Councils fail to spend £70m despite cuts warning

Deputy First Minister John Swinney. Picture: Phil Wilkinson
Deputy First Minister John Swinney. Picture: Phil Wilkinson
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SCOTLAND’S councils failed to spend almost £70 million of their budgets last year and now have about £1.9 billion of reserves sitting in the bank, official figures have revealed.

The news comes despite town hall leaders warning in recent weeks that they will be forced to cut jobs and services as a result of reductions to their budgets in the coming year. One senior MSP now says councils have “more than enough cash” to ensure services are protected.

Deputy First Minister John Swinney said the figures show councils have been “treated fairly” by the Scottish Government. The statistics, covering all of Scotland’s 32 councils, showed they recorded a surplus of £69.4m in 2014-15.

It means their overall cash reserve pot increased to £1.879bn.

A spokesman for local government body Cosla said the reserves would be used to protect services against funding cuts in the year ahead, but warned this approach is “not sustainable” in the longer term.

Despite the underspend, the figures also show that the money allocated to education increased by £33m, to £4.61bn last year.

Councils have warned they face losing £350m from their budgets next year (2016-17) as a result of swingeing reductions to their funding set out by Mr Swinney in his Budget which was passed by MSPs last week. Services such as schools will be hit, with classroom assistants, music tuition and school buses among the areas facing cutbacks.

An estimated 15,000 jobs have also been earmarked for the axe.

Mr Swinney said: “These figures demonstrate that, despite cuts of nearly 10 per cent to the Scottish Budget from the UK Government, local government has been treated very fairly by the Scottish Government and protected from the worst impact of UK cuts.”

He added: “In the Budget Bill 2016-17, passed by parliament only last week, the overall reduction in funding equates to less than 1 per cent of local government’s estimated total expenditure when taking into account the addition of the £250m to support the integration of health and social care.”

SNP MSP Kevin Stewart, who chairs Holyrood’s local government committee, said the figures undermine claims from opposition parties about the extent of council funding cuts. “Scotland’s councils have consistently received a fair deal from the Scottish Government – and are sitting on more than enough cash to ensure the public’s priorities are delivered,” he said.

“And in light of these new figures, senior Labour figures such as Kezia Dugdale and Jackie Baillie may wish to withdraw their previous erroneous claims on local government funding.”

The figures published by the Scottish Government yesterday also show spending on services increased by 1 per cent, from £10.4bn in 2013-14 to £10.5bn in 2014-15. After education, social work received the next largest net expenditure, of £3.11bn, an increase of 2.6 per cent.

Relations between council chiefs and the Scottish Government have sunk to a new low in recent months as John Swinney’s Budget set out cuts of about £350m to local authority budgets.

But Mr Swinney prevented councils from increasing the council tax to raise extra revenues under the threat of further financial sanctions.

A spokesman for local government body Cosla insisted the figures released by the Scottish government “hide the true story” of what is happening on the ground.

“The fact is that the considerable majority of these reserves will already be committed by councils for specific and planned areas of local spend such as service transformation, creating capacity and responding to severe weather to name but a few,” he added.

“It is therefore simply wrong to think of this money as being a surplus sitting in a bank account.”