COUNCIL chiefs in Winchester, who are trying to rescue £1m from a failed bank, are being given some breathing space.
Westminster is relaxing its bookkeeping rules to help local authorities with money caught in the Icelandic banking crash. Between them, 125 British councils have more than £900m frozen in Iceland. In September Winchester City Council placed £1m with Heritable Bank which called in administrators the month after.
Councils would usually have to set aside enough money to cover bank failures. Westminster is worried that if authorities are forced to boost reserves then frontline services might suffer.
As a result, it is telling councils to carry on as if the Icelandic money is safe, with the aim of avoiding cuts.
A council spokesman said they had not cut any services so far because of the missing £1m. They still aimed to recover the money from Heritable.
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