With reference to last week’s front-page article (Council could face £2.9M loss), it would appear council taxpayers who provided the cash for the catastrophic gamble in Iceland’s unstable banks are now being fed half-truths as to how Scottish Borders Council intends to balance the books in the wake of such reckless folly.
The impression was given in May via a glib press release that suitable arrangements had been made by SBC to borrow £1.021million (courtesy of the ultra-helpful Scottish Government), then pay it back from five successive revenue budgets.
But it now transpires the £215,000-per-year repayments will come from the council’s Loans Fund, even though there is no provision in that fund for the Icelandic losses. No mention of that in the press release. Does this represent sound financial management by supposed guardians of the public purse, or even by someone in control of the smallest domestic budget?
SBC was also careful not to mention in its public statement that its losses could treble should a forthcoming court judgement in Iceland prove to be unfavourable to those naive UK local authorities who fell hook, line and sinker for Iceland’s bloated and unsustainable interest rates.
Nor did the council tell us that it had been “invited” in March to apply for consent to borrow another £2.9million just in case there is to be more bad news from the land of ice and volcanic ash. It would appear finance secretary John Swinney’s largesse knows no bounds.
Needless to say the invitation has been eagerly accepted, allowing the council to abdicate responsibility for a financial disaster of its own making. Why was all of this information considered in private?
When the full extent of this sorry saga first came to light last year I wrote twice to Mr Swinney urging him to launch an investigation to establish why some Scottish local authorities had been so keen to take risks with our money. I did not even receive an acknowledgement. Audit Scotland also refused to intervene.
Since the Scottish parliamentary election in May I have written twice to Aileen Campbell MSP, the new minister for local government, inviting her to look into an affair that has cost cash-strapped Scotland more than £20million. But – as you may have guessed – she has not had the courtesy to reply either.
It is surely unacceptable that the senior council officials who deposited our money in the collapsed Icelandic banks or elected councillors who are supposed to supervise them will not even be asked to account for their actions, let alone face the prospect of having to make good the debt from their own pockets.
There were dire warnings from global ratings agencies and financial experts from 2006 – the year SBC started depositing a total of £172million of its/our “spare cash” offshore – that Iceland’s economy was heading for potential meltdown. So why were those warnings ignored?
During the current phone hacking scandal we have seen Rebekah Brooks and Sir Paul Stephenson face up to their responsibilities and resign. Perhaps those to blame for an episode which has already cost the Borders more than £1million should follow their example.