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Councils facing elections next month using reserves

A survey for the FT suggests that Councils facing elections next month are more likely to be using up reseves than those that aren't. It is not surprising that political pressures have an influence on these decisions. The FT frets that there will be "little spare cash left for emergencies." Yet their figures of reserves falling by £200 million from £2.6 billion is hardly alarming. Other figures have suggested an 8% fall to £10.4 billion. This is confusing territory.

Using reserves to smooth the the way to reorganisation and staff reductions is entirely reasonable. The issue is whether the reserves are being spent effectively for such a purpose - or as, Matthew Sinclair of the Taxpayers Alliance, puts it "just delaying a more severe day of reckoning later."

Provided the reserves are being used for adjusting to change rather than postponing it spending them is reasonable. The real criticism is that Councils are sitting on such big reserves.

The FT says:

Those councils who have “all-out” elections, where all councillors, as opposed to just half or a third, face the vote, are on average dipping into 8 per cent of their reserves. The figure falls to 2 per cent at
the 83 English councils, controlled by one of the three main parties, where no election is taking place.

The trend is starkest at Labour councils, where the party’s 18 councils with elections in May plan to spend an average 6 per cent of their reserves this year. The majority of the 35 without elections
plan either to add to their reserves, or leave them untouched.

Conservative-run councils are, on average, raiding their reserves the most and even those with no election this year plan to spend on average 5 per cent of their reserves.


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