Council advised to be prudent with the ‘rainy day’ pennies in 2018/19

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The Accounts Commission has confirmed what Falkirk Council has been telling us all along – times are tough and they are only going to get tougher.

A new financial overview of Scottish local authorities highlights the fact funding has reduced while costs and demands have increased, and more councils are using reserves to fund services.

Looking at the current financial year of 2017/18, the report states councils have approved £317 million of savings and the use of £105 million in reserves, but 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.

And while Falkirk Council does not yet fall into the danger zone category of authorities like Clackmannanshire, Moray and North Ayrshire – which face the prospect of running out of cash reserves within two or three years – they are heading for difficult times.

Falkirk Council leader Cecil Meiklejohn said: “The Accounts Commission report highlights the level of austerity being inflicted on Scotland from Westminster that directly impacts on local government.

“That is why we need to target dwindling resources on the most vulnerable groups in our community – investment in people rather than bricks and mortar has to be the priority.”

According to the Audit Commission report the Scottish Government provides two thirds of council budgets, but this funding fell by 5.2 per cent in 2016/17 to a total of £9.7 billion.

Meanwhile, overall council debt rose by £800 million over the same period.

The report also focuses on a number of financial pressures for councils with a rising proportion of council funding directed towards national priorities such as educational initiatives.

This means councils have to look at deeper cuts in other services like resources for culture, planning and development and roads – which have seen the sharpest falls in funding over the last three years.

Graham Sharp, Accounts Commission chairman, said: “Generally, councils face increasing challenges which require flexible responses that balance immediate needs, sound long term planning and limited financial resources.

“We live in a rapidly changing public sector landscape, where external issues such as the transfer of further powers to Scotland and the decision to withdraw from the European Union add to an already complex domestic environment.

“A major element of this operating environment for councils is the continuing pressure on finances. There was a real terms reduction in councils’ main source of funding from the Scottish Government for 2016/17 and this year has seen a further real terms funding reduction, with that trend forecast to continue into future years.

“Councils tell us that they are finding the situation more serious than ever.”

The signs are already looking bad for Falkirk as the reality of their financial position hits home.

Earlier this month parents admitted they were infuriated by the council’s decision to close disability centres in Bainsford and Camelon.

The council claimed the shake-up would deliver an approach to care better attuned to the needs of individuals, but Carronshore mum Mary Walker said the closure of the Bainsford centre will be a devastating blow for her son Derek (49) who used the centre since he was 16.

And that is just the tip of the iceberg of proposed cuts – Falkirk Council has to make £40 million of savings in the next two years.

The authority put their long list of savings proposals out to public consultation in October and it included hard to swallow measures like cutting school breakfast clubs, removing Christmas lights provision and doing away with waste collections in flatted premises.

At the time Councillor David Alexander said: “We have known this has been coming but little has happened in previous administrations to accommodate this – we need to change, we need to prioritise.”

Falkirk Council’s budget for 2017/18, set back in February by the outgoing Labour administration, saw a rise in council tax of three per cent, the maximum level allowed by the Scottish Government.

The rise meant Band D properties in Falkirk, of which there are almost 9000, saw their bill rise by 61p a week – £32 a year from £1070 to £1102. It was hoped residents would not grudge the increase when they saw the £1.7 million generated would be going back into initiatives to help the community.

According the Accounts Commission report, when it came to income generated from council tax, non-domestic rates and the general revenue grant provided by the Scottish Government in 2016/17, Falkirk was 24th out of 32 councils.

Per head of population in 2016/17 Falkirk received £1305 from the general revenue grant – compared to £2796 for the 1st ranked Shetland and £691 for 32nd ranked Edinburgh.

Falkirk received £349 in council tax compared to £368 for Shetland and £444 for Edinburgh and £436 in non-domestic rates compared to £768 for Shetland and £751 for Edinburgh.

On December 14 the Scottish Government will announce its budget and reveal how much it intends to give councils for 2018/19 and the Accounts Commission will publish another financial overview report on the councils’ performance in April 2018.