The credit crisis has sparked concerns at Hart District Council about whether its investments are in safe hands.

A heated debate broke out during last Thursday’s cabinet meeting about whether or not to extend the list of banks and building societies the council can invest in.

In a report, head of finance Dec Mooney advised councillors that because of the recent spate of bank closures and acquisitions, the choices available for making investments had “narrowed considerably”.

There is already an approved list of banks and building societies for the council’s financial team to invest in, but Mr Mooney wanted to add some smaller banks and building societies to it.

But some councillors, in particular Cllr Tim Davies, were concerned that the smaller banks represented a bigger risk.

The Conservative councillor for Fleet West, who has more than a decade of experience working in the City, said it was unlikely that the government would bail out the smaller institutions like Furness, Cambridge and Leek United if they were to get in trouble. This is because that trouble would not affect very many people.

“I don’t want us to be remotely put in that position,” he added.

Cllr Chris Axam, the Community Campaign Hart member for Fleet Courtmoor, agreed.

He said: “Let’s not try to be clever, let’s play it safe.”

Irish banks and Northern Rock were singled out as safer investments. This is because the Irish government has said it will guarantee all deposits made in Irish banks — even those above the £50,000 limit that the UK government is currently willing to guarantee.

But some councillors, like Cllr David Neighbour, wanted to give Mr Mooney the flexibility he asked for.

Cllr Neighbour said: “I don’t believe, looking at how Hart has invested in the past, that we need to be worried. I think it’s naturally careful, and does well.

“I see no problem with the recommendation on the paper as long as the way it’s managed is ‘small c’ conservative.”

He added: “I don’t think we should be panicking and putting all our funds into one big bank.”

Cllr Stephen Gorys, a Conservative member for Odiham, was firmly against extending the list.

He said: “I don’t think we should change the list, providing we add the Irish banks and Northern Rock. These are rock solid, government-backed.

“I frankly don’t think we should waste any more time on this. It’s caution, caution, caution.”

After the heated debate, council leader Cllr Ken Crookes decided to back the prevailing opinion that the list should remain as simple as possible.

He said: “We are not financial experts. I would rather see Mr Mooney come back to us with detailed reports into these smaller institutions before we agree to add them.”

Banks taken off the list of approved organisations for temporary deposits

• Bradford & Bingley
• Bristol and West plc
• Co Operative Bank plc

Building Societies taken off the list of approved organisations for temporary deposits

• Britannia
• Portman
• West Bromwich
• Principality
• Both Derbyshire and Cheshire were also removed as they have merged with Nationwide