Podcast transcript - Local government in Scotland: Financial overview 2018/19 
I’m here with Graham Sharp, Chair of the Accounts Commission, and Audit Manager, Kathrine Sibbald, to talk us through this year’s financial overview of Scottish councils.  
Graham, please can you tell me what this report is about?
Graham: Yes. This is our yearly financial overview of councils in Scotland. It looks at how councils and Integration Joint Boards managed their money. We consider their funding and other income, budgets and how effectively they are managing the public money they are responsible for. We also look ahead to what the financial future looks like for local government. 
Kathrine, what did you find during your audit work?
Kathrine: What we found is that it’s clear that council budgets are being increasingly stretched and strained. All councils are struggling to keep pace with increasing demands for services.  A worrying finding this year is that most of Scotland’s 32 councils continue to be reliant on using money from reserves to keep up with demand for services and balance their budgets. Reserves are the money councils set aside for funding specific projects and for emergencies. And what we found is that twenty-three of Scotland’s 32 councils have reduced their main pot of reserves, that’s their general fund reserves, over the last three years.  
 So it simply isn’t sustainable for councils to continue using their reserves to meet shortfalls in their budgets. 
And what did you find in relation to the Integration Joint Boards? 
Kathrine: Integration Joint Boards – those are the bodies funded by NHS boards and councils to run our health and social care services - they are also really struggling to balance their budgets. What we found is that without additional funding from NHS Boards and councils, most of Scotland’s Integrations Joint Boards would have had shortfalls in their budgets. 
Graham, is there anything more that councils and Integration Joint Boards can do to be more efficient and save money?
Graham: Funding reductions, making savings and delivering more for less has been a constant issue for local government over a number of years. This simply isn’t going to change. In fact, forecasts indicate that it is likely that there will be further reductions in funding from the Scottish Government in the years to come for councils.
It’s clear from our audit work that the situation we have now can’t continue. Councils have to act faster to realise the change in the way our local services are delivered, or for some services consider whether they should continue to provide these at all.  And for the Integration Joint Boards, across the country we have already reported that the integration of health and social care has been too slow. Change needs to move faster, which in turn will help to ensure that the Integration Joint Boards are financially sustainable for the longer term.
Just less than £10 billion in Scottish Government funding seems a vast amount of money. Can’t councils simply be more flexible in how they use this money to meet demand?
Graham: Across the country, demand for council services continues to grow, at a time when funding is projected to decrease. That’s why the Accounts Commission has been urging councils to focus on how best to provide what individuals and communities need and redesign the way they deliver services, to save money, be more efficient and work with partners and other councils.
So what does all of this mean for the public? 
Graham: Councils are really under pressure. And over the last few years, as the pressures on services have increased and funding reduced, they have done a good job of continuing to do what they do and provide local services across the country.
Focusing on today’s issues has, of course, been a constant pressure. And it probably isn’t surprising that a major shift in the way councils’ services need to be delivered for the future hasn’t yet happened.
I think we have reached that point, where the focus needs to move away from managing services for the here and now and to consider how services can be delivered differently, more efficiently and more effectively. This also means making extremely difficult decisions, alongside local communities, about what services councils may have to stop delivering.
This sounds like a tough environment for councils and for those of us relying on council services. What’s the future looking like?
Graham: In terms of funding, there is no positive message for councils. What is an achievement is the ways in which many councils have continued to deliver, maintain and sometimes improve services. We’ve reported on this in our Best Value audits of councils throughout the year. 
But this simply can’t continue. In our Best Value reports being published in 2020 we will continue to review the changes councils are making to manage services within the constraints of falling budgets and, very importantly, how they are working with local communities to shape and determine services for the future. 

Graham and Kathrine, thank you very much.

And you can download the full report at www.audit-scotland.gov.uk