Friday, 5 February 2016

Living way beyond their means

As I See It...DOUG COLLIE's take on Scottish Borders Council's budget proposals.

The Borders local government budget proposals for 2015/16 - a 39-page catalogue of financial tables and proposals for savings complete with a fine picture of a steam engine on the front cover - is available for scrutiny on the council website.

Apparently the draconian financial settlement imposed on councils by the Scottish Government means the ruling administration at SBC has to find £11.396 million worth of spending cuts this time round to balance the books, and that is proving to be a tough ask.

There are warnings of 130 job losses, but we are promised that front line services will be protected at all costs with the emphasis on education, roads and economic regeneration. It is puzzling therefore to see the Great Tapestry of Scotland museum - a project which is simply unaffordable - retain its place on the capital expenditure agenda with a price tag of £5.8 million.

Members of the public who are forced to sponsor SBC via council tax demands had been invited to submit their own cost cutting measures to help out the beleaguered councillors and highly paid officers as they grappled with the complicated mathematics. Unsurprisingly, axing the Tweedbank tapestry gallery came top of the suggested savings list put forward by disillusioned Borders punters.

So when some bright spark in Not Just Sheep & Rugby's editorial suite suggested our team should cast an eye over the SBC budget I found myself roped in after a great deal of Hillary Clinton style coin tossing.

A couple of eye-watering sums jumped off the pages of the SBC presentation, which is likely to be rubber-stamped at next Thursday's full council meeting. It led to the conclusion that Borders council, along with Scotland's other 31 local authorities, are living way beyond their means and will never get their monetary houses in order until they manage to radically reduce their interest payments.

Not too many folk will be aware that in 2016/17 SBC expects to pay £20.710 million in loan charges for previous borrowing while the annual bill for three Berwickshire secondary schools, built under one of those crazy PPP contracts seven years ago, stands at £8.296 million.

The £8,296,000 which SBC pays each year for its PPP schools contract works out at £22,728 per DAY or £159,538 per WEEK.

The £20,710,000 which SBC pays each year to service other borrowing works out at £56,739 per DAY or £398,269 per WEEK.

The twin burdens for those loan charges total just over £29 million, enough to fend off the £11.396 million in cuts almost three times over. It is difficult to envisage any private business based in the Scottish Borders being able to trade with financial albatrosses like that around their necks.

And the crippling PPP payments are set to continue every year until 2038. Just another unsound financial deal in the annals of Borders local government. Perhaps it should go into a Newtown St Boswells Hall of Shame alongside Icelandic Bank Investments, The Disastrous Waste Management Contract With New Earth Solutions, and The Business Case For The Great Tapestry of Scotland Venture.

According to the council report: "External consultants have been engaged to review the PPP contract with a target to deliver savings of £107,000 from 2016/17 with an emphasis on insurance costs, contract lifecycles and all other services provided within the contract". Well, every little helps!

The combined debt of Scottish local authorities runs into many billions of pounds, and is set to continue spiralling in years to come. But surely council tax payers cannot go on servicing debts in their local area of up to £29 million per annum when the Borders council tax take is only £52 million.

All of this points to an urgent need for a radical overhaul of our local government system instead of merely tinkering with the number of council tax bands. We hear that some councils are getting together with neighbours to explore the possibility of joint working on the delivery of services, and to indulge in bulk buying of supplies..

It might be better to amalgamate council areas and reduce the overblown level of bureaucracy by creating say a dozen units. The potential savings from a cull of hundreds of directors on salaries of £100,000 and more would certainly go some way to reducing those unaffordable loan charges and PPP repayments.

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