Finances

Council budget reserves increased by £46m since 2010 – so why the continuing cuts to services?

Since 2010 Derby City Council has done a good job in managing its finances and protecting its reserves – in fact so good,  specific usable budget reserves have increased by £46m!

Many Councils throughout the country are depleting valuable reserves to make up for budget shortfalls; some are in serious financial crisis – but not Derby City Council. Despite the concerns expressed about austerity, the need for cuts to high profile services, and hardships attributable to Government funding, the level of Budget-related Usable Reserves  held by the Council are at record levels!

The Councils reserves are split between Usable and Unusable ( i.e. not cash based). Of the Usable reserves, a good proportion of it is “earmarked” for specific purposes. The residue left is to cover unexpected arisings in the annual revenue budget.

At 31st March 2010, the Usable Reserves ( Unallocated and Budget Risk) were £12.6m

 

At 31st March 2017, the Usable Reserves set aside for revenue budget fluctuations were £58.3m….a rise of nearly £46m in 7 years! This includes the £3.4m from the Assembly Rooms insurance claim.

Comment

The Council deems that it’s unallocated budget risk reserves should be in the range if £7m – £10m to protect unexpected fluctuations – this is sensible, and was the position in 2010 when, some would argue, the Council was much better funded.

Despite the political rhetoric, the Council’s income has been around £220m each year since 2010 – very predictable, unlike a commercial private organisation.

Whilst reserves cannot fund running costs, forever, it can provide a measured bridging position to ensure that a clean and managed transition can be implemented.

What it does highlight, again, is that the statements that inexpensive services have been cut due to government funding is a phallacy, and one inspired by a political agenda.

Eg. The 10 libraries currently in the process of being “outsourced” to save £500k pa ( at best) which is being rushed through on the premise that it is not affordable could be funded for , say, 5 years at a cost of £2.5m  whilst a proper transition plan is developed – just 5% of the £46m increase in reserves.

The Council Tax payers should ask.. why the published reports don’t support the public political statements? Why is it that the Council insist on removing valuable services where there clearly is scope for protecting them?

Categories: Finances

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