Bank crisisin Iceland:taxpayers reassured

Answering a series of questions from members, Cllr Louise Goldsmith, cabinet member for finance and resources, said that although this was a huge amount, it was just five per cent of the budget.

'I hope that with pressure from the Local Government Association and other pressures we will get back some or all of it,' she added.

A joint letter from the county council and Sussex Police Authority has been sent to Chancellor Alistair Darling demanding that the money should all be returned.

The county council has 12.9m in the UK-licensed Heritable Bank, and the police authority 6.8m. Both sums were frozen when Heritable was taken into administration.

The letter demands an assurance that deposits will be underwritten by the Government. Cllr Goldsmith told the county council she was fairly confident that if the money was lost, this would not have any impact on council tax or services.

She said the Government had accepted that local authorities had not been reckless '“ they had been following guidelines, and investing on behalf of residents.

'It's the Government that has been reckless,' she declared.

Cllr Goldsmith said the situation in the country and the world was dire.

The county council had to be sure that what it was doing was right within its guidelines and not being gung ho '“ and this was absolutely the case.

She added: 'We are waiting for the situation to be clarified. I have checked if this will affect our services to the weak, to the vulnerable, and to our residents, and it will not.'

They were looking at ways to get the money back, and wanted the Government to recognise that West Sussex had acted responsibly, within the guidelines laid down.

'This is not our money, but the money of every resident in West Sussex,' she said.