Has Breckland Council been taking spectacular risks with their funds in Icelandic banks ?

Yes, a lot of councils have had money invested quite sensibly in Icelandic banks and appear to have been caught out. No one can particularly blame them for that. However, I was astonished to see that Breckland Council, a small Norfolk District Council whose total expenditure is £19 million (according to their own figures), has had £12 million invested (and possibly lost) in Icelandic banks.

My initial thoughts were that there are other councils who have lost more, but as a percentage of their total spend, is there another council who has lost more than 60% of their annual expenditure ?

The other question is why have Breckland got so much of their money in one bank ? Are they not supposed to spread the money around in order to spread the risk ? I note that the EDP states that Breckland has total cash reserves of £40 million pounds, so £12m represents more than 25% of total reserves.


Joe Otten said...

Hmm, I would have thought putting it all on a horse would be a spectacular risk, and keeping it in a bank would be pretty safe by comparison.

Anonymous said...

What I fail to understand is why any council needs cash reserves that are equivalent to over 2 years of their expenditure.

These are not businesses who are trying to build up reserves on their balance sheets, they are governmental organisations who collect our local taxes to provide local services.

David Allen said...

I see the beeb website is giving star billing to your testimonial to Robert Peston--kudos! (can't paste a screenshot here, but get over to http://www.bbc.co.uk/blogs/thereporters/robertpeston/

Norfolk Blogger said...

A ggod point about their reserves.

And it is even more interesting to note that they also receive a very generous grant settlement from central government too. We estimated, when I was on North Norfolk Council, that if North Norfolk received the same per capita amount as Breckland does we could have cut council tax by 32%, and they have no coastline to defend !