Mark Whitehead 28 November 2017

Scottish councils show signs of ‘financial stress’

Scottish councils show signs of ‘financial stress’ image

Councils in Scotland are showing signs of 'increasing financial stress' and some could run out of money in two or three years, spending watchdogs have warned.

The Accounts Commission says councils' overall debt rose by £800m in 2016/17 as they took advantage of low interest rates to fund projects.

It says that while not posing an immediate problem some councils are concerned about longer term affordability.

The commission's annual financial overview for the current financial year says funding from the Scottish government which provides around two thirds of council budgets fell by 5.2% in 2016/17 to £9.7bn.

It warns that some councils could risk running out of general fund reserves within two or three years if they continue to draw on them at current levels.

Deputy chair of the Accounts Commission Ronnie Hinds said: 'Our evidence tells us that councils are finding the financial pressures increasingly difficult to manage.

'The elections in May this year brought in major changes in council administrations across Scotland.

'Councils that have demonstrated effective leadership and robust planning will be in a better position to deal with the challenges that lie ahead.'

Local government finance experts said the 'sobering' report demonstrated the financial stress Scottish councils were under.

Don Peebles, head of devolved nations at CIPFA, said: 'We agree with the Accounts Commission that there are big question marks over the financial resilience of a significant number of local authorities.

'This should be a warning to both the Scottish government and local authorities that they must continue with efforts to put the sector on a more sustainable footing.'

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