Langham Parish Church
Rutland - Multum in Parvo

Langham Parish Council - Reserves Policy

Langham Parish Council is required to maintain adequate financial reserves to meet the needs of the Council. This policy sets out how the Parish Council will do this.

Sections 31A and 42A of the Local Government Finance Act 1992 require local authorities to have regard to the level of reserves needed for meeting estimated future expenditure when calculating the budget requirement. The JPAG Practitioners’ Guide recommends that councils maintain their general reserve at a level between six and twelve-months net revenue expenditure.

Types of Reserves

Reserves can be categorised as earmarked or general reserves.

Earmarked Reserves:

Earmarked reserves can be held for several reasons:

  • Money given under Section 106 agreement to be spent on a specific project or area within the Parish.
  • Money given under a CIL agreement to be spent to support development by funding infrastructure.
  • Renewal and replacements – to enable the council to plan and finance an effective programme of equipment and infrastructure replacement and maintenance.
  • Election costs
  • Other earmarked reserves may be set up to meet known or predicted liabilities.

All earmarked reserves are recorded on a central schedule by the Responsible Finance Officer (RFO) and reported during the annual audit process.

Reserve levels will be considered as part of the annual budget setting process and a recommendation made to the full Council for approval.

General Reserves:

  • General reserves are funds which do not have any restrictions as to their use. These reserves can be used to manage cash flow, offset budget requirements or used in the case of unexpected events or emergencies.
  • The level of general reserves will be decided as part of the annual budget setting process. The Parish Council must hold a sufficient reserve to cover key risks.
  • Should general reserves be exhausted due to major unforeseen spending within a particular financial year, the council is able to draw down from its earmarked reserve to provide short term resources.
  • Any such draw down will be replenished from subsequent annual budget setting and precept requests.

Langham Parish Council
March 2024