Borrowing warnings fail to deter Scottish councils from backing infrastructure

 

Scottish councils have defended the use of borrowing to fund infrastructure projects, despite warnings from auditors over the management of their £15bn debt.

A report from the Accounts Commission has today urged town halls to improve training and oversight of long-term borrowing, which has become a key tool for funding key services and roads.

While total debt from borrowing at Scotland’s 32 councils has remained relatively constant at £12.1bn, over half of town halls have increased borrowing levels over the past 10 years.

However total debt levels are thought to reach £14.8bn owing to the impact of Public Private Partnerships.

Auditors warned councils needed to make better use of information to highlight the long-term impact of borrowing, shed jargon in reports and ensure solid governance.

Yet Cllr Kevin Keenan, finance spokesman at representative body COSLA, said the fact that councils were borrowing to invest in infrastructure ‘should not automatically be seen as a bad thing’.

He added that town hall investment in capital infrastructure had been ‘a key aspect’ of efforts to boost local economies and had been ‘encouraged by the Scottish Government’.

‘Councils are operating under increasing financial pressures as funding continues to fall behind demand for local services. On top of this, it is also worth mentioning that the general economic climate in recent years has been challenging and one of the big impacts locally has been in councils' ability to use capital receipts from sales of land and property as a source of funding,’ Cllr Keenan added.

Chair of the Accounts Commission, Douglas Sinclair, said: ‘This is a highly complex technical area. Councillors don't need to know every detail but they do need to know enough to ask the right questions.

‘This is a critical part of council business which requires close and effective scrutiny, particularly in times like this when budgets are so tight.’

 
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