Iceland bank crisis could hit parks funding

Press Releasein Local Authority

Green space departments whose councils had invested money in stricken Icelandic banks could face a funding squeeze, parks experts have warned.

More than 100 councils across the UK had £800m of investments frozen last week when Icelandic banks Landsbanki and Glitnir collapsed. The UK government has refused to guarantee council cash lost and parks consultants fear both this and the bail-out of UK banks will lead to spending cuts for parks.

Parks consultant Alan Barber said: "I think the present financial situation will have a detrimental effect on local authorities anyway as the Government's huge payments to the banks will have to be paid for, in part, by public expenditure cuts. If the grant to local authorities gets cut, public parks, as usual, will be the first to suffer as they are a non-statutory service.

"Those local authorities which foolishly ignored the downgrading of shares by the ratings agencies and continued to invest in Icelandic banks probably deserve to suffer some penalty, but any loss of money will affect their balances so, again, cuts in parks budgets look likely. It is ironic that the ratings agencies are being criticised for not warning of the sub-prime problem early enough but they did warn about the Icelandic banks. I think it probable that some heads will roll."

Oldham council head of parks Steve Smith said Oldham had no money in Iceland but added: "My worry is that the Government may think it can only recoup the billions spent propping up financial markets by making drastic cuts in the public sector."

Parks consultant Sid Sullivan said councils may have invested money from any parks revenue programmes in Iceland to provide income for green spaces.

He said: "Parks are easy targets for cuts. We could pay a big price for an extra 0.75 per cent of interest from Icelandic banks. If the Government is going to protect City fat cats, is it going to protect parks in the same way when you think of the public health benefits they bring?" Sullivan added that council treasurers should be more transparent in how they invest.

A Local Government Association representative said it was too early to say how parks would be hit.

He said: "We called for the Government to guarantee deposits in the same way as it has guaranteed personal deposits but it has said it will look at it on a case-by-case basis."

Pressure group the TaxPayers' Alliance representative Mark Wallace said: "The important thing when councils are looking at their finances in the aftermath of the Icelandic fiasco is to cut wasteful spending on consultants and PR. That should go long before front-line services like parks.

"The Government is not going to guarantee councils' money in the same way as they are guaranteeing individual savers' money because councils had access to expert financial advice, which seems to have gone wrong. Councils spend an average of £1m a year on publicity and if you ask people what they want from councils, it's not spin, but front-line services."

English local authorities with money in Icelandic banks include Kent County Council, Nottingham City Council, Bolton City Council and the London boroughs of Barnet, Brent, Bromley, Haringey, Havering, Hillingdon, Newham, Sutton and Westminster.

Nottingham's head of parks Eddie Curry said: "Although we have £41.6m in Icelandic banks, we don't envisage that affecting service delivery or salaries."

Havering Council said there "was no indication our deposits will not be returned".

Source:- Horticulture Week

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