Reserves Policy

Types of Reserves

The council will maintain the following categories of reserves:

• General Reserve

A working balance to cushion the impact of uneven cash flow, respond to emergencies, and provide financial stability.

• Earmarked Reserves

Funds set aside for specific projects, commitments, or future developments, established by resolution of the council. Examples may include building projects, asset replacement, election costs, or community initiatives.

• Capital Reserves

Funds earmarked for the purchase, improvement, or replacement of fixed assets.

Principles for Holding Reserves

• As a smaller authority and in line with Proper Practices, the council will maintain a General Reserve equivalent to 12 months’ net revenue expenditure, subject to annual review.
• Earmarked Reserves will only be created or varied following approval by the council and will be reviewed annually to confirm their continuing relevance and adequacy.
• All reserves will be recorded in the council’s financial records.

Use of Reserves

• General Reserve may be used to smooth cash flow, meet unexpected costs, or respond to emergencies.
• Earmarked Reserves will only be used for the purpose for which they were created unless the council approves a transfer.
• Any use of reserves will be authorised by full council.

 Review and Reporting

• The Responsible Financial Officer (RFO) will report the level and purpose of reserves to the council at least annually as part of the budget setting process.
• The adequacy of reserves will be reviewed each year when setting the budget and precept.

Policy Review

This policy will be reviewed by the council every three years, or sooner if required by legislation, best practice, or material changes to the council’s financial position.