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CONTROLLER OF AUDIT REPORTS ON FINANCIAL AFFAIRS OF FORMER SCOTTISH COUNCILS

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A report into how the former regional and district councils managed their financial affairs in their final year of ...
A report into how the former regional and district councils managed their financial affairs in their final year of existence (1995/96) has been published by the Controller of Audit, Robert Black. The four part report explains the background to reorganisation, the difficulties and pressures on local authorities and how they coped, the key issues which emerged from the audit process and finally, it draws broad conclusions and possible lessons for the future.

In his concluding remarks Mr Black says:

- CoSLA estimated the total cost of reorganisation at£281m compared with The Scottish Office provision of£76m. Although these estimates have not been independently audited, it is clear that the actual costs of reorganisation were significantly greater than the estimates provided for by The Scottish Office.

- The Scottish Office made no explicit provision for redundancy costs incurred by the outgoing councils in 1995/96 whereas CoSLA figures say that severance costs amounted to£80m in that year.

- The net deficit of£78m for the 62 outgoing councils must be viewed against these severe financial pressures.

- Overall, staff numbers were reduced by some 10,000. The planning and administration of these reductions placed severe pressure upon the remaining staff. Although the cost of severance packages contributed significantly to the overall deficit at the end of the year the outgoing councils acted responsibly in slimming down staff numbers quickly.

- Some of the outgoing councils may not have acted responsibly in the extensive use of payments in lieu of notice, totalling£9.5m and involving some 3,800 employees.

- The loss of key staff and their expertise added significantly to the problems of the outgoing councils in maintaining the control environment right up to the last day.

Mr Black says:

'There will never again be a reorganisation of local government as challenging as that which took place in 1995/96. If, however, there is a further reorganisation at some time in the future, then I would suggest that the main lessons from the experience of 1995/96 are that greater attention should be paid to forward planning, to projecting the costs accurately, to maintaining proper financial stewardship and control during the period of transition, and to ensuring that adequate resources are allocated to facilitate the early completion of the accounts and the audits.'

The Report was produced in the public interest and has been sent to the 32 new councils, the secretary of state and minister for local government and is being made available to the public through the Accounts Commission's web site.

The Controller of Audit is also about to publish his report into the Commercial Operations Deficit at East Ayrshire Council.

The report is 15 pages long and is available on the Accounts Commission web site: www.accounts-commission.gov.uk or, you can ask for a copy to be sent to you by e-mailing: publications@scot-ac.gov.uk

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