Council's Iceland cash tax pledge

Northumberland County Council has reassured taxpayers services will not be hit after it emerged it has £23m invested in failed Icelandic banks.

The cash was placed with Landsbanki Islands, Glitner and Kaupthing, Singer and Friedlander banks and UK subsidiary Heritable Bank.

The council is one of several organisations in the region with funds in the collapsed banks.

It has pledged there will be no hike in council tax or cuts to services.

I can reassure residents that the situation with Icelandic banks will not cause either an increase in council tax or service reductions Steve Stewart, Northumberland council chief executive

The UK government has so far refused to guarantee local authorities' deposits with Icelandic banks.

Council chief executive Steve Stewart said: "It is early days and there remains much uncertainty over the individual financial position of each bank, so we just can't speculate on what the precise financial impact will arise from this developing situation.

"However, I can reassure residents that the situation with Icelandic banks will not cause either an increase in council tax or service reductions.

"The county council can and will continue to operate normally.

"We are now adjusting our financial forecasting to reflect the potential loss. This will still leave us with surplus cash to invest, and operate as usual."

Elsewhere in the region, Gateshead Council has £4.5m and Northumbria Police Authority £3.5m in Heritable Bank.

Redcar and Cleveland Council has £6m in two banks and Derwentside Council £7m invested in three Icelandic banks.