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Councils told to unlock reserves as budget cuts loom

THE city council, Swale Borough Council and others in Kent are being urged to use “rainy day” money to cushion the impact of budget cuts next year after figures showed that together they are holding £222m in reserves.

Councils told to unlock reserves as budget cuts loomCanterbury City Council, which has been warning of the cuts to come, currently has reserves of £12.1m – 44% of its revenue budget.

Local government minister Eric Pickles says councils should not he “turning town hall vaults into Fort Knox” and now was the time to tap into unused funds. But the suggestion has been given short shrift by some authorities, who say much of the money they are holding is already earmarked for particular schemes.

There is also irritation at Mr Pickles’ intervention, with some seeing it as a ploy to divert attention away from the government’s impending announcement on next year’s level of council funding.

Kent County Council has £105.5m in total reserves, representing 5.3% of its budget. Finance chiefs said while they were not ruling out the idea of using reserves, much of the money was already committed or being kept aside to deal with spending pressures.

The council is anticipating a shortfall of £340m over the next four years as the government’s austerity drive gets under way. It has already used some money to absorb part of a £15m package of cuts it was forced to implement to this year’s budget.

Cllr John Simmonds (Con), cabinet member for finance, said:

We will consider using reserves if necessary but we have to keep a prudent level and I do not want to empty the bank.

We are not keeping this money unnecessarily. It is sensible to look at what we’ve got but until we know the outcome of the [government’s] comprehensive spending review, I am not going to spend money from contingencies.

Of the £105m, about £33m was not earmarked for particular projects or dealing with pressures such as bad weather and the costs of capital building, he added.

Canterbury City Council said it expected to dip into its reserves in future years. City Council spokesman Rob Davies said:

We can’t say by how much at the moment until we get our confirmed revenue support grant in the next week or two, but we estimate that the figure of 44 per cent could fall to less than 20%. We’re also using our capital reserves for projects such as the new Marlowe Theatre and new sports facilities at Herne Bay High School.

He added that the Audit Commission said the council had demonstrated good financial management in difficult circumstances over the last few years its future plans up to 2012/13 were ‘robust’.

Kentish Gazette, 9th Dec 2010

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