Council borrowing needs to be scrutinised

A report from the Accounts Commission has called for better scrutiny of council borrowing across Scotland…

The public spending watchdog has revealed Scotland’s 33 councils have mounted a total of £12.1bn worth of debt from borrowing. An additional £2.7bn has also been borrowed from the Public Private Partnerships, which brings the total debt to £14.8bn.

The report calls for better scrutiny of spending and for councils to ensure councillors have access to information to enable them to make informed decisions.

Borrowing is a major source of funding for investment in key services such as schools and roads. The report said councils need to look at the long term impact of borrowing on future debts.

Chair of the Accounts Commission Douglas Sinclair said: “This is a highly complex technical area. Councillors don’t need to know every detail but they do need to know enough to ask the right questions.

“This is a critical part of council business which requires close and effective scrutiny, particularly in times like this when budgets are so tight.

“We hope this report will help councillors and officers make improvements through clearer information and wider analysis of options so that they can be confident that their borrowing policies deliver best value in the longer term.”

However, the council organisation COSLA said local authorities were managing debts prudently.

Councillor Kevin Keenan, spokesperson for finance, said: “As today’s report rightly points out borrowing is a major source of funding which allows councils to invest in key services like schools and roads.

“It also goes on to point out that councils have developed strategies to develop their own local priorities and needs.

“Councils undertake borrowing for many reasons and the fact that they borrow to invest in infrastructure should not automatically be seen as a bad thing.

“The debt profile for each council is constantly changing as borrowing is repaid and fresh borrowing is undertaken.

“This reflects local flexibility and attention to local investment priorities that matter to local communities.

“Councils are operating under increasing financial pressures as funding continues to fall behind demand for local services.

“On top of this, it is also worth mentioning that the general economic climate in recent years has been challenging and one of the big impacts locally has been in councils’ ability to use capital receipts from sales of land and property as a source of funding.

“Councils have played a significant role in boosting the local economy through these challenging times and investment in capital infrastructure has been a key aspect of this. This was a position supported and indeed encouraged by the Scottish Government.

“In short, as today’s report shows, Councils are managing their borrowing prudently in order to ensure investment in the vital services provided by them to local communities.”

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