Icelandic investment hits taxpayers

IPSWICH taxpayers will lose more than �200,000 in interest as a result of the borough's investments in the collapsed Icelandic banking system.

IPSWICH taxpayers will lose more than �200,000 in interest as a result of the borough's investments in the collapsed Icelandic banking system.

Although Ipswich expects to recoup 92 per cent of its �5m deposit, the loss in interest means the council will be �608,000 worse off.

This is comprised of �400,000 which is 8pc of the combined �1million invested with Heritable Bank and �4m with Lansbanki and �208,000 in lost interest.

A report to this week's borough audit committee from head of finance Ian Blofield said the failure of the Icelandic banks “was unprecedented in recent times and was, in the main, the failure of the credit ratings agencies to recognise the potential problems.

The report said: “The council made all its investments when the credit ratings were high and met the council's criteria.”

Although councils of all political parties across Great Britain had invested in Iceland, the borough's Labour group is unimpressed at the losses being incurred by Ipswich council taxpayers.

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Labour Leader David Ellesmere said: “�600,000 is a staggering amount of money for the council to lose.”

He said the Tory-Liberal Democrat administration should apologise to Ipswich residents “for wasting such a huge amount of their money.”

Mr Ellesmere added that the interest lost could have been used to keep Ipswich Buses fares down or freeze council tax for two years.

The borough's exposure to the Icelandic banking collapse is small by comparison with other local authorities. Tory controlled Kent county council had �48.9million on deposit, Labour controlled Nottingham city council had �41.4m, Labour run Haringey in London had �37m, and Tory run Dorset county council has �28.1m.

n. Are you concerned by the loss of money? Write to Your Letters, Evening Star, 30 Lower Brook Street, Ipswich, IP4 1AN or email eveningstarletters@eveningstar.co.uk or have your say at www.eveningstar.co.uk

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