Laura Sharman 01 July 2015

Reserves already allocated for use by councils, shows survey

The majority of councils have already earmarked their cash reserves for specific purposes, new research has revealed.

A survey by the Chartered Institute of Public Finance and Accountancy (CIPFA) found that while local authorities have increased their levels of reserves over the last parliament, 80% was already allocated to meet known or predicted spending requirements.

The survey also revealed that 94% of local authorities would be using their reserves, with 40% saying they are increasing reserves to meet the financial pressures of Government policy.

Rob Whiteman CIPFA CEO said: ‘Local authorities know that using reserves to provide for future services, protect against risks and manage the transformation of services is the right way for local authorities to manage their finances in the long-term interests of their communities and the country.

‘Reserves are a vital part of prudential financial management and councils should be congratulated that they have sensibly been building up their reserves to both enable them to safeguard future services for local communities and to protect against both known and unknown risks.’

In April 2014, councils held £19.8bn in reserves, with £13.8bn set aside for future local public spending and £2.3bn earmarked for schools or public health projects.

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