Laura Sharman 19 November 2015

Council chiefs lash out at ‘misleading’ reserves figure

Reports that councils have more than £22bn in cash reserves have been slammed as ‘hugely misleading’ by council leaders.

Yesterday, the Department for Communities and Local Government (DCLG) said local authorities in England held £22.5bn in non-ringfenced reserves, an increase of 170% in the past 15 years.

However, the Local Government Association (LGA) said the figure did not paint an accurate picture of councils’ finances as some of this had already been earmarked for certain projects or would allow councils to manage future risks.

‘These figures are hugely misleading and the suggestion that they prove councils are able to absorb further funding cuts is wrong,’ said cllr Claire Kober, resources portfolio holder at the LGA.

‘Reserves can help councils manage growing financial risks to local services but what’s left after these earmarked reserves would only cover less than a month’s spending at a time when many councils are already struggling to keep services running.

The LGA added that 93 councils had already been forced to withdraw from their reserves in 2014/15, with a further 203 planning to do in the next financial year.

Communities secretary, Greg Clark, said: ‘As we continue to secure our country’s economic future and cut the deficit, now is the time to make efficient use of their assets and resources to provide the services local people want to see.’

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