MPs to probe Icelandic investments

Tuesday, 21 October 2008 10:32

Investments by local UK authorities are to be investigated by MPs following the freeze of many of their accounts in Iceland.

The local government committee inquiry will examine the existing arrangements for local authority's treasury management, particularly on their investment strategies and their effects on local authorities.

Potential changes in the framework of local government reserves will be looked into, as well as whether local authority money should be invested in low-risk, low-return government stock.

The role of the central government in terms of providing advice and guidance will be examined.

MPs are also expected to investigate whether Westminster should protect local authority's investments, raising fundamental questions over the relationship between central and local government.

UK local authorities have almost £1 billion invested in Iceland's main banks, all of which were nationalised earlier this month and their assets frozen.

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