Council reserves – clarification

By on 05/02/2013 in Rebuttals

An article on the Birmingham Post website quotes figures from the Department for Communities and Local Government that relate to the council’s reserves – and how local authorities could minimise the impact of funding cuts by using those reserves.

The position portrayed by the DCLG is misleading.

According to the latest draft statement of accounts, as of 31 March 2012, the city council had USEABLE reserves of £22.3m, down from £34.1m in the 2010/11 financial year. By useable, this means funds that can be used to fund revenue or capital expenditure or to keep Council Tax increases low. Other reserves held by the council are already earmarked for use (such as government grants received in advance for projects such as the Highways PFI), so cannot be allocated to other projects or policy initiatives.

It must also be noted that the council’s latest Annual Audit Letter, the annual independent assessment of council finances, says that the city council’s reserves are lower than other metropolitan authorities and recommends that they are strengthened in Birmingham.

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