THURROCK Council’s financial position has been ‘misrepresented’ in a national newspaper article about local government finances says the authority.
The council was responding to an investigation in today’s Financial Times (Friday, 13 April) which described Thurrock as the worst performing authority in the country in terms of maintaining its financial reserves.
The Financial Times says nearly half of the councils in England have run down their financial reserves, with many struggling to cope with a pincer movement of cuts to central government funding and rising social care costs.
The paper reports that 70 per cent of the country’s 152 councils with social care obligations have seen their reserves fall over the past two years, quoting Thurrock as the authority which has suffered the biggest fall, a drop of 65 per cent to £11.8m, over the two-year period between March 2015 and March 2017.
In its report the Financial Times says Thurrock Council said the fall was largely the result of paying to get out of a services contract with outsourcing group Serco five years early in 2015.
The report the council goes on to say: “The amount of reserves held for schools also fell due to an accounting change when multiple schools became academies and were moved out of local authority control. The council said reserves had also been invested in unspecified “change programmes” designed to generate long-term savings, but had not been used to fund frontline services.”
Today a spokesperson for the council said the Financial Times’ report was a snapshot in time that misrepresents the current position.
She told the Thurrock Independent: “Thurrock Council is fortunate to be in a financially secure position, and in terms of financial stability the most important reserve is the council’s ‘general fund unallocated balance’.
“This has stayed stable at £8m since 2015 and has, as widely reported, increased by 38% to £11m as at 31 March 2018. In addition, the council was recently presented with a four year balanced budget demonstrating still greater stability.
“A Financial Times article published on Friday, 13 April about ‘council reserves’ was a snapshot in time that misrepresents the current position.
“It included earmarked reserves that are, by definition, earmarked for specific reasons. For instance, they included the amount set aside to buy Serco out of their contract with the council – circa £10m – and balances held for schools that have reduced by £6m over the period as more schools transferred to academies. They also include government grants that are for specific schemes and not for a council’s general use.”
Thurrock Council’s portfolio holder for corporate services, Cllr Shane Hebb, also commented on the story by the FT.
He told the Thurrock Independent: “It is fact that Thurrock Council’s “rainy day” general fund reserve has increased by 40% since 2016 from £8m to £11m. Thurrock Council’s frontline hasn’t been this well protected in decades.
“The Financial Times article is talking about money held – so called ‘ear-marked reserves’ – that includes funds for projects such as school building and other capital plans, or, money that the council held but then handed over when schools moved from council-maintained to academy schools. A lot of what the FT reports on, is the latter.
“Taxpayers expect their institutions to have enough cash to fall back on in the event of a financial crisis, but conversely, not sit idly on their tax-levied funds. Thurrock Conservatives agree – thus our review of reserves to ensure the council doesn’t sit on council tax payers money for no reason. It is not right to set aside money for a purpose – classroom building, the new integrated medical centres, as examples – and then not spend it as intended.
“Unlike other councils we haven’t written to Westminster to raise concerns about our income levels – instead we have set a balanced budget for four years and increased our reserves to ensure our services are further protected”.