Councillors condemn handling of Icelandic banks 'fiasco' (From Times Series)

Councillors condemn handling of Icelandic banks 'fiasco' as Barnet Council prepares for upto £18 million losses

1:22pm Monday 22nd February 2010 in Top Stories By Kevin Bradford

OPPOSITION party leaders have warned of a “catastrophic” impact if millions are lost in the failed Icelandic banks.

Figures due to go before Barnet Council's cabinet tonight suggest between £10.4 million and £18 million could be lost of the £27.4 million deposited in Landsbanki and Glitnir banks.

Councillors have said Tory bosses face “a day of reckoning” over the “fiasco” as the initial losses estimated at about £4.3 million continue to snowball after the authority was refused priority status by the winding-up board of Glitnir Bank.

Jack Cohen, leader of Barnet Liberal Democrat group, said any losses could have real implications on wider council services because of “poor decision making and a lack of control”.

He said: “It has become a complete fiasco. We would have had a lot more respect if the Conservatives had been honest from the beginning and taken action to deal with it.

“They have buried their head in the sand over this for far too long. They seem to want to blame everyone else but themselves.

“The day of reckoning is coming for the elected councillors to take responsibility.

“Services are going to be cut to the bone, and those services we take for granted will be put at risk because it is an awful lot of money we have to find.”

The council report says the money “will have to be found from reserves and balances” and Council leader, Councillor Lynne Hillan, claimed it would only be “prudent” to look at the “worst case scenario” while still working to get the money back.

But leader of Barnet Labour Group, Councillor Alison Moore said: “It is quite clear that local residents will be paying for the Tories’ Icelandic deposits fiasco for many years to come.

“The impact on local services of losing as much as £18m could be catastrophic.”

A legal challenge has been started by the Local Government Association on behalf of councils to secure them priority status and Cllr Hillan said they remained “very confident” of getting most of the money back.