Monday, 3 September 2012

Local Councils increase reserves (what was that about cuts?)


The LGA is weeping crocodile tears about Council's using reserves to manage the process of budget reductions (we should really call it 'rebasing' but that is rather too much of a jargon term for little old me). Apparently prudent local councils (who have stashed away £17 billion for a range of rainy days) will run out of money if the "cuts" continue:

...the LGA has said that the £17bn saved in cash reserves by the most prudent authorities will be used up in five years time if employed for the management of Government austerity measures. 

Of course a council may choose to use some of its reserves to extend the period over which the budget is reduced from its current base to a new base. This allows for fewer redundancies, gives space for effective service redesign and allows for the impact of any service reductions to be ameliorated. It is - in a period of savings - good budget management. Which explains of course why Bradford's Labour leadership has chosen to keep the reserves and cut the services. I call it the machismo of cuts.

But the LGA then comes up with a whining little reason why Council's shouldn't spend reserves:

This will leave councils without funds to invest in growth promoting infrastructure projects or support any further financial risks...

Pretty scary! Especially when we see the actual situation - what has really happened to reserves during this period of massive budget cuts:

Over last year, town halls outside of the capital were found to have added £2bn to their reserves, while authorities within the Greater London Authority furthered their reserves by £0.6bn. 

So it seems that, during a period of severe budget cuts, local councils have managed to squirrel away yet more cash for ill-defined and often unspecified future purposes - "strategic revenue reserves" and "change programme funds" abound providing senior officers and politicians with handy little slush funds to bung at preferred schemes and vote-buying campaigns. 

But the boss of the LGA - a Tory for heaven's sake - still bleats on about how this is all terrible:

'Councils are working extremely hard to shield frontline services from the 28% cut to the money they receive from Government. But cash reserves can only dampen the impact, not fill the gap. If councils plundered their reserves to cover the cuts, the cupboard would be bare within five years and there would be nothing left to invest in the growth promoting projects Britain desperately needs.’

So tell me Cllr Cockell, why aren't councils investing in these 'growth promoting projects' now? Why are councils continuing to hoard cash - Bradford has over £170 million, Manchester getting on for £250 million - against some proverbial rainy day? What are revenue reserves for if it's not to allow effective restructuring and the proper management of a reducing budget?

This is just special pleading - I would say ignorance but I simply don't believe that the leadership of the LGA are ignorant. This is deliberate wibble, an attempt to wangle a little more cash out of the government this autumn. That is all.


1 comment:

tony said...

well it isn't just about money (important as that is). It's also about central government stripping away power from local authorities. (You can also see this in the ongoing Education & Social Service reforms.)
Although Westminster gives lip-service to localism, there seems a systematic campaign to marginalize local authorities. Eventually everything locally will be controlled solely by either Westminster & the business community .Local citizens will have very little say in anything.