Take a closer look George!

It is discouraging to read today that George Osborne thinks that councils can resolve their budgetary problems by dipping into their reserves. 

His suggestion is in direct contradiction to the advice that councils recently received from the highly respected organisation CIPFA, the association of council chief financial officers,  which strongly warned against digging into such free reserves that remain in order to fund shortfalls in expenditure.

The size of councils' reserves at £21bn, look quite high, but much of this represents money that has been set aside to meet known future obligations.  In many cases reserves that are genuinely free to spend are a lot lower than this.

We know that George Osborne actually has no clue as to whether councils can actually afford to dip into reserves as he suggests.  The National Audit office in a critical report last year demonstrated that central government has no idea about the financial strength of individual councils, or their ability to bear increased costs and further cuts.

Much of the pain has been caused by the activities and expectations of central government itself.  If local government is seen as a series of donkeys, then some are already  buckling at the knees.  It will not take much more in the way of additional burden to cause a total collapse.

In addition it seems that Osborne has threatened to cap the amount of reserves that councils can hold.  If he looks closer at the implications of such a suggestion I doubt if he would really wish to go ahead with it, and if he did he would have to set the cap at a fairly high level.   His tendency to immediately reach for a blanket restriction of this sort is deeply depressing.  Above all it leads one to question yet again government's sincerity when it speaks of the devolution of power.