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Page last updated at 06:34 GMT, Sunday, 21 June 2009 07:34 UK

Local councils recoup millions

Paul Barltrop
Paul Barltrop
The Politics Show
BBC West

Taxpayers' money frozen in Icelandic banks is on its way back. Councils should get most of their investments back... though it could take several years.

Glitnir Bank, Iceland
Glitnir and Landsbanki became notorious

Until they collapsed in October, names like Glitnir and Landsbanki were little known.

But they soon became notorious.

Frozen in their accounts was nearly a billion pounds of money from British local authorities.

Some feared it would never be seen again.

Across the West almost every area was affected: Bristol and North Somerset, Gloucestershire and five of the county's districts, Wiltshire, Somerset, and Dorset.

Chasing the cash

Leading the pursuit to get it back was the Local Government Association.

Wiltshire Council
Wiltshire Council was amongst those affected

Officials visited Iceland, talking to ministers, the banks and their administrators.

The result: British councils were made a priority as assets are sold off to repay creditors.

The proportion coming back will vary, but they expect it will average 90% - and could be more.

Richard Kemp
Richard Kemp: We could get back more

"All this money has been secured against assets, and assets are now rising, as we all know the stock markets are rising, so we could get back more," says LGA Vice-Chairman Richard Kemp.

"It's not inconceivable that we would get all the money back into local government."

New council, old debt

It is a big relief in Wiltshire - where a new unitary authority came into being in April 2009 with £12 million missing.

On present estimates they can expect to get nearly £10 million, with the money starting to arrive in July 2009.

Fleur de Rhe-Philipe
Cllr Fleur de Rhe-Philipe : sense of relief?

"The news has got steadily better," says Cllr Fleur de Rhe-Philipe.

"I won't believe it all until it's actually in the bank - another bank - but on the other hand I think we are now quite confident that we will get most of our money back."

Never again

All local authorities want to ensure such financial calamity never happens again.

Bristol City Council is among many which have introduced new rules for investing.

Mike Popham
Cllr Popham: We need to be very cautious

Money will only be put in banks with top ratings from three credit rating agencies. Overall it will lend less and borrow less.

"We just need to be safe with our money, be very, very cautious, and be careful who we listen to in relation to the advice we receive," says Cllr Mike Popham.

Councils will need patience: getting the money back could take three years.

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