Local authority leaders have criticised the lack of consistency in a Treasury Select Committee report on losses incurred when Icelandic banks collapsed. The committee is recommending that charities should be compensated for their losses but said there was no need for assistance for councils.
The Committee report looked at three distinct sets of depositors, local authorities, charities and UK citizens and considered the case for the provision of Government assistance to each of these. The report says: “The Committee does not accept that there is a need to provide assistance to the local authorities. It does however recommend that, on this occasion only, all charities should be compensated for losses incurred as a consequence of the failures of the Icelandic banks.”
Explaining this decision it says local authorities are required to take their own decisions on the level of prudent, affordable capital investment and have a duty to the taxpayer. Some authorities, the report says, have shown themselves to be better than others in this regard. The report concludes it would seem perverse to reward those authorities who failed to protect their investment with more money from the taxpayer.
The Chairman of the Local Government Association, Margaret Eaton said the LGA, and the councils it was working with, expected to get back the lion’s share of the money lost by authorities and the Association was working to ensure council taxpayers would be top of the list for repayment.
”There must be a consistent and fair approach to compensation. If charities are to be compensated why should there be no relief whatsoever for the council taxpayer? Councils provide vital services to society’s most vulnerable people,” she said. Councillor Eaton said the events of last October were part of a bigger financial crisis that affected not just councils but other parts of the public sector as well as charities, businesses and individual savers.