Chief executive explains cash

PUBLISHED: 11:56 05 November 2008 | UPDATED: 21:37 31 May 2010

Council offices in Saffron Walden

Council offices in Saffron Walden

CHIEF executive of Uttlesford District Council (UDC), John Mitchell, has defended the authority s decision to invest money in an Icelandic bank. Following a visit from financial experts sent by the Local Government Association, it was determined that the

CHIEF executive of Uttlesford District Council (UDC), John Mitchell, has defended the authority's decision to invest money in an Icelandic bank.

Following a visit from financial experts sent by the Local Government Association, it was determined that the council acted "strictly in accordance with government and treasury management rules," said Mr Mitchell.

UDC has £2.2million invested in Icelandic bank Landsbanki, which it is currently unable to get back.

Mr Mitchell said that he was concerend that some of the letters published in the last few weeks did not demonstarte a full understanding of the council's financial position.

"This £2.2 million is not extra money available to the council. It does not mean that our financial position last year was anything other than what was reported to members at the time," he said.

"With any organisation that turns over millions of pounds it is inevitable that temporary surpluses of cash arise. In addition, the council receives monies from central government in advance of the need to spend and the money has to be placed on deposit until it is required. The council's investments are organised in such a way that fixed term deposits mature throughout the year, ensuring there is a constant cash flow.

"To put it in domestic terms, if you are paid on the first of the month and your mortgage goes out on the 15th, that money will be earning interest in your account for two weeks - but it does not mean that you have more money than you need.

"The council's financial position last year was extremely serious. Every action taken, including the redundancies we were forced to make, was necessary to stabilise the council's finances.

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