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Huge council reserve growth despite government cuts

PUBLISHED: 14:33 31 March 2018 | UPDATED: 14:33 31 March 2018

Waveney District Council's headquarters at Riverside in Lowestoft. Picture: Nick Butcher.

Waveney District Council's headquarters at Riverside in Lowestoft. Picture: Nick Butcher.

© Archant 2015

Waveney and Suffolk Coastal councils have seen huge reserves growth since 2010/11 despite sweeping spending cuts and a merger of services in 2010.

Data from The Bureau of Investigative Journalism and the National Audit Office shows Suffolk Coastal District Council (SCDC) has seen a rise of £20.4m to £31.6m in overall reserves, with Waveney District Council’s (WDC) reserves rising by £9.3m to £14.3m since 2010/11.

This means that SCDC’s total reserves are nearly 2.5 times the council’s annual expenditure, with WDC at nearly 1.5 times its annual expenditure.

Despite this, SCDC’s general unallocated reserves have seen a drop of 30.1% from £8.59m to £6.06m according to the Bureau.

National Audit Office data also shows net council spending has decreased by a combined total of £10.9m since 2010/11.

This came alongside a drop in funding from Westminster of 55.3% for WDC and 48.0% for SCDC in real terms.

The councils blame Westminster funding cuts combined with the council tax freeze endured by councils between 2010/11 and 2016/17 for the spending reduction.

Pressure is not expected to be lifted on either council in the near future, with SCDC predicted to be forced to pay over £313k to central government by 2019/20 due to further funding cuts.

Both WDC and SCDC have made efficiency savings since 2010 through a merger of services, with the councils claiming a significant saving across both councils while continuing to provide the same services to the public.

Data from the councils show that more than £12m of SCDC’s reserves have been earmarked to protect the council from unexpected changes in income from business rates.

This is alongside the total £2.21m earmarked for the Community Housing Fund reserve between both councils, which allows local community groups to provide affordable housing through government funding.

Labour councillor for Suffolk, Waveney District, and Lowestoft Town Councils Keith Patience said that he understood the need for money to be held back, but that it would help services if some was released.

He said: “I personally do think that some reserves should be released, but not to the degree that is being done in Northamptonshire.

“They have to keep some of it back as if there was a catastrophe like Grenfell Tower you need a reasonable amoount of money to deal with it.

He added: “However, in my opinion Suffolk Coastal have kept far too much back, which is not so much the case with Waveney.”

A spokesman for East Suffolk said: “Both councils are working towards becoming financially self sufficient as set out in the East Suffolk Business Plan.

“The authorities’ approach to financial planning reflects the financial environment within which the councils operate and adopts a balanced approach between creating a financial framework to invest in opportunities or mitigate risks where necessary.”

WDC Earmarked Reserves have increased from £1.607m to £9.142m between 2010/11 to 2016/17 because of:

· £1.476m in relation to Business Rates Equalisation reserve to provide a source of finance to equalise the effect of changes in Business Rate income from rateable value changes;

· £0.685m in relation to Community Housing Fund reserve which is Government funding to enable local community groups to deliver affordable housing units;

· £0.607m in relation to Enterprise Zone reserve. Enterprise Zone income is generated through business rates from development which occurs within each zone. Waveney District Council is the collecting authority and by default the administrators of the funds;

· £1.300m in relation to previous years in-year savings that are available to support future year budget gaps;

· £1.079m in relation to New Homes Bonus reserve which is Government funding to provide a source of finance to fund social and community related investments and initiatives ;

· £0.526m in relation to Transformation reserve to provide seed funding for efficiency (invest to save) initiatives that will produce savings in future revenue budgets.

SCDC Earmarked Reserves have increased from £7.568m to £26.072m between 2010/11 to 2016/17 because of:

· £12.706m to partly mitigate the risk of volatility in business rate value relating to the District unusual mix of economy and its exposure to risk of changes in business rate income. The Equalisation reserve would also provide a source of finance for capital or specific initiatives or investment opportunities.

· £1.525m in relation to Community Housing Fund reserve which is Government funding to enable local community groups to deliver affordable housing units;

· £0.318m in relation to Emerging Plans Initiative reserve to facilitate the delivery of the Council’s Business Plan including any emerging priorities;

· £1.850m in relation to previous years’ in-year savings that are available to support future year budget gaps;

· £2.115m in relation to New Homes Bonus reserve which is Government funding to provide a source of finance to fund social and community related investments and initiatives.

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