CONCERN OVER COUNCIL'S NEW INVESTMENT STRATEGY

October 22, 2008 4:30 PM

Today's cabinet meeting revealed a new investment strategy following the financial mess left by £12million of council deposits in Iceland's failing banks.

The county council has decided to double the investment limit from £15million to £30million on investments of Gloucestershire taxpayers cash in the so-called "money market funds".

The council is relying on credit agency advice to rate the safety of these new multi-million pound deposits of Gloucestershire taxpayers cash. Previous credit agency advice was used by the Conservative council administration and has left the council working round-the-clock to prevent a loss of £12million of local taxpayers money.

Councillor Jeremy Hilton, Liberal Democrat leader said: "Suddenly announcing this new investment stategy for millions of local taxpayers money is really worrying. Large amounts of cash is sitting in council bank accounts and now the cabinet is going to rely on more credit agency advice to tell them where to put the money. If you've had your fingers burnt by bad advice from a financial advisor most people would think twice before relying on them again. We need an immediate cross-party internal inquiry into what went wrong with previous investments. To stop the council making knee-jerk decisions and get their new investments onto a sound basis can only be achieved by a cross-party investigation."

The Liberal Democrat group has written to the Chairperson of the County Council's Overview & Scrutiny Committee asking for an immediate inquiry and review of the council plans for a new investment strategy.

The Labour Government has confirmed in a statement by John Healey MP, minister for local government, they will not be guaranteeing council deposits in Icelandic banks as they have for retail depositors.