English councils ‘expect further squeeze’ as reserve levels rise  

23 Aug 19

English local authorities expect austerity to continue, according to CIPFA chief executive Rob Whiteman, as latest figures showed they have added to their reserve levels.

Ministry of Housing, Communities and Local Government data released yesterday revealed local authority reserves in England had reached £25.5bn, up £1.7bn (7.4%) on the previous year, at the end of 2018-19.

Although, the Greater London Authority added £776m to its own revenue account – largely by refinancing Crossrail rolling stock.

Whiteman said: “These figures show that councils are topping up their reserves where they can, reflecting the absence of a long-term funding settlement for the sector, continued uncertainty around the spending review and Fair Funding Review and an expectation that the long hard winter of austerity is set to continue.”

But there was a large variation between authorities: 164 (37%) made a net use of their reserves in 2018-19. PF found last year English councils had been dipping into their reserve funds, which raised concern they were raiding their rainy day funds for day-to-day spending.

Nearly half (48%) of shire counties and organisations like police and crime commissioners and fire, waste, national park and transport authorities made net use of their reserves – higher than all other types of council.

The least likely to have taken from their reserves were shire districts – only 28% did so.

Overall council total revenue expenditure was £94.2bn in 2018-19, up 1.2% in cash terms from the previous year but 0.6% lower when adjusted for inflation.

Excluding education spending, which has been falling in recent years as more schools become academies, councils spent 1% more than the previous year, taking inflation into account.

Whiteman highlighted the increases in spending on adult and children’s social care (5.1% and 5.8% respectively), saying this shows “very real” pressures on particular areas.

He said most councils “should be commended” for how well they have managed their finances, adding that continued focus on strong financial management is “crucial” given the “uncertain future for funding and service demands”.

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