Why do councils, police authorities, etc, hold these funds to invest? Do they have the investment expertise? Surely the Bank of England should be their banker, with daily surpluses held by the Bank to use as appropriate? Each should negotiate an overdraft limit with the Bank to cover borrowing needs

John Appleyard, Ripon, UK

The councils that deposited money in Icelandinc banks weren't being reckless and making speculative investments. They simple put money into accounts that promised the best interest. They didn't know that those banks would collapse. It's the Icelandic government that is acting illegally.

Toby, Newport, IOW

I cannot believe local councils have remit to invest significant sums of our money overseas in any location or security that carries risk at any level. Surely it would make more sense to invest in treasury bonds in this country so the investment does not leave the uk economy needlessly.

tom, manchester,

Hmmm, I feel a multiple choice coming on. To cover the losses, should the local councils;

A - Increase council tax
B - Cut spending on public services
C - Tell the civil servants within the council that they now can't retire until they're 65, using the savings to cover the losses.

Bet it's not C

MCJ, Nottingham, UK

When are we going to see members of the SSA's 2,500 staff leave their Canary Wharfe palace with their effects in bin liners? Those guys were & are paid good money to oversee the financial world. They are as much use as a pork pie at a bar mitzvah. Another of Grim Gordon's scheme seen for what it is

W D Toulman, WALKINGTON East Yorkshire, United Kingdom

Brown had to find a Scapegoat. He´ll loose the next elections so why not kick Kaupthing in the belly, because another bank Icesave went bankrupt. There was nothing wrong with Kaupthings finances, all accounts open, so a law on terrorists was put on the bank.

Gudjon, Reykjavik, Iceland

I do think that the behaviour of Brown and Darling are irresponsable. They use this situation to serve own their political agendas and treating Iceland as a terrorist country will have consequences on the long term after the crisis. No one forced people to invest money in Icelandic banks.

Virgile, Reykjavik, Iceland

The vast majority of local government funding comes from central gov. not from council tax.

Presumably when this is paid there are surpluses: these must be invested. I'd assume Icelandic banks paid good rates.

No doubt all you crystal ball gazers wise after the event would have avoided Iceland..

David, Kent, UK

Mr Brown and Mr Darling are letting down the public purse again/?
So much for them stating that no investor would lose their deposits with a bank graded as AA+

Mike, Sole Street, England

So, being regulated by the FSA means nothing - better off moving all public money to an Irish bank

Mike, Sole Street, England

Those in the council resposible for this loss should have their pension funds docked

Gareth Williams, Powys,

If Icesave will not release these funds, then the British government should take reciprocal action against Icelandic-owned assets in this country.

Paul, Coventry,

Let us hope this puts to rest the lie that council chiefs deserve comparable pay to the private sector.
See what happens when they get it wrong, they bleat "We were only following approved investment guidelines".
No sackings, no resignations.
They would be OUT of a job in the private sector.

jasper, chelmsford,

I expect that if the councils concerned hadn't been putting their money in the highest-yielding accounts possible they would have been open to accusations of financial mismanagement by The Audit Commission.

Simon Stock, Meppershall, Bedfordshire

For years Brown has cut away the ability of local authorities to stand up to New Labour dictat - and now Brown has been handed his biggest opportunity yet to take local council finances directly under the control of the Treasury.

Local elections are now essentially meaningless. Big Government wins.

Tim, Edinburgh,

As I understand it, councils were encouraged by the Treasury to seek out the highest available return on their available funds. Not surprising therefore that money went to Iceland, however stupid that now looks. As usual, the real culprit is the Government which thinks there is a free lunch.

Nick, South Croydon, UK

So that's where all the Council Tax goes. I thought they spent it all on biscuits.

Frank Upton, Solihull,

What about the depositors who have funds in Landsbanki Guernsey? In the good times, Guernsey, Jersey and IOM sheltered behind their affiliation to the UK as a means of attracting foreign depositors. Now that Lansbanki has gone bust, the UK government has washed its hands of Guernsey.

Norman, Kingstown, St Vincent

It is not good enough to blame advisers and talk about AAA ratings. Northern Rock had a AAA rating and this failure should have sent a signal to any sensible cautious investor, it did me.
For councils to threaten to damage UK banks by withdrawing funds is just a further indication of poor judgement

simon, Chiddingly, UK

The icelandic banking system has been teetering all of this year - just check back with S&P's and general press coverage.
It must have been obvious to the councils concerned that there was an an undue risk associated with depositing large sums with these banks so why did they do it?

Jeff, Lincoln, UK

Remember the title of Michael Moore's exposé on the USA - Stupid White Men?

Looks like he could do a sequel here

Pete, London,

Oh god, the bankers are not very good at it! the council chiefs are pretending to be good at it, executives are on tax payer funded jolly's not caring if they are good at it, IT - investment and looking after other peoples money. Warren Buffet please help, buy buy buy!!!!!

Shirley Collins, Southampton, Hampshire

This is just the beginning. The money that has disappeared into a so called 'investment' black hole has to be found from somewhere. Higher taxes is the only realistic way forward yet we have to listen to mealy mouthed ministers trying to make out that it is all the fault of the silly Councils.

Alan C, Chorley, UK

This is what you get for running around trying to get an extra 0.1% or 0.2% p.a. Why did the Councils not invest in UK banks - can you imagine French Councils depositing their money in foreign banks?

mike isaacs, london,

Surely if the Icelandic banks were authoried by the FSA, the latter have obligations to all depositors not just those with less than £50K. There's so much involved, I can see lots actions against the FSA for negligence if Darling and Brown don't cough up.

shirley wilson, london,

So, because of some "clever" bean-counters, the tax payer will have to bail-out the tax payer...

To me, this brings into question the judgment and professionalism of the people who have been trusted with our tax money. Heads should roll!

Martin, Poole, UK

Can we now expect high level job losses, and financial penalties for the civil servants who are responsible for this loss? I am sure these are the very people calling for sanctions on Bank executives.

Clearly greed is not limited to Bankers!!!

Tony, Cardiff, UK

The Decision to Whack People With Higher Poll Tax Is Wrong
This Is A Council Blunder Not The Peoples,Sounds Illegal To Tax Them Because Of Thier Bad Decisions.

Thomas, Surbiton, uk

Hold on a minute... my council tax goes up unceremoniously every year, and it turns out that they have £1bn to invest in Icelandic banks alone... how much more is 'invested' rather than used to fund the public services it should be?

Disgusting, arrogant incompetence, as usual.

Dan E, London,

Why on earth do county councils and the MET have it under their power to be investing tax payers money? Surely their funds should be held in a central UK Treasury pot and drawn on as required. We might accept that the Treasury has some of the necessary experience to invest any surplus.

Bob, Reading,

I hope the treasury do not bail out the councils - the individuals involved should be punished. If the councils are protected then private limited companies should also be protected. Guess who's going to pay for their mistakes anyway! Job for life council workers should not exist.

Paul, Leeds,

Northumberland is not in the south nor is labour Nottingham (£42 million). Darling has not got the money and probably at fault with regulation again.
However Tory Leader of Kent says they were exposed to £17 million on TV not 50 and they had reserved of £70 million. So are these figures right?

TrevorsDen, Wallingford, OXON

Oh good, so he'll bail out anyone exept rover, members of the public, and institutions which exist to help them - nice one Darling!

Gary, London, England

What about quango's and councils being obliged to offset all surplus money against the national debt.

Colin, London, London

oh dear never mind i presume that the jobs worths in the councils will be sacked as councils will have to tighten the councils finaces.
so good bye pregnanacie advisors 5 friut a day people racial awarenes staff ,help the criminals depts,council house buildings,immigrant settling in depts,etc

mike, peterborough, uk

If this money is "lost"--then just what then does it mean to each and every council tax payer?

William Grierson, Kimpton, UK

Where are the freemarket capitalism cheerleaders now?

Local councils should be keeping their constituents' assets LOCALLY!

Tim, London, UK

Mr Hal, the money was not offshore, these banks had UK based accounts and were regualted by FSA.
On another aspect its not healthy to see the Governament running to save the banks but not so fast to save the councils' taxpayers money. Who does the Gov. works for?? Big Banks or us??

Rogerio Barros, London,

Kaupthing was not having financial difficulties, it was doing fine on it's own. Due to an apparent misunderstanding between Alistair Darling and Árni M. Mathiesen, the Icelandic minister of finance, Kaupthing in Britain was closed down, this was done with the use of special terrorist laws.

Heidar Orn Bernhardsson, Norwich, England

I knew we were paying too much council tax. Fat cat councils must be punished too! Seems that there is no control over these amateur tycoons whatsoever.

Peter, Liverpool, UK

Its my guess these funds were more to do with the pensions of the councils executives ! or if you like the bonuses of the public sector !! It seems to me we need to bring back the guillotine for these leeches who have hidden the gains of high council taxes and the cuts in healthcare for one reason !

