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Councils hoarding £10bn - Pickles

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Councils are hoarding £10bn of reserves despite spending cuts putting services at risk, communities secretary Eric Pickles has said.

Town hall chiefs have warned that a 28% cut in their budgets over four years will inevitably hit frontline services with 140,000 jobs set to be axed next year alone.

But Mr Pickles accused some of treating their vaults like “Fort Knox” and urged them to raid their “piggy banks” to ease the impact.

One authority - Crawley in West Sussex - had “untapped cash” worth more than twice its annual budget, according to figures released by his department.

More than 50 had reserves of £50m or more and in 165 cases they were worth at least a fifth of the annual budget, officials said.

Mr Pickles, left, said local people would be shocked at the scale of the unused money - although some has to be set aside by law for specific purposes.

“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.

“I’m sure many residents would be shocked to find local authorities still have over £10bn in their piggy banks when they are hearing weekly scare stories of service and job cuts.

“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.”

The cash could be used to invest in longer-term money-saving projects such as energy efficiency, moving services online, better IT and joint working, officials suggested.

According to the figures released by the Department for Communities & Local Government, there were nine authorities with reserves worth at least one year’s budget:

  • Crawley 202%
  • Three Rivers 167.8%
  • South Oxfordshire 144.4%
  • Tunbridge Wells 132.3%
  • Aylesbury Vale 125.3%
  • Surrey Heath 122.3%
  • Wycombe 121.9%
  • Chichester 121.4%
  • Hertsmere 119.2%

Those with the biggest pots in monetary value were:

  • Essex £200m
  • Greenwich £133m
  • Hampshire £130m
  • East Sussex £130m
  • Derbyshire £116m
  • Kensington & Chelsea £112m
  • Lancashire £110
  • Manchester £108m
  • Wandsworth £105m
  • Kent £105m

Labour’s shadow local government secretary Caroline Flint said: “Eric Pickles’ call for councils to run down their emergency reserves shows just how bad the consequences of his decision to frontload cuts to local government spending will be.

“This is a clear recognition from Eric Pickles that the government’s cuts go too far, too fast.”

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Readers' comments (1)

  • I think Mr Pickles needs a lesson in good housekeeping. Using one-off reserves for revenue expenditure simply builds up problems for the future at a time when the revenue grant is falling fast. Perhaps LGC would also like to list those authorities not in the fortunate position of Essex etc and whose reserves, according to the Audit Commmission, are worryingly low

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