadow Local Government Secretary Caroline Spelman warned taxes will have to rise or services be cut amid suggestions councils could only recoup 80% of their investments.
Iceland’s financial system seized up in October last year, trapping around £1bn of UK local authority funds.
According to the BBC, the administrators for one of the banks that collapsed, Heritable Bank, have now indicated creditors will receive around four-fifths of their funds back – equating to a total repayment of about £300m.
The leader of Kent County Council – which had around £50m invested with some of the country’s banks including £18m with Heritable – said the pay-out could be even more if market conditions improved.
“They’re hoping to make their first payment towards the end of July and August, 70 to 80 pence in the pound they’re predicting,” Paul Carter told the BBC.
