Islington News: Andrew Cornwell | Icelandic Bank | Pensions

Publications by New Journal Enterprises

Home

Archive

Competition

Islington Tribune - by ROISIN GADELRAB
Published: 17 October 2008

Town Hall cash safe, but meltdown hits pensions

Plea for more power to move money to banks backed by state

FINANCE chief Andrew Cornwell has taken emergency measures to shore up the Town Hall coffers last week by pushing for officials to have more power to move cash to more secure banks.
Cllr Cornwell told a full council meeting last Thursday that Islington had not suffered any cash losses through the collapse of Icelandic banks. But the Lib Dem councillor has refused to give the Tribune a list of the banks where Islington’s cash is tied up.
He also admitted the council has suffered a “heavy fall in the value” of pensions – estimated to be in the region of 20 per cent – but has refused to disclose what this would represent in real terms.
About 16,000 past and present staff are members of the council’s pensions scheme.
At last week’s meeting, Cllr Cornwell won backing from members for his plea to raise the amount of money Town Hall treasurers can move without having to seek approval first.
He said: “These are exceptional circumstances and yesterday we saw something I never thought I would see in my lifetime – the nationalisation of this country’s leading banks.”
Islington was not one of the 100 councils with deposits in Icelandic-owned institutions, he said. Cllr Cornwell added: “Nor has the council suffered any cash loss as a result of financial institutions failing since the credit crunch began in August 2007.”
He said the council’s treasury team had been “taking a cautious approach” by spreading risks across institutions and placing deposits at the “highest rated banks”.
He added: “The problem in the past few weeks is that credit ratings have lost much of their meaning and it has become clear that no bank is too big not to come under pressure.”
A key part of Islington’s policy would be to concentrate deposits in banks covered by the UK government’s partial nationalisation scheme, he added.
“I hope all councillors will support giving the director of finance greater flexibility than the current policy allows so we put more funds into those backed by the state,” Cllr Cornwell said.
But Labour councillor Richard Greening cautioned against being too hasty in taking money out of banks. “It does seem there’s a danger in this,” he said. “What’s happened in the market is that everybody followed the same approach. We’ve a responsibility not to add to the problem.
“It does occur to me that property is perhaps a safer place to keep assets and that’s not something your administration seeks to maintain or support as you’ve nearly sold off all of it and there’s now the problem of putting all your eggs in one basket.
“There are lessons to be learned and actions to be taken.”

Comment on this article.
(You must supply your full name and email address for your comment to be published)

Name:

Email:

Comment: