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A return to investment advice being handed down from Whitehall has been dismissed by the local government minister. John Healey told the Commons communities committee, which is investigating the Iceland banking fiasco, that reintroducing an approved list of financial centres for councils to place their cash was a backward step. Mr Healey pointed out the last list included BCCI, which went bust owing hundreds of creditors. he said: ‘There have been calls from some to go back to prescriptive places and local authorities shouldn't be allowed to invest. That would, in my view, be a step backwards.' The minister revealed the councils with biggest exposure had maintained business as usual. ‘All have maintained services and commitments to staff and contractors. No local authority has fallen over,' he said. He also revealed the Icelandic assets seized by the UK equalled the money owed to UK creditors. Mr Healey suggested possible reforms. ‘There may well be a case for better support and training for committee members, and a case for encouraging all councils to have audit committees,' he added. ‘Some have them, but by no means all.' Also giving evidence was Steven Bundred, Audit Commission chief executive, who said the treasury function of councils had been ‘off our risk radar', as the CIPFA investment code of practice had been believed to be sufficient. But he told MPs the code was being reviewed. ‘If we think that should be strengthened we will say so.' Mr Bundred urged councils to step up oversight of their finances. ‘With the markets as volatile as they are, there is a case for more frequent reporting,' he said. The Building Societies Association told the committee that a credit analyst earned £80,000 in the private sector but the equivalent council treasury officer earned £40,000.

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WHITEHALL

Let councils decide on investments, MPs told

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