Earlier in the year the Accounts Commission, the financial watchdog for local government in Scotland, estimated total long-term and short-term debt owed by councils to be £12.8 billion. The money owed is made up from loans from the UK Government as well as private loans from banks. The(Western Isles Council spent more than 100% of its council tax revenue servicing its debts.Clackmannanshire, Dundee, Edinburgh, Glasgow, Highland, Inverclyde, South Lanarkshire and West Dunbartonshire councils all spend at least half of their council tax revenue servicing debt.
The Scottish Greens party’s co-convener Patrick Harvie has called for local government debt to be cancelled by the UK Government. He said: “Given the crisis facing local authority finances, it’s unacceptable that councils are using council tax revenue to deal with historic debts that enrich private banks and the UK Treasury. The unethical nature of the loans from private banks justifies cancellation of these payments and the Westminster government should write off council debts to end the unfair squeeze on local services. We must also improve oversight so that our local authorities aren’t forced into such high-risk financing in future. A Scottish Government-controlled loans board would offer greater stability and value, and I would encourage Scottish ministers to explore the idea.”
Long-term debt owed by councils:
- Aberdeen City Council – £483m
- Aberdeenshire Council – £505m
- Angus Council – £160m
- Argyll and Bute Council – £153m
- Clackmannanshire Council – £108m
- Comhairle nan Eilean Siar – £147m
- Dundee City Council – £404m
- Dumfries and Galloway – £153m
- East Ayrshire Council – £334m
- East Dunbartonshire Council – £142m
- East Renfrewshire Council – £68m
- Edinburgh City Council – £1.4bn
- Falkirk Council – £203m
- Fife Council – £690m
- Glasgow City Council – £1.4bn
- Highlands Council – £746m
- Inverclyde Council – £214m
- Midlothian Council – £198m
- Moray Council – £156m
- North Ayrshire Council – £226m
- North Lanarkshire Council – 507m
- Orkney Council – 40m
- Perth and Kinross Council – £243m
- Renfrewshire Council – £226m
- Scottish Borders Council – £171m
- Shetland Council – £31m
- South Ayrshire Council – £177m
- South Lanarkshire Council – 1.1bn
- Stirling Council – £126m
- West Dunbartonshire Council – £234m
- West Lothian Council – £479m
The Accounts Commission has previously expressed little concern towards debt repayments which councils have to make. In their latest report, it judged: “At March 2015, all councils had balanced their budgets and were not planning to spend more in 2015/16 than they could afford.
“External auditors reported that councils had adequate reserves and could afford to repay their current debts. However, audit work has highlighted concerns about some aspects of financial planning, management and sustainability in a small number of councils”.
Local government umbrella body Cosla said its councils borrowed money “extremely responsibly”. A spokesman for the group said: “Loans are taken out to fund vital infrastructure which is integral to the services which are provided to support communities. Councils operate within strict guidelines through well-established Treasury management policies and they apply the prudential code on affordability to ensure that debt is not a burden on the council or its communities. Nonetheless, we are all very aware that councils are facing extremely difficult financial circumstances, with the prospect of another difficult financial settlement, and anything that can be done by the UK Government, as part of the Chancellor’s autumn statement, to help alleviate these pressures and free up resources to protect services to our communities would be welcome.”
