On why reserves are necessary to protect services and invest in the future

As I descend ever deeper into middle age, I find the BBC’s Question Time ever more difficult to watch.  Even in the programme’s pomp under Sir Robin Day I might occasionally have been irritated by a panellist who rather than a thoughtful response acknowledging the complexity of an issue would instead deliver a ‘clap line’ designed to get the audience applauding like seals.  But these days the clap lines seem to have taken over [and that’s not good for my ulcers].  And sadly clap lines are not confined to Question Time; they have been creeping into local politics too.

The one I am currently contending with is this: every time we have to make a tough decision, up pops the usual suspects to say “you don’t have to do this, Kensington and Chelsea has got massive reserves.”

Predictably, hisses and cries of “shame” then issue from the public gallery.  We have  heard them over the play service, the passenger transport contract, the letting of the Isaac Newton Centre and much else besides, so today I thought I would devote a few paragraphs to explaining why this reserves stuff is nothing more than a clap line, a mere political trope.

Since the age of austerity started, in 2010, the Council’s budget has shrunk by some £50 million and we fear that it will fall by at least this amount over the next four years.

In Council terms, that’s huge, but by and large we have so far managed to protect our residents’ services.  We have done so by sharing with our neighbouring boroughs, by making savings in management, and by managing our property estate in a much more dynamic way.  Doing all that has involved a whole series of difficult but necessary decisions.

Every time our critics isolate one of those decisions and say “you don’t have to do this, you have got all those reserves,” it’s bogus because it’s not one decision they want to defer but many, it is not hundreds of thousands they want to pay out of reserves annually but millions and of course reserves are different from revenue: they can only be spent once.  If we use them to defer difficult decisions, they will soon be gone and for reasons I will come on to we need those reserves.

The answer to shrinking revenue therefore is not clap lines but the hard gruelling business of doing things differently, of doing things better, for as long as we can.

But let’s talk about our reserves which are indeed healthy, for now anyway. For that I would like to pay tribute to our financial managers past and present, making special mention of our formidable former director of finance [Mrs] Sue Beauchamp who sadly died recently.

In recent years local government has seen strikes, banking collapses, market implosions and contractor failure.  Any organisation of our size, delivering hundreds of vital services, simply must hold some cash reserves if it wants to be able to insulate its residents against those risks.

And risk is not the only reason for reserves.  Despite austerity we have refused to set aside our ambitions for our residents.  In fact we have some £200 million of capital projects in the pipeline right now, new schools, a new sports centre, new facilities for children with disabilities, an expanded dementia service and much else as well.

In addition we are bringing forward proposals for hundreds of new homes so that we can make our contribution to solving the housing crisis.

That we can do all that is of course down to our reserves which will soon start shrinking to pay the bills.

So our reserves protect your services against risks and enable us to invest in the future.  And here’s the irony: if over the years we had followed the policies recommended by the clap line merchants, those reserves wouldn’t even exist; we would be unable to invest in the public realm and we would be more.

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