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Prescott ‘told councils to invest for high interest’
Paul Waugh, Deputy Political Editor10.10.08
Tory councils are blaming John Prescott for encouraging them to invest in Icelandic banks with high rates of interest.
Official guidance sent out by the office of the then deputy prime minister in 2004 stated that councils should “seek the highest rate of return”.
Local Government minister John Healey today dismissed the claim, saying that the full advice made plain that town halls should only choose investments that were “consistent with proper levels of security and liquidity”.
The advice also stressed that “priority” should be given to how safe the money would be and how easily it could be withdrawn.
Mr Healey pointed out that the advice had been to spread risk by investing in several different banks. An official list of approved banks had been withdrawn in 2003 so there was no question of Whitehall endorsement of specific Icelandic banks, he added.
But Tory shadow minister Eric Pickles demanded new guidelines and that the “advice must be re-written immediately”.
A Local Government Association spokesman said: “Councils have followed advice to the letter to spread risk and place deposits in banks with a decent credit rating and interest rate.”
Reader views (5)
So again Labour is not practising what it preaches, thought they were against offshore investment!
This crisis is bringing some very interesting facts out of the woodwork that even the IC under the Data Protection Act would have had difficulty getting at.
- Tony Islander, Herts
I wondered how long it would be before the Tories blamed someone in the government for their own ineptitude. I worked in local government until my retirement and know for a fact that the guidelines do not suggest investing in Icelandic banks per se. What they do say is that investments should be spread between banks to reduce risk. The first priority is the safety of the funds and the ease of withdrawal. I have a vested interest here; my pension is paid by Kent County Council.
- Val Daniels, Mijas Costa. Spain
Labour sure keeps shooting itself in the foot. Thought they (Labour) were against off-shore investment.
There is no doubt that THIS crisis has all sorts of things coming out of the woodwork, some of which would have taken considerable effort by the Information Commissioner under the Data Protection Act to gather!
- Tony Islander, Herts
Prescott isn't that smart.
- Phil, USA
Since when did anyone listen to what Prescott said? If they took his advice, good luck to them.
- Nobby Clark, Perth, Scotland
