- Up to a fifth of local authorities are warning they need to raise levies to protect services
- Figures show councils have salted away billions in reserves
By
Jason Groves
Last updated at 1:19 AM on 29th December 2011
Local authorities in England are hoarding almost £11billion in cash, figures have revealed.
Yet up to a fifth are warning they may need to increase council tax next year, claiming they need to protect services – despite the Government’s offer of £805million to fund a freeze.
The latest figures, released yesterday by the Department for Communities and Local Government, will put them under renewed pressure to freeze or cut bills.
Protection: Up to a fifth of councils are warning they may need to increase council tax next year, claiming they need to safeguard services
They show local authorities have salted away a staggering £10.8 billion in reserves – equal to almost half the entire annual revenue from council tax. That figure is £300million higher than councils forecast in March.
Local Government Secretary Eric Pickles said the figures showed that local authorities had enough financial flexibility to avoid a rise in council tax.
He said: ‘All told, councils still have over £10billion held in reserve to fall back on in the coming year.
‘Most councils have maintained significant reserves, which will give them room to manoeuvre on their finances next year, and help them to support budgets, and deliver efficient local services.’
The figures also reveal a huge variation in the level of reserves held by councils.
While some big authorities such as Birmingham, Devon and Sheffield hold the equivalent of just 3 or 4 per cent of their annual revenue in reserve, others are hoarding far more.
Reserves: Eric Pickles (left) said the figures showed local authorities could avoid a rise in council tax, while Sir Merrick Cockell (right) insisted councils had to keep reasonable reserves for contingencies
South Oxfordshire District Council, which announced plans to axe travel tokens for the elderly as part of a £1.7million package of cuts, has reserves of more than £32million – almost double its total annual spending.
And Labour-run Manchester City Council, which announced plans to close all but one of the city’s public toilets this year as part of a cuts programme, has more than £100million stashed away.
Essex County Council holds the highest cash sum in reserves, with £173.7 million in the bank – equal to 9.7 per cent of its annual spending.
Sir Merrick Cockell, chairman of the Local Government Association, insisted councils had to keep reasonable reserves for contingencies.
Stash: Labour-run Manchester City Council (pictured) has more than £100million in reserves
Coffers: Essex County Council (pictured) holds the highest
cash sum in reserves, with £173.7 million in the bank – equal to 9.7 per
cent of its annual spending
He added: ‘Local authorities should be prepared to use money that is not earmarked for a specific project to help them cope with difficult financial times.
‘However, capital reserves can only be spent once and cannot be considered a long-term solution to the unprecedented funding reductions councils are currently facing.
‘Councils aren’t simply sitting on vast reserves of untapped money. The majority of council reserves are already earmarked for specific purposes like paying for future capital investments, making redundancy payments, paying for insurance and meeting other long-term liabilities.’
Councils are required to hold reserves for certain purposes. But a recent report by the Audit Commission showed many held huge sums in ‘unallocated reserves’. In many cases the reserves totalled more than the reduction in Government funding the council was facing.
Share this article:
Here’s what other readers have said. Why not add your thoughts,
or debate this issue live on our message boards.
The comments below have not been moderated.
-
Newest -
Oldest -
Best rated -
Worst rated
Newcastle is Labour again after a few years of being Lib Dem controlled. During that time the annual council tax increases were ALWAYS much lower than the neighbouring Gateshead (Labour) council. I lived in both places and noticed no difference in services. My bet is now that Newcastle will go back to its annual minimum of 4-5% increases rather than the 1-2% the Lib Dems gave us. And I’m prepared to bet that not only will there be no improvement in services there will be a reduction – at least for those who actually PAY council tax, I daresay those who don’t pay it won’t notice a change (and in Newcastle that’s a significant percentage)
Report abuse
No , that money should be spent on these Marvellous statues Signs, twinning with some remote town in a remote country, enjoying their hospitably, and returning it, and and council buildings, and Mayors cars etc.?Being sarcastic ??? But true items the Councils seem to spend your money on?Only a few thousand here and there?
Report abuse
What Labour did was to send in the National Audit people.
If you were not following Labour Policies then the NAO would find you in a failure that required immediate Government Takeover.
This was how the dustbin 2 weekly collections started.
There is so way that you can put the NAO in to check and if they decide you have failed then the whole ‘shebang’ is taken over by Government Appointed people until the Government decides to let go but our “Left of Labour Liberals” will not allow it to happen although if they were in Government “we would all be stood up at 6.00am in our ‘Jamas’ facing Brussels”.
Report abuse
There are a number of councils withdrawing services and refusing to spend the money they already have simply to make a political point: “Look at what the nasty Tories are making us do.” While some reserves are necessary, there aught to be legal limits on how much that can be.
Report abuse
Well someone has to pay councillors huge pay increases.
Report abuse
Any chance you could ” name and shame” those councils? Just so we know who to vote for come the next local elections?
Now WOULDNT that be handy !!!
Report abuse
The views expressed in the contents above are those of our users and do not necessarily reflect the views of MailOnline.
Related posts:
Views: 0