Local Authorities Lose Millions of Ratepayers Money on Iceland Deposits

mrposhman

chardir wrote: »

If you're running a business with a £2 billion budget it would be extremely negligent not to have around £100 million in deposit accounts.

The treasury holds the cash, and provides cash when required.

It should be run much like any cost centre, its own P&L, balance sheet and cashflow but cashflow is distributed from the centre when required.

I can see where the added bureaucracy we now pay for under labour has come from.

dunstonh

Why are councils investing our cash??

They are not investing. They are saving.

Heard on the local news that South Norfolk had 2 million in iceland but withdrew is a week ago and got their money back. Well done to their financial team. Although they cut it a bit fine.

mrposhman

dunstonh wrote: »

They are not investing. They are saving.

Heard on the local news that South Norfolk had 2 million in iceland but withdrew is a week ago and got their money back. Well done to their financial team. Although they cut it a bit fine.

savings ARE investments

mrposhman

Plus this is a quote from bbc news.

Councils say they have followed Treasury advice by investing surplus money to deliver the highest return for taxpayers

A COST CENTRE is one which knows what its costs are and then applies for funding to cover this. Any profit made on this (ie. surplus cash) should be provided back to the public.

In my opinion, councils shouldn't even get this far. They SHOULD NOT be investing cash in order to gain returns. Any large business has a treasury department to invest funds for them, its not carried out by a cost centre.

I would like to know how much "surplus" cash is lying around in our councils. I suspect we wouldn't have any council tax increases next year if these were used to cover inflationary increases. The sceptic in me doesn't think this is accumulated into the centre in order to provide benefits back to the public.

dunstonh

mrposhman wrote: »

savings ARE investments

since when?

mrposhman

since they were invested in a savings account to make money

Seajays

mrposhman wrote: »

since they were invested in a savings account to make money

Perhaps before going any further you might want to read the following which are quite helpful in distinguishing the two...

http://en.wikipedia.org/wiki/Saving_(money)
http://en.wikipedia.org/wiki/Investment

dunstonh

<arggghhh......wiki copy and paste on>

To help establish whether an asset is saving(s) or an investment you should ask yourself, "where is my money invested?" If the answer is cash then it is savings, if it is a type of asset which can fluctuate in nominal value then it is investment.

<arggghhh......wiki copy and paste off>

nicholbb

dunstonh wrote: »

<arggghhh......wiki copy and paste on>

To help establish whether an asset is saving(s) or an investment you should ask yourself, "where is my money invested?" If the answer is cash then it is savings, if it is a type of asset which can fluctuate in nominal value then it is investment.

<arggghhh......wiki copy and paste off>

So last week people had savings in an Icesave account and this week it had transformed into an investment when it fluctuated to a value to 0?

mrposhman

An investment is one where your invested capital (whether cash or shares, it makes no difference) is placed somewhere to make a return.

Whether thats a fixed return in savings or variable in terms of shares is irrelevant.

The only difference between savings and what you deem to be investments is the risk factor around the investment.