Call to spend ‘surplus’ £3.7m on vulnerable

A meeting of the council’s reserves working group this week heard that its general fund balance stands at £13.7 million – approximately five per cent of the net budget for 2022-23 – and that the local authority retains a minimum balance of £10m at all times to address any unexpected challenges.

In a report presented to members, the council’s chief accountant Alison Shannon said that maintaining this balance was in line with recommended best practice.

However, Councillor Udey Singh, the authority’s vice chair for resources and equality, said that if the minimum amount required to be held in reserves was £10m, then the council should use the additional £3.7m to help people struggling to stay afloat financially due to soaring costs.

“We are living in a cost of living crisis and no-one is unaffected by this. So I do think we need to be drilling into these figures a lot more rather than have money that we are not spending just sitting there,” he told members.

“If we have got an extra £3.7m to play with, it’s at a time like this when we should be using that to help the most vulnerable people in our communities on a local level. It is money that belongs to the people of Wolverhampton, and like everyone else up and down the country, they are going to need all the help they can get to deal with spiralling costs.”

Councillor Ellis Turrell added: “I have to support my colleague here. We’re in a cost of living crisis, so in my opinion there shouldn’t be any reserves that we are not spending in this financial year. They should all be put to use.”

The council report said: “Reserves are made up of revenue resources which have been set aside by the council in previous financial years in order to fund specific items of expenditure in the future, and they play a vital role in the financial sustainability of the council.

“It is vital that we continue to hold these to mitigate the risk of uncertainty and any potential future expenditure, and to support the delivery of council priorities.

“Due to the projected financial challenges facing the council over the medium term, combined with the budget risks, reserves should only be called on in very specific circumstances.”

The council’s director of finance Claire Nye told the meeting: “Technically, we could use this money. For example, if something totally unexpected happened the reserve is there to be drawn on – particularly in times of crisis. But then we would put plans in place to top that back up to £10m as soon as possible as that is the minimum threshold.

“I think it’s prudent that we hold that level of reserves going forward. I would be concerned if we were to use all of that in one year because these reserves form part of our overall financial position that I have to consider when we come to budget setting.”