Banking-probe MPs told to cancel Iceland trip amid backlash fears

THE Foreign Office has warned MPs not to travel to Iceland due to fears their presence could trigger a backlash in the run-up to the cash-strapped country's referendum on paying back British taxpayers.

The British Ambassador to Reykjavik, Ian Whitting, told Scottish Affairs Committee chairman Mohammed Sarwar that it would be inappropriate to visit the near-bankrupt country ahead of a such a sensitive vote.

MPs on the committee were due to travel to the country for a five-day visit at the end of this month as part of their inquiry into the banking crisis.

Iceland will hold a referendum on 6 March over whether the government will pay back 3.4 billion to British and Dutch taxpayers who bailed out savers that lost out in the collapsed Icesave bank.

The trip has now been cancelled because of the advice.

A Foreign Office spokesman said: "The Icelandic government has scheduled a referendum on the Icesave Bill for 6 March. Against this backdrop, we advised the Scottish Affairs Committee against travelling to Iceland during the referendum campaign."

Pete Wishart, an SNP member of the committee, claimed members were told the trip had been cancelled due to "political instability" – a charge denied by the Foreign Office.

He said: "It beggars belief that, on the advice of the Foreign and Commonwealth Office, the Scottish Affairs Committee should cancel its visit to a friendly European country.

"Iceland is not unstable. According to the FCO's own website, Iceland is perfectly safe for tourists. The impression given by the FCO is akin to a country at war."

Mr Sarwar, chairman of the committee, confirmed MPs had decided to scrap the visit but denied he had been advised that there were signs of instability in the country.

"The reason for the advice not go is that there is a referendum taking place.

"We were advised that if we went, it could be perceived that we were there trying to manipulate the result."