Icelandic meltdown for London's greediest councils
PUBLISHED: 11:14 16 October 2008 | UPDATED: 15:31 07 September 2010
WHETHER by accident or design, Camden Council has escaped the chill economic wind of Icelandic investments. Neighbouring councils including Barnet, Westminster and Haringey have had their fingers well and truly burnt. Naturally all the councils are playin
WHETHER by accident or design, Camden Council has escaped the chill economic wind of Icelandic investments. Neighbouring councils including Barnet, Westminster and Haringey have had their fingers well and truly burnt.
Naturally all the councils are playing down the losses but by implication, the statement issued by Camden is a damning indictment on those who yielded to unwise temptations.
Perhaps Camden's statement was meant to be critical of others. When council leader Keith Moffitt says: ''we invest our money based on advice from credible experts and within the framework of the agreed national financial code of practice for local authorities'' it poses the question as to what criteria other authorities have been working to, and the quality of financial advice they sought.
Most members of the public will be as mystified as they are alarmed by the actions of our errant financial bosses. Iceland is not exactly at the centre of the economic universe and an endless array of more secure investment options was available, even in these troubled times.
True, many private companies and many individuals have also lost money, but it was theirs to lose. Officers and members of local authorities must show prudence above all other things when investing public money. Instead a cavalier attitude seems to have prevailed, a gung-ho mentality that refused to believe, despite all the warning signs, that the prospect of recession was creeping ever closer.
And so it comes as something of a shock to learn that Haringey Council, as recently as September 29, was ploughing more new money into Icelandic banks, long after other councils had been warned off. Per head of population, Haringey's exposure remains one of the highest in the UK. Who will carry the can?
The shock to the system was so severe early this week that rumours spread of the council not being able to pay the wages of some employees. Haringey leader George Meehan was quick to scotch any such suggestions, but the proof of the pudding will come when the new budgets are assembled for the next financial year. What services will be cut, what schemes and proposals axed? Already the council's move to new premises has been iced, though people in the west of the borough will not complain.
Most importantly of all, what will be the effect on council tax levels and services? Will residents be expected to foot much higher bills while services decline?
Barnet and Westminster Councils are probably wealthy enough to ride the storm, but the same isn't true of Haringey, which includes swathes of deprived areas in which continual investment is required. It is those areas which are likely to suffer most.