Councils across the East of England are sitting on reserves of £470m. The figure has gone up by almost £125m over the last ve years despite the pressures of austerity.
The government said councils should be spending some of their reserves rather than cutting services, but the councils argue that it is important to plan for unforeseen expenditure.
Estimated unallocated reserves for 2015-16
- Bedfordshire: £34,892m
- Milton Keynes: 9,923m
- Cambridgeshire: £55.025m
- Essex: £112.786m
- Hertfordshire: £57.024m
- Norfolk: £55,006m
- Northamptonshire: £40,238m
- Suffolk: £72,660m
The money which central government gives to local councils is going to continue to be reduced. If councils complain about having to make cuts, ministers will tell them to look at their reserves.
‘The public will see these figures and they’ll quite rightly be saying ‘hang on if councils say they don’t have enough money how come they can increase their reserves by almost £125m in our region,’ said local government minister and Great Yarmouth MP Brandon Lewis.
Councils argue they can never be sure how many people will claim benefits or business rebates, most do not insure their council houses but would need to replace them in the event of after or other calamity.
Rob Whiteman, of the Chartered Institute of Public Finance and Accountancy said: ‘Most people and companies save money for a rainy day and most councils hold just 4% of their expenditure in reserve which is not a lot. It may be attractive for the government to say that instead of cutting services councils should be spending reserves. It’s good politics but bad accountancy.’
There are signs that some councils are starting to use some of their reserves. Suffolk County Council revealed that it will be using £14m of reserves to help it ease the pain of budget cuts. The council’s cabinet member for nance Richard Smith said: ‘Reserves are for a rainy day and in local government it’s pouring.’
‘Local government has been hit very hard’
Essex County Council response to Comprehensive Spending Review-Autumn Statement
Cllr David Finch, Leader of Essex County Council, said: ‘The very significant reduction in our grant funding will place considerable extra pressures on services across the board. We were already considering a council tax increase of 2%. Enabling us to increase council tax by a further 2% to pay for social care funding puts the onus on the taxpayer to bridge the funding gap – there is no new money in this, just new taxes. In Essex, 2% would only provide half of the money we need to pay for the national living wage. We would need to consider the impact on taxpayers very carefully.
‘The Chancellor asking us to use our reserves to help would only give us 23 days of funding. Most of our reserves are earmarked and we couldn’t use them anyway.
‘The Chancellor had better news on devolution and retaining business rates but that was a promise for the future, rather than the reality of the situation today, which is far worse than we had been anticipating.’