BRACKNELL CAUGHT NAPPING BY ICELAND BANK CRASH

11.25.38pm BST (GMT +0100) Tue 14th Oct 2008

Council leader plays down significance of £5m loss to taxpayers

Bracknell Forest chief executive, Tim Wheadon, confirmed earlier this week that Bracknell Forest Council was also a victim of the collapse of two Icelandic banks to the tune of £5m. The collapse was directly linked to the effects of the present global 'credit crunch' and the council was working with the Local Government Association to find out how much of this loss would be underwritten by the government.

Despite the assurances offered by the chief executive that the necessary checks had been made and the appropriate financial procedures followed in making the investment, it is far from clear that the arrangements for monitoring the investment were adequate. It had been widely recognised for some time that the banks in question were in financial difficulty and yet no action appears to have been taken by the council to minimise the growing risk to its finances.

While there may be no immediate impact on council services, according to Tim Wheadon, the longer term threat to services remains unclear, especially if the government is unable or unwilling to resolve the situation to the council's satisfaction. A shortfall of £5m could clearly have implications for future services and make it almost impossible to produce a balanced budget next year without either cutting services or imposing another inflation busting increase in council tax.

Commenting on the council's precarious predicament, Lib Dem Parliamentary Spokesperson, Ray Earwicker, said '£5m represented three years' council tax increases. If Cllr Bettison and the Council could afford to take such a relaxed view of the loss they should not have felt it necessary to impose the increases in the first place. He was extremely surprised that steps had not been taken to eliminate the risk and transfer such a large sum elsewhere. If the Government was unable to retrieve the situation there was very little prospect of ever being able to implement the proposed Tory council tax freeze in Bracknell but then, according to Cllr Bettison, this was a dead duck anyway.'