Exclusive: Yorkshire councils sitting on £1.2bn cash pot

While public finances are in their most parlous state in decades and school rebuilding schemes and vital transport projects have been decimated by spending cuts, the study shows council treasurers across Yorkshire are quietly sitting on reserves worth hundreds of millions of pounds.

Some of the money is ring-fenced by Government for specific uses and some has been allocated to ongoing projects but not yet spent. However, hundreds of millions more is lying unused and not allocated in local authority bank accounts up and down Yorkshire.

An analysis of the draft accounts produced by the region's 22 local authorities for 2009-10 show council reserves across Yorkshire reached more than 1.2bn at the end of March – around 400 for every taxpayer in the region.

Bradford Council, which increased its council tax by 0.9 per cent this year, had the largest reserves at the end of the last financial year, totalling almost 120m.

By contrast, Leeds – Yorkshire's biggest council, with a budget 60 per cent larger than Bradford's – was sitting on around half that amount.

It is considered prudent for all councils to have a certain amount of cash in reserve in case of unexpected occurrences or budget overspends. But some have built up vast stockpiles, often from the sale of public assets such as council houses or disused buildings.

A spokesman for Bradford Council told the Yorkshire Post that around 20m of its reserves had since been spent on this year's budget and much of the remainder was either ring-fenced or earmarked for council projects. But some 22m remains available for use.

Council leader Ian Greenwood said this was likely to be spent on day-to-day services as the Government reins in council funding.

Coun Greenwood said: "The reserves available to cushion the blow of cuts are around 22m. This is dwarfed by the size of the cuts we are being told to make, which are over 30m this year."

Bradford's cash reserve represented around nine per cent of its annual 1.3bn turnover. A far higher proportion of cash is being held by Hambleton Council in North Yorkshire, which is sitting on almost 22m – and has a turnover of just 38m. By contrast, neighbouring

Richmondshire, a similar-sized authority, has 1.3m in the bank. Both increased council tax by 2.5 per cent this year.

Hambleton deputy chief executive Phil Morton said it was the council's long-term strategy to keep large amounts in reserve to prop up its annual spending. The authority has one of the lowest council tax rates in England.

"On the face of it we've got large sums of money in the bank," Mr Morton said. "But in reality we need that money to support the low council tax level we've got."

Within their reserves, every authority is obliged to keep a general fund which it can use to prop up spending plans.

The amount of taxpayers' money set aside in this way varies widely, depending on the policies of those in charge. More than 200m in total is currently lying unused in general fund accounts in Yorkshire.

East Riding Council has the largest general fund in the region, at almost 25m. Accounts reveal it has been intentionally under-spending on its services over the past 12 months to build up a war chest ahead of impending Government funding cuts.

Around half of Yorkshire's unspent 1.2bn is stored in so-called earmarked reserves – cash put aside with a specific purpose in mind.

York Council holds 2.2m in a "venture fund" and another 1.2m in "investment reserves" and Scarborough Council dipped into an earmarked contingency reserve earlier this month to plug an 800,000 hole in the Scarborough Spa redevelopment scheme, after Yorkshire Forward withdrew funds.

Other reserves are ring-fenced by law and can only be put to specific uses. Around 160m is held by Yorkshire councils on behalf of local schools, and a further 160m is held in special housing accounts and is mostly profits from rents.