Laura Sharman 13 April 2017

Cash reserves unable to meet cost of voluntary mergers, warns CIPFA

Councils will be unable to cover the costs of voluntary mergers in Wales using their reserves, the Chartered Institute of Public Finance (CIPFA) has warned.

In its submission to the Welsh Government, CIPFA said there has been no consideration about how potential council mergers will be funded, or whether the benefits will outweigh the costs.

It found that Welsh councils held £196.5 in reserves in 2015, which is more than £70m short of the estimated cost of the merger process.

‘Council mergers could help Welsh local authorities streamline resources and boost performance,’ said Don Peebles, head of devolved nations at CIPFA.

‘However, it is important that the financial and social benefits of mergers must be compared against upfront costs of reorganisation, which if funded from reserves alone, could reduce the ability of local authorities to protect themselves from future risks.

'By taking stock of the costs in the context of the budgetary pressures, the Welsh Government will be able to fully assess whether plans will ensure the long-term sustainability of services.'

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