Norwich City Council plans �2.5m reserves plan

Shaun LowthorpeCouncil leaders in Norwich are looking to build up a �2.5m reserves stockpile to help ward off any unexpected drains on finances and the continuing impact of the recession.Shaun Lowthorpe

Council leaders in Norwich are looking to build up a �2.5m reserves stockpile to help ward off any unexpected drains on finances and the continuing impact of the recession.

Norwich City Council is set to approve its �25.1m budget with a planned 2.4pc increase in council tax bills for city-based services.

As part of the budget setting process, the authority is also looking at building up a contingency reserve so that it can continue to ride out the impact of the recession, which has seen income fall and demand for services rise, while low interest rate levels have also seen yields from investment income flat line.

A report to be considered by the council's scrutiny committee today warns that in the medium term the council faces 'considerable uncertainty' over funding issues, complicated by the national economic outlook and the looming general election.

Another question mark surrounds the level of funding around the concessionary bus fares scheme, which could tip the balance either way, particularly if the council is forced to give in to a �800,000 demand from First Eastern Counties buses. The company claims it has been underpaid for operating concessionary bus fares.

Recent years has seen reserves drop from around �11m to just over �4m as the authority dipped in to its coffers to ward off the worst impacts of the recession as income from fees and charges has dropped and demand for services increased.

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To cope with the turbulent financial outlook, Barry Marshall, the council's head of finance, is recommending the authority builds up a �2.5m over the next five years.

'Given the future uncertainties surrounding local government finance it would be appropriate to build up a contingency for large unforeseen financial events,' Mr Marshall said in his report. 'It is opinion of the chief financial officer that a contingency of at least �2.5m should be established over the next five years to mitigate this risk.'

Alan Waters, executive member for corporate resources and governance, said the idea was to build up the reserves to cushion the pressures on the authority.

'The view is that, given the projections, it's going to get even tougher for local government and we need to keep building up those reserves for that contingency,' he said. 'This is about preparing for what's going to be a tough time ahead, but also making sure we have got cash to give us time to deal with anything.

Claire Stephenson, leader of the opposition Green group, welcomed the contingency plans, but said the party was still running the rule over the rest of the finance plans amid concerns the Labour executive was stretching itself too thin.

'It seems sensible in the current climate and it's a good thing to have it as a safety net,' she said.

Do you have a council story? Ring Shaun Lowthorpe on 01603 772471 or email