Stoke-on-Trent City Council announced today it was one of the 80 councils that has received its first repayment from money owed after the collapse of the Icelandic bank, Landsbanki.

The city council received £1.5m of its £5m owed and is expecting more installments in the future. Stoke-on-Trent City Council lost the money in the Icelandic banking crash after an email, sent by the council’s credit agency, which showed a downward review of Landsbanki’s credit rating, was not acted upon by one of the council’s officers.

Sarah Hill, cabinet member for finance, said this morning

This is excellent news for the city council and a well-deserved success for the Local Government Association (LGA) and its partners in the Supreme Court case. The way in which we have co-ordinated the legal action with the LGA, and other local authorities is an example of our effectiveness as a council, we have minimised legal costs and provided excellent value for money for the taxpayer.

This is very welcomed money for the council, £1.5m is a lot of money but it isn’t new money, it is money we were confident we would get back and is already committed for capital expenditure over the next few years.

So unfortunately it doesn’t change the budget proposals before the council later this week. However it is good that after four years we know for certain we will get most of our money back from Landsbanki.

The legal action was, coordinated by the Local Government Association, to secure priority creditor status for UK local authorities following the winding up of Landsbanki and another bank Glitnir. Local authority funds worth £413m were held by Landsbanki when it collapsed in 2008, and the LGA expects some 98% to be eventually recovered.

LGA chair Sir Merrick Cockell, said

This is the result of four years of hard work on behalf of the sector and we are absolutely delighted that we have been able to help more than 80 local authorities.