By Claire West
Local Government Secretary Eric Pickles today (30 August 2013) highlighted the ‘hypocrisy’ of councils pleading poverty when they have trebled their cash reserves over the last 10 years.
New statistics published show that councils have increased their cash reserves by over 20% in real terms since 2010 to 2011. Reserves now stand at over £19 billion — an increase of £2.6 billion in the last year alone.
Mr Pickles called on local authorities to consider whether such substantial reserves are necessary at a time when they should be focusing on protecting frontline services for residents and making sensible investments for the longer term.
Councils account for a quarter of all public spending. In total councils are forecast to spend £102 billion in 2013 to 2014 - up 4% from their forecast the year before.
The figures also show that councils’ in-house spending continued to rise by a further 2% despite repeated calls by ministers to reduce administration costs and overheads.
Local Government and Communities Secretary Eric Pickles said:
There are no rules that specify minimum or maximum levels of reserves and people will be surprised that while councils are hoarding billions in their piggy banks some are pleading poverty and raising Council Tax.
While it is sensible for local authorities to maintain a healthy cushion, such substantial reserves are completely unnecessary and should be tapped into to ensure councils can protect frontline services and keep Council Tax down for hardworking people.
Councils should also be making creative use of reserves to address short-term costs, such as restructuring or investing now to realise savings in the longer-term.