Assurances sought over Iceland cash

Local authority leaders are to meet the Icelandic ambassador in a bid to win assurances that millions of pounds invested by British councils in collapsed banks in Iceland will be repaid.

The Local Government Association said it will demand that taxpayers money which it insisted had been invested "prudently" by local councils should be at the top of the pile when repayments are made.

The group, which represents councils across England and Wales, said if it fails to win assurances from the ambassador it will take its case directly to the Icelandic Government in Reykjavik.

More than 100 local authorities have invested hundreds of millions of pounds in Icelandic banks and some authorities could face big financial problems as a result of the collapse of the Icelandic institutions.

The LGA has already met with the British government and won a promise that authorities facing severe short term difficulties would receive assistance.

The LGA is expected to hold more talks with the government next week and has insisted that authorities have not been "reckless" by investing in the Icelandic banks.

The LGA said an estimated 108 councils had deposited almost £800 million in Icelandic banks.

A number of other public sector organisations, including Transport for London have also invested millions of pounds in Icelandic financial institutions.

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