THREE Scottish councils are among the UK local authorities with the highest average debt, according to new figures.
An analysis of data from the Department for Levelling Up, Housing and Communities by the BBC looked at the top 10 council areas with the highest average debt per resident.
Topping the list is Woking Council in Surrey, eclipsing the other local authorities by a large amount at £18,756 per resident.
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The Scottish council highest on the list is Comhairle Nan Eilean Siar – led by an independent councillor – at £4845 per resident. Aberdeen – led by a coalition between the SNP and the Liberal Democrats – is next at £4825, followed by Labour-led East Lothian at £4106.
The full list is below:
- Woking, £18,756
- Spelthorne, £10,415
- Warrington, £8236
- Thurrock, £8049
- Runnymede, $7276
- Comhairle Nan Eilean Siar, £4845
- Aberdeen, £4825
- Barking and Dagenham, £4735
- South Tyneside, £4283
- East Lothian, £4106
A report in 2012 signed by then Communities secretary Eric Pickles encouraged council leaders to pursue investments in order to prevent cuts.
Most of the borrowing comes from the Public Works Loan Board (PWLB), part of the Treasury, which uses public money to hand out long-term loans at a low rate of interest.
It comes after a watchdog said the finances of Scottish councils are not unsustainable but there are “real risks” in the future.
The latest report on council finances from the Accounts Commission said the total budget gap in the country’s local authorities rose to £725 million for the next financial year – almost double the £476m from the year before.
In England, a number of councils are struggling financially, raising the spectre of the same happening north of the Border, with Middlesbrough Council appealing to the UK Government for financial aid to avoid declaring effective bankruptcy.
Local authority body Cosla said the report shows how shaky the financial ground is for councils and highlights the need to secure a “solution to these long-term issues in order to protect the essential frontline service of our communities”.
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The report said: “Local appointed auditors did not identify any councils in Scotland as being financially unsustainable in the short term.
“However, the financial outlook is extremely challenging, with Scottish councils facing unprecedented financial and service demand pressures which present real risks for the future.
“Although Scottish Government core funding increased in cash and real terms in 2023-24, councils reported a significant increase in the total budget gap to £725 million.”
It added: “Councils’ medium- and longer-term financial plans demonstrate a clear recognition of the difficult financial context and the need to continue to innovate at pace and make difficult decisions to become more financially sustainable.
“But some councils are already experiencing significant resistance when seeking to make service reductions to balance budgets.
“This reinforces the need for effective consultation and engagement with communities on planned local service changes.”
Last summer, the Scottish Government and Cosla signed the Verity House Agreement – a deal between the two bodies which pledged to create a fiscal framework for councils as well as better long-term budgeting.
The Accounts Commission said meeting the commitments of the agreement will be “important”, increasing financial certainty and flexibility for councils.
Cosla’s resources spokeswoman, Katie Hagmann, said some of the messages from the Accounts Commission report were “stark” but “came as no great surprise” to councils.
“Today’s Accounts Commission bulletin is a true reflection of where we are now,” she added.
“Our reality right now is extremely challenging – years of real-terms cuts to council budgets have been coupled with increasing additional policy commitments and increased ring-fencing.
“With so much funding still directed, the ability to take local decisions on most of our budget is almost impossible.”
The report also took aim at the Scottish Government’s proposed council tax freeze for next year.
The policy, announced by First Minister Humza Yousaf at the SNP conference in Aberdeen, will see councils given a share of £144m to fund it.
But the decision drew the ire of councils, who claimed there had been no consultation on the issue before it was announced and dashed hopes that authorities could be able to raise the levy to ease pressures.
A spokesman for the Scottish Government said: “We welcome the report from the Accounts Commission that confirms the Scottish Government provided a real-terms increase in revenue funding for local government in both 2022-23 and 2023-24.
“The Scottish Government recognises the financial challenges that the entire public sector are facing and that local authorities and their employees play a pivotal role in our communities.
“In the face of a profoundly challenging financial situation, we are making available record funding of over £14 billion to councils – a real-terms increase of 4.3% compared with the 2023-24 budget.”
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