East of England councils' reserves top £470m

Piggy bank in a council chamber
Image caption The research by the Sunday Politics East has also found the figure has gone up by almost £125m over the last five years despite the pressures of austerity

Councils across the East of England are sitting on reserves of £470m, a BBC East investigation has found.

The research by Sunday Politics East also found the figure has gone up by almost £125m over the last five years despite the pressures of austerity.

The government said councils should be spending some of their reserves rather than cutting services, but the councils argue that it is important to plan for unforeseen expenditure,

How much our councils hold in reserve is going to become a big issue over the next few years.

The money which central government gives to local councils is going to continue to be reduced. If councils complain about having to make cuts, ministers will tell them to look at their reserves.

Spendable reserves by county estimated unallocated reserves for 2015-16

  • Bedfordshire: £34.892m
  • Milton Keynes: £9.923m
  • Cambridgeshire: £55.025m
  • Essex: £112.786m
  • Hertfordshire: £57.024m
  • Norfolk: £55.006m
  • Northamptonshire: £40.238m
  • Suffolk: £72.660m

(Figures include all unitary, county and district authorities. Source: DCLG)

"The public will see these figures and they'll quite rightly be saying 'hang on if councils say they don't have enough money how come they can increase their reserves by almost £125m in our region'," said local government minister and Great Yarmouth MP Brandon Lewis.

"It is very difficult for local authorities to say that on one hand they need more money but on the other hand they have been keeping and building surpluses."

Councils hold reserves for a number of reasons and some of the money may be being saved for a long term project like a new transport scheme or school building.

These figures refer to unallocated reserves which appear to be sitting in the bank doing nothing.

The councils we have spoken to insist that they are holding just enough.

Councils argue they can never be sure how many people will claim benefits or business rebates, most do not insure their council houses but would need to replace them in the event of a fire or other calamity.

Image caption Local government minister and Great Yarmouth MP Brandon Lewis said it is "very difficult for local authorities to say that on one hand they need more money" when they are building surpluses

Rob Whiteman, of the Chartered Institute of Public Finance and Accountancy, told the BBC: "Most people and companies save money for a rainy day and most councils hold just 4% of their expenditure in reserve which is not a lot.

"It may be attractive for the government to say that instead of cutting services councils should be spending reserves. It's good politics but bad accountancy."

Councils point out that by law they are not allowed to go bust. If they could not meet an unforeseen bill they would have to immediately cut services.

And the uncertainty of imposing budget savings means that many would like to keep a little extra in reserve for now.

Others like Broadland District Council in Norfolk said they had not made any cuts to services and make a virtue out of the fact that they have large reserves.

The government said it expects councils to keep "sensible" levels of reserves, it just questions if they are holding onto too much.

There are signs that some councils are starting to use some of their reserves.

This week Suffolk County Council revealed that it' will be using £14m of reserves to help it ease the pain of budget cuts.

The council's cabinet member for finance Richard Smith said: "Reserves are for a rainy day and in local government it's pouring."

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