The powerful Commons Treasury Committee says all charities should be compensated for their losses as a one-off measure and has called for new guidelines to govern their investments.But MPs said that it would be "perverse to reward" council authorities who also lost money in the collapse.Estimates suggest local authorities had £953m deposited with Icelandic banks when the crisis broke. The committee said that some councils had managed the risks better than others.They said: "Local authorities are required to take their own decisions on the level of prudent, affordable capital investment. They have a duty to the taxpayer diligently to protect the money they are investing on their behalf. Under these circumstances it would seem perverse to reward those authorities who failed to protect their investment with yet more money from the taxpayer."The Local Government Association (LGA) criticised the report, saying it was inconsistent to bail out charities but not councils. Margaret Eaton, the chairwoman of the LGA, said: "There must be a consistent and fair approach to compensation. If charities are to be compensated why should there be no relief whatsoever for the council taxpayer? Councils provide vital services to society's most vulnerable people.
The powerful Commons Treasury Committee says all charities should be compensated for their losses as a one-off measure and has called for new guidelines to govern their investments.
But MPs said that it would be "perverse to reward" council authorities who also lost money in the collapse.
Estimates suggest local authorities had £953m deposited with Icelandic banks when the crisis broke. The committee said that some councils had managed the risks better than others.
They said: "Local authorities are required to take their own decisions on the level of prudent, affordable capital investment. They have a duty to the taxpayer diligently to protect the money they are investing on their behalf. Under these circumstances it would seem perverse to reward those authorities who failed to protect their investment with yet more money from the taxpayer."
The Local Government Association (LGA) criticised the report, saying it was inconsistent to bail out charities but not councils. Margaret Eaton, the chairwoman of the LGA, said: "There must be a consistent and fair approach to compensation. If charities are to be compensated why should there be no relief whatsoever for the council taxpayer? Councils provide vital services to society's most vulnerable people.
And if someinstitutions held funds destined for vital public needs, then the way they manage that money should be much more closely regulated, even if all they did was buy the AAA tranches of CDOs. In the long run, we're all dead. John Maynard Keynes
