A Leeds council finance chief says the authority’s ‘rainy day’ fund is at half the levels he would like - and dipping into it to plug any budget gaps would leave the authority in a “less than ideal” situation.
Alan Gay, Leeds City Council’s deputy chief executive and director of resources, was speaking before a cross party scrutiny panel during a discussion about the city’s schools budget, which faces a £5m shortfall next year. The panel discussed the possibility of the authority using its reserves pot to plug the shortfall.
Councillor Kim Groves, chair of the strategy and resources scrutiny panel, asked if this would leave the council with its lowest ever reserve levels and if there was a “plan B”.
Mr Gay explained “The reserves have been down to a much lower level, at around £12m.
“This would get us down to about £20m.
“It’s hard to say what the right level of reserve is, I don’t think we would wish it to be as low as that.”
He said in recent years, the council had maintained a reserve pot of between £20m and £25m every year.
Conservative councillor Dan Cohen then asked: “In an ideal world - and I know we are not in an ideal world - what would be your professional recommendation in terms of what our reserves ought to be?”
Mr Gay responded: “In the event that we have to absorb an additional cost of £5m, that would put us in a position, I think, where reserves were lower than ideal.”
He stressed that “whilst it would make me very comfortable to have double that amount of reserves...I think we can manage the risks better than that”.
Meanwhile Doug Meeson, the council’s chief officer for financial management, admitted that “we do keep reserves for that ‘rainy day’ and I guess that if we ended up with a £5.2m problem, that would be a pretty wet day I think”.
Leeds City Council is set to rubber-stamp its 2017/18 budget next month.
The authority needs to save £75.3m by 2018 - and is slashing 800 jobs - due to a combination of reduced Government funding and pressures on services.