COUNCILS in Oxfordshire were yesterday criticised over “substantial failures” that led to millions of pounds of taxpayers’ money being invested in Icelandic banks that later collapsed.

Oxfordshire councils invested £23.5m in Icelandic banks which went under last autumn after credit markets froze in the wake of US financial giant Lehman Brothers’ bankruptcy.

Oxford City Council had deposited £4.5m, South Oxfordshire District Council £2.5m, Cherwell District Council £6.5m, Vale of White Horse District Council £1m and West Oxfordshire District Council £9m.

In addition, Oxfordshire County Council reportedly has deposits totalling £5m in the country’s banks.

None of the money is believed to have been retrieved, although the councils have been told they may recoup some of the cash.

A report by the Communities and Local Government Select Committee, published yesterday, said some of the warning signs had emerged as far back as 2006.

Committee chairman, former Oxford city councillor Phyllis Starkey, said: “Our inquiry has exposed a significant level of misunderstanding, misinformation and complacency – not just within local authorities, but also among those who provide them with specialist investment advice.”