Borough bosses look to plug gap

TOWN chiefs face the prospect of plugging a £175,000 funding gap unless £5million invested in Icelandic banks is secured by next April, it emerged today.

TOWN chiefs face the prospect of plugging a £175,000 funding gap unless £5million invested in Icelandic banks is secured by next April, it emerged today.

As revealed by The Evening Star last week, cash invested by Ipswich Borough Council with Icelandic bank Landsbanki is at risk after the institution faltered amid the global financial crisis.

The £5million of council cash invested in Iceland makes up around 12 per cent of the council's entire investment portfolio of around £40million.

Interest from the at-risk savings, which totals between £150,000 and £175,000, goes towards the annual cost of running the council.

Council leader Liz Harsant said there could be “an impact” on the council if the cash is not secured by the time it comes to finalising next year's budget.

She said: “Let's hope it won't come to that. In my heart of hearts I think it will sort itself out but it is a concern.”

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Mrs Harsant added that work continues to ensure the money is safe.

“We are still talking with the Icelandic government,” she said.

“As far as we are concerned we are working very hard with the Local Government Association (LGA) to make sure that our voice is heard.”

This week local authority officials have met ministers to discuss help for the 116 English and Welsh councils with money in troubled Icelandic banks.

The country's attractive interest rates had lured many customers from overseas, but last week its biggest banks had to be nationalised.