How the council uses its reserves
We use our reserves as part of our financial strategy to provide a more sustainable financial outcome for the future. The value of our reserves is about average among the 33 London Boroughs. The general reserves represent a small proportion of our overall annual budget and are needed to protect against general financial risks.
At the beginning of April 2016, the council (excluding schools) held general reserves of £20 million and earmarked reserves which relate to sums set aside for a stated purpose of £96 million. Of the earmarked reserves over half (£54 million) is set aside for invest to save, support for economic growth and longer term investment in order to generate income to help protect key services. The remaining reserves have been set aside to protect against specific known risks and support investment in future changes in health and social care.
If the reserves were used to just balance the budget they would be fully spent in the next few years resulting in greater budget cuts in the future. Using this money to fund services is not a sustainable approach as these reserves are not budgets that are renewed each year. Similar to a savings account – once it is spent, it is gone. There would be no money left to manage growing financial risks or make new investment to create income to protect key services.Information on the council’s approach to using reserves is shown in Appendix 4 of the 2016/17 Council Tax report