06/12/2012

Councils Hold £12.9bn In Reserve Funds

English councils have almost £13bn in reserve funds, having increased by £4.5bn over the last five years despite funding cuts, the Audit Commission has said.

The public spending watchdog found councils had a total of £12.9bn set aside – equal to nearly a third of their spending on services.

The figures have been used by Communities Secretary Eric Pickles to attack some councils for "scaremongering" about funding cuts.

But the Local Government Association (LGA) said councils were being prudent.

The Audit Commission's figures come after the chancellor announced an extra 2% cut to council budgets in 2014-15 in his Autumn Statement.

In its report, the Audit Commission found that between 2007 and 2012, 77% of councils in England had increased their reserves relative to their spending and 26% had more than doubled them.

Council reserves grew by 36% in real terms over the five-year period, the watchdog said.

The watchdog said that £9.9bn of the money held in reserve had been earmarked for a specific purpose, although this didn't always mean there was a plan for spending the funds.

It recommended councils regularly review their reserves to reflect the risks they face as well as their future spending plans.

(H/GK)


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