Leading Conservative Councils caught out in Icelandic bank crisis

Two leading Conservative-run councils have exposed council taxpayers to risk by investing money in Icelandic banks now being bailed out.

According to the Guardian, Westminster City Council and Kent County Council invested millions of pounds in banks now being bailed out. Kent has £50m in Landsbanki and its UK subsidiary Heritable, as well as Glitnir Bank, while Westminster has £17m in Icelandic accounts.

The Local Government Association, run by the Conservatives, has called on the government to step in.

But hand on a second, before taxpayers money goes to bail out more taxpayers money, shouldn't there be a full investigation of why assets were invested in this way?

I wonder, given that councils of similar outlooks often emulate each other's approaches or otherwise swap good tips, whether this is worthy of a more detailed look.

Obviously, if a move to protect state assets helps shore up the financial system the government needs to step in, like it has done to protect private savings. However, the LGA surely should also be investigating why some councils have taken out large positions in riskier banks.

While it is clear that the portfolio of local government investments must have suffered across the board, it seemed to be quite well known that the Icelandic banks in particular were risky earlier this year, as evidenced by this story in May.

Here are the councils with the highest risk, and their political control.

Kent county council (Con) £50m
Brent (Lib Dem - Con) approx £27m
Westminster (Con) £17m
West Sussex county council (Con) £12.9m
Havering £12.5m (Con)
Sutton £5.5m (Lib Dem)
Ipswich £2m (Lib Dem - Con)

Update: Further councils are listed on Conservative Home, again the vast majority are Tory ones.