Scarborough Town Council Bolsters Financial ‘War Chest’ Despite Precept Cut

Alongside the recent announcement of a one per cent reduction in the council tax precept, Scarborough Town Council is now focusing on a deliberate strategy to significantly increase its financial reserves.

While the headline-grabbing tax cut will see the precept drop to £380,000 for the 2026/27 financial year, the council is simultaneously building a "war chest" to safeguard against future economic shocks.

The Reform-led council passed the budget in late January with a 10 to two vote, formalising a plan to increase reserves from £147,500 to £177,500. This strategy is designed to provide a safety net for a relatively new authority that is still navigating its long-term service responsibilities.

Councillor William Stuart, speaking for the Reform group, emphasised that the move is rooted in prudence. He argued that the level of reserves is necessary to protect residents from "sudden financial shocks" while the council prepares to potentially take over services like verge maintenance and Christmas lights from North Yorkshire Council. Councillor Stuart stated:

"This budget continues a clear and deliberate reserves strategy based on prudence and resilience from an initial recommended level of 100,000 the council increased reserves to 147,500 in his first budget to strengthen financial security.

This budget proposes to increase reserves further to 177,500 providing protection against unexpected costs, service pressures, or an unplanned midterm election.

This level of reserve is not excessive. It reflects careful financial planning, disciplined spending, and a commitment to safeguarding residents from sudden financial shocks or future instability."

The council’s policy aims to maintain reserves at a level representing three to six months of running costs. Town Clerk Anne-Marie Benson explained that while more established authorities might operate with lower margins, the lack of historical spending data in Scarborough necessitates a more cautious approach for the time being. Addressing the reasoning behind the current targets, she noted:

"Councils of our size will usually have three months worth of reserves. However, newer councils who have no prehistory of what our budgets are, of what our spending costs are also the fact that we don't know what is or isn't coming down the line. They suggest that for newer councils, it's more towards the middle of 6 months. So, that is the reasoning behind it.

The idea is, and I think it's stated in the reserves policy, is that maybe in a year or two years time we'll be able to review that to go to the 3 months. But that is the reason for now."

However, the decision to "stockpile" funds has drawn sharp criticism from opposition members who believe the money should be actively invested in the community today. Independent Councillor Rich Maw described the budget as "shockingly unambitious," pointing out that the community grants budget was reduced from £50,000 to £19,000 to facilitate the current financial plan.

Councillor Maw expressed concern that the focus on high reserves could lead to stagnation, stating:

"Every pound sitting in a bank account is a pound not supporting community groups, town centre activity or visible improvements residents expect from a town council.

Residents did not elect us to quietly stockpile money. They elected us to use public funds responsibly and visibly.

So I support resilience, but resilience without ambition becomes inertia and that is what I'm concerned this policy risk enabling."

Scarborough Town Council's administration has maintained that its strategy of "counting the pennies" allows for both a lower precept and long-term stability. Town Mayor Councillor Thomas Murray defended the balance, suggesting that while the tax reduction of 29p per year for a Band D property may seem small to some, for others, "it means a loaf of bread in the kitchen cupboard".

The council has also prioritised diversifying its investments to ensure capital security and liquidity as it continues to stabilise its financial position for the years ahead.