Sir Jeremy Beecham was responding to a report in The Independent newspaper that councils who paid the consultants Butlers for strategic advice were almost twice as likely to have placed money in the three stricken Icelandic banks than those advised by other companies.
Of the 116 councils to have lost money in Iceland, 51 received advice from Butlers and their losses, around£470m, comprise more than half the total amount of council funds frozen in the unravelling banks.
Treasurer of the Conservative Party, Michael Spencer runs Butlers, according to the Independent, a claim political rivals have seized upon.
Sir Jeremy Beecham, who heads the LGA Labour group, said: “The Tories cannot continue to stay quiet on this.
"Whatever private embarrassment they may have regarding all the Tory councils caught up in this, they must ensure that Butlers make a full disclosure to the investigation in Parliament.”
“With this kind of financial advice from his Treasurer, and [shadow chancellor] George Osborne’s failure to grasp the current economic situation, it is hardly surprising that Cameron has panicked and asked Ken Clarke to return to the shadow front bench.”