Councils need advice on foreign cash - Williams (Clwyd West Liberal Democrats)

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Clwyd West Liberal Democrats <info@libdems.org.uk>

Councils need advice on foreign cash - Williams

October 16, 2008 12:00 AM
Originally published by Welsh Liberal Democrats

Speaking after revealing details of letters he will today send to all local authorities in Wales, Liberal Democrat Shadow Secretary of State for Wales Roger Williams MP has called for more Government advice on foreign investments and warnings on failing banks in light of the Icelandic crisis.

The Department for Communities and Local Government has this week announced that they are setting up a "rapid response unit" to help councils that face financial difficulties as a result of the banking crisis in Iceland.

The Treasury provides the Local Government Association with general advice that is circulated to local authorities in England and Wales.

Roger Williams has today written to the Chief Executives of all local authorities in Wales asking several key questions:

· How much money do they have deposited in foreign banks?

· What level of advice have they received on these investments from the UK Government and the Welsh Assembly Government?

· Do they employ consultants to advise them on investments? Did they set a minimum credit rating for banks to invest in, and who gave them advice on this?

· Do they have a policy on foreign investments, and were councillors involved in the decision-making process?

· Has the Wales Audit Office reviewed these deposits and what comments or advice did they give?

Roger Williams will also be writing to other institutions including universities and public bodies to ask them similar questions.

Commenting, Roger Williams said:

"The idea of councils trying to spread their risk is a sound one, but as has become apparent in the last week, there are dangers.

"Some councils did see the problems and moved their money accordingly, but we can't expect small authorities with limited budgets to be constantly scanning the Financial Times to find out what's going on in the markets.

"Local Government funding is the responsibility of the Assembly, so they have a role to play, but it is the Treasury that defines our relationships with the banking sector, so there is no excuse for them to abdicate responsibility completely.

"The Government should provide regular advice to councils on unsound investments, and if it becomes apparent that there is a forthcoming danger they should be prepared to provide advice to local authorities that want to recoup as much of the deposits as they can. On his letter to local authorities and other public bodies, Mr Williams added: "It is important that we know how widespread these issues are, and what actions public bodies are taking to reduce risks. "I am hoping that the information I get back will enable us to formulate a plan for what we can do to help local authorities.

"It is right that any body funded by public money should take responsibility for the security of its finances, but when serious and unforeseen financial circumstances occur we cannot just throw them to the wolves."