Scotland’s councils owe a whopping £9 billion


By Cara Sulieman

SCOTLAND’S councils owe more than £9 billion between them according to new research, with only two local authorities not in debt.

Combined with looming spending cuts, there are worries that the organisations will struggle to keep up the repayments on their massive debts.

Experts have said it is “difficult to see how authorities will cope” as budgets are reigned in as part of the government’s plan to scrape back money.

Chancellor George Osborne is expected to announce the results of the country’s spending review later this month.

Reducing public sector borrowing without increasing taxation is central to his plan to get the economy back on track, but this could hit a number of Scots councils hard.

Just two of the 32 councils across the country have a cash surplus – Shetland Islands with reserves of £275 million and Argyll and Bute have £48 million.

In stark contrast the two major cities owe billions of pounds, with Glasgow owing £1.4 billion and Edinburgh £1.2 billion in the red.

When local government was reorganised in 1996, councils have been allowed to borrow massive amounts of money if they can demonstrate that they can pay it back.

But Professor David Bell from Stirling University warned that local authorities have had their usual channels of funding cut in the last few years.

He said: “Councils can generate revenue via council tax, business rates, the sale of land and charges for services like care, parking and sports facilities.

“Council tax has been frozen for three years.

“The value of land sales has dropped significantly and very little is being sold.

“Now there are fears the Chancellor will cut the Scottish budget by 17 to 20 per cent over the next four years.

“It’s difficult to see how some authorities will cope.”

Others point out that council tax is just 15 per cent of revenue for most councils, meaning that any increase would have to be massive to cover the shortfall.

The other options are to cut back on services like road repairs, bin collection, free entrance for leisure facilities and library services.

Even councils with relatively low debt are worrying, with councillor Rhondda Geekie, leader of East Dunbartonshire Council saying they will have to make cut backs despite having the lowest amount to pay back.

She said: “Every council is aware of the need to service their debts, that’s why we’ve tried to keep them low.

“There are core services councils always have and always will deliver – but ‘added extras’ will be at risk.”

Councillor James Dornan, SNP group leader at Glasgow City Council said: “I’m extremely concerned.

“It’s been clear for some time councils were going to be facing financial difficulties because of mishandling of economic situation by Westminster.

“I’m worried front-line services are going to be badly affected by these extremely high debts.”

Edinburgh’s Labour group leader Councillor Andrew Burns said: “While I think there are dangers I don’t think bankruptcy in an individual council is likely.

“To the best of my knowledge I don’t think it’s likely the council will default on its loans either.

“The council’s borrowing does concern us as it’s close to the upper limit of what is currently allowed for local authorities in Scotland.

“The administration needs to make sure the payments on debt are affordable.”

And Dundee City Council’s Lord Provost John Letford said: “I’m thankful that in Dundee we’ve had prudent management.

“Cuts are going to hit every council hard.”

Debt by council (£millions)

Aberdeen £561.9

Aberdeenshire £357.1

Angus £155.7

City of Edinburgh £1200

Clackmannanshire £128.1

Dumfries and Galloway £160.4

Dundee £61

East Ayrshire £204

East Dunbartonshire £21.1

East Lothian £206.9

East Renfrewshire £85.9

Fife £546

Falkirk £156

Glasgow £1426

Highland £603.6

Inverclyde £208.6

Midlothian £196

Moray £128

North Ayrshire £240

North Lanarkshire £496.6

Orkney Islands £40

Perth and Kinross £160

Renfrewshire £273.8

Scottish Borders £173.2

South Ayrshire £174.9

South Lanarkshire £564.4

Stirling £133.5

West Dunbartonshire £215.4

West Lothian £405.9

Total £9285 million