Shropshire's two councils hold £140m in reserves
More than £140 million is being held in bank accounts by Shropshire's two councils, new figures reveal today.
Shropshire Council has funds of £126.3 million including cash reserves and deposits, while Telford & Wrekin Council has just over £14.6 million put away.
The substantial reserves are held despite the councils pushing through cuts in their budgets, following a fall in government funding.
Councillors in Telford & Wrekin last week approved a £9 million budget cut for the next financial year.
Telford & Wrekin Council
Cash held in imprest accounts, petty cash and float balances as of November 30 = £163,000
Bank Current Accounts (HSBC) including cash in transit as of November 30 = £564,000
Call Accounts short term investments accounts = £13.918 million
Total cash = £14.645 million
Shropshire Council
Current account/imprest accounts = £230,000
Notice accounts = £20 million
Call accounts = £38.07 million
Term deposits = £68 million
Total cash = £126.30 million [/breakout]
Last month members of the Shropshire authority approved plans to make £40m of savings, with adult social care facing the biggest cuts for both councils. It also angered town and parish councils by agreeing to keep £511,000 in government grants that should have been passed on for local services.
Council leaders today defended the size of their cash reserves, insisting their finance teams had to ensure there were adequate funds available to meet its "cash liabilities" to ensure "effective service delivery" to residents.
This money is stored away in reserves, temporary cash flow balances, current accounts and for Shropshire Council includes £68million in deposits.
It includes Government grants received in advance, money ring-fenced to deliver services, council tax collected but not yet spent on services and cash-backed reserves.
Today's figures were revealed by a Freedom of Information request submitted by the Shropshire Star.
Russell Griffin, of Telford & Wrekin Council, said: "Bank accounts change on a daily basis according to cash inflows and outflows.
The council has to ensure that it has adequate funds available within its bank account to meet its cash liabilities and does not exceed any overdraft facility that may be in place from time to time."
A spokesman for Masons Independent Financial Advisers in Shrewsbury said today that councils needed reserves as financial emergencies had to be taken into account.
He said: "Councils will have to keep cash reserves for emergencies. If there is an emergency and they need to react quickly, they will always have to keep cash reserves, on top of that they will have a business plan and spending plans and need to keep cash ready for that so it all depends what projected spending there is.
"Before the financial crisis many councils were putting their money into Icelandic banks and they went bust so authorities have to be wary. It is difficult to say whether these are appropriate amounts to have in reserves without knowing the incomings and outgoings, it depends on the expenditure and budget plans."
The £126 million, which was accurate as of January 31 this year, in bank accounts owned by Shropshire Council, is expected to fall to £100 million by the end of the financial year due to the reduced council tax income in February and March, the figures revealed.
The figures provided by Telford & Wrekin Council showed that the authority had £14.467 million in bank accounts on March 31 last year, with an extra £10 million in a long term deposit, and a total of £14,645,000 in cash reserves, with no deposits at the end of November last year.
A spokesman for Shropshire Council said: "The £126 million investment portfolio comprises temporary cash flow balances, such as Government grants received in advances, council tax collected but not yet spent on services, cash backed reserves, capital receipts and housing revenue account balances ring-fenced to deliver services to the council's tenants.
"These balances are invested on a temporary basis, generating a return which helps keep council tax low."
In 2012, English councils increased their reserves by £4.5 billion over the previous five years to almost £13 billion, despite cuts to funding, the Audit Commission said.
The public spending watchdog found councils had a total of £12.9 billion set aside – the equivalent of nearly a third of their spending on services.
Communities Secretary Eric Pickles used the figures to attack some councils for "scaremongering" about funding cuts at the time. But the Local Government Association (LGA) said councils were being prudent.
