Rising fuel prices hit council reserves, LGA warns

7 Mar 11
Spiralling petrol prices have forced local authorities to take £20m from their reserves to meet extra costs, the Local Government Association has said.
By Mark Smulian

 

7 March 2011

Spiralling petrol prices have forced local authorities to take £20m from their reserves to meet extra costs, the Local Government Association has said.

It warned that dwindling reserves could  ‘only be spent once’.

In an implied rebuke to Local Government Secretary Eric Pickles – who criticised councils in November for hoarding reserves totalling some £10bn – LGA economy and transport board chair Peter Box said: ‘Councils don’t have the luxury of spare cash to spend on fuel.

‘Unallocated reserves only make up about 3% of councils’ total revenue and are crucial to helping them manage their budgets at a time of financial constraint. This money is not limitless and can only be spent once.’

Box said reserves were set aide for specific purposes and emergencies and that ‘using this cash continually to balance the books in the short-term is not feasible’.

Pickles had told councils: ‘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.’

Rising oil prices will also hit councils’ costs in highways maintenance warned Matthew Lugg, vice-president of the Association of Directors of Environment, Economy, Planning and Transportation.

‘Our standard materials for road surface dressings are all bituminous,’ he said. ‘We haven’t seen price increases yet because they take a while to feed through, but we will and that will just exacerbate the effects of the cuts.’

Fuel prices have reached an average of 130.84 pence per litre for unleaded petrol and 136.38 for diesel according to the website http://www.petrolprices.com/.

Increased fuel prices have affected councils’ costs in running refuse collection, street cleansing, social work and grounds maintenance among other services.

Many have invested in fuel-efficient vehicles, route-planning technology and driver monitoring, ‘but rising fuel prices have wiped out much of the projected savings’, the LGA said.

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