building up council reserves to protect the public from future financial problems is good financial management - cipfa


Rob Whiteman, CEO of the Chartered institute of Public Finance and Accountancy responded today to the publication by the ONS of the Local Authority Revenue Expenditure and Financing Provisional Outturn for 2012-13.

Speaking on the latest figures that show local councils are building up their financial reserves, Rob Whiteman said:

“The increasing financial pressure on local authority funding, including the council tax freeze and cuts to central government funding has created real uncertainty for councils’ future budgets and their ability to continue to provide much-needed services to the public.
“If local councils are trying to manage their reserves to protect the public from future financial problems this good financial management and should be applauded. In fact it is encouraging that the majority of councils are exercising prudence in their reserves management, providing crucial capacity to invest in service transformation and protect against future unexpected shortfalls.
“Indeed authorities should be very wary about using one-off reserves to deal with shortfalls in recurring funding.

“That is a recipe for significant financial problems in the future. 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.”

Rob Whiteman added:

“It makes a good headline to claim reserves are a problem, but it should not mask the fact that councils are managing the most significant cuts faced by any public service. It is a shame that they are being impugned when the evidence simply doesn’t stack up to justify this.”


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