Scottish councils digging into reserves to cover budget cuts, Accounts Commission reports

Scottish councils are digging into their reserves to cover cuts to their budgets, the Accounts Commission reports

Reserves are kept aside by councils for major projects or unexpected emergencies such as flooding, but councils are increasingly dipping into to these back-up funds to meet the cost of everyday services.

Scottish Government revenue funding to councils increased by 0.9 per cent in 2019-20, but has decreased by 7.6 per cent since 2013-14, while a growing proportion is committed to national policies.

In its annual report on council finance, the local government auditor notes that £45m was drawn from reserves in 2018-19 to cover budget shortfalls, more than had originally been planned.

While no council would run out of reserves within three years at the current rate, one council, Moray, would run out within five years if the use of reserves to fill budget gaps continues.

The report also says integration joint boards (IJBs) are struggling to balance their budgets, with 19 of Scotland’s 30 IJBs needing additional funding or recording deficits in 2018-19.

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.”