Audit Scotland produces a useful annual overview of local government and the 2013 version is published today 'Responding to Challenges and Change'. It primarily sets out the financial challenges facing the service in 2013. Not surprisingly there is not much good news for Scottish councils.
The key metric is the Scottish Government funding settlement to local authorities for 2013/14 at £9.9 billion, a decrease of about 0.2 per cent in cash terms or 2.2 per cent in real terms. The ongoing Council Tax freeze is being covered by increased charges for services - a regressive measure on top of a regressive tax cut. At the same time cost pressures are rising, particularly fuel costs. Demand pressures are also rising as councils support people most affected by economic recession, welfare reform, and the effect on services of the ageing population. Achieving savings to address all of this will become progressively more difficult.
The Scottish Government views local government as being at the heart of public service reform through Community Planning Partnerships. However, Audit Scotland believes that there is a long way to go before the full potential of community planning will be realised. Councils will also have to cope with Police and Fire reform, adult health and care integration, welfare reform and many other changes during the year.
On shared services, Audit Scotland remains of the view that significant savings in the short term are unlikely from sharing services. It suggests that instead of looking for economies of scale councils should look for economies of skills through sharing expertise. This is a point I made to the Scottish Parliament’s Local Government and Regeneration Committee in oral evidence yesterday.
The paper emphasises the importance of good governance and the role of councillors. More worryingly they highlight weaknesses in basic accounting systems and controls and under-resourcing of internal audit. Management delayering means that in about a half of councils the chief financial officer is below director level. There are also delays in updating standing orders and other financial controls. This is the second time Audit Scotland have highlighted concerns about basic controls and is a reflection of the staffing pressures finance departments are under.
The number of staff directly employed by councils has decreased by about 6.4 per cent since 2010, a reduction of 25,800 people or 14,100 full-time equivalent (FTE) posts. The lowest staffing level since 1999. Actually it is worse than these figures because 34,500 jobs have gone from councils since the 2008 crash.
Since 2010, about 9,400 local authority staff left on voluntary early release at an average cost of £35,600 per person and at an aggregate cost over the two years of £335 million. Audit Scotland is undertaking a study of early release and is particularly critical of some senior officer retirements. Councils are also urged to ensure that workforce plans are up to date and to take a longer-term view in line with service plans, ensuring that they have sufficient skills and capacity.
Since the prudential borrowing code was introduced, the overall level of net indebtedness increased by around 40%, from £9.1 billion to £12.9 billion. I am not sure 'indebtedness' is the best way to describe this as it is borrowing that they can finance through revenue in accordance with the prudential code. However, despite financial pressures the overall level of reserves increased by £0.21 billion (14%) compared with the previous year and totalled £1.68 billion at 31 March 2012.
This paper is a useful overview of the finances, workforce and assets of Scotland's councils. It starkly sets out the challenges facing local government and should be essential reading for anyone interested in Scotland's councils.