Cash-strapped councils still owed millions by Icelandic banks
Cash-strapped local authorities forced to switch off street lights and close libraries are still owed millions of pounds by Icelandic banks, despite a legal ruling that the money belongs to British taxpayers.
A third instalment has now been paid, but it still leaves millions of pounds of taxpayers’ money in the banking black hole in Reykjavik. And council chiefs have admitted it could be years before they get all of the money back.
This week’s repayment of just £25 million leaves councils, police authorities and fire brigades more than £300 million short, with some in the West owed seven-figure sums.
Meanwhile, councils are pressing ahead with widespread redundancies, recruitment freezes, spending cuts and service changes.
Earlier this year, councils banded together to successfully take the quartet of Icelandic banks to court on the island to press for the money to be returned.
Some £1.04 billion of council cash from British local authorities was kept in the banks, because they were offering the best rates of interest.
The latest instalment comes from Landsbanki, and included just £180,000 to Wiltshire Council, which had some £3 million deposited there in 2008, along with £8million with another bank. The Trowbridge-based council has now received little over half that original £3 million figure, but council leader Jane Scott said she is confident of getting the full sum back – eventually.
“I am very pleased the third payment from Landsbanki has been made to the council and brings our total repayments to more than £1.5 million,” said Mrs Scott.
“We will keep a close eye on the winding-up proceedings and will continue to update the public,” she added.
A council spokesman added: “Latest indications show the council will eventually receive 100 per cent of its outstanding deposit of £3 million. It is likely the recovery of all the assets and the winding-up proceedings will take a while and may not be concluded for a few more years.”
Most other West councils have received little over half their original deposits. Cheltenham Borough Council, for instance, confirmed yesterday it has only had 64 per cent of its original £11 million, which was deposited in three different Icelandic banks, and is still owed more than £4 million.
Somerset county council had £25 million deposited there, and still has more than £6 million to be paid back, while Gloucester City Council is still owed millions of the £12million it originally lost.
Sir Merrick Cockell, the chairman of the Local Government Association, said the trickle of payments still justified the councils taking legal action to recoup the money. “This is another vindication of our decision to fight on behalf of our members for priority creditor status,” he said.