Pete, stockport, UK

I assume that the Finance Directors will now resign. Any FD in this situation in the private sector would be forced to do so and public sector FD's are now paid in line with their private sector equivalents.

C Byrne, Pinner, UK

It's about time that local councils had defined benfit pension schemes - why should the council tax payer cough up to give them watertight, indexlinked pensions when the rest of us have only dross.

Come to think of it, have any other readers looked into the final salary pension scheme for MPs ??

mark walker, Bristol, UK

My friend who had investments in Iceland pulled them out weeks ago because it was obvious that the whole Icelandic economy was in severe trouble. Why on earth didn't all these councils see the same? Gross negligence?
I just feel for the council tax payers, me included!

V Glover, Penzance, UK

One bilion pounds deposited in foreign banks by councils and public service providers suggests a massive surplus over expenditure. More insulting, the millions of profits are hidden in foreign banks without FSCS protection - idiots. A rebate would have been useful to heat homes this christmas

Benjamin, Birmingham, UK

What would bailing them out even mean? It would still all have to be taxed again.

Julian Morrison, Reading, UK

So which is it? Is Darling REFUSING to bail out Councils or is it simply that THERE IS NO SIGN OF IT. Your text says both, which is inconsistent. Please don't add to the hysteria.

Ian, Manchester, UK

Whay are these Local Authority chaps so dim? The banks in Zimbabwe are offering much higher rates of interest.

Howard , Basingstoke, UK

KCC have mismanaged just about every other aspect of running the county to the liking of Residents, so why should this be a surprise?
KCC county hall must be the second most expensive asylum in the country.

Neil, Maidstone, uk

What on earth are councils doing putting OUR money off-shore? Is the prime minister going to deal with this in the same way as he promises to deal with the City compensation and bonus culture? Rotten boroughs indeed!

Stephen Hal, Andover,

Not one of those councils listed is under Labour control. Yet they invested in a bank regulated by the FSA - the regulator set up by Gordon Brown that was found to be at fault with Northern Rock.
This Government looks after it's own - as was seen with the contempt for Halifax staff in favour of BOS

Eddie, Cheshunt, Herts

Doesn't this show we have been paying too much tax ? I thought this was to pay for services , not for local councils to build up savings when your average joe doesn't have any savings at all . A complete restructuring is required and full audits of where our money is going should be required .

Benzo, Nr Chelmsford,

Mark Russell, given that at least 300,000 UK investors had money in Icelandic banks indicates that not '(e)veryone in world new (sic) Iceland hand (sic again) more liabilities that it GDP' (sick of the sics already). How wonderful hindsight is - just pleased laziness stopped me investing there.

Ian Burgess, Bristol,

The public sector as it is, is unsustainable. This presents an opportunity to rationalise it before it becomes even worse and even more public sector workers suffer the consequences.

cara brown, London, U.K.

I agree that the Icelandic authorities were irresponsible but that does not absolve the Bank of England and the FSA from responsibility for licensing the Icelandic banks as deposit takers in the UK and hence implicitly warrantying them as sound; perhaps a partial reimbursement is justified?

Ian Stuart, Frederick, USA

Have these council incompetents not heard of BCCI? Just to remind them, this was where councils lost lots of taxpayer's money chasing high rates but not thinking who they were giving the money to. And now they've done it again. Clowns.

Nick, Seaford, UK

Nice to see how our council taxes are needed by the authority for essential services. When we can't pay we're threatened with the cowboy/traveller/heavies Drakes Bailiffs, with carte blanche to trash our lives.

But when the councils get stuffed, I wonder who will end up footing the bill? Hmm..!

iain, bedford, uk

If they took professional advice about the security of these companies they should claim against the indemnity insurance all advisors should carry, the tax payer should not have to pay twice, or is it three times ?? most government / council employees + ministers are just enthusiastic amateur

am, letchworth,

I was PA to the MD of a French consumer credit bank three years ago. There were plenty of press cuttings around about the US credit situation. Please tell me all the UK bank bosses have the intelligence to interpret that data?? Some are paid more than 500 times what I was! Too much optimism around

E Phillips, Guildford,

Just guessing, but most of these councils are in the South and possibly have Tory majorities? It is certain that had the list included councils in Scotland a different political stance would have been taken in view of the forthcoming by-election.

TonyG, Newark, UK

Just shows what you get when you have a bunch of amateurs running the financial show in councils. Everyone in the world new Iceland hand more liabilities that it GDP.

Mark Russell, Poitiers, France