Speaking in the Chamber of the House of Commons yesterday, Hemel MP Mike Penning called for a Government Minister to tell MPs how the Government will help local Councils make up the money they have lost.
Hertfordshire County Council has invested £17m in Landsbanki and Heritable Bank, £7m in Glitr and £4m in Kaupthing. Hertfordshire Police Authority also has £3m invested in Icelandic banks.
Calling for an immediate statement to the House, Mike Penning explained:
“This will cause a shortfall in cash flow as well as a shortfall in next year’s funding, because the interest was required to go forward.”
In reply Leader of the House, Harriett Harman, told MPs that there would be a debate on financial stability in the coming week.
Speaking afterwards, Mike Penning said:
“This is not good enough. The County Council invested the money in good faith – as indeed it is required by the Government to do. They invested our money with Government-approved institutions but, as ever, it is us – the taxpayers – who will lose out.
“Every day the Government delays the Council is losing money it would have earned in interest. This money is already spent so will have to be made up somehow.
“Because of the large number of local authorities involved and large sums of money involved, a Minister should have come to the House to tell MPs what they plan to do. My constituents are worried it is going to cost them more in council tax and I urge the Government to ensure that taxpayers are not left out of pocket.”
FULL TEXT:
Mike Penning (Hemel Hempstead) (Con): The people of Hertfordshire will be surprised by the Leader of the House’s decision not to call for a statement on local government finance problems due to banks crashing in Iceland. In Hertfordshire, £17 million is invested in those banks. That investment was made in good faith and at the Government’s request, because the assets were being held. That will cause a shortfall in cash flow as well as a shortfall in next year’s funding, because the interest was required to go forward. Can we have an immediate statement on how local government will survive in that situation?
Ms Harman: I have put next week’s business before the House. We arranged for this week a debate on financial stability, which will take place shortly. As well as having the opportunity to speak in that debate, Members will be able to ask the Minister questions during his speech.
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