Local Government Minister Eric Pickles believes local councils are misleading the public by claiming they have no money left while increasing their cash reserves and he wants them also to invest in funding restructuring.
Latest figures show that councils have increased their cash reserves by over 20% in real terms since 2010 to 2011. Reserves now stand at over £19 billion, an increase of £2.6 billion in the last year.
Eric Pickles called on councils to consider whether such substantial reserves are necessary at a time when they should be focusing on protecting frontline services for residents and making sensible investments for the longer term.
Councils account for a quarter of all public spending. In total councils are forecast to spend £102 billion in 2013 to 2014 – up 4% from their forecast the year before.
The figures also show that councils’ in-house spending continued to rise by a further 2% despite repeated calls by ministers to reduce administration costs and overheads.
Eric Pickles said: “There are no rules on what councils should hold in reserve and taxpayers will be amazed that while councils are amassing billions in secret stockpiles some are pleading poverty and raising Council Tax bills for hard working families.
Everyone appreciates the need for a financial umbrella for those rainy days but keeping reserves at levels unprecedented in recent years should give local residents pause for thought. Instead they could be tapped into to ensure councils can protect frontline services and keep Council Tax down for hardworking people. Councils can also look at using reserves to pay for the short-term costs of restructuring their management structures to save millions in the long-run.”