Accounts Commission: Councils must make more savings

Councils have managed their finances well but significant challenges lie ahead, says the Accounts Commission.

In its financial overview published today, the local government spending watchdog said councils had remained within their overall budgets, increased their reserves slightly and reduced their debt in 2015/16.

Each council has its own particular challenges but all councils face financial shortfalls requiring further savings or using reserves. They need to change the way they work if they are to make the savings needed.

The Scottish Government provides around 60 per cent of councils’ total income. Over the past six years, up to and including 2016/17, Scottish Government funding (revenue and capital) for councils fell by 8.4 per cent in real terms.

The report warns that further reductions are expected while demand on key services, particularly social care, continues to rise. Councils also face increased cost pressures in areas such as pension provision.

Ronnie Hinds, deputy chair of the Accounts Commission, said: “Councils are generally doing a good job with their finances in difficult circumstances. But pressures continue to increase on a number of fronts at the same time as they face the prospect of further reductions in their funding.

“It’s vital that councillors and officers set medium and long-term financial plans based on clear priorities for the services they provide to their communities”.

The Audit Scotland report illustrates the need for a ‘framework for local government to set the ground rules for future funding,’ say the Scottish Greens.

Andy Wightman MSP, the Scottish Greens’ local government spokesperson, said: “Scotland’s local authorities face real financial challenges and reductions in funding will inevitably have an impact on local services. Much time and effort has been spent negotiating the financial relationship between Holyrood and Westminster and what powers should be controlled by the Scottish Parliament.

“It is clear we now need to dedicate as much time and energy on negotiating a fiscal framework for local government to set the ground rules for future funding and to increase fiscal autonomy and democracy. The Scottish Greens will be leading a parliamentary debate this week highlighting the need to improve local democracy.”