ESTABLISHING EARMARKED RESERVES

Question

A recent explanation from our clerk advised that technically when creating and EMR pot there was no need to nominate a specific power to justify it ie PC only has to do that when spending it.  Whilst this does not make sense is that statement correct?.  Just another example of the laxity which exists around all forms of reserves .  The last few days has taught me a lot ie the budget setting exercise is really a precept setting exercise and making the reserves pots fit  and the yearly EMR review is little more than a tick box jobby.  Totally disillusioned

Answer 1

If your council has General Power of Competence, it is the power of first resort and therefore there is no requirement to identify a further power.  EMR should be to cover short term liabilities that the council has or to build up a pot for a larger project in the future, for example to cover any elections, emergency tree work or to budget for a new playground....

Comments

We have huge EMR and at the annual review stage I sought to question what power they intended to use on various pots as we don't have GPC.   The clerk replied well actually  we don't have to nominate a power until we spend it.  This seemed a ridiculous statement but I wondered if it was factually correct

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surely each ear marked reserve has a title as to what it is being kept for?

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Yes but they don't necessarily align with a given power.   For example we have one entitled Village Enhancement Scheme which could be for anything. Many pots were created during GPC times and not updated.  When questioned I was told that powers dont need to be considered until we choose to spend it

Answer 2

I’d say your questioning approach is entirely appropriate - but likely to be particularly unwelcome.
Your logic is sound - if there is no power to spend the money in the area for which it is being set aside, then why the hell set it aside if it can’t be spent there.

Answer 3

EMR’s should be specific not vague they should be reviewed regularly and your Financial Regs should cover this process

It sounds like what your PC is doing is hoarding money under false pretences but this is common as having a huge pile of other peoples cash means you don’t need to bother about managing the finances
Calculate the loss each year between the interest rate you get and inflation