Islington ‘shouldn’t use reserves’, says London Councils

A pressure group has warned the council not to dip into its £37.3 million of funding reserves, despite encouragement from central government to do so. The capital’s 32 boroughs have a total of £1.6 billion in reserves which the Government believes should be used to compensate for this year’s tight budget settlements.

But London Councils, a group representing the capital’s local government bodies, warned that the sums currently lining the council’s coffers should be saved.

A spokesman for London Councils said: “London’s local authorities have prudently built up reserves to prepare for emergencies, and to suggest that they wipe out these reserves to mitigate reductions to their funding is misguided and potentially hugely damaging.

“Local authorities have responsibility to their residents to take a long-term and strategic view.

“Many will question whether it is prudent to top up funding shortfalls in the short-term when every indication we have had from central government is that the austerity measures will be here for many years to come.”

Local government secretary Eric Pickles suggested last week that councils only needed to keep funding reserves worth 2.5 per cent of their annual budget.

Andrew Stunell, a local government minister, said: “All good councils in the capital should be considering the merits of temporary dipping into this money as part of their budget planning to help protect frontline services, with a view to building up their reserves again in the summer days to come.”

Islington Council declined to comment.