Reserves: not a pot to be plundered – Alex’s latest MJ column
Author: Alex Thomson |
In Localis chief executive Alex Thomson’s latest opinion piece for the MJ he considers the importance of councils holding reserves. You can read the piece in full here or below.
A great deal has been written and said about local authority reserves in the past few years. It has been thankfully rather less high profile in recent months. But for local authorities, reserves of all kinds are now more vital than ever.
With more power to shape local circumstance than at any point in the last three decades and much depleted budgets, the landscape in which local authorities operate has become a lot riskier.
The case for having a prudent level of financial reserves is unarguable. The move from grant to business rates, while welcome, automatically increases the variability of projected income. Judging whether offering to put forward discounts in an attempt to encourage and catalyse additional local growth adds further risk.
Also playing into this equation is many local authorities’ increasing reliance on commercially-generated income.
Entrepreneurialism offers large potential upsides but such revenue streams are inherently uncertain although cash in the bank is vital in case of unexpected rainy days and to allow ‘invest to save’ projects for various services.
But looking beyond pounds and pence, intangible but hugely important political reserves will also be crucial. As recent devolution deals and those in the pipeline have proven, agreeing on a viable geography to devolve to is not easy. The rewards available are considerable but local leaders and chief executives need to employ their diplomatic skills to the utmost to secure them.
The need for collaborative leadership doesn’t stop there. Across the country the opportunities to forge a new, more integrated and effective model of public service is unprecedented.
The benefits of this for local residents would be vast, but working with other public sector bodies which operate in a separate governance and accountability framework is undoubtedly a challenge.
However, I’m optimistic because local government can draw on another reserve – the vast fund of talent, compassion, perception and wisdom that characterises the people within the sector. No-one would suggest the next few years won’t be tricky, but that’s not to say there aren’t glistening prizes within reach.