English councils warned on ‘running out’ of reserve cash
Some councils in England have been warned they risk running out of cash reserves if recent spending continues.
Analysis by the BBC has identified 11 authorities the Chartered Institute of Public Finance and Accountancy (Cipfa) said would have “fully exhausted” reserves within four years unless they topped them up.
The Local Government Association said councils faced “systemic underfunding”.
The government said councils were responsible for managing their funds.
Councils have faced cuts to their government funding and rising demand for services such as social care, while MPs have warned children’s services are at “breaking point”.
Cash reserves – money held back for specific projects or emergencies, such as flooding – are seen as a measure of councils’ financial security.
The BBC analysis of government data follows work by Cipfa, which published a “resilience” index of councils, but stopped short of naming those it warned were depleting reserves the fastest.
The warning was based on the latest data available, comparing reserves as of March 2018 with March 2015.
The analysis reveals which 11 of the 152 major English councils have used so much of their reserves since 2015 that Cipfa said they would run out within four years if spending patterns continued.
Which councils have seen the biggest fall in reserves?
Councillor Richard Watts from the Local Government Association said: “Some councils are facing a choice between using reserves to try and plug funding gaps or further cutting back local services in order to balance the books.
“This is unsustainable and does nothing to address the systemic underfunding that they face. Ongoing funding gaps are simply too big to be plugged by reserves.”
The data showed Northamptonshire County Council recorded a 91% drop in reserves. The authority was forced to stop non-essential spending during 2017-18.
Thurrock Council was shown to have spent 58% of its reserves but insisted it was planned and the authority was not running out of money.
Somerset County Council said it was putting money back into its reserves after data showed a 73% fall.
Croydon Council appeared to have spent more than half of its reserves but said the government data was “inaccurate” and its reserves “remain strong”. The figures were supplied to the government by the council itself but it has asked for them to be corrected.
Source : BBC NEWS