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Local Government: Bank Services

Volume 480: debated on Friday 17 October 2008

To ask the Secretary of State for Communities and Local Government on what date (a) her Department and (b) the Audit Commission was first informed of the financial vulnerability of Icelandic banking institutions. (228198)

Neither my Department nor the Audit Commission monitors the performance or creditworthiness of any investment institution on behalf of local government; that is a matter for the local authorities concerned, as the Department’s investment guidance, published in 2004, makes very clear.

To ask the Secretary of State for Communities and Local Government what the financial exposure of each (a) local authorities and (b) fire authorities to the Icelandic banking crisis is, expressed in cash terms. (228227)

We have been working closely with the Local Government Association (LGA) to assess the position of local authorities that have deposits in Icelandic banks, and to ensure that any authority facing serious short-term difficulty is offered support and expertise from experts drawn from local government itself.

The LGA has been compiling the information supplied by individual local authorities. It has published on its website a list of authorities that have assets in Icelandic Banks, together with the amount, at

To ask the Secretary of State for Communities and Local Government what assessment she has made of the financial exposure of (a) local authority private finance initiative schemes and (b) housing associations to the Icelandic banking crisis. (228229)

The positions of contractors and senior lenders under standardised PFI contracts are structured so that, if difficulties occur, changes can be made to the parties, within defined limits. No central assessment of particular funders has been carried out. However, if a local authority were to approach this Department with concerns about a project we sponsor, we would provide advice and support as appropriate.

There are around 2,000 housing associations in England—many of which are organisations of significant financial size who will, as a matter of course, keep monies on deposit. We are currently working to establish the extent to which associations are exposed and will continue to monitor the position closely. Housing Associations have a statutory duty to inform their regulator the Housing Corporation if they face any significant difficulties.