MP Vincent Cable's criticism of Richmond Council's "war chest" has brought a strong response from Cllr Nicholas True, deputy leader of the council and cabinet member for finance.

Dr Cable questioned the council's policy of holding large financial reserves of around £40m. "Of course there have to be prudent levels of reserves to deal with unexpected events. But this is ridiculous," he commented.

"It makes no sense to hoard cash while very basic local services are being squeezed out of existence - like the petty cuts of removing public toilets in Twickenham and Teddington.

"I am also concerned about the impact of extreme levels of reserves on relations with the government. Whichever party has been in power locally I have supported the council's argument that it gets a bad deal from the government, forcing up council tax to painful levels. In fact this council has had several extra pay outs from the government; and since these are not being passed onto residents the government will argue that Richmond has got more money than it knows what to do with.

"The official justification for the reserves is that the council has big capital funding requirements, particularly for new secondary schools. But no progress has been made in identifying a site for a new school on the Twickenham side.

"A more cynical interpretation is that the reserves are a 'war chest', and are being stored up to cut council tax and finance services in the run up to the next council elections."

This has brought a stinging response from Cllr True. "Dr Cable has made a foolish and unhelpful attack on our Borough," he said. "He agrees that Richmond Council gets a very poor financial deal from government - in fact, among the very worst in the country. Then in the next breath he hands ammunition to Gordon Brown by saying we are awash with reserves.

"This is a massive own goal for Richmond, booted into the net by our MP. Dr Cable makes David James look sure-handed. Local people should expect better support and loyalty from their MP.

"Dr Cable also makes a serious allegation that money paid over for residents has not been passed on. This amounts to a charge of maladministration against council officers. Dr Cable must today specify what entitlements have not been passed on - or withdraw his damaging slur.

"We recently published detailed figures on the Council's reserves. These show that in terms of the days of emergency spending they could cover they are no higher than they were under the LibDem council before Sir David Williams decided to blow our then reserves.

"Any sensible person knows you have to have savings in hand to underpin consistent programmes of investment. The tragedy of recent years was that our predecessors spent the reserves until the District Auditor told them they must stop - then had to make emergency cuts in basic services like refuse collection, parks, street trees and street sweeping, cuts which we have restored since 2002.

"Dr Cable also doesn't understand that large proportions of our reserves are already earmarked for future investment as part of the challenge of making good the £65 million backlog in capital investment we inherited in 2002. Our long term strategies for investment in libraries and playgrounds and the increase in planned works to highways demonstrate our commitment over a 5 to 10 year period and, together with the identified need to invest in secondary schools, would more than exhaust the funds set out above.

"The Council's main reserves that are not earmarked for specific purposes consist of a general reserve of £11m and infrastructure reserves of approximately £16m. The former is about 6% of the Council's net budget, broadly in line with Audit Commission expectations.

"Dr Cable is playing politics. He cannot attack us for wasting money as our predecessors used to - so he attacks us for being too prudent. That is criticism we can take, but I am happy to arrange for officers to provide Dr Cable some basic briefing in local government finance so he does not embarrass himself and Richmond in future. He fails to understand, for example, that simple removal of the so-called floor in the Government Grant settlement (a mechanism which protects our Council from a reduction in its overall grant) would cost Richmond over £6m. Where would local residents be left if that day came and, as Dr Cable asks, we had spent all the money in our reserves? We would be facing major service cuts like those made by the Liberals four years ago - something this Council will never risk and never countenance.

"We were elected to restore and safeguard services and that is what we have done and will continue to do."

Tuesday, September 7, 2004

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