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Friday, October 10, 2014

Misdirection over council finances

The Public Services Minister's evidence to the Assembly's Communities Committee yesterday was a classic case of misdirection.

Having announced a local government settlement that cuts grant funding by 3.4% he was keen to put the onus back on councillors, hinting that making savings was not going to be as hard as it looks, simply because between them Wales' 22 Councils hold nearly £1 billion in  reserves.

Seven of these councils he said hold roughly 20% of their turnover in reserve. He added that if this money was being kept back for a rainy day then that time has come.

If only things were that simple. The fact is that most of these reserves are earmarked or committed for specific projects put in place to benefit local people.

In some cases tens of millions of pounds have been put to one side to meet equal pay claims from staff. In other cases money is there for pension changes or capital projects. And of course those reserves can only be spent once. If you use them to fill a gap in revenue funding then you are just deferring difficult decisions to future years.

It is not as if councils can complain about these tactics of course. After all many of them have tried the same trick on schools when cutting education budgets. But really, it does not help anybody when having taken a difficult decision the minister then hints that local councils have easier alternatives to the deep cuts they are all contemplating.
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