Friday, 10 October 2014

Minister Andrews and a Shotgun Wedding.

Yesterday I speculated whether WAG cuts make council merger less or more likely?

One problem I foresaw was  was one council dipping into reserves whilst  its potential makes cuts.

It is clear that Public Services Minister Leighton Andrews may have had this partly in mind when he  questioned the high levels of financial reserves held by some councils and suggested they could be used to help mitigate the effect of cuts.
This week Mr Andrews announced cuts totalling £146m to Wales’ 22 local authorities.
But giving evidence to an Assembly committee he pointed out that seven councils had reserves that amounted to more than 20% of their turnover, and that total reserves were approaching £1bn.
He said:
 “Reserves, it seems to me, are there for a number of reasons.“Sometimes they are there for prudent forward planning in the sense of budgeting for major capital investments that they develop.“Sometimes they are there against the arrival of a rainy day.“I think the rainy day has been here now for a year or two, and I think we have to ask very straightforwardly to what extent are those reserves being effectively used and to what extent can we really expect local government to carry reserves such as they are carrying at a time like this.”

There is of a third reason Mr Andrews missed and that a financial crisis could wipe millions off councils investment as occurred in the Iceland where Public sector bodies in Wales are still owed more than a third of the cash they had invested in Icelandic banks.

Eight councils, three universities and three former police authorities had almost £75m tied up in the country's banking sector which collapsed in 2008.

Neath Port Talbot council is due the most, with £8m of £20m outstanding, and Caerphilly council is owed £5.6m.

The Welsh Local Government Association (WLGA) said it was possible bodies may get nearly all the money back. but by 2012 they were still struggling

Leighton Andrews left his previous post as Education Minister following a row over his defence of a school which faced closure under his own surplus places policy.

The suspicion must be that Leighton has been brought as a enforcer to make sure that voluntary mergers of local authorities  will go through even if it amounts to a shotgun wedding



Though it remains to be sen if neither ,one ,or both potential partners want to go through with this.

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