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Report warns of £500million in extra council cuts

Local authorities are facing serious cuts to their budgets
Local authorities are facing serious cuts to their budgets

Finance experts have warned councils could need to make millions of pounds of further cuts if they are to balance the books in the coming years.

Audit Scotland has said “financial challenges” will see local authorities forced to make “further savings” or dip into cash reserves in a bid to break even.

Local authorities could experience a shortfall of more than £500million in just two years’ time, according to the report.

The annual review of council finances also confirms that Aberdeen city gets the lowest government grant in the country – while tax revenues in Aberdeenshire have also fallen.

The report, which covers the 2015/16 financial year, also urges councillors to improve long-term financial planning.

Opposition politicians placed the blame for the shortfalls squarely at the feet of the Scottish Government, but the administration insisted they had treated local authorities “very fairly”.

North East Conservative MSP Ross Thomson, said: “This report confirms what we have been warming for some time – that councils are facing deeper cuts at a time when demand on services and the cost of delivery is increasing.”

Mr Thomson said that recently approved SNP changes to council tax – which will see money raised by local authorities but then clawed back into central coffers – would add additional pressure to local authority budgets.

He said: “Aberdeen is already the lowest-funded council in Scotland. To make matters worse, millions raised in extra council tax from the north-east will be spent in the central belt.

“There will be very little benefit for thousands of households here who will be stuck with higher bills.”

Willie Young, convener of the finance, policy and resources committee at Aberdeen City Council, agreed.

He said: “The SNP Government in Edinburgh are forcing councils to make unnecessary cuts to vital services by, firstly, not allowing councils the autonomy needed to grow the economy via devolution of powers and, secondly, by undermining the principal of local accountability by taking residents council tax payments out of the local authority are and using it nationally.”

But a Scottish Government spokeswoman said they had treated local authorities “very fairly”.

She added: “This report highlights the pressures that councils – like other parts of the public sector – face, but also highlights that they are continuing to improve services.

“We expect local authorities to continue to use resources as efficiently and effectively as possible to ensure taxpayers get the best possible services and value for money.”