New rapid response unit ready to deploy team of finance experts to councils

Published	14 October 2008

A new joint rapid response unit has been set up and is in operation, ready to deploy finance experts to local authorities who need assistance following the failures of Icelandic banks.

The unit, announced by Communities Secretary Hazel Blears today, has been established by Government, the Local Government Association (LGA) and the Improvement and Development Agency, to provide sector-led support to local authorities facing severe short-term difficulties. It has a team of experts in local authority financial management in place and ready to go immediately to any authorities who need that assistance.

The Government and the LGA will agree an appropriate set of ways to assist authorities in that position and have agreed that we will look at the issues facing each authority on a case-by-case basis.

These steps come as part of a wider action plan of support to English councils experiencing serious short-term difficulties and to protect the public services they deliver and the communities they serve.

In a written statement, Hazel Blears also said that many local authorities had already publicly stated that any risk they face was not a threat to frontline services. However, a small number of authorities may have specific problems which is why the government was putting in place this support and expertise.

She added that no local authority had told the LGA that it cannot pay the wages of its staff.

Communities Secretary Hazel Blears said:

"The Government's first priority has been to do everything we can to help local authorities, along with other creditors, get back the money which they had deposited in the banks.

"My Department has been working closely with the Local Government Association to ensure that individual authorities who are experiencing severe short term difficulty get assistance to help them through this period. The new rapid response team is up and running, with a team of finance experts ready to go immediately to any authorities who need assistance.

"We are taking this action to protect council taxpayers, communities and those public services on which the most vulnerable people in our society depend."

The LGA is finalising an urgent analysis of the effects of the situation on individual local authorities. Local Government Minister, John Healey and Treasury colleagues will be meeting again with the LGA later on this week to see what further action is needed.

Notes to editors

1. Communities Secretary Hazel Blears gave her Written Ministerial Statement to Parliament today on the impact on council finances of Icelandic bank failures.

2. Last week, Chancellor Alistair Darling froze the UK assets of Landsbanki to ensure that local authorities and other creditors are treated fairly, and an HM Treasury delegation was sent to Iceland on Friday to discuss ways in which deposits could be protected.

3. In relation to the banks in administration in the UK - Kaupthing, Singer & Friedlander and Heritable - the Government is working to ensure that deposits are recovered as quickly as possible; and the Local Government Association has opened discussions with the administrators, Ernst and Young.