Lancashire councils' funds frozen

At least 100 councils are known to have put money in Icelandic banks

Several Lancashire councils are among those whose funds were frozen after the collapse of Iceland's banking system.

Lancashire, Chorley, South Ribble, Burnley and Lancaster councils all invested in Icelandic banks.

The Lancashire councils said the money had been invested as a short-term measure and added that council services would not be affected by the crisis.

The total invested by local authorities across the UK has now risen to more than £760m.

Government ministers have now met council leaders and are promising "appropriate" help on a "case-by-case basis".

Prime Minister Gordon Brown said he was considering "further action", but the government is not offering to guarantee authorities' deposits with Icelandic banks.

Amounts invested Lancashire County Council - £10m Lancaster Council - £6m Chorley Borough Council - £2m South Ribble Borough Council - £5m Burnley Council - £1m

Lancashire County Councillor Tony Martin, cabinet member for resources and performance, said: "We have a £10m deposit with the Landsbanki bank which was due to be returned to us in December.

"While this is a large amount of money, it represents less than 2% of the total amount of the county council's current investments."

He added: "I would emphasise that the bank was very highly rated by independent rating agencies and that the county council only lends to those institutions with very high credit ratings."

Councillor Alan Cullens, Chorley's executive member for resources, said it invested "across many different financial institutions", an approach recommended by the government.

"I would reassure Chorley residents that we are doing everything possible to bring this issue to a positive conclusion during a very uncertain and unforeseen time," he said.