A LOST £1million owed to Burnley Council following the Icelandic bank collapse is expected to be repaid - but not until 2018.

Town hall chiefs in Burnley were among dozens of authorities across the UK which was left high and dry after Scandinavian financier Landsbanki went under.

The council had deposited £1million with the Icelandic institution, on a short-term basis, in September 2008 but failed to secure its return when the figure became due a month later.

Ongoing talks between the Local Government Association and Icelandic government has yielded a positive result for the council though.

Finance spokesman Lindsay Cowburn said in a report: “It is estimated that 95 per cent of the £1m deposit and interest due, after accounting for inflation, will ultimately be recovered.

“The current legal position is that the council's claim will enjoy priority status. It is however not expected that the final payment will be made until 2018.”

Steve Rumbelow, chief executive of Burnley Council, said: “Clearly we are pleased that we are going to be able to recover 95 per cent of the money that was invested.

“But it is a matter of regret that we have had to go down this line and that it will take so long to be returned.”

Government leaders in Iceland have pledge to honour the debts incurred when their banking sector went into meltdown and assets are still being recovered through the various institutions'

administrators.

Nearly £9million was lodged by Lancashire County Council, including £2.5million from the authority's pension fund, with Landsbanki at a similar point in 2008.

But county treasurers are hopeful of securing at least 94 per cent of that total through the same process.