Council fund to stave off losses
PUBLISHED: 10:40 02 April 2009 | UPDATED: 14:09 10 May 2010
AN emergency fund has been set up by Uttlesford District Council in case they are landed in the situation of losing all their Iceland cash. The financially fragile council is one of the few authorities to have more money invested in a collapsed Iceland
AN emergency fund has been set up by Uttlesford District Council in case they are landed in the situation of losing all their Iceland cash.
The financially fragile council is one of the few authorities to have more money invested in a collapsed Icelandic bank - £2.2 million - than it has left in its reserves.
Council boss John Mitchell warned councillors at a meeting of the finance and administration committee that with only £1 million left in the council's reserves "if we have to write the Iceland money off we won't have much to fall back on".
The financial year ends next week and councillors have agreed to put the predicted savings of £360,000 into a contingency fund in case the worst should happen.
So where have the savings been made? Almost £100,000 came in the form of a grant from the Government's business growth incentive scheme, a further £100,000 was saved in the departments at the Saffron Walden office and the remainder was made up from savings such as fuel costs.
Cllr Geoffrey Sell argued that some of the money from the savings should be used to support small businesses instead of being held in contingency. He said: "If we could provide a clinic with experts who could come up with advice to prevent a business going bankrupt, isn't that a good use of public money?"
But leader of the council, Jim Ketteridge, rejected the idea saying that the council had "very little room for manoeuvre".
The Audit Commission's report, published last Thursday, revealed that of the 451 English authorities with money invested in an Icelandic bank, only 18 have more money at risk than they have in their reserves.
Chief finance officer, Stephen Joyce, said: "There is no new information available to us on the prospects of recovering this money. It's for the Icelandic authorities to make the decision whether local councils have preferential creditor status - if we do then we should get some of the money back."
Mr Joyce also confirmed that the rest of the council's money is now only held in the seven banks that have access to the Government's guarantee scheme; this includes Lloyds TSB and Bank of Scotland which have been downgraded to below the council's usual requirement.