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Local Government Financial Overview 2017 Podcast transcript
I’m here with Ronnie Hinds, deputy chair of the Accounts Commission, to talk about a new report on local government finance.  Ronnie, can you tell me what this report is about?
Yes  – it our annual financial overview of local government and it’s  largely based on the annual reports for all 32 councils in Scotland for the last financial year.  
And what have you found?
Well the bigger picture is that councils are showing increasing signs of financial stress and face even tougher challenges ahead. That’s down to reductions in funding at a time of increasing costs and demands for services..  We found that more councils are using reserves to fund services.
At the same time the accounts for all councils were completed and signed off in time and with no qualifications. So they are doing a good job in managing their finances.
What does this mean for council tax payers?
The council tax freeze ended last year and many people have seen a rise in their monthly bills. These may seem high - but council tax only provides about 14% of councils’ income – or one in every seven pounds that they spend. 
And if all councils chose to raise council tax by three per cent, it would yield an estimated £68 million - broadly comparable to a one per cent pay rise for their staff.
So where do councils get their money from?
The Scottish Government provides around two thirds of council budgets. And this fell by 5.2 per cent in 2016/17 to £9.7 billion. 
The report highlights a number of financial pressures. A rising proportion of council funding directed towards national priorities such as educational initiatives means councils have to look at deeper cuts in other services. For example, resources for culture, planning and development, and roads have seen the sharpest falls in funding over the last three years.
Overall council debt rose by £800 million in 2016/17 as councils took advantage of low interest rates to fund projects.  While not posing an immediate problem some councils are concerned about longer term affordability.
That was last year – what about now?
We also looked at the current financial year (2017/18) where councils have approved £317 million of savings and the use of £105 million in reserves. What we found is 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.
So what do you want to see happen next?
That’s the critical question. This report is for the public and particularly to help councillors over the next few months when they plan their 2018/19 budgets. 
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.
Ronnie, thank you very much