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REVIEW COSTS WILL HIT£281M CIPFA SAYS

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The reorganisation of Scottish local government will cost£281 million - four times the amount estimated by the gov...
The reorganisation of Scottish local government will cost £281 million - four times the amount estimated by the government, according to a study by CIPFA and the Convention of Scottish Local Authorities.

COSLA says the total Scottish Office provision for reorganisation is £76m, which leaves a shortfall of £205m. This equates to 17% on council tax bills.

The report warns that a failure to make up the difference will lead to increases in tax, cuts in major services and significant job losses.

Cuts of £410m in the current year already show the pressure being placed on services by reorganisation, the report says.

The figures were supplied by directors of finance and cover actual spending since 1995 and projected spending until the end of 1997-98.

The bill covers preparation costs, redundancy and compensation payments, and computing.

The shortfall on capital resources is put at £56m, with the estimated need put at £71m and the government's allocation at £15m. For revenue, the government's allocation is short by £149m, with an estimated total cost of £210m compared with provision of £61m.

One of the biggest funding gaps is for staffing. The Scottish Office has allowed £43m for redundancies but actual costs are estimated to be £105m.

The report warns that the cost of installing IT systems is likely to rise in the long run because shortage of funds is forcing councils to install temporary solutions.

In addition, receipts from property that is no longer needed are likely to be lower than expected because of over-supply.

The joint study says £410m of cuts have been necessary this year because of the underfunding of reorganisation, an inadequate finance settlement and incorrect assumptions by the government on pay awards.

'This (study) is in stark contrast to the deskbound exercises undertaken by the secretary of state's appointed consultants Touche Ross and officials within the Scottish Office in forecasting reorganisation cost and savings,' the report says.

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