Don’t let our cash reserves slip below £5m Calderdale councillors are warned

Members of the council’s Audit Committee had previously asked for a report on the financial resilience of the authority and considered the paper prepared by Director of Finance, Nigel Broadbent.

In his report, which also set out the wider context nationally, Mr Broadbent said councils including Calderdale have to produce a balanced budget to support their services.

The report reminded councillors of the ultimate action chief finance officers have had to take at some authorities, most recently at Slough and Croydon, issuing Section 114 notices where councils have 21 days to produce an alternative budget that does balance, making spending cuts necessary to do it.

Falling reserves were a key issue in Slough’s case and Calderdale is at high risk in terms of its reserves sustainability and reductions in its reserves in the last three years, says Mr Broadbent.

However, it has relatively low debt compared to other metropolitan borough councils and use of prudential borrowing – local authorities can borrow money much more cheaply from government agencies – in the main on an “invest to save” basis reduces the level of overall risk, says Mr Broadbent.

Over more recent years Mr Broadbent has advised councillors when setting budgets that the council should not rely on using reserves to support its budget.

He says this is also his recommendation for the next three years.

In general fund balances – other reserves the council has are ring-fenced for specific purposes, for example education – the council had £5.8 million, an improved position, available to it but members are advised not to let this go below £5 million.

Mr Broadbent says steps should also be taken to ensure in-year overspends can be mitigated without the use of reserves – done through regular monitoring of delivery of savings plans, and taking action to address pressures when they arise will be required.

At a number of previous meetings across the council, councillors have debated and argued about the impact of meeting financial challenges at time of falling income, factors ranging from reductions in Government settlements over the last decade to, more recently, the impact of the COVID-19 pandemic.

Balancing the budget can require cuts to services or increasing its income, and council directorates are encouraged to be commercially minded.

Councillors receive regular updates through the authority’s Medium Term Financial Strategy.

* Support your Halifax Courier by becoming a digital subscriber. You will see 70 per cent fewer ads on stories, meaning faster load times and an overall enhanced user experience. Click here to subscribe