Trowbridge Town Council has been advised by an auditor to re-look at its planned budget for this financial year.

Following the council's year-end internal audit in May, auditor Mark Mulberry said its general reserve balance was not within the recommended range for a smaller local authority and should be increased.

At the end of the last financial year, the council's general reserves stood at £94,811 - £575,878 below the recommended three-month minimum of £670,689. 

Following the internal audit, Mr Mulberry had advised the council that it might have to re-look at its budget for 2024/25 to recoup some extra funds, which could potentially affect services.

He said: “I urge council to review the 2024/25 budget carefully with a view to building up the general reserve.”

The council's chief executive Lance Allan said that the council has an approved budget which cannot be changed but can be underspent, adding additional funds to general reserves at the end of the financial year.

He said: "Trowbridge Town Council has an adopted budget for the 2024/2025 financial year.

"It has already identified savings in that budget which should ensure that the planned contribution to general reserves of ££107,400 this year is exceeded and a three year forward plan which includes contributions of: £107,400 2025/26; £172,775 2026/27 and £240,378 2027/28 which will see its general reserves match the minimum recommended level by 2027.”

To explain, he continued: "The town council has managed its finances with reserves below the recommended minimum for the past two decades, including through the financial crash of 2008, the pandemic and recent years of high inflation.

"The 2024/25 three-month recommended minimum is £670,689. The 2024/25 budget includes a contribution of £107,400 and it is anticipated that this will be achieved and it is likely that this will be exceeded."

Mr Allan says the council's 2025 to 2028 medium-term financial plan indicates contributions of £150,000 in 2025/26, £172,500 in 2026/27 and £172,500 in 2027/28.

He added: "This will bring the total above the minimum recommended by 2027/28."

If the council makes those contributions, it would have general reserves of £697,211 by 2027/28.

Based on £2.5 million net revenue expenditure per annum, three months’ net expenditure is circa £648,000.

At the end of the financial year, the council held circa £477,536 in earmarked reserves and a further £94,811 in the general reserve. It reported a £166,003 deficit for 2023/24.

The Joint Panel on Accountability and Governance Practitioner’s guide recommends a smaller authority’s general reserve should be maintained at between three and 12 months of net revenue expenditure.

In his report, which was approved by councillors on Tuesday, June 18, Mr Mulberry, of Mulberry Local Authority Services, said Trowbridge Town Council’s general reserve balance was not within the recommended range and at its current level did not even cover one month’s overhead.

He added: “This is far too low for a council of this size. This balance could be quickly extinguished if the council had an emergency spending requirement.

“This has been mentioned in previous interim audits and council requested to improve its general reserve balance as part of its budget-setting process. I strongly recommend council continue to monitor this."

Trowbridge Town Council leader, Stewart Palmen said: “Yes, our reserves are much lower than we would like as a town council but there are plans in place over the next few years to replenish the reserves up to the levels recommended by the auditor.”

Concerns over the low level of general reserves have previously been raised by Conservative councillors Edward Kirk and Antonio Piazza, who said: “Since being elected, Cllr Kirk and I have highlighted this issue at numerous budget meetings.

“Regretfully, our RFO chooses to draft a budget every financial year that kicks the can down the road, meaning the problem is left to future generations of the town to solve. 

“The independent auditor's recommendation comes from NALC guidance, put in place to financially safeguard our services and residents.

"Considering the amount of uncertainty and instability globally, a more prudent level would be closer to the upper end of twelve months. 

“This ensures that even if the sky falls, you will still be able to meet your financial commitments without scrambling for emergency measures.”