Scotland business

Scottish council spending 'lacking clarity'

Generic building site
Image caption Councils have spent £23bn on capital projects since 2010

Local authorities are often unable to show whether major building projects were finished on time and on budget, the public spending watchdog has found.

Councils spend more than anyone else in the public sector on building and maintaining infrastructure.

The Accounts Commission said there were often "significant gaps" in information about initial cost estimates and timescale projections.

This made it more difficult to hold decision-makers to account, it said.

The commission carried out the first comprehensive review of major capital investment in councils, focusing on 63 projects costing more than £5m which had been completed since 2009.

Where the necessary information was made available, councils completed most of these within or close to the contract cost, despite initial estimates being too low.

'Better information'

But most projects experienced delays, the report stated.

It added: "Councils have improved their oversight of major capital projects in recent years and are also clear about their broad goals.

"However, they rarely specify the expected benefits and how they will be measured.

"Councils need to develop long-term investment spending and financing plans. They also need better information to allow effective scrutiny of major projects and whether they are completed to budget and on time."

The commission stressed things were improving, but with continued pressures on public finances it was important that councillors and officers had effective plans and controls in place to ensure the money is well spent.

The report said a total of £27bn had been invested since 2000/01 on schools, social housing, sports and leisure centres and other projects.

Councils paid for most of this using capital budgets, with £4bn of the total provided through private finance methods such as Private Finance Initiative and Non-Profit Distribution contracts.

The investment was needed to address backlog maintenance and develop new infrastructure.

There are 203 major capital projects under way with a combined value of just over £5bn - but