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Steve Freer, CEO of the Chartered Institute of Public Finance (CIPFA), responded today to the publication by the ONS of the Local Authority Revenue Expenditure and Financing Provisional Outturn for 2012-13.
Speaking about the increased level of reserves held by councils, Steve Freer said:
“Recent changes to local authority funding, including the localisation of business rates and council tax benefit, have created additional uncertainty for councils’ future budgets.
“When considered in the context of the Government’s on-going austerity programmes and ever tighter financial settlements, it is encouraging that the majority of councils are exercising prudence in their reserves management, providing crucial capacity to invest in service transformation and a hedge against future unexpected shortfalls.
“Authorities should be particularly careful about using one-off reserves to deal with shortfalls in recurring funding. That is a recipe for significant financial problems in the medium term. Reserves are not a long term solution to funding challenges and at best can only buy time to enable service changes to be planned and implemented in an orderly way.”
Contact: Matt Patterson
CIPFA Press Office
t 0207 543 5787
Notes to Editors:
1) The ONS’ Local Authority Revenue Expenditure and Financing: 2012-13 Provisional Outturn can be found here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/233176/RO_Provisional_Outturn_2012-13_Statistical_Release_-_FINAL.pdf
2) CIPFA set out its position on council reserves in December 2012: http://www.cipfa.org/about-cipfa/press-office/latest-press-releases/cipfa-sets-out-position-on-council-reserves
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