Balancing the books

by Apr 23, 2012 No Comments

The challenges facing local government are myriad and complex, but a recent report from Scotland’s public spending watchdog suggests the outlook is not all bleak

Challenge and change is not new for councils. However, according to the Accounts Commission, the current pressures on finances from reducing budgets and growing demands for services are “substantial”. The report, ‘An overview of local government in Scotland: challenges and change in 2012’,which was published last month, is based on findings from annual audit reports on the 2010/11 accounts, Best Value and audit work up to December 2011.

Overall, the Commission found local authorities have coped well with financial pressures. Most operated within budget in the financial year 2010/11 and accounts show a relatively stable fi nancial position, with the overall level of reserves higher than the previous year. In 2010/11, Scotland’s 32 councils spent about £21bn providing vital public services, employed about 240,000 full time equivalent staff and used buildings and other assets with a value of about £35bn. Auditors found that to date, councils have secured savings through pay restraint and by reducing staff numbers.

Chairman of the Accounts Commission John Baillie says: “I recognise the scale of the task facing local authorities and welcome the progress they have made in recent years. Challenge and change is not new for local government, but the current pressures on fi nances from reducing budgets and growing demands for services are substantial.

“The year ahead off ers opportunities for fresh thinking on how best to improve outcomes for people and communities across Scotland. Those elected in May will need to get up to speed quickly. They will have to deal with diffi cult choices and will need good support and advice from the outset. I am sure this report will help them.”

Looking ahead, the Commission has some stark warnings, both for the new intake of councillors taking on their roles after 3 May, and for councils themselves. For newly elected members, the message is particularly clear and slightly daunting.

The report states: “Those elected in May will need to… build on the progress which local government in Scotland has achieved in recent years. Immediate tasks will be to establish eff ective working relationships within councils and with local partners and to provide strong leadership and direction which will drive improvements in services resulting in better outcomes for people and communities.  The Commission recognises the scale of the task and hopes that councillors will fi nd this report helpful in identifying priorities and preparing for the future.”

It goes on to say: “The council elections in May 2012 will bring further changes, possibly in political control and certainly, in some degree, in council membership. The councillor role, which at its heart involves representing constituents, providing leadership and scrutinising performance, is complex, and new and returning councillors will need good support and advice from the outset. Overall, the financial context and the elections present challenges and change but they also provide opportunities for fresh thinking on service design and delivery which more closely aligns with people’s needs and demonstrates improved value and outcomes.  There are also opportunities to check that committee and management structures are up to date, fit for purpose and provide a firm foundation for Best Value.”

The report also stresses the need for sound governance, accountability and robust performance information. Auditors acknowledged that in the current financial and political climate, it is “unlikely” local authorities will be able to improve performance in all outcomes, service areas and across all aspects of corporate activity. While the Commission recognised that councillors face diffi cult choices in prioritising the level and quality of services provided and allocating resources accordingly, the report also states that it expects to see evidence of eff ective governance to provide the best for local communities. Councils are also urged to do more work to address a substantial backlog in maintaining buildings and roads, with the report stating that “the condition of council assets remains a concern”.

Achieving improvements in procurement is also a priority outlined in the report. Scottish local authorities spend about £4bn annually procuring goods and services to deliver for their communities, varying from entering into contracts for the supply of utilities and the purchase of computers, supplies and equipment, to buying in professional services or social and community care. Auditors found in 2010/11 that councils reported savings of £13m from better purchasing. However, the Commission concluded that while there has been progress in procurement, more work is required to deliver better value from the substantial amount of money involved.

Councillor Pat Watters, outgoing Convention of Scottish Local Authorities president, praised the Commission and said its fi ndings were “almost bang on the money”.

He said: “There is very little in the overview report that we can disagree with. Th e Commission are right to say that Scottish local authorities have coped well with financial pressures and equally right to point out that councils continue to face tough challenges from reducing budgets and growing demands for services. This has always been the conundrum councils have had to wrestle with, particularly in times of a downturn in the wider economy.

“It is also pleasing that the report recognises the scale of the task facing local authorities and welcomes the progress we have made in recent years. It has not been easy but as the report points out we have not shirked the difficult decisions on behalf of communities. As I have often said myself, neither challenge nor change is new for local government, but the current pressures on finances from reducing budgets and growing demand for services are substantial, indeed it could be argued that they have never been greater.

“Demand for our services will unfortunately always outweigh our ability to pay for these. However our focus remains on how best to improve outcomes for people and communities across Scotland. The bottom line is that we live in a demand-led society. People want the very best results from their public services. To make that happen, the Christie Commission showed that we need to invest in prevention across the whole of the public sector, and do more to ensure that services work together to focus on what matters most to communities. Our joint working with the Scottish Government around community planning partnerships will ensure that we continue to strive towards this goal.”

 Another important area that the report mentions is the potential impact of the controversial welfare system reforms being brought forward by the UK Government. These will start to come into effect from April 2013 and by 2017 all benefits, such as Jobseeker’s Allowance, child benefit and housing benefits will form part of the new universal credit. Scottish councils currently administer housing and council tax benefits but because the former will be part of the universal credit,this responsibility will end after 2017. The Commission found these changes will have “significant implications” for councils.

The report states: “They face challenges in communicating the position to claimants and in maintaining services and performance in a period of change. In addition, councils face reduced funding as the housing benefit caseload moves from council administration to universal credit and the likelihood of staff reductions. There are also implications and risks for councils as landlords. The majority of Scottish councils (26 of the 32 councils) manage their own housing stock. For Scotland, around 60 per cent of the rental income for these properties comes directly from housing benefits.

“Currently, where councils operate both housing rent and housing benefits, the systems are linked and benefits are automatically applied against rents due. However, under universal credit, claimants receive benefits directly and it will be the claimant’s responsibility to pay rent to the council. Social and private landlords will be similarly affected. Overall, substantial changes are ongoing and planned which will have a significant impact on structures and services. These need to be managed alongside existing resource and demand pressures while managing service performance and improvement.”

Kate Shannon Kate Shannon

After graduating from Glasgow University with a degree in English and Scottish Literature, Kate has been working as a journalist since 2005. She started out in the colourful world of local newspapers, both in her home region of Dumfries and Galloway and in Fife, before working for a national news agency based at the Scottish Parliament. Kate joined the Holyrood team in 2011 as Local Government Correspondent, covering everything from the nuances of the planning system to quizzing council leaders and chief executives. She is passionate about Scotland's varied and interesting local government landscape and is an advocate of social media. Kate is particularly devoted to Twitter and likes to mix the two worlds by tweeting from major events and on the...

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