Pickles urges councils to spend reserves

30 Nov 10
Communities Secretary Eric Pickles has called on local authorities to spend more of their reserves to cushion the impact of the recession, accusing some of 'turning town hall vaults into Fort Knox'.

By David Williams

1 December 2010

Communities Secretary Eric Pickles has called on local authorities to spend more of their reserves to cushion the impact of the recession, accusing some of ‘turning town hall vaults into Fort Knox’.

Pickles has this morning published the reserves held by every local authority in England, alongside their average revenue spend.

The figures show a number of councils have more in reserve than they spend in a year – the total held in reserve tops £10bn, and 50 councils have more than £50m in reserve.

The phenomenon is most pronounced among second-tier authorities, some of whom are holding more in reserve than they spend in a year.

Foremost among them is Crawley Borough Council in West Sussex, whose £38.1m reserves are more than double its annual revenue spend of £18.8m. Three Rivers District Council in Hertfordshire is not far behind. Its £25.3m reserves are worth 167.8% of its annual expenditure.

Aylesbury Vale District Council, Tunbridge Wells Borough Council and Surrey Heath Borough Council all have reserves worth more than their respective revenue budgets.

Some other local authorities also have anomalously high reserve levels. The West London Waste Authority has reserves of £7.3m against an annual revenue spend of £1.4m. The Tyne and Wear Passenger Transport Authority has more than double in reserve what it spends in a year, while another four transport, police and waste authorities also have more in the bank than their annual spend.

Pickles called on councils to invest in potentially cost-saving projects such as making their building stock more energy-efficient, carrying out more transactions online, and bringing more services under the same roof.

He said: ‘Good financial planning is about putting a little extra away when the sun is shining so you have some cover during the rainy days.

‘But building up reserves isn’t simply about turning town hall vaults into Fort Knox. These untapped funds exist to ensure councils can respond to unexpected situations like the pressing need to tackle the nation's unprecedented level of debt.

‘Just like any household facing challenging times, all good councils should be considering the merits of temporarily dipping into the money they have set aside as part of their plans to address immediate financial challenges, with a view to building up their reserves again in the sunnier days to come.’

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