AUDITORS have warned Blaenau Gwent council over a 'worrying' trend of diminishing reserves.

The authority currently has the lowest percentage of available cash reserves of any council across Wales, standing at five per cent of its overall expenditure.

The issue was highlighted as part of a review by the Wales Audit Office into the financial resilience of the authority, which was requested by the council to help it improve.

Neal Hollis, from the Wales Audit Office (WAO), told a meeting of the council's audit committee on Tuesday that reserves had been decreasing over several years.

South Wales Argus:

A chart showing the council's level of reserves against the Wales average

The level of usable reserves is currently the lowest in the country, but Mr Hollis said the trend of dwindling reserves was "more of a worry" for the watchdog.

Standing at five per cent, the council's level of reserves is currently just one per cent above its minimum target level.

Dave Wilson, from the WAO, warned any further decrease could cause problems for the authority.

"The conclusion [of the review] is the council has a reserve fund of five per cent, which is above its minimum target level of four per cent.

"You can only spend reserves once and if you run them down much lower than this you've got a serious problem about how you are going to finance things."

But Michelle Morris, managing director of Blaenau Gwent council, said the authority was working to increase reserves.

Money has been allocated in the budget for the next financial year towards replenishing the emergency fund.

Ms Morris said the council recognised "the importance of sustaining and growing [the council's] reserves going forward."

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Cllr Steve Thomas suggested that the council may need to consider bigger changes, having previously called for a merger with another local authority to be reconsidered.

He said the low level of reserves was to be 'expected', considering the impact of austerity on the authority's stretched resources.

"There were times in 2014/15 when we did replenish reserves even in the middle of austerity," said the former council leader.

"The warning is there but I believe this is a wider issue in terms of where we go next."

Council leader, Cllr Nigel Daniels, said the authority has developed a robust action plan in response to the WAO report.

This includes a "strategic approach to control, maintain and replenish council reserves."