16 April 2004
Councils in Scotland have come under pressure to explain why they have not cut council tax bills when total reserves are as high as £839m, or 9% of expenditure.
In a report last week (Public Finance, April 9-15), the Accounts Commission said the wide variation in reserves across Scotland suggested that some councils needed to review their policy on the holding of balances.
The average Band D council tax in Scotland this year has gone up by an above-inflation 4.4%. Following the publication of the Accounts Commission report, opposition political parties have demanded an explanation of why the council tax was not cut in view of the scale of reserves.
The Scottish Conservative Party said the reserves could have paid for a reduction of £100 in some cases. Finance spokesman Brian Monteith said it was the level of tax bills, not the council tax system itself, that caused so much avoidable pain.
'With 15% of council income coming from council tax, the scope for cuts is massive,' Monteith said. He warned that Liberal Democrat and Scottish National Party plans for a local income tax would cost thousands of Scots more of their hard-earned money.
The SNP called on councils to explain to Scotland's pensioners and all council taxpayers why their bills had gone up yet again this year. Fergus Ewing, its finance spokesman, said the Accounts Commission findings showed that authorities were keeping too tight a grip on their resources. 'The money may be intended for a rainy day, but for hard-pressed pensioners, its already raining,' he added.
The Convention of Scottish Local Authorities welcomed the commission's report, saying the level of reserves showed that councils were taking a prudent approach to financial management.
The Accounts Commission report showed that in general fund balances alone councils are holding £323m, with the amounts varying from 1% of the net cost of services in South Lanarkshire to more than 8% in Dumfries and Galloway.
When all reserves are added together, including housing revenue account surpluses, renewal and repair funds, insurance and capital funds, the figure comes to £839m.
PFapr2004
