Reserves policy

Good practice suggests that when councils review their medium term financial plans and prepare their annual budgets they should consider the establishment and maintenance of reserves.

These can be held for 3 main purposes:

• a working balance to help cushion the impact of uneven cash flows and avoid unnecessary temporary borrowing - this forms part of general reserves
• a contingency to cushion the impact of unexpected events or emergencies - this also forms part of general reserves
• a means of building up funds, often referred to as earmarked reserves, to meet known or predicted liabilities