Rochdale Council's wise decision on investment

Rochdale Council confirmed today (Thursday 9 October) that they have not invested any taxpayer's money in Icelandic banks.

Local authorties up and down the country have been thrown into financial difficulty following the crash of banks in Iceland.

Councils leaders have called upon the Treasury to bail them out and, although the credit crunch is sure to have some effect on Rochdale Council at some stage, a spokesperson today confirmed that the Council had not invested any money in Icelandic banks.

Current estimates suggest that at least 45 councils had deposits in the affected banks. Bolton Council is thought to be the only council affected in the North West.

Until the Chancellor makes a decision on guaranteeing local government deposits, the Local Government Association is calling for councils to be allowed to defer making business rate payments to central Government, if they need to borrow because they cannot access funds placed in banks that go bankrupt.

Councillor Margaret Eaton, Chairman of the LGA, said: “Councils are not experiencing immediate cash flow problems at the moment, but allowing a certain breathing space for a small number councils that could be affected is necessary and needed.

“These would be temporary, short term measures until the Chancellor can reassure councils that their deposits are protected in the same way as personal assets. Allowing councils to keep money collected from business rates would help to raise millions of pounds to help plug any short term cash flow problems.

”Prudent financial management means that councils put their money into a diverse range of banks to make sure that any risk is spread to minimise the impact of problems in the financial markets. Town halls invested in Landsbanki as a reputable bank with a solid credit rating.”