Committee
Public Audit Committee 01 April 2015
01 Apr 2015 · S4 · Public Audit Committee
Item of business
Accounts Commission Report
“Borrowing and treasury management in councils”
On page 5, the report says: “Overall borrowing has remained at around £12 billion for the last three years, with total assets of £39 billion.” In fact, that point is made quite often throughout the report. Does that mean that you are quite content with borrowing sitting at around a third of the level of assets? At what point should we as committee members be concerned about the level of borrowing in relation to assets?
In the same item of business
The Convener
Lab
Agenda item 2 is a briefing on the Accounts Commission report entitled “Borrowing and treasury management in councils”. I welcome from the Accounts Commissio...
Graham Sharp (Accounts Commission)
Thank you, convener. The report that we are here to discuss today on behalf of the Accounts Commission looks at borrowing and treasury management in councils...
The Convener
Lab
Thank you, Mr Sharp. I refer the witnesses to page 31 of the report, which states: “Council governance structures are in place but not all meet code requi...
Gemma Diamond (Audit Scotland)
We found that councils were all generally following the principles of the code but, sometimes, the requirement for everything to be approved by the full coun...
The Convener
Lab
How many councils did you find in that position?
Gemma Diamond
Two of the six that we looked at.
The Convener
Lab
So only six councils were looked at in this assessment.
Gemma Diamond
That is right. We looked at six councils in detail.
The Convener
Lab
In percentage terms, therefore, the figure could be even higher.
Gemma Diamond
We do not have any evidence for other councils, so I am not able to comment on that.
The Convener
Lab
Should that part of the code not be pursued to ensure that the requirements are met?
Gemma Diamond
The councils all consider that they are meeting the general spirit of the code’s requirements, because the full council would have the opportunity to see the...
Fraser McKinlay (Audit Scotland)
As Gemma Diamond said, we took a sample, which is what we often do in our work. However, if it would help the committee, we could see whether we could find o...
The Convener
Lab
Correct me if I am wrong but I believe that in your opening remarks, Mr Sharp, you said that councils were meeting those requirements—I am sure that you refe...
Graham Sharp
In my opening remarks, I said that, in material terms, councils are meeting the code. The more significant point that I think we are trying to get across in ...
Mary Scanlon (Highlands and Islands) (Con)
Con
On page 5, the report says: “Overall borrowing has remained at around £12 billion for the last three years, with total assets of £39 billion.” In fact, tha...
Graham Sharp
There are a couple of levels to that question that need to be dealt with. First of all, we are talking about total figures, and I would be neither content no...
Mary Scanlon
Con
I am an economist, not an accountant, but I note that you constantly mention £12 billion of borrowing against £39 billion of assets. The way I read that comm...
Graham Sharp
As I said, I would assess that on the basis of individual councils’ specific plans and borrowings, not on the aggregated figures.
Fraser McKinlay
I do not suppose that using those numbers is designed to give comfort or otherwise; rather, it is designed to give a sense of scale. Similarly, with referenc...
Mary Scanlon
Con
On the financial plans for individual councils, the histogram in exhibit 4 on page 13 shows that East Lothian and West Lothian have probably more than double...
Fraser McKinlay
I will kick off; if we do not have the detail, I will be happy to come back to the committee because, as you say, the numbers are striking. From other audit...
Gemma Diamond
I do not have the detail on it all. It essentially depends on the council’s asset management plan and capital investment plan over the period. Exhibit 4 show...
Colin Beattie (Midlothian North and Musselburgh) (SNP)
SNP
Who is ultimately responsible for borrowing by councils?
Graham Sharp
I believe that the councils themselves are legally responsible for their borrowing.
Colin Beattie
SNP
The councils are responsible, not the Government.
Graham Sharp
Correct.
Colin Beattie
SNP
Councils are completely independent.
Graham Sharp
They are.
Colin Beattie
SNP
Thank you. Paragraph 16 states that 17 of the 32 councils increased their borrowing, but paragraph 18 says: “fewer councils are borrowing now than ten year...