It’s budget setting time again this year – a time to tell a tale of two accounts.

Like most businesses, Ryedale has a Capital Account (which is generally called Reserves or Balances, and totals about £8.6M in credit) and then there is the Revenue Account, which mainly includes the Council Tax and Government grants. Now the two accounts I refer to are the Car Parking revenue and the account which holds the interest received on Capital. Both include money realised from the Council’s assets, but revenue from Car parks is treated as part of the Revenue Account, while interest on the capital is treated as capital. The result is that, when money is taken from the interest on the Capital invested, it is called a “subsidy” for the Revenue Account, but income from car parks which subsidises the Council Tax is not. .

This year the grant provided by Government has been reasonable. So there is no talk of cutting jobs or services. However, there is cause for concern of another kind. The bureaucrats at Whitehall are about to make the third attempt in ten years to do away with our rural democracy. So it cannot be in the interest of the local community to keep the Council’s Reserves at an absurdly high level, when our £8.6M might soon be snatched from us and spent outside Ryedale, unless we spend a large part of it on worthwhile projects within Ryedale now. In other words, now is the time to think about running down our Reserves to a more reasonable level. .

There is also the point that no business would allow its reserves to exceed the value of its Revenue budget, as Ryedale’s do. .

So, what do you think Ryedale is doing? Are they running down the Council’s reserves? Certainly not: instead they are building them up, as they have been building them up for years. £471,000 of the £571,000 interest on the capital reserves is going to go back into Capital Reserves, as it is not treated as Revenue. At the same time £209,000 is being taken from Council Tax to support the Council’s “Repairs and Renewals” fund, which is also part of the Council’s Reserves. .

And what happened to the £261,000 surplus on Revenue account which was identified in July? Well, £100,000 was appropriated to the “Community Investment Fund” – a fund which makes grants. The rest was to be used for works in relation to last year’s flooding in the Helmsley area. The Council’s bid for government “Belwin” funding has been approved, and there is about £75,000 of this money left. Now bearing in mind that this was Revenue money coming from Council Tax and Government Grant, what do you think Ryedale has done with it? Well, they’ve used it to set up an entirely new “Improvement, Contingency and Emergency Fund”, haven’t they! This is another Capital Reserve, which is completely unnecessary, bearing in mind that the Council already has a General Reserve fund, which is available to deal with emergencies. .

Now I could understand the argument to keep our reserves high, if the interest on those reserves was being paid into Revenue and used to keep the Council Tax down. However, only £100,000 of the £571,000 interest is being used for this purpose. So keeping the reserves high has very little to do with keeping the Council Tax down. .

Again, one could accept the argument of keeping the Reserves high, if Ryedale’s future was guaranteed – which it clearly is not. .

Equally, there could be an argument in favour of using revenue money to replace capital money which has been spent on capital schemes. However, last year there was a slippage on capital schemes of £1,183,000 – a net slippage of £710,000 after certain increased costs had been taken into account. So there can be no justification for transferring money from Council Tax revenue to replace capital money which has not been spent. .

Officers and members have been invited to submit bids for surplus funds. These surplus funds do not include the moneys which are to be transferred into Reserves. I duly considered the interests of my ward and put in a bid for £171,000 for “Fair Car Parking Fees”. This figure of £171,000 is, of course, equivalent to the extra income obtained from last year’s extortionate 25% car park fee increase. This bid went through an evaluation process and appeared on a table entitled “Prioritisation – Revenue Bids 2006/7” as joint equal last of the Council’s priorities. .

I think this has sinister implications. Fair Car park fees seems to me to be very much about being fair to local business and supporting local business. So what we have here (unless Councillors are prepared to change it) is a Council which ranks supporting local business as joint equal last on its list of priorities. .