Thursday, 9 October 2008

Councils lose £0.5billion in Iceland terror attack?

How much has been lost by UK local authorities who invested their cash in Icelandic banks? And where do the Anti Terror laws come in?

The Conservatives say their own research has identified at least one London council that had banked £40m, one in the South East which had a £30m deposit and others with £20m or £25m.

Meanwhile, London public authorities are thought to face a total exposure of around £200m, according the umbrella organisation London Councils – with Brent (£27M), Westminster (£17M) and Havering (£12.5M) leading the queue of Icelandic creditors in the capital (along with TfL - £40M and the Met Police - £30M).

Meanwhile, county councils like Kent (£50M) and Herts (£17M) have also lost significant sums. There is a deafening silence from most Mets, Unitaries and Districts. Whilst district councils have lost less, there are a lot more of them, and their potential losses are estimated at around £150M, with Mets and Unitaries also losing c £150M.

Like bankers, many authorities have been reluctant to reveal the size of their problems publicly (congratulations to those that have been totally open), but extrapolating from the information available at the moment, it seems highly likely that the total losses will exceed £500M.

Incidentally, it’s surprising to me that the Government has used the Anti terror laws to deal with the Landsbanki Bank problem. The wording of the new Statutory Instrument (2008 No. 2668), laid before parliament at 8th October 08, called the The Landsbanki Freezing Order 2008, starts with:

The Treasury believe that action to the detriment of the United Kingdom’s economy (or part of it) has been or is likely to be taken by certain persons who are the government of or resident of a country or territory outside the United Kingdom.

The Treasury, in exercise of the powers conferred by sections 4 and 14 of and Schedule 3 to the Anti-terrorism, Crime and Security Act 2001(a), make the following Order:

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