Council set to reclaim funds frozen in Iceland
With the addition of an expected £1,673,000 in punitive interest rates, the council will actually recover about £400,000 more than it invested.
The city council was one of the victims when Iceland's financial system seized up in October last year, leaving around £800 million of British local authority funds frozen.
The council is expecting to get back at least 83p in the pound of the £4million invested with Landsbanki, Cabinet members were told at their meeting yesterday.
A formal claim has been submitted to the Landsbanki creditors committee on behalf of the council, including interest up to April 22 this year, some of it at a penalty rate of 22 per cent.
The council hopes to get back all of the £6million, plus interest, invested with Glitnir, under an agreement reached in September. A formal claim is due to be lodged by the end of this month.
The UK-based Heritable bank had £3million of Plymouth's money. A first dividend of £508,448, equating to 16.3p in the pound plus interest, has been received. Another dividend is expected to be paid before the end of the year.
The repayments will come as a relief to the council, which is on course to overspend its 2009/10 budget by £2.3million, 1.2 per cent of the £196.525million revenue.
The city's financial position is improving: earlier this year the deficit forecast was more than £3.3 million.
An increase in the number of looked-after children is putting pressure on the council coffers.
The service is overspending by £958,000 as it is having to pay for five placements over budget.
The number of children in care has risen from 374 to 389 over the last year. The number who are subject to child protection plans has risen from 189 to 288.
The council has to pick up the tab for placements ordered by the court system.
Lower earnings from car parking have also hit the budget. Earlier this year income fell while the Theatre Royal car park was being refurbished.
Meanwhile, the council is changing the balance of its assets and debts to reduce the risks to the city.
By next March, it is aiming to reduce debt from £405million to £227million and cut investments from £213million to £73million.
Big capital projects have faced a squeeze this year, with the council unlikely to hit its initial target of £100.4million of spending.
By the end of September it had spent £35.7million, and now expects to achieve only £82.478million.
Three projects have been put on hold: the replacement for the council's headquarters at the Civic Centre; Parkside training centre; and a History Centre to house the city's archives.
Earlier this year the council announced that it was cutting 300 posts and making 200 staff redundant.
At the end of September redundancy payments totalling £588,000 had been paid, with another £362,000 in the pipeline.
The council has earmarked £1.133million for redundancies.
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