Lancashire County Council has invested £9m., Lancashire Police Authority had £600,000, and Lancashire Fire Authority placed £400,000 in Landsbanki, which has frozen all funds since it was put under the control of the Icelandic Government after its collapse.

If the money cannot be replaced, council tax could be affected and services cut, although the authorities have said this is not certain yet and they are still trying to recoup the money.

This news follows the bombshell that Burnley Borough Council has £1m. tied up in Landsbanki. The Chancellor of the Exchequer, Alistair Darling, has moved to freeze all British assets in the bank but the repayment is not yet certain.

A spokesman for Lancashire Police Authority said the money in Landsbanki represented less than 2% of the authorities total investments.

They added: "It is important not be alarmist about this situation. This is an unprecedented event due to the current worldwide circumstances.
The deposit is not due for repayment until December 2nd and at this stage the bank has not indicated that it will default on the repayment.

"This will not have any impact on the delivery of policing services in Lancashire and we would reassure Lancashire people that it is 'business as usual'."