The government will seek to achieve “greater transparency” of councils’ reserves given that they have increased by £11.1bn over the last two years, the director of local government finance at the Department for Levelling Up, Housing and Communities (DLUHC) has said.
Nico Heslop, speaking at the Local Government Associations’ (LGA’s) Local Government Finance Conference, addressed recent criticism of the finance policy statement, which encouraged “local authorities to consider how they can use their reserves to maintain services in the face of immediate inflationary pressure”.
He said that that the local government settlement announced on 19 December 2022 had “not assumed any drawdown on reserves”. Instead, he stated that DLUHC will be looking into how councils can publish data on reserves in a clearer way.
“I think what we’re actually trying to achieve is much greater transparency across the sector. So, that members of the public, local politicians, officers and central government can look at and compare reserve across different classes of authorities,” Heslop told delegates.
Heslop detailed that even though there is an uneven distribution in the levels of reserves across authorities, the total number of reserves over all councils in England has significantly increased.
“But it is the truth that over the last two years reserves have gone up by £11.1bn. That’s a 50% increase – they’ve gone up more in the last two years than they did in the previous ten.
“And therefore, there is something going on, on reserves. And we just want to understand that in the most transparent way possible and that is what we’re going to seek to do,” he added.
I think at the Autumn Statement the government prioritised three sectors – they prioritised the NHS, they prioritised schools and they prioritised local government.
Common definitions
As well as publishing data on reserves in a more transparent way, Heslop also stated that the department will work with the LGA, CIPFA and councils to try to set up common definitions for reserves.
“Local authorities describe their reserves in different ways and there is not a uniform way of describing them. I think that’s one of the main things we want to achieve.
“So, what is a ‘ring-fenced reserve’, what is a ‘non-ringfenced reserve’, how do you account for capital provisions?” he continued.
‘Real challenges’ remain
In his speech, Heslop also detailed that he was surprised at the increase in funding local government received following the Autumn Statement in November and the local government finance settlement in December.
“If someone had said to me that after the Autumn Statement or after the local government finance settlement. we’d have ended up in this position in June, July, August or September, I would have bitten their hand off and I think most of the sector would have as well,” he said.
However, he did acknowledge that, despite the increase in funding, the sector still faces “real challenges”.
“I think in the Autumn Statement the government prioritised three sectors – they prioritised the NHS, they prioritised schools, and they prioritised local government. Within government, local government was seen as one of the big winners from the settlement, completely noting, that does not mean that every problem is solved,” he added.
—————
FREE weekly newsletters
Subscribe to Room151 Newsletters
Room151 LinkedIn Community
Join here
Monthly Online Treasury Briefing
Sign up here with a .gov.uk email address
Room151 Webinars
Visit the Room151 channel
