Covid will affect council finances for some time

SLC planning for impact of Covid on future budgets following Audit Scotland report v.1

Thursday, 4th February 2021, 11:28 am
South Lanarkshire Council will feel the financial effects of Covid-19 for some time

SOUTH Lanarkshire Council expect coronavirus to impact council spending “for some time to come”.

The comments come after a report by the Accounts Commission into local government finance which outlined large rises in costs and spending, combined with falling income as a result of the pandemic.

Executive director for finance Paul Manning said councillors were regularly “updated on estimates of the total cost to the council of Covid-19” and that they continued to plan for the long-term impacts.

This week, the Accounts Commission revealed that local authorities in Scotland saw a combined increase in funding of £500 million last year and that 22 of the 32 councils, including South Lanarkshire, were able to increase their reserves in 2019-20.

However, much of that funding is ring-fenced such as the £200 million made available for expanding early learning and childcare.

Over the last seven years, councils have seen greater reductions in funding than other areas of the Scottish Government budget and South Lanarkshire have had to cut £151 million from their budget in the last decade.

Concerns were also raised by the commission about the financial stability and leadership of Integration Joint Boards (IJBs), the bodies set-up to manage local health and social care services.

Most IJBs couldn’t deliver services within their budgets and needed extra money from health boards and councils.

Elma Murray, interim chair of the Accounts Commission, said: “Councils and Integration Joint Boards play a vital role in supporting Scotland’s communities. Even before Covid-19 the pressures and demands on council services had intensified.

“At the same time reductions in local government funding over the past seven years have been greater than in other areas of the Scottish Government budget.

“Covid-19 has fundamentally affected local government services, increasing their reliance on working with their partners and communities. The financial impact of the pandemic on our public services is extreme and creates increased uncertainty of how those services will be provided in the future.

“Good governance, strong financial management and transparency of decision making will be critical as councils and IJBs deal with the impact and consequences of the pandemic.

Outlining the situation in South Lanarkshire, Mr Manning said the council were in a good place to deal with future challenges.

He said: “When Audit Scotland carried out its most recent Best Value Audit on South Lanarkshire Council it found that the council was well placed to address the financial challenges faced by the sector, noting the council demonstrated sound financial management and having in place a good process for long-term financial planning.

“The council has had to find £151m in efficiencies in the last decade and is currently finalising its budget for 2021-22.

“As part of that process we are consulting on a number of savings options which have been presented to elected members to consider as we seek to close a budget gap which is currently estimated at £11.8m, though options submitted to the executive committee on 13 February could reduce that to under £5m.

“It is well-documented that Scottish local authorities, including South Lanarkshire Council, have received additional funding in recent years to fund a range of new and specific tasks required by government.

“This has been particularly true in the last year, when councils have taken a lead role in supporting our communities and local businesses during the Covid-19 pandemic.

“Budget monitoring reports to the executive committee throughout 2020 updated on estimates of the total cost to the council of Covid-19.  As part of our financial planning we are anticipating that the impact of Covid-19 will continue for some time to come.”