Contingency plans are being drawn up to move council money away from the Co-op bank.

Kirklees Council says it has assessed options ahead of a decision on the bank’s restructure, due to be revealed soon, that could change practices at the Co-op.

The move comes after a turbulent time for the banking group and Kirklees, still reeling from losing money in the Icelandic bank crash in 2008, is taking no risks this time.

In questions to Cabinet members at last night’s Full Council, Clr David Hall, Conservative deputy leader, asked what the council’s stance was on the Co-op.

Clr Hall said: “Given the uncertainty about the Co-op banking is it wise to continue banking or would it be wise to be prudent and withdraw from investment ahead of next week’s vote which might not go in our favour?

“Is it not a high-risk strategy to wait for the result.” He said they should “avoid the rush” and get out now.

Clr David Sheard, the council’s deputy leader, said: “We’ve drawn up contingency plans. Co-op’s speculators have said the banking business should withdraw from the local authority function.”

The meeting was told that if the changes at the Co-op no longer suited council needs, the authority would close its accounts, which includes an account for day-to-day cash access. Kirklees Council is still owed £505,000 from the Icelandic bank crash and is considering selling the debt on to a third party to re-coup the money.

The questioning of the council’s banking practices quickly became political during Full Council, with the saga over the Labour Party’s financial benefit from the Co-op bank raised.

Clr Robert Light, Conservative leader, asked “why the Labour administration changed the council’s bank to the Co-op?” Clr Shabir Pandor said it was changed based on internal procurement strategies and due diligence was followed. Clr Light added: “Some people have suggested the reason so many Labour councils changed from a traditional bank to the Co-op bank was because of the financial interest of the Labour party.”

Clr Sheard demanded to know “who said it” and Clr Pandor threw the spotlight back on to what the Chancellor George Osbourne was doing.