‘Rainy day’ funds being raided by local councils

council finance: Local authorities struggling to cope with funding cuts

Dundee and Fife have the lowest levels of cash reserves in the country, leaving council services “dangerously exposed”.

Rainy day funds have dwindled as local authorities struggle to cope with financial pressures, says the public spending watchdog.

The raid on reserves from 20 councils totalled £79 million for 2016-17 and follows a 7.6% real terms cut in funding from the Scottish Government since 2010-11.

Meanwhile, town hall debt increased by £836m, bringing the total to £14.5 billion, the Audit Scotland report for 2016-17 found.

The report, which is published today, warned: “Councils are showing signs of increasing financial stress.

“They are finding it increasingly difficult to identify and deliver savings and more have drawn on reserves than in previous years to fund change programmes and routine service delivery.”

Dundee City Council has cash reserves worth 5% of its total income, compared with 7.5% in Fife Council.

The City of Discovery ranked second in the country for making dips into the fund that were not budgeted for.

It follows a £7m overspend in 201617 in Dundee, which was driven by increased spending in children and family services.

A multi-million-pound overspend is predicted for this financial year.

Perth and Kinross and Angus councils have bigger reserves as a proportion of their income, at 24% and 15% respectively.

In separate figures obtained by The Courier, Dundee’s rainy day fund fell by £8m to £20m in 2016-17.

In Fife the council’s reserves increased by £3m to £71m.

Tory MSP Bill Bowman accused SNP councillors in Dundee of playing “fast and loose” with public cash and services.

Scottish Liberal Democrat leader Willie Rennie said: “Councils are burning through their reserves at a rapid rate. This is not sustainable.”

The Scottish Government say councils have seen their spending power increase by £383m this year when cash for health and social care integration and new council tax powers are factored in.

“We have treated local government very fairly despite the cuts to the Scottish Budget from the UK Government,” a spokesman said.

A Dundee City Council spokeswoman said: “The council has not been reliant on reserves in the past and has carried a modest level of reserves in recent years.”

Eileen Rowand, Fife’s finance director, said they do not have reserves to meet all financial risks but the fund provides “adequate coverage”.

gmcpherson@thecourier.co.uk

Picture: Kris Miller. Dundee City Council’s cash reserves have fallen by £8m in the last financial year.