Cambridge City Council leader, Liberal Democrat, Sian Reid went on BBC Radio Cambridgeshire on Wednesday morning to talk about money which under her party’s leadership the city council had invested in Icelandic banks which have now gone bust. Cambridge City Council had invested £5 million with Landsbanki and £4 million with Heritable Bank Limited.
During her radio interview Cllr Reid said :
The Heritable loan; that should all be repaid by the end of 2012
and in response to a question asking “What about the £5m which is in Landsbanki how much of that will we get back?” she said:
we might expect up to 95% back … we would expect, to have settled it by something like 2013.
At Cambridge City Council’s Full Council meeting on the 22nd of July Cllr Reid came across as much less bullish about the prospect of getting such a large fraction of the lost money back. I think its wrong to give one impression to the public listening to breakfast radio and another to better informed councillors. Leader of the Labour opposition Lewis Herbert asked Cllr Reid an oral question:
What progress has been made, and what steps is she currently leading, to recover the £5m of the council’s money in Icelandic Bank Landsbanki, and also recover at least part of the £644,000 involved in the 2008 Folk Festival on-line tickets fiasco?
Cllr Reid responded to say that the council’s claim agianst Landsbanki was passing though Icelandic legal system and the court date date would be October 2010 at the earliest.
She said that the council was already receiving “dividends” from Heritable and had so far received £1.68m which amounted to 41.25 “pence in the pound”, she said she anticipated about twice that to be eventually returned.
Cllr Herbert suggested that the fact the council was getting money back from Heritable was due to the Labour chancellor Alistair Darling having used “any legislation possible” to keep the money in the UK protected.
He also commented that he thought it was over ambitious of leader to go on BBC Cambridgeshire and suggest that almost 100% of the money would come back.
Sian Reid brusquely replied: “I’ve not been on BBC Cambridgeshire saying we are going to get nearly 100% back”
Cllr Reid did not address the question of recovery of the Folk Festival funds.
Transcripts of Radio Exchanges
Below are some of the questions which Jeremy Sallis put to council leader Sian Reid, along with her replies. I think they strongly suggest that Cllr Reid is expecting almost all the money to be returned;
Jeremy Sallis: Ian Nimmo-Smith, the previous leader who you replaced, said he’d eat his hat if you didn’t get the money back. Has he got his salt and pepper out Sian? Are you confident you will get the majority of this money back?
Sian Reid: Yes, we’re very much on track with Heritable, we’ve got almost £1.7m back out of £4m and we’ve still got schedules, you know, payments – many payments to come and a schedule of payments running at about 5% of the loan running until September ’12, so I think we’re very confident of that yeah.
[If those were monthly payments of 5% then as there are more than twenty months between now and September 2012 we'd be getting all our money back.]
Jeremy Sallis: What about the £5m which is in Landsbanki how much of that will we get back?
Sian Reid: The receivership arrangements for that will go through the Icelandic courts and not the British courts and that action is due to start there in the autumn and finish in Spring 2011 so we won’t really know the solid outcome until then. We are on the one hand being advised by the government public finance body that we might expect up to 95% back but on the other hand we’re being advised that you know until things go through the courts there’s obviously uncertainty about that and it depends on if British local authorities, of which there are very many of us, are seen as a priority ahead of other creditors.
Jeremy Sallis: So we’re looking at getting 85% of the money back from both of these banks by what point Sian, by twenty-what?
Sian Reid: More! More! On the Heritable loan that should all be repaid by the end of 2012. On the Landsbanki one as I said the matter still has to go through the Icelandic courts, we are acting with many other local authorities and we’re being advised by the Local Government Association and the timing of that, it will be over, we would expect, to have settled it by something like 2013.
Jeremy Sallis: OK Sian thank you very much, that’s Sian Reid who is the leader of Cambridge City Council.
The Impression I Gained
I listened to the above exchanges on the radio on Wednesday morning and I got the impression that Sian Reid was saying that she thought the city council would eventually get all our money back from Iceland.
While Cllr Reid did say during her BBC Cambridgeshire interview that she was expecting 85% of the money back from Heritable and 95% from Landsbanki I thought the overall impression given, especially given her cries of “more! more!” when the prospect of an 85% return was put to her was that she was expecting essentially all of the money back. I felt she repeatedly implied this towards the end of the interview.
Denial of Responsibility
The Liberal Democrats never act as if they’re actually running the council; they take the approach that things just happen around them. They are reluctant to grasp the reigns of power, apparently thinking they’ll get themselves into less trouble that way. The Lib Dems really appear to believe they are not responsible for losing the city’s money in Iceland, as is shown by the following exchange:
Jeremy Sallis: Does the City Council, do you consider yourselves culpable in any way for getting council tax payer’s money tied up in Icelandic banks? Do you accept any responsibility for that? Do you consider it was your fault that money was invested over there?
Sian Reid: We followed the very best advice that was available at the time and in-line with very many other authorities and this question has been discussed very often in committees and in council. We’ve never been able to pinpoint a decision, any kind of decision which we think was a poor decision – on the contrary we’ve always followed the very best practice guidance.