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Peter Black and South Wales West Liberal DemocratsRepresenting Aberavon, Bridgend, Gower, Neath, Ogmore, Port Talbot, and Swansea |
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Welsh Government must create financial stability for Councils so they can better use their reserves
March 2, 2009 12:00 AM
The Welsh Liberal Democrat Local Government Spokesperson, Peter Black, has called on the Welsh Government to create a stable financial climate for local Councils so that they can make better use of the cash and capital reserves they hold for the benefit of the local economy.
Commenting on the news that the 22 local Councils in Wales hold over £625 million between them in reserves Mr. Black said that the issue was far more complex than the Welsh Government had portrayed it:
"Unlike the Government local Councils deliver services to their local communities and thus need to have contingencies in place to ensure that unexpected costs do not jeopardise the delivery of those services. Last year for example a 50% increase in energy costs and plummeting interest rates caused many authorities to overspend. The Audit Commission require that Councils hold between 3% and 5% of their budget in non-earmarked reserves to provide a protective cushion.
"It is also the case that many of the reserves referred to in this report are already earmarked for capital projects such as new schools or to settle outstanding equal pay claims. It is very simplistic therefore to say that Councils are hoarding money unnecessarily.
"The problem that all local authorities face is that in an uncertain economic climate, in which the Welsh Government has held back money from them and is predicting further cuts in grant in future years, not to hold adequate reserves would be financial madness.
"If Welsh Government Ministers want Councils to reduce the level of their reserves then they need to put something back in return. I would suggest that as a minimum that would involve a guarantee that they will pass onto local government any increase in grant they receive from Westminster, this year they only passed on 2.9% of a 4.8% uplift. There needs to be a promise that such a guarantee will last for a number of years, at least until the 2011 Assembly elections. It would also help if the Welsh Government provided adequate finance for new initiatives they are promoting such as the Foundation Phase and 14 to 19 Learning Pathways, and actually put their money where their mouth is with regards to school buildings.
"Welsh Government Ministers should stop treating local government as whipping boys for their own failures on service delivery and finance and accept that this should be a partnership. Local authority spending already puts a huge amount of money into the local economy, over £150 million in Swansea's case alone, but if we are to release yet more then there needs to a stable financial climate and more understanding of the problems Councils face."
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