Financial freeze

Little did we think that the current banking crisis would hit home as a result of decisions taken in Iceland. On face value, Ceredigion County Council has through no fault of its own had £5.4M frozen by the Icelandic Government. Now, my Plaid Cymru colleague Chris Franks has touched on the kind of questions that need to be asked,

When I was a councillor I met with local authority treasurers, my first question was always 'are you sure the money is invested in a safe haven rather than in accounts that paid the top interest rates'. I would hope members of local authorities in Wales would have asked similar questions.

Where Ceredigion and other authorities are concerned, answers to the following questions will have to be volunteered:-

• Were the appropriate rules followed when this money was invested?
• If the credit rating advisors persisted to provide a triple 'A' rating to dodgy banks then why should they be paid a consultancy fee when the taxpayers money is under threat?
• Were there any warnings received about the creditworthiness of Icelandic banks and when? Did the authority invest after such a warning?
• Is the invested money part of an earmarked reserve? If the answer is 'Yes' then which projects? In Ceredigion does this mean the new office building or the Penweddig PFI project?
• Is the invested money part of the general reserves?
• Is the invested money part of the daily cash flow needs of the authority? If its frozen then will the liquidity of the authority be affected and is there money available to pay bills and salaries this month?

The sooner we get the answers the better. In the meantime the Assembly should get its thinking cap on and persuade the UK Treasury to stump up the cash deficits which have been incurred. Local authority services are as important as a liquid banking system.