Date: Wednesday 27 January 2016

New financial powers could save Scottish councils £50m, says UNISON

Public services union UNISON has today (Wed 27 January 2016) urged the Scottish Government to push ahead with proposed new financial powers for Scottish councils to relax the rules for borrowing, lending and the repayment of loans.

These proposed changes to Scottish councils' financial powers should now be used for greater flexibility to deal with the funding crisis in Scottish councils. If used effectively it could save Scottish councils upwards of £50million, or save over 1000 jobs.

UNISON called for these ‘long overdue’ changes in their report Combating Austerity (Sept 2015). The report called for a relaxing of the repayment of loans fund regulations, arguing that councils need greater flexibility to mitigate austerity.

The Combating Austerity report explores all options and argues that making full use of flexibility in new borrowing or refinancing, and restructuring existing borrowing could potentially free up significant sums of money, at a time of severe austerity cuts.

Dave Watson, head of UNISON Scotland policy and public affairs said,
‘These limited changes are very welcome we have been urging the Scottish Government to introduce them for some time. Scottish councils are in real crisis, cutting local services and shedding 1000s of jobs. Giving councils this flexibility could save upwards of £50m and over 1000 jobs. This is not going to solve the problem but is an example of how we need to start thinking to mitigate the worst of austerity and council tax freeze.'

UNISON is now urging the Scottish Government to go further and include new proposals to enable councils to borrow to either make grants to third parties where these grants fund capital expenditure, or for the authority to incur expenditure directly on third party tangible assets; and a new provision for a local authority to be able to borrow to lend to any of its subsidiary bodies where the loan is to be used to finance capital expenditure of the subsidiary.

Dave Watson said, ‘Further changes beyond what is now being proposed, could make a real difference and mitigate some of the worst of austerity. Councils could use new types of borrowing to support, for example buyouts of expensive Privtae Finance Intitiative (PFI) contracts or, perhaps, to finance new conventional spending, they could offer health boards an alternative to expensive hub Public Private Partnerships (PPP), PFI, or Non-Profit Distributing (NPD) schemes. We think they could be doing this now. However the Scottish Government should make it explicit in the rules for Scottish councils, so we can encourage innovation and more efficient use of public funds. And vitally, use these rules to save our public services and thousands of local jobs.

END

Notes for editors

• UNISON is the biggest trade union in Scotland and the biggest union in local government.
• UNISON report Combating Austerity: signposting the ways Scotland could limit some of the damage from Austerity (PDF). Combating Austerity Press release 23 September 2015 here: http://www.unison-scotland.org.uk/news/2015/sepoct/0923.htm
• UNISON summary briefing here:
http://www.unison-scotland.org.uk/briefings/
e-briefing_RelaxingBorrowingRules4Councils_Jan2016.pdf
• The new draft Local Authority (Capital Finance and Accounting) (Scotland) Regulations 2016 and on Loans Fund Accounting are set to come into effect, with any changes following the consultation, from 1 April 2016 and statutory guidance can be read here: http://www.legislation.gov.uk/sdsi/2016/9780111031063
• These regulations cover changes to the statutory arrangements for local authority borrowing, lending and the statutory loans fund. They were the subject of a short consultation at the end of 2015.
• UNISON Consultation response to The new draft Local Authority (Capital Finance and Accounting) (Scotland) Regulations 2016 Here:
http://www.unison-scotland.org.uk/response/
LocalAuthorityCapitalFinanceRegs_UNISONResponsetoScotGov_Jan2016.pdf

UNISON Contacts
Dave Watson, head of policy and public affairs 07956 122 409
Danny Phillips, communication officer, 07944 664 110

Index