Seascale Parish Council

Policies

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April 2026

RESERVES POLICY

1. Parish Council Reserves

Seascale Parish Council is required to maintain adequate financial reserves to meet the needs of the organisation. The purpose of this policy is to set out how the Council will determine and review the level of reserves.

Sections 32 and 43 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.

Although there is no specified minimum level of reserves that an authority should hold, the Smaller Authorities Proper Practices Panel (SAPPP) state in their practitioners’ guide that between 3 and 12 months nett revenue expenditure should be held, with smaller councils holding closer to the 12 months. It is the responsibility of the Responsible Financial Officer to advise the Council about the level of reserves and to ensure that there are procedures for their establishment and use.

2. Types of Reserves

Seascale Parish Council maintains three types of reserves;

a) Earmarked Reserves

This provides a means of accumulating funds, for use in a later financial year, to meet known or planned policy initiatives. Earmarked Reserves will increase through decisions of the Council and will decrease as they are spent on their specific intended purposes.

The purpose of an Earmarked Reserve is to set aside amounts for projects that extend beyond one year or as a contingency against a specific situation occurring. Once an Earmarked Reserve has been established by the Parish Council it is the responsibility of the Responsible Finance Officer to ensure funds are spent in line with their purpose. The purpose of each Earmarked Reserve should be reviewed annually to ensure that it is still relevant.

b) Ring-Fenced Reserves

The Council holds funds from grant receipts, which can only be used for the purpose for which they were awarded.

c) General Reserve

This represents the balance of Council funds. The main purposes of the General Reserves are firstly to operate as a working balance to help manage the impact of uneven cash flows and secondly, to provide a contingency to cushion the impact of emerging or unforeseen events or genuine emergencies. In general, a robust level of reserve should be maintained and take account of operational and financial issues facing the Parish Council.

The Parish Council’s aspiration is that reserves should cover the Parish Council’s nett revenue expenditure for 12 months.

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April 2026

A well-run authority with a prudent approach to setting its budget will each year consider its level of general reserves. These general reserves will also need to be supported by earmarked reserves for specific needs, contingencies and commitments. In assessing the level of the Parish Council’s reserves, account needs to be taken of the risks facing the Council in terms of any significant unforeseen expenditure requirements

3. Purpose of General Fund Reserves

The purpose of general reserves is to minimise the possible financial impacts to the authority from; emergencies, unforeseen events and ad hoc emerging issues during the year.

4. General Fund Reserve – Risk Assessment

Risks can be identified as; risks from potential one-off events; risks which will have general financial consequences and actions that need to be in place to minimise the potential for financial support.

The risk assessment is reviewed annually.