The curious case of Councillor Coleman’s piggy bank

Mike Tuffrey AM

A little reported feature of Boris Johnson’s budget this year is the switch in Council Tax precept income from LFEPA to the MPA, to the tune of £20m.

Under normal circumstances, that would result in £20m in spending cuts to the fire service. But the plan is for that spending to be funded from accumulated reserves, which are projected to reach some £40m by the end of March this year.

In fact reserves, along with underspends on the annual budget, have been a feature of LFEPA finances for some time, dating back to the Livingstone era. In 2006/07, the annual underspend was some £9m and year end reserves £35m, and the following year some £7m and £25m respectively.

In Boris Johnson’s first year, the underspend was some £15m and year end reserves £40m. By 2009/10 they had reached a whopping £18m and £43m respectively.

Surely, you might ask, keeping some reserves is prudent. Yes indeed – a figure of 2.5% of spending, officers advise. That equates to £11m, which means that fire reserves will be running at nearly three times the level prudence dictates, even after the Mayor’s raid for the police.

The chutzpah of Authority Chair Coleman knows no bounds. We need the money to protect the service in these uncertain times, he says, failing to mention the little matter of an election next year… when the piggy bank will ensure Boris Johnson can claim to have held council tax down for four years.

I seem to remember government ministers recently berating local authorities for sitting on large reserves. And it’s true councils with money in the bank should be using that now for ‘invest to save’ reforms in the way they work. Otherwise they will not withstand the continuing squeeze in years ahead as the full pain from paying down Labour’s exorbitant national borrowing hits even harder. Sadly, we’ve seen little sign yet of that forward-thinking approach in LFEPA.

Mike Tuffrey AM is a Liberal Democrat London Assembly Member and member of the London Fire and Emergency Planning Authority