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Local councils' investments 'measured'

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MPs have been told that most local authorities take a measured approach to their investments and spread their portfolios quite widely.

But they were also told that those authorities with investments more exposed to risk during the current credit crunch were smaller authorities.

The judgement came from Audit Commission chief executive Steve Bundred in evidence to the Community and Local Government Committee inquiring into local government investments.

Mr Bundred expressed the commission's embarrassment at having its own investments in high risk areas such as in the Icelandic Banks.

Committee chair Dr Phyllis Starkey questioned whether the Audit Commission was well placed to advise local authorities having itself fallen foul of an over-reliance on short term credit ratings.

Lessons were to be learnt by the Audit Commission in this area, Mr Bundred stressed, and by learning these lessons the credibility of the commission would be maintained.

Mr Bundred said that, on the whole, local authorities took a measured approach and spread their portfolios quite widely. What had been found, Mr Bundred added, was that those authorities with investments more exposed to risk, were smaller authorities.

Conservative MP Greg Hands asked if members and councillors had the necessary skills to oversee and scrutinise the treasury management function.

Mr Bundred said members did not have to be experts in treasury management to ask insightful questions and challenge the officers responsible for that function.

Members with responsibility for treasury management oversight should undergo some form of training, Mr Bundred added.

Information from DeHavilland

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