Council bosses have admitted being worried after it emerged £5 million of taxpayers’ money is trapped in troubled Icelandic banks but have pledged essential services would not suffer.

Wokingham Borough Council admitted it has £2 million in Landsbanki and £3 million in Heritable last week after the accounts were frozen by the Icelandic government.

The council is one of more than 100 local authorities in the UK fighting to retrieve their cash  because, unlike personal accounts, the British Government has yet to decide whether it will guarantee the cash.

Leader Councillor David Lee admitted the freeze would have an impact on council services although he gave his word services to the most vulnerable would guaranteed.

“We are worried about this and down the line this will have an impact on council services," he told the Wokingham Times.

“I can say it will not affect our most vulnerable elderly people and children, or the regeneration of the town centre, but some of the less important things may have to be put on hold and I think people would expect that.

“We don’t know what will be done yet.

"It might be we have to have a few less cappuccinos, but we have priorities to maintain and protecting our vulnerable residents and regenerating the town centre are right at the top of that list.”

Chancellor Alistair Darling announced the Government will be loaning £100 million to Landsbanki to help secure the deposits of around 300,000 British people with investments in the bank totalling several billion pounds.

However, negotiations on how local authorities can get their cash back are ongoing, with the Local Government Association (LGA) lobbying in support of the councils.

- More in this week's Wokingham Times.

- Do you have cash stuck in Icelandic banks? Do you think the council was right to invest taxpayers' money? Click the link below to have your say.

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