Councils seek help as banks fail

The position of savers is unclear

Local authorities across the South West are calling on the government to guarantee their investments in failed Icelandic financial institutions.

Plymouth Council has revealed it has £13m in three Icelandic finance houses. The council says it is very concerned over what might happen to its money.

Exeter City Council says it has £5m tied up in two Icelandic banks.

Cornwall County Council has £5m invested in the failed Icelandic bank Landsbanki.

South Hams Council in South Devon has £1.25m held by a UK-registered arm of an Icelandic bank.

Finance managers at the councils are waiting to find out whether the cash will be guaranteed by the UK Government.

When we get money in... we try to make the most of it Brian Higman, Cornwall County Council

Brian Higman, executive member for corporate support on Cornwall Council, said investing the funds it held across the financial markets was a prudent thing to do.

He said: "When we get money in, whether it's from council tax or grants, rather than leave it doing nothing, we try to make the most of it.

"That money is invested across a spread of many investments.

"If we had invested everything in Landsbanki, just imagine the position we would be in."

Councillor Ian Bowyer, Budget Cabinet Member on Plymouth Council, said: "The council is now a creditor of these banks and we are actively trying to determine the likelihood of not being able to recover all the investment.

"It is too early to say what impact this might have and what support packages may be offered by either the Icelandic or UK governments.

" Plymouth City Council is in a similar position to many other local authorities and we are joining the Local Government Association in seeking assurances from the government that councils will be protected from this unprecedented financial problem."