Thomas Bridge 25 November 2015

Spending Review: Osborne pushes councils to ‘draw on reserves’

George Osborne has urged councils to ‘draw on reserves’ to improve local services, while gifting greater freedom over asset sales.

Delivering his Spending Review and Autumn Statement, the chancellor announced local authorities would be able to keep hold of all funds raised through the sale of assets to improve local services.

‘Local government is sitting on property worth quarter of a trillion pounds,’ he said.

‘So we’re going to let councils spend 100% of the receipts from the assets they sell to improve their local services.’

Citing figures from the Department for Communities and Local Government claiming councils had increased their reserves by almost £10bn over the past parliament, Mr Osborne said he would now ‘encourage’ local authorities ‘to draw on these reserves as they undertake reforms’.

His comments mirror those made last week by communities secretary Greg Clark, reflecting a united government stance on the use of council reserves in the face of warnings from the Local Government Association.

‘If you take into account both the fall in grant and the rise in council incomes, it means that by the end of this Parliament local government will be spending the same in cash terms as it does today,’ Mr Osborne added.

He added that councils were receiving ‘a big package of new powers, but also new responsibilities’.

‘It’s a revolution in the way we govern this country,’ Mr Osborne told the Commons.

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