Protect services, say politicians

Landsbanki owned the internet bank Icesave, with 300,000 UK customers

Frontline services must be safeguarded say politicians after it emerged both of mid Wales' local councils have money tied up in Icelandic banks.

Powys council has invested £4m and Ceredigion £5.5m at Landsbanki and Glitnir, which are in receivership.

Brecon and Radnorshire AM Kirsty Williams and MP Roger Williams have called for talks with Powys Council.

Both Powys and Ceredigion councils said the current situation did not effect the delivery of services.

More than £56m of public money from Welsh councils and police authorities is tied up in investments with the Icelandic banks.

Powys and Ceredigion are two of seven councils in Wales affected by the crisis.

'Financial crisis'

Kirsty Williams said: "We still do not know what the ramifications will be and whilst it may only be a comparatively small part of the council's overall budget, I am concerned that it must not mean the threat of cuts to frontline services or the raising of council tax."

Roger Williams said he had written to Chancellor Alistair Darling.

He added: "If the government do not support local authorities affected by this it will have a serious effect on the level of council tax or will mean a serious cut in the level of local services."

Meanwhile, Ceredigion MP Mark Williams urged the Chancellor to move quickly to ease the concerns of local authorities.

He said: "It is crucial that whatever happens, core council services must not be hit by the financial crisis."

Mr Darling has said he will ensure all UK savers with accounts with the closed internet bank Icesave will get all of their money back.

But the position with corporate investors, such as councils, is less clear.