Joint Statement by Government and the Local Government Association

Published	9 October 2008

Statement issued jointly by Government and the LGA following their meeting to discuss councils' investments in Icelandic banks.

We had a very productive meeting and we agreed to stay in close touch, meeting again next week. Government and the LGA agreed that there is no evidence of recklessness by local authorities. They also agreed the financial framework for local authorities, which requires them to strike an appropriate balance between security of investments and returns, appears to have been adhered to.

Many authorities have already publicly stated that any risk is not a threat to frontline services but a small number of authorities may have specific problems.

We agreed once the LGA completed its analysis of the effects of the situation on individual local authorities, we will look at issues arising on a case by case basis. For those local authorities who are facing severe short term difficulties Government and the LGA will agree an appropriate set of ways to assist. We will judge what's appropriate on a case by case basis but in previous situations support has included helping local authorities restructure their financial priorities, providing additional expertise and capitalisation of expenditure.

The Government and international partners have already acted to support stability of the banking system. Action has also been taken in relation to the position of Icelandic banks - including freezing assets of Landsbanki. Local authorities, along with all other investors, will benefit. The LGA will be seeking to open discussions with administrators of the UK subsidiaries. The LGA and Government encourages all councils to continue operating investments in accordance with the guidance.

LGA and Government will continue to monitor the situation closely.