Monmouthshire Hit for £1.2 million in Icelandic Bank Collapse | "Investment would have matured next week"

12.00.00am GMT Thu 9th Oct 2008

Monmouthshire County Council has been hit for £1.2 million after the collapse of Icelandic banks.

Following an urgent e-mail yesterday from Cllr. Phil Hobson, leader of the Liberal Democrats on Monmouthshire County Council, to Steve Greenslade, the Council's chief of finance, it has been confirmed that Monmouthshire has, for the moment, lost its investment.

In discussions between the two this morning it further emerged that the Council's money with the Icelandic Bank was a fixed term investment which was due to mature just next week.

"The Council couldn't have withdrawn its investment before it matures next week. We've been hit with just a week to go and this is a bit of a blow", said Cllr. Hobson.

Cllr. Hobson added that he also asked for a list of all the Council's investments and for all of them to be assessed for risk.

"This loss will not affect the Council's operations today or next week. However, it will no doubt impact on the Council's investments plans. £1.2 million makes a difference: for example it means the difference between a new primary school or not."

Speaking on latest episode of the financial crisis, local Assembly Member Michael German, leader of the Welsh Liberal Democrats, said: "With the combination of below inflation settlements that local councils are facing from the Labour-Plaid Assembly Government, there is an increasing risk which could become disastrous for Council Tax payers.

" I believe that Gordon Brown and his Chancellor, Alistair Darling, are going to have to rescue local Councils like Monmouthshire if the money is lost. The Government bailed out the banks, and rightly agreed to protect individual British savers. The precedent has been set and I don't see council tax payers being exposed to these kinds of losses."

Mr. German added that if local councils didn't get protection from their investments losses, " local people will face extreme rises in Council taxes just to stand still, at a time when many are struggling to make ends meet."

Monmouthshire County Council is due to meet in full session this afternoon (October 9th) and it is understood that Mr. Greenslade will make an emergency statement. Cllr. Hobson says he will want answers to his questions on the risk faced by the Council.