Briefing - the facts on Barclays Bank investment allegations
13 March 2012
Following a misleading Argus newspaper article (13 March 2012 linked below) suggesting a direct decision will be made to invest Brighton & Hove City Council funds in Barclays Bank, the Green Party has issued the following points to clarify:
A report is going before the cabinet of Brighton and Hove City Council on Thursday 15 March, which sets out officer recommendations for safe handling of short term funds that will be used in the very near future for council expenditure.
Contrary to misinformation from other political parties, this is not about Greens 'supporting' Barclays Bank PLC in anyway.
This is about council funds that have yet to be invested and no decision has been made.
No commitment to invest in any bank
The published papers are not a commitment to invest anything anywhere, but outline possible safe institutions and the advised maximum amounts the council could put in.
This list includes six banks, six building societies and other institutions, including other local councils.
One of the banks is Barclays Bank PLC. Another is the Cooperative Bank.
Also on the list are six building societies. The full list can be seen here, on the last page:
The £5m figure listed in the report for Barclays is simply the maximum that could be deposited at Barclays should deposits ever be made there.
It is not an actual amount to be deposited.
By contrast, the maximum at the Coop bank is £10m.
A list of potential financial institutions - nothing confirmed
This is ONLY a list of institutions where money could potentially be deposited.
The list has yet to be approved by the cabinet. Full council approves the strategy; the cabinet are only agreeing on Thursday to send to Full Council for full approval.
The council has a duty of care to minimise all financial risk
The council has a duty of care to identify the 'safest' places to deposit taxpayers' money and the existence of certain banks on the list does not guarantee that they will ever be used.
This is about safeguarding public money already budgeted to fund services so the list must be as financially risk-averse as possible, particularly in the light of the Icelandic banking crisis of 2008 and beyond, in which some local councils were badly burned.
The council also has a duty of care to present many possible institutions and keep the list quite long, so as to minimise any future risk of ‘eggs in one basket'.
Greens have serious concerns about the ethical performance of many UK financial institutions, but public bodies such as local councils have a duty to treat public money with the utmost care at a time of financial instability and devastating government cuts.
Greens have been at the forefront of campaigning for tougher regulation of the banking sector and higher ethical standards but changes of this type are a national
Parliamentary matter and the Coalition Government has the power to introduce this type of legislation.
We will continue to put pressure on the Coalition to take more steps to deal with unethical banking practices.
The council's investment policy
The council investments are governed by guidance issued by the Secretary of State that puts capital security at the forefront of all investment decisions and this is replicated in the investment limits recommended in annual investment strategies.
However the council also has an approved ethical investment statement that applies to all cash investments made by, or on behalf of, the council: institutions are advised of the statement each and every time a deposit is placed with them.
The council's ethical investment statement says:
The council has approved the following ethical investment statement that will apply to all cash investments made by, or on behalf of, the council:
Brighton & Hove City Council, in making investments through its treasury management function, fully supports the ethos of socially responsible investments.
We will actively seek to communicate this support to those institutions we invest in as well as those we are considering investing in by:
- encouraging those institutions to adopt and publicise policies on socially responsible investments.
- requesting those institutions to apply council deposits in a socially responsible manner.
- advising counterparties of the above statement each and every time a deposit is placed with them.
Other ethical investment/financial inclusion work the council is undertaking under Green leadership
- The council is launching a Community Banking Partnership, which will unify and support access to debt advice, banking facilities, affordable loans, saving initiatives and financial education.
- The council has been actively supporting the East Sussex Credit Union through internal promotion events.
- The recent recruitment drive among council staff has seen the number of savers rise.
- The council is also pushing for more ethical investment of the local pensions fund (though this is outside our immediate control), including the investment of pensions money in local community infrastructure, as endorsed by the Local Government Association recently.
- The council recently introduced a new sustainable procurement policy which will allow the council to choose providers of services and goods that meet social, economic and environmental standards.
For more information, please contact the Brighton and Hove Green Party office on 01273 766 670.
If you are a journalist and you need to contact a party spokesperson, please call the duty press officer on 07931 231390.
For national media information and assistance, please visit the national Green Party media centre.
Latest information from Caroline Lucas MP is at www.carolinelucas.com
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