Page last updated at 07:01 GMT, Monday, 2 March 2009

Welsh councils' 625m in reserves

Welsh local councils have 625m in cash reserves with large variations between authorities.

Welsh local councils have £625m in cash reserves with large variations between authorities, BBC Wales has learned.

Savings are kept for future projects and to cope with emergencies.

Gwynedd had the highest proportion of cash reserves compared to the total budget: just under £48m out of a budget last year of more than £198m, or 24%.

Councils said they were bringing forward spending on projects to help counter the recession and they had to prepare for cutbacks in their funding.

Gwynedd is planning to spend £37m from its reserves on specific projects in the future, while keeping £11m for emergencies.

Freedom of Information (FOI) requests made by BBC Wales uncovered other local authorities with high levels of reserves compared with their total budget.

I think it would be a bit dangerous, at this particular stage, for us to be micro-managing the finances of individual local authorities
Local Government Minister Brian Gibbons

Carmarthenshire, Denbighshire and Pembrokeshire had 18% of their annual budget in reserves and Neath Port Talbot, Blaenau Gwent and Newport 17%.

Bridgend and Caerphilly had the lowest, around 7%.

The Welsh Assembly Government, which provides local councils with most of their funding, is itself holding only 1% in cash reserves this year.

Critics, including Wrexham AM Lesley Griffiths, said no councils should be sitting on large cash reserves during a recession, when spending them could help stimulate the economy.

She called on the auditor general to consider whether local authorities should have guidelines on their level of reserves and argued that the assembly government might need to issue advice on the matter.

piggy bank
Anglesey: £17.4m - 15.2% of total budget
Blaenau Gwent: £20.6m - 17.7%
Bridgend: £14.2m - 7.1%
Caerphilly: £16.4m - 6.8%
Cardiff: £36.4m - 8.1%
Carmarthenshire: £52.5m - 18.7%
Ceredigion: £17.8m - 15.7%
Conwy: £14.2m - 8.4%
Denbighshire: £29m - 18.6%
Flintshire: £28.2m - 13.5%
Gwynedd: £47.7m - 24%
Merthyr Tydfil: £9.4m - 9.9%
Monmouthshire: £18m - 14.6%
Neath Port Talbot: £38.5m - 17.1%
Newport: £37.3m - 17.2%
Pembrokeshire: £34.8m - 18.8%
Powys: £30.5m - 14.2%
Rhondda Cynon Taf: £47.3m - 12.5%
Swansea: £49.8m - 14.5%
Torfaen: £16.2m - 11.1%
Vale of Glamorgan: £20.8m - 11.7%
Wrexham: £22.5m - 12.2%
Source: BBC Wales Freedom of Information inquiries. Pembrokeshire declined to provide the information and said it was in the public domain. Its figures are WLGA assessments

The assembly government agreed that there were large differences between how councils were handling the recession in their areas.

Local Government Minister Brian Gibbons warned against telling councils how to spend their money.

"There is certainly professional guidance out there already through the accounting agencies and the finance officers of local authorities so, if they're professional on the job, they know what makes economic sense for them," he said.

"I think it would be a bit dangerous, at this particular stage, for us to be micro-managing the finances of individual local authorities," Dr Gibbons added.

But ministers said that councils should bring forward spending on projects where possible, as the assembly and UK governments have.

'Fundamentally flawed'

The Welsh Local Government Association (WLGA) insisted this was already happening in many cases.

And it argued there were cutbacks of £500m projected for the assembly government's budget and this would inevitably have an impact on local government finances.

WLGA chief executive Steve Thomas said councils needed to prepare for this.

He said: "From our point of view, the reserves have been built up and are there because of statutory guidance from the Wales Office.

"They'll be used to help people during the recession, but will also be phased-in during a period of time within communities.

"So we've got to make sure we've got a sustainable local government in Wales in the next five to six years and it's not all about spending reserves now and leaving the cupboard bare.

"The lessons of the last two years prove that strategy is fundamentally flawed."

WLGA leader Cllr John Davies said it was "incredulous" that councils were being questioned over their reserve levels "when it is these same reserves that will play such a vital role in ensuring financial risks can be managed".

The Federation of Small Businesses (FSB) said councils should use their surpluses to provide short-term loans to small businesses unable to get funding from banks.

They FSB said this would be an effective way of boosting the economy during the recession.

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