‘It is prudent to keep £16m in reserve’
Stoke-on-trent City council recorded a multi-million pound ‘underspend’ during the pandemic Because of the ‘challenging’ financial picture, But some Feel the cash should Be spent on much-needed services instead. Political reporter Phil Corrigan looks at t
COUNCIL chiefs have defended leaving £16 million of funds unspent during the pandemic – saying the authority’s overall financial situation remains ‘hugely challenging’.
Stoke-on-trent City Council still faces having to make a further £10 million of savings, or possibly more, next year, members of the authority’s corporate services committee were told.
The council has been criticised for recording a £16.4 million underspend in 2020/21, despite the covid crisis hitting income and putting extra pressure on services.
Bosses received around £31 million of extra government funding last year to help them through the pandemic.
They say it was ‘prudent’ to put some of this money into reserves, rather than spending it during the course of the year, as the council still faces further financial challenges, including the tail-end of covid.
City director Jon Rouse told the committee that Chancellor Rishi Sunak’s autumn ‘mini-budget’ could make things even tougher for local authorities.
He said: “The council’s overall financial position remains really challenging, if we take a two or three-year perspective. This is in the context of the overall national financial position.
“We expect a very challenging spending review in the autumn. So prudence has to be our watchword. We’ve got to be really careful we don’t start using non-recurrent reserves for recurrent purposes – that way real trouble will lie ahead, because you create a cliff edge for yourself somewhere down the line.
“I wouldn’t be surprised if we ended up having to spend every penny of the covid reserve we’ve created to meet covid costs.
“We are expecting to have to make a further £10 million of savings going into next year, and that could worsen depending on the outcome of the spending review.”
Following the 2020/21 underspend, the council created three new reserves – a £6.2 million covid reserve, a £4.7 million transformation reserve, and a £5.4 million strategic risk reserve.
Labour councillor Paul Shotton questioned why so much money is being ‘stashed away’ when it could be spent on services.
He said: “Have any conversations taken place about reinvesting in areas where there have been cuts and underinvestment?
“We’ve made cuts to children’s services, to adult social care – surely we could have vired (moved) over investment into those sorts of areas rather than saving £16 million and putting it into reserves.
“I know reserves are needed, but at the end of the day, we’re here to deliver services for the people of Stoke-on-trent, not stash money away in little pots.”
Nick Edmonds, assistant director for finance, confirmed that there was danger of the Government ‘clawing back’ the unspent covid funding, as there was no obligation to spend it in-year.
He said: “In terms of the main covid grant, part of that funding was meant to continue to support us through the tail of covid into this financial year.
“The reserve we have created is from that covid grant, and that will be used in the current financial year to address those challenges and service pressures that remain.
“In terms of the wider picture of the council’s finances overall, the underlying challenges remain.
“This year has been an unprecedented year, and the challenges we’ve faced have affected the financial position.
“But the underlying base position from a council perspective remains hugely challenging, with uncertainty both in terms of covid and the wider financing of the sector.”