What are council reserves?

Yesterday, amid all the snow-related stories, Eric Pickles the Tory local government minister issued an extraordinary statement about council reserves:

“…building up reserves isn’t simply about turning town hall vaults into Fort Knox. These untapped funds exist to ensure councils can respond to unexpected situations like the pressing need to tackle the nation’s unprecedented level of debt.”

Naturally this got widely reported, along with figures on local authority reserve levels e.g. The Argus writing “Sussex councils holding on to more than £387 million between them”

The problem with all this is that most council reserves are not there for emergencies. Of the £65.8m reported as being in Brighton & Hove City Council’s reserves, the vast majority is allocated. About £9m is the general reserve which is for use in case of unexpected issues like severe weather, swine flu, terrorism or a major financial hiccup. Certainly some of that could be used to bridge a gap in the council’s budget whilst trying to meet the coalition government’s cuts.

The rest of the ‘reserves’ are more like separate savings accounts for specific purposes. For example one is used to tuck away money for big IT spends — we don’t have enough spare cash in one year to buy these big ticket items so we save up for them — just like people do. We also put away money for things like the cost of major, long-term contracts such as the waste Private Finance Initiative deal with Veolia. Capital costs, for building and refurbishing, are also set aside in ‘reserves’ while the projects are tendered for and delivered. It’s money we have to spend, not spare cash.

If Eric Pickles was just an uninformed commentator this wouldn’t be worth my noting. But Pickles is a former leader of Bradford Council, an MP and the minister responsible for Local Government. He knows full well that most council reserves are not available for general spending. The cynicism of his intervention, just before the details of local government cuts are published, is quite breath taking. He has managed to put a story out there which implies councils are sitting on piles of unused cash whilst heartlessly cutting services.

Pickles knows no shame and is an ideological cuts man through and through, as he was on Bradford Council. The reasons Councils are going through contortions to save money and cut services is because that is what the ConDem government and Eric Pickles want. Labour planned cuts too, and stick by that message post-election. Only Greens proposed finding new sources of revenue by reducing tax evasion and increased top-rate taxes. We will keep putting the alternative out there and working constructively to prevent the worst cuts.

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