Vir Cantium

I'm right, you know …

Councillor’s Rant

So Gordon is going to give the Icelanders what-for. He’s going to sue them. Eh? Does anyone actually believe this rubbish?

There has been much gnashing and wailing in the last 24 hours over the amount of money deposited in Icelandic banks by public authorities and charities. The critics fall into two broad camps:

There are those who think Councils shouldn’t have been so stupid to put taxpayers money in dodgy offshore accounts and why are they holding so much cash anyway. Why don’t they spend it on schools’n’hospitals buses. Let’s call these people the “financially illiterate” – the sort of people who, if they won £1m on the lottery, would probably blow it all in six months, rather than invest it and enjoy the returns for the rest of their days. In any case, the Heritable was a top credited-rated British based bank (albeit owned by Landsbanki), so was hardly a dodgy offshore arrangement.

Then we have those who are opposed to any compensation on the back of the British taxpayer, whether it’s to retail depositors or anyone else. I can see their point as it happens, though I would have had no problems with a properly funded insurance scheme that doesn’t burden the public purse. However, to shift overnight the goalposts of the existing arrangements (however imperfect they are) hardly encourages those of us who have been careful and spread our risk – mindful of the £35,000/£50,000 guarantee limits, but whose taxes will now be bailing out the imprudent (such as the idiot woman on the radio the other night who had put her life savings of £190,000 into Icesave, and this a year on from Northern Rock – jeez!)

Given that the Treasury has now extended 100% cover for UK retail depositors of Icelandic based/owned banks, local government’s position is simply that sauce for the goose is sauce for the gander. The government argues that Councils are in a different positions, having received professional advice and acted as professional investors. That’s true, but given that councils do indeed work to professional advice and make use of credit ratings such as Fitch’s, they are by most measures being more prudent (despite my heated remarks of yesterday) than a good few retail depositors who will be compensated 100%.

Then again, has this government ever regarded local government as anything more than a dumping ground for the tough decisions that Gordon Brown and co have regularly bottled out of in the least eleven and a half years?


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