Wirral Council will not have to scale back budgets after Icelandic banks crisis

Dec 3 2008 by Sue McCann, Birkenhead News

WIRRAL Council will not have to scale back budgets next year while it attempts to recover funds from collapsed Icelandic banks.

Treasury minister John Healey has said rules were being relaxed to enable local authorities hit by the Icelandic crisis to set spending on the basis they will recover the money. He warned it would have to be offset in future years if the cash was not retrieved.

Wirral was among more than 100 local authorities with investments in the collapsed banks totalling more than £850m.

Wirral Council had a £2m bond with the Icelandic-owned Heritable Bank and had invested a £7.5m on behalf of the Merseyside Pension Fund. Cheshire had £8.5m invested with Heritable Bank, a UK subsidiary whose parent bank Landsbanki has been put into administration.

Mr Healey made the announcement while confirming that English councils will receive a 4.2% funding increase for next year.

He conceded the settlement was “tight”, but remained “fair and affordable”.

But he accused councils of not doing enough to make their operations more efficient, and demanded another £3bn of savings over the next two years on top of the £1bn for this year.