Scots councils ‘face unprecedented financial challenge’

4 Mar 15

Unprecedented pressures lie ahead for Scottish local government finances, and councils need effective long-term plans to prepare for them, the Accounts Commission for Scotland warns today in its annual overview of the sector.

Councils have seen their funding from the Scottish Government fall in by 8.5% in real terms since 2010/11 against a backdrop of rising demand for public services, the report notes, and the way ahead looks bleaker still.

The Accounts Commission recognises the efforts councils have made, mostly through staff cuts, to restrain their budgets, but says that this strategy is not indefinitely sustainable, and that many councils are now reporting funding gaps.

‘Councils tell us that they should manage budgetary pressures in 2015/16 but the years beyond that pose a level of challenge not previously experienced,’ the report says.

‘That is why the Commission expects councils to plan now for the period to 2017/18 and beyond, not least because of the lag time between planning and delivering.

‘Longer-term planning is crucial in building a shared understanding among councillors of the financial position. Comprehensive and accessible financial information helps identify what needs to be done now to avoid storing up problems for the future.

‘It also helps inform local and national discussions about the options for council services. Councils are consulting with communities and service users but the challenges ahead make it all the more important to involve communities more in planning and delivering services.’

Scotland’s 32 unitary authorities currently receive £17.8bn in funding and income, and have useable reserves of £1.8bn and assets of £39bn. Spending totals £18.6bn annually on services, and £2.2bn on capital projects, with debt standing at £14.8bn. There are 1,223 councillors and 247,000 staff.

‘Councils have coped well so far,’ Accounts Commission chair Douglas Sinclair said. ‘But they will face pressures beyond next year of a scale not previously experienced, as budgets become even tighter and demands on services continue to increase.

‘The challenge for councillors is to make best use of the money that is available and to take difficult decisions now to avoid storing up problems for the future.’

Commenting on the report, Don Peebles, head of CIPFA in Scotland, said the report recognised the extend of the challenge facing public finance professionals.

‘As well as this it also acknowledges that despite staff numbers having been reduced, financial reporting was still completed on time which is a very positive message about the stewardship by Scotland’s local authorities,’ he said.

‘This report also outlines some of the future challenges that Scottish councils face, such as demographics and the cost of debt repayments. CIPFA agree that these are worrying issues and that only by having the right data and information available can elected members tackle this issue and plan for the future.'

  • Keith Aitken
    Keith Aitken

    covers Scottish affairs for Public Finance from Edinburgh. He was formerly economics editor and chief leader writer on The Scotsman and now has a busy freelance career as a writer, broadcaster and event chair.

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