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In a statement the council says it has 'never exposed' funds to banks in Iceland and is doing 'its utmost' to avoid any risk to public money by ensuring its investments are spread around top rated UK banks that are backed by the Bank of England.

The borough may not escape totally unscathed though says MP Andrew Pelling.听 He has criticised the GLA for having 拢70 million deposited with bankrupt Icelandic banks.听 As a result, he says: "Croydon taxpayers could see an increase in their Council Tax bills".

"拢3 million of Croydon taxpayers鈥� money has been lost, and if the deposits cannot be rescued this error will add 7.9 % to Croydon's Council Tax bills," warns Mr Pelling

saw writing on the wall

According to the council it was always wary of investing in Icelandic banks.

"The present approach is to stick firmly with British banks and building societies and thereby avoid the uncertainty which has particularly beset foreign banks.听 In the present climate the council takes the view that security of funds should be top priority".

"We believe it鈥檚 time to stay British.听 Security is more important than high interest and frankly we would never have invested in Icelandic banks because we were unconvinced that their standards met our requirements".

Croydon Clocktower house Town Hall

While banks worldwide are continuing to come under pressure the council is as confident as it can be that Croydon's public money is in safe hands while still earning a competitive rate of interest.

"We take pride in our stewardship of public money in Croydon.听 We have an excellent team working on treasury management - as evidenced by our four star rating for use of resources鈥�, continues Cllr Mead