A British government delegation left Iceland on Saturday having agreed ”in principle” that Iceland’s government will speed up the payback of British deposits trapped in Icesave, a subsidiary of Icelandic bank Landsbanki which collapsed last week.

However, the two countries made no mention, in a brief joint statement issued on Saturday evening, of the nearly £1bn of deposits owned by UK local authorities, police forces and charities which is also frozen in Iceland’s three failed banks.