Councils ‘must improve capital investment planning’ despite one-year deal

Councils must provide better information to councillors so that they can scrutinise capital investment effectively, the Accounts Commission has said.

The Scottish auditor argued that despite some progress in the field, councils need to improve further the way they manage major projects, including schools, roads, housing and flood prevention.

Although they have taken a “range of actions” to improve practices, the pace of improvement is still dragging, with several weaknesses still remaining in capital investment planning.

At the centre of this is a failure to develop long-term capital investment strategies and plans, including being clear on how this would contribute to their strategic objectives.

Authorities are also failing to define why and how certain projects are prioritised and set out the clear benefits each one is intended to deliver.

Accounts commission chair, Dougal Sinclair, said: “"Councils spend a great deal of money on capital projects such as schools and roads which are vital for local services.

“Our 2013 report recommended actions to help councils improve performance. They have made some progress since then but they need to do further work to fully comply with good practice. In particular, they should provide councillors with better information through clear, good quality reports to enable them to effectively challenge and scrutinise capital investment decisions, plans and progress. “

In Scotland, councils have spent £7bn on capital investment in the last three years – more than half of the country’s public sector capital expenditure. As from October 2015, they had 245 projects worth £5bn underway, with over 40% of them being schools.

The auditor considered school projects the best performing investments in terms of cost and time targets, but still highlighted a need to review business cases as these schemes progress, as well as evaluate them post-completion to share best practice within councils.

Local government body COSLA, however, fought back at the “inaccurate and misleading” report.

Its finance spokesperson, Cllr Kevin Keenen, said: “This is not about individual capital projects like a school being built. What they are talking about is capital investment planning for the longer-term and this is something that councils were making great progress on until we had the rug pulled from under our feet from the centre.

“How can the Accounts Commission realistically expect us to plan major capital investment programmes costing millions of pounds when we are faced, like this year, with a short-term one-year budget from the Scottish Government?”

When the funding settlement for local government was announced last year, England took home a four-year cash deal designed to maximise long-term reform, but Scotland stuck to the one-year settlement.

Overall, the country’s settlement represented a 3.5% cut to the local government cash pot, despite featuring measures to support health and social care integration and retain existing teachers. Measures to maintain the nine-year council tax freeze, however, are currently under dispute as several councils are coming forward in defence of a tax hike to save frontline services.

(Top image c. Images of Money)


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