Roger Gambba-Jones

The most recent casualties of the credit crunch, local councils, have come in for some stick from taxpayers because of the mysterious way local government appears to manage its finances - I can't say as I blame them, the whole process is a mystery to most elected members! 

The public outcry about these bulging foreign bank accounts shows that local councils don't do a very good job of telling people how it all works when it comes to setting the level of council tax.  Why they ask, does my council keep saying that it's either raise the council tax or cut services, when they have millions of pounds in the bank!

The money in these accounts comes from various sources and sits in these bank accounts for different lengths of time.  Long term accounts tend to be used for money being set aside for major projects such as new sports centre, community centres, public parks etc.  Other short term accounts are used to hold the money collected on behalf of government such as the business rates, so that the council can gain some interest on the cash before it is passed on to the Treasury. 

Other money is put in to accounts as a buffer for the day to day running of things because the government pays the grant we get in stages, but the bills arrive every day!  It's also there as a contingency fund, where emergency funds might be required to provide specialist help or emergency accommodation to those affected.  On a more mundane level, it has also helped councils cover the huge increases in fuel costs we've all suffered.  On occasion, heaven forbid, it may also be needed to deal with legal costs.  The interest earned from these deposits also gives the council some extra funds to put towards the council tax, thereby limiting the amount of the annual rise.

So, whilst the loss of these funds will not have an immediate effect, it will certainly have a long term one, because councils are not just collecting money and salting it away because they like counting it.  Incidentally, SHDC doesn't appear to have any cash at risk, unlike some of our neighbours.