Another ‘under-spend’ at council HQ yet debts climb by12%

EXCLUSIVE by DOUG COLLIE

Scottish Borders Council has declared a wafer thin under-spend on its £261 million revenue budget for the fifth year in succession while at the same time running up more than £21 million of extra external debt during the 2016/17 financial year.

The situation is outlined in draft annual accounts which will be presented to councillors later this week.

Research by Not Just Sheep & Rugby staff has confirmed that in every fiscal year since 2012/13 the council has recorded an under-spend of less than one per cent, demonstrating an apparently remarkable control on expenditure over scores of different budget headings.

This time round the books were closed with a miniscule 0.05% (£128,000) ‘in the black’ figure. The corresponding returns in previous years were 2012/13 0.30%; 2013/14 0.18%; 2014/15 0.16%; and 2015/16 0.49%.

The report containing the latest set of unaudited accounts claims under the heading Highlights of the Year: “Against a very difficult financial background, the Council has achieved a great deal during 2016/17 as follows: signed a 13-year contract with CGI to establish a digital services partnership;

“Achieved £8.9 million of planned Financial Plan savings on a permanent recurring basis; Delivered £261.6 million of revenue spending within budget; Delivered Capital Investment of £51.5 million on schools, flood protection, roads, lighting and other assets; Supported a successful first year operation of the new integrated Sport & Culture Trust (Live Borders)”.

However, for some reason, the accelerated rate of borrowing does not feature among the highlights. A few pages further on Borders residents are told: “External Debt: The Council’s external debt as at 31 March 2017 was £197 million. Additional long term borrowing was undertaken during the year amounting to £12 million.

“Short term borrowing for cash flow purposes was also undertaken with £9 million outstanding at the end of the year. The average rate of interest paid on outstanding external debt was 6.2%”.

One wonders if the many extra millions borrowed are taken into account when calculating that 0.05% "under-spend".

In fact the total debt figure had soared by 12.1% from its level of £175.25 million in March 2016. And no less than £11.879 million of taxpayers’ cash was required in 2016/17 just to service SBC’s portfolio of loans.

There was a hefty bill too for the long-term PFI scheme which delivered new secondary schools a decade ago in Eyemouth, Duns and Earlston. The accounts show there will be a service charge of £6.024 million in 2017/18 plus an additional £2.66 million to cover interest. The total cost of the Initiative will be more than £238 million, including an eye-watering £34.7 million in interest charges.

The ‘Remuneration’ section of the accounts will no doubt be of special interest to many of those who take the trouble to scrutinise the authority’s financial house-keeping.

For example: the number of employees at SBC who earn £50,000 or more increased from 115 to 125 last year. And the top 13 senior employees received total remunerations of £1,002,622 (up from £989,519 in 2015/16).

But the exit door at Newtown St Boswells appears to have been less busy; 2016/17 saw 23 exit packages for departing staff at a total cost of £430,745. In the previous financial year SBC offloaded 71 staff members who took £2.233 million with them.

The report concludes: “The operating environment for the Council continues to be very challenging with financial and economic influences such as increasing demands on services, reducing Scottish Government funding, low interest rates and cost pressures from pay and price inflation all affecting the Council’s finances. The Council, despite these challenges, remains financially sound and well placed to serve the people of the Scottish Borders in the future”.

No doubt the people of the Borders can also anticipate another wafer thin under-spend when March 2018 comes round. The level of external debt may be more difficult to predict.

According to monthly lists of loans displayed on the Public Works Loan Board website SBC borrowed £8 million over 10 years on February 24th 2017, the money to be applied to expenditure 'within one month'.

And on April 26th 2017 the local authority borrowed another £10 million over 10 years. This time the cash was to be applied to expenditure 'immediately'.