Government calls for councils to spend their budget reserves cannot be met in York, as its reserves are at the legal minimum.

Reserves are a fund that a council must legally hold in order to tackle unexpected problems that arise each year.  Finance officers at the council have confirmed reserves held by City of York Council in 2007 were around £11m, but the previous Liberal Democrat administration had almost halved this to £6m before Labour took office seven months ago.  

Labour leader of City of York Council, Coun. James Alexander, said:
“Eric Pickles says councils should be using their reserves to balance their budgets and make up for the shortfall in Government funding. Unfortunately this doesn’t apply to York, as the Liberal Democrats left office seven months ago with what officers confirm was the legal minimum of reserves, meaning we cannot use any reserves to meet the shortfall in Government funding.

“The Liberal Democrats in York did not save in the good times to pay for the bad and this has made Labour’s task of mitigating the worst excesses of the Conservative-Liberal Democrat Government even harder. We will take tough decisions now to secure the future.”
 
“Increased costs in adult care and looked after children coupled with a series of budget black holes left by the Liberal Democrats have also meant that any unexpected savings this year have had to be used to close in year budget pressures. The inherited budget black holes include £800k in housing and £700k in communities and neighbourhoods.
 
“It is a common misconception that the 2.5% council tax equivalent offered to councils by the Government to freeze council tax is a grant, when in fact it is a loan to be repaid next year. Many councils will use their reserves to pay back the loan next year, but the Liberal Democrats in York left office without leaving this option to the new administration.  

“So if the council accepts the loan, further cuts or council tax increases will be needed next year.”