What are Reserves and why can’t the Council just spend them?

The Council holds reserves for a number of reasons:

  • it’s required by strict accounting policy
  • to manage significant emergency risks across all council budgets
  • to manage budget risks arising from increased prices or demand on services over the year
  • to support the future year budget position, against temporary pressures
  • to address future short and long term liabilities.

The Council’s financial environment is constantly changing and Council tax only covers a small part of the money needed to pay for all public services the Council provides. Most of the money the Council receives comes from the government as a grant which we depend on.

As the government continues to make cuts, we are being given less and less money to provide these services. Yet the cost of living is rising and poverty is increasing – this means demand on our services is going up and up.

Reserves are an important part of the Council’s financial strategy. They enable long-term budgetary stability and allow the Council to manage change without having an impact on Council Tax. The Council needs to provide assurance that potential financial impact of unplanned changes to its budgets can be managed.

  • Reserves are set at a level that recognises the financial risks facing the Council.
  • The greater the level of uncertainty, the more likely reserves will be needed.

Why can the reserves be used to save us from budget cuts? The use of reserves (a one-off cash amount), can only be used to address risks ‘once’. The risks associated with the need to make £69m of cuts over the next three years are of a ‘permanent’ nature. Applying reserves, if available, therefore only puts off the timing of making permanent cuts, and further reduces the temporary funding available to manage risks into the future. The strategy of simply using high levels of reserves to avoid cuts is not good financial management, however it is recognised that neither is holding too high a level of reserve. The balance therefore needs to be managed carefully, something which is being done in setting the 2015/16 budget.

In summary

Reserves = once

Budget Cuts = permanent and on-going

If you’re interested in finding out more about our reserves balances in detail you can find more information on our website.


Fair Deal For Derby campaign re-launched

The Labour administration at Derby City Council re-launched “A Fair Deal for Derby” earlier today (Monday 26th January) at Mackworth Library. The campaign, which calls on the Government for a fairer funding settlement, has brought together Council Leaders from Derby City, Nottingham City, Nottinghamshire County and Derbyshire County Council.

Since the Government austerity measures began in 2010, we have been forced to cut £96 million from our budget, with another £69 million to be found by 2018.Chris William MP and Cllr Russell sign petition for a fair settlement

Councillor Ranjit Banwait, Leader of Derby City Council, said:

“Time and time again we find ourselves facing massive cuts to Local Government funding, and yet there is clear evidence that these cuts are disproportionately affecting the most deprived areas. We demand to be treated fairly and I call on the people of Derby to get behind the city to push harder than ever for a Fair Deal for Derby.”

Councillor Sarah Russell, Cabinet Member for Housing, Finance and Welfare said:

“The Government cuts to the Council mean our city has been under a prolonged financial assault since 2010, which is having a profound and detrimental effect on the services that we are expected to deliver. We are urging Derby residents to help us call on the Government for a Fair Deal for Derby.”

If you want to make your views known to the Government you can download a copy of a the Fair Deal for Derby petition. Completed petition sheets can be returned to Derby City Council, Derby City Council, The Council House, Corporation Street, Derby DE1 2FS and other Council offices.

You can also tell us if they think Derby is getting a fair deal and give your ideas for next year’s budget on our Big Conversation page.