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KCC wants new bank for public funds

Peter Gilroy
Peter Gilroy

Taxpayers money could be put into a national town hall bank under an idea being proposed by Kent County Council.

It says councils should consider joining forces to establish a national bank to hold their multi-million pound deposits and investments and to release money for major building projects.

The proposal has come from KCC chief executive Peter Gilroy, who said councils needed to think of different ways in which they could safeguard public money.

It comes after the recent Icelandic banks cash crisis which saw millions invested by KCC and more than 100 local authorities at risk after three of the country’s banks folded.

Mr Gilroy said councils would always need to have somewhere to invest and deposit money as part of the way they handled their budgets. As a result, they needed to ask if there were alternative ways of doing things.

“The question is how can we insure and protect taxpayers’ money in these times because we have to deposit our money somewhere and deposit it somewhere. Is there another way we could do it?” said Mr Gilroy.

With the amount of money in councils’ budgets, as much as £150billion in funds could be available, with up to £20billion at any one time on deposit, he added. “With those sums, a local government bank would be highly coveted.”

A national bank run by and for councils would be a safe haven at a time when the economy was so turbulent, he said.

“We are in unprecedented times and perhaps the only time in my lifetime that a recession has been complicated by the global banking institutions,” he said.

Opposition Labour leader Cllr Mike Eddy gave a cautious welcome to the idea. “It is well worth exploring but I would prefer any bank to be run as a co-operative or mutual society which would hold money and make loans.”

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