Final outturns: revenue reserve levels rise amid budget underspends
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Total useable revenue reserves (URRs) in upper tier authorities increased by 6% last year, according to early analysis of final outturn reports.
Data analysis firm Pixel Financial Resilience has compiled figures for 125 out of England’s 150 unitary and county councils, showing total URRs rising from 12.08m to £12.81m over the past year.
However, the figures, released after last week’s final accounts deadline, hide a reduction in URRs in 45 councils, which make up 36% of the total.
A statement by Pixel said that its data shows a “mixed picture in respect of resilience – over a third of upper tier authorities are still depleting usable revenue reserves but overall there is a 6% increase in these reserves”.
London boroughs saw the healthiest increases in URRs between the end of the 2017/18 and 2018/19 financial years – up 10% from £1.50m to £1.65m.
Counties and unitaries saw a rise of 6% over the period (£12.08m to £12.81m / £3.23m to £3.41m respectively).
Metropolitan upper tier councils saw the lowest rise of any group – just 1% – from £2.87 to £2.90m during the last year.
However, six out of 12 inner London Boroughs (50%) saw URR levels drop.
Percentage figures for other types of council were outer London boroughs (23% saw URRs fall), metropolitan councils (45%), unitaries (30%), counties (35%).
Experts in the sector have also noted that a number of councils have reported underspends on their budgets in their outturn reports.
This week, Somerset County Council reported that a series of in-year measures had helped turned a projected overspend of £12.1m for the last financial year into an underspend of £5.9m.
Paul Dossett, public services partner at Grant Thornton, said he had seen “quite a lot” of underspends so far this year.
“Partly this is savings, partly the Improved Better Care Fund, partly business rates and partly other income,” he said.
“So I suspect 2018/19 maybe a better outturn than predicted but we don’t have final data yet across the sector.”
Last month, Room151 reported that Northamptonshire County Council has turned a projected overspend of more than £30m for 2018/19 into a budget surplus of £1m in a turnaround described by the authority’s executive financial director as “unprecedented”.
In a report to a meeting of Northamptonshire’s cabinet, section 151 officer Ian Duncan said the council’s provisional outturn for the year to 31 March was an improvement of £31.1m on the in-year forecast overspend position reported when the authority issued a section 114 notice in July.
Graham Liddell, managing director of public sector financial consultancy LPFG, said dramatic in-year turnarounds often stemmed from “overly-cautious budget setting – particularly in relation to demand-led services that prompted clampdowns on non-essential spending.”
A number of councils this week complained after the BBC last week named them as at risk of running out of reserves within four years.
Some councils said the BBC should not have included earmarked reserves in addition to useable reserves in its calculations.
However, the BBC said that it was using the same methodology used by CIPFA in its new resilience index.
Additional reporting by Colin Marrs
