ConDems Call For Councils To Use Financial Reserves

6 Dec 2010

ConDem local government minister Eric Pickles calls for councils to spend their reserves to make up the loss of central government grant which GMB says is financially illiterate.

This year’s council pay freeze has contributed £750m to those reserves and last year’s 1% pay rise contributed another £500m so this £1.25 billion should be paid back to council workers says GMB.

GMB commented on the statement last week by Eric Pickles Secretary of State for Local Government and Communities saying that local authority bodies in England should spend their reserves of £10.5 billion which averages nearly 10% of current expenditure.

Brian Strutton, GMB, National Secretary for public services said “This year’s council pay freeze has contributed £750m to those reserves and last years 1% pay rise contributed another £500m. This is because councils were allocated this money from central government and budgeted for 2.5% pay rises but withheld it. This £1.25 billion should be paid back to council workers.

Eric Pickles has come around to seeing what the local government trade unions have pointed out for some time – that councils have been withholding pay rises and squirreling the money away in reserves. While some contingency is necessary it is crystal clear that the £1.25b that has been taken from council workers over the past two years has contributed to these bloated reserves and should be paid back. There is no justification at all for council workers to have their pay frozen just to build up unnecessary cash piles for councils.

However Eric Pickles call for Councils to spend their reserves to make up some of the loss of central government grant is financially illiterate. You can only dip into savings once and it is not a sustainable way to make up for the draconian cuts in funding local government has had imposed on it. Mr Pickles would be more credible if he supported front line council services by opposing the central government cuts.”

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