Saturday, 12 March 2011

Only £20 million in reserves, who are you trying to kid Cllr Priest? A little more on Manchester's budget.


Danny Alexander, number two at the treasury has joined in the criticism of Labour Councils and, in particular, Manchester City Council. Mr Alexander points to Manchester’s levels of reserves as an area of concern:

In an attack on local authorities which he accused of sitting on reserves of more than £2.6 billion, the Liberal Democrat minister claimed that Labour preferred to blame the Government for job losses and cuts to services rather than dip into “rainy day” funds.  He singled out Manchester City Council, which this week announced cuts of £109 million while running a reserve of £108 million.

And Manchester’s response is a classic of spinning nonsense:

Councillor Bernard Priest, executive member for finance at Manchester Council, said, however:

"There has been some suggestion that Manchester City Council has somehow been hoarding a massive war chest of reserves while having to lay off staff.  I want to make it perfectly clear – this is untrue. Our reserves had been set aside to pay for necessary projects, such as new school buildings, job-creating projects in the city centre and the essential refurbishment of Central Library.

“However, our voluntary severance and early retirement package is primarily being funded through raiding these reserves. We are sensible with what we keep aside for a rainy day and it is about £20m. This is exactly what our auditor tells us we should have in the bank."

Before I make a further comment about those reserves – and Mr Alexander understates them – let’s be clear that Cllr Priest is talking absolute nonsense, confuses capital funding with revenue funding and is either being misled by officers or else shouldn’t hold the position.

So Manchester City Council’s reserves (and this doesn’t include the City’s £120million plus shareholding in the Airport of course). These are figures from March 2010 – the most up-to-date comprehensive statement of reserves available publicly:

Capital Receipts Reserve (£14.7m)
Major Repairs Reserve (£1.9m)
General Fund reserve (£23.0m)
Housing Revenue Account Reserve (£49.0m)
Collection Fund Adjustment Account (£2.7m)
Unused Dividends Reserve (£4.0m)
LMS Reserves (£19.2m)
Development Fund Reserve (£4.0m)
On-Street Parking Reserve (£1.8m)
Service Improvement Fund Reserve (£5.1m)
Capital Fund Reserve (£48.1m)
Town Hall Reserve (£18.6m)
Public Lighting PFI Reserve (£6.9m)
Insurance Fund Reserve (£17.3m)
Closed Schools Reserve (£3.6m)
Community Care Reserve (£2.6m)
LAGBI Reserve (£5.7m)
Cleopatra Reserve (£1.1m)
Area Based Grant Reserve (£5.8m)
Planning Delivery Grant Reserve (£5.0)
B of the Bang Replacement Reserve (£0.3m)
Pension Contribution Reserve (£4.6m)
Other Revenue Reserves (£6.8m)

All this adds up to £258.2m – an awful lot of money sitting around in an organisation claiming to be strapped for cash! Without touching the housing and education provisions (although one assumes they could be directed to these areas) or the capital programmes there is £56.7m available. This is some £30m greater than the amount Cllr Priest thinks prudent to retain and could have reduced the negative impact of this year’s settlement on local people and local services.

And one final thought – Manchester and Bradford have similar populations (483,800 and 477,800 respectively). Take a look at the budgets:

Manchester (gross): £1,795m
Bradford (gross):      £1,283m

Manchester (net):  £678.9m
Bradford (net):       £433.5m

So per capita government grant in Manchester is £1403.30 but a measly £907.30 in Bradford!

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