The worldwide banking crisis hit Ceredigion today with the county council announcing that it had £5.5m invested in the collapsed Icelandic banks. The is terrible news for Ceredigion residents, as it is for residents of all local authorities similarly affected.
Some will ask why Ceredigion had £5.5m in the bank in the first place, especially as it has had to make substantal budget cuts recently. Of course a cheap point is easy to make but the reality is that spending takes place over the whole year and the money has to be somewhere while its waiting to be spent. Councils have a duty to plan for emergencies so a fund needs to be kept aside at all times and if the money is there it makes sense to invest it and make interest. This means that in the end the council tax will go further. Cardis are well known for being careful with money and I don’t think that reputation has been tarnished. The Welsh Local Government Association say that the failed banks were given a good security rating as late as last week.
The real villain in all this is the irresponsible and unregulated international banking system. Close behind is its ever present friend, the New Labour government. There was no problem finding £50m to bail out the banks on Monday but help for local authorities has been refused. No problem in keeping champaigne flowing in the city but no cash for social services. Now I know that a banking system that works is beneficial to us all (to an extent) but the government has been quite willing to pump public money into banks who have behaved in a very irresponsible way. The shareholders, directors and top managers are all safe and underwritten by people working for the minimum wage. But when Ceredigion Council faces losing £5.5m, when they were only doing what the Treasury had told them to, help is out of the question.
Filed under: Posts in English | Tagged: Ceredigion County Council, Credit Crunch, Icelandic banks
