The Scottish voluntary sector yesterday called for protection against the effects of the financial crisis after it was revealed that British charities had lost around £120m in Icelandic banks.
CHRIS WATT and CATHERINE FEGAN
The Scottish voluntary sector yesterday called for protection against the effects of the financial crisis after it was revealed that British charities had lost around £120m in Icelandic banks.
Umbrella body the Scottish Council for Voluntary Organisations (SCVO) said the UK Treasury and the Scottish Government must provide financial security or risk a wave of charity closures.
Lucy McTernan, chief executive of the SCVO, warned that voluntary organisations would be particularly important should a recession hit Scotland.
She said: "Charities are worried that their carefully garnered reserves may be under threat due to the global financial emergency.
"As we face a potential recession many Scots may have a new need for the services that charities deliver, whether debt advice, accommodation or care services. But without financial security, many voluntary organisations will be unable to meet new needs."
The SCVO has called for a meeting with the new Secretary of State for Scotland, Jim Murphy, and will be speaking with the Scottish Government and the Convention of Scottish Local Authorities (Cosla).
The full impact of the Icelandic banking collapse is expected to be revealed next week, with Scottish charities yesterday struggling to come to terms with the scale of the problem.
Cosla also met yesterday to discuss the financial crisis, and wrote to Chancellor of the Exchequer Alistair Darling to request equal involvement to English councils.
Pat Watters, Cosla's president, said: We are determined that Scottish local government will be represented equally at all discussions with the Treasury to seek a solution to the problems caused by the Icelandic banking crisis."
As talks continued, East Renfrewshire Council became the eighth in Scotland to announce losses due to the Icelandic banking collapse.
The authority said it had £1m invested in Heritable Bank, the London-based subsidiary of Landsbanki.
Council finance director Norie Williamson said: "That £1m investment is due to mature in early December. We are in touch with the administrators and hope in the longer term, once the banks' and the governments' positions clarify, that we will be able to recover this investment."
Strathclyde Fire and Rescue also revealed yesterday that it had a £3m investment in Heritable.
Earlier this week, seven Scots councils had announced details of money in troubled Icelandic financial institutions including Landsbanki, Heritable and Glitnir. The total loss is nearly £50m.
Meanwhile, Glasgow City Council said yesterday that it had pension funds tied up in a frozen Icelandic account.
A spokesperson for the council revealed that a £4m bond issued by Glitnir had been bought by asset managers acting on behalf on the council.
As the losses due to the crisis continued to mount, a campaign group accused local authorities of being "cavalier" with taxpayers' money.
Mark Wallace, leader of the Taxpayers' Alliance, said councils should have withdrawn deposits after financial advisers first predicted trouble with Iceland's banks.
He said: "I think a lot of local authorities are letting taxpayers down. When you look at councils like Brighton and Hove that took their money out a year ago, it seems that many others had a cavalier attitude with taxpayers' money."
A number of large financial houses issued warnings earlier this year, prompting many investors to remove their money from the Icelandic system.
Standard and Poor's downgraded their rating of one Icelandic bank, Glitnir, to BBB+ as early as April this year.
A spokesman said: "That rating meant it was one of the riskiest banks anywhere in western Europe. These figures were publicly available, and the councils could have accessed them online."
