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As debt repayment is set to soar, Scottish councils struggle to account for capital spending

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A progress report from the Accounts Commission has again warned that Scottish councils are failing to properly scrutinise capital spending. What can local authorities do to cope with financial management concerns?

Long-term planning

The Accounts Commission's latest report states that Scottish councils are responsible for over 50% of all capital spending in Scotland and urges improved management of projects relating to schools, roads, housing and flood prevention. Dougal Sinclair, the Accounts Commission Chair, said that councils should provide councillors with clear reports to allow them to properly scrutinise capital investment plans.

While councils are receptive to the Commission’s advice, it has proven difficult to apply. Kevin Keenan, Finance Spokesperson for the Convention of Scottish Local Authorities (COSLA), was quick to point out that long-term planning is all but impossible for councils when they are restricted by short-term, one-year budgets from the Scottish Government.

Soaring debt repayments

Scottish council borrowing reportedly reached a record high in April 2014, partly due to the extent of government funding cuts. Recent research from the Guardian indicates that Scottish councils now hold record debts of £14.8 billion, and that nearly half of this must be repaid within the next 20 years. What’s more, government funding for Scottish councils will be cut by a further 3.5% in 2016/17.

In response to soaring debt repayments, some local authorities are taking drastic steps to balance their budgets. Moray Council is currently proposing an 18% council tax rise to manage its £11.9 million financial shortfall for the year ahead. If successful, the move will break Scotland's freeze on council tax since 2007. Defending the proposal, Council leader Stewart Cree claimed improved efficiencies would not be enough to achieve the level of savings required.

It is clear that better management alone is not the answer to the capital spending problems identified by the Accounts Commission. Scottish local councils must take steps to increase their cash reserves in order to meet shortfalls and adequately plan for the future. Enforcement Agents assist councils by collecting outstanding arrears in a fair, timely and ethical manner. For information on how Dukes Bailiffs can help Local Authorities can manage financial issues, contact one of our Centre Managers today.

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