Government urged to introduce new financial rules

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UNISON is calling for the Scottish Government to push ahead with proposed new financial powers for Scottish councils to relax the rules for borrowing, lending and the repayment of loans.

These proposed changes to Scottish councils’ financial powers could be used for greater flexibility to deal with the funding crisis in councils. It is estimated that it could save Scottish councils upwards of £50million, or save over 1000 jobs.

UNISON called for the changes in their report Combating Austerity (Sept 2015). The report explores all options and argues that making full use of flexibility in new borrowing or refinancing, and restructuring existing borrowing could potentially free up significant sums of money, at a time of severe austerity cuts.

Dave Watson, head of UNISON Scotland policy and public affairs said: “These limited changes are very welcome we have been urging the Scottish Government to introduce them for some time.

“Giving councils this flexibility could save upwards of £50m and over 1000 jobs. This is not going to solve the problem but is an example of how we need to start thinking to mitigate the worst of austerity and council tax freeze.”

UNISON is urging the Government to go further and include new proposals to enable councils to borrow to either make grants to third parties where these grants fund capital expenditure, or for the authority to incur expenditure directly on third party tangible assets; and a new provision for a local authority to be able to borrow to lend to any of its subsidiary bodies where the loan is to be used to finance capital expenditure of the subsidiary.

Dave Watson said: “Further changes beyond what is now being proposed, could make a real difference and mitigate some of the worst of austerity.

“Councils could use new types of borrowing to support, for example buyouts of expensive Private Finance Intitiative (PFI) contracts or, perhaps, to finance new conventional spending, they could offer health boards an alternative to expensive hub Public Private Partnerships (PPP), PFI, or Non-Profit Distributing (NPD) schemes.”