Council Reserve Cash Reignites Debate About Politically Motivated Cuts

Source: eGov monitor -A Policy Dialogue Platform
Published Tuesday, 12 April, 2011 - 09:24

Recent studies have revealed that local councils are sitting on billions of pounds of reserve funds while cutting services.  Ministers in the coalition government have accused councils of making politically motivated cuts but councils deny the allegation.

A recent study had revealed that there is more than £10 Billion in reserve funds for councils across England. Some of the councils with significant funds are Greater London Authority(£1.6 Billion), Essex County Council (£200 Million), Greenwich Council (£133 Million) and Hampshire (£131 Million).  

This weekend a BBC survey of the capital's 26 boroughs revealed that London Boroughs are sitting on reserve funds of £1.2 Billion. On average each London council has approximately £46 Million in reserve funds. Despite these funds being available, councils are using very little of this money to protect services.

A survey of Local authorities Finance Directors conducted by the Local Government Association revealed that councils are looking to protect the most vulnerable but cut other services such as Sure Start and public libraries to cope with the funding cuts. In addition, thousands of jobs are also going in the process.

The Communities Secretary Eric Pickles have repeatedly asked councils to use their reserve funds to protect frontline services while tackling bureaucracy and waste. However, projections from the DCLG shows that councils would use about £1 Billion of non ringfenced reserves to fund themselves this year.

The London Councils have defended the London Boroughs and have said the local authorities in London are reducing their reserves but cautioned "once used, this money is gone".

“Councils have to weigh up whether it is worth propping up a service for two more years when they know they won’t be able to fund it in the longer term," a spokesperson for the London Councils said.