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.
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."