Accounts Commission: Councils increasingly relying on reserves as budgets strain to keep pace with demand

Most of Scotland’s 32 councils are increasingly relying on money from reserves to keep up with demand for services and balance their budgets, with financial pressures likely to get worse, according to the Accounts Commission.

Accounts Commission: Councils increasingly relying on reserves as budgets strain to keep pace with demand

Graham Sharp

A report today from the local government watchdog found that while demand for services continues to grow, funding for councils from the Scottish Government has reduced by 7.6% since 2013/14 and is forecast to reduce further.

Over the last three years, 23 of Scotland’s 32 local authorities have drawn from their reserves, with a net reduction in the amount held by councils of £45 million at the end of last year, the second year in a row when council savings have seen a net reduction.

The report, Local Government in Scotland, also raised concerns over the state of Scotland’s Integration Joint Boards (IJBs), bodies put in place to bring together health and social care, with the watchdog saying the position of the boards is becoming “increasingly unsustainable”.

According to the report, IJBs struggled to balance their budgets, with 19 of the 30 relying on extra funding from partners to ensure they would not be left with a deficit.

Without the extra cash injection, the boards would have lost £58m last year.

The Accounts Commission also said the pace of integration was too slow, something that may be rooted in the inconsistency wrought by a third of senior staff at IJBs in the last year being replaced.

Graham Sharp, chair of the Accounts Commission, said: “We urgently need much faster progress in the reform of our health and social care services. The current position is increasingly unsustainable.

“There’s a need for councils to continue rethinking how they deliver services, as well as look at ways to increase their income. For some councils in Scotland, finding ways to do this is getting more and more difficult as their current income doesn’t match demand.”

A Scottish Government spokesman said: “Despite further UK Government cuts to the Scottish budget, we have ensured our partners in local government receive a fair funding settlement, delivering a funding package of £11.2 billion for all local authorities in 2019-20 - a real-terms increase of more than £310m, or 2.9%.

“Contrary to the Accounts Commission’s claim that local authority revenue funding reduced by 0.7% in real terms, Scottish Government revenue funding in 2018-19 increased by 0.3% in real terms compared with 2017-18.”

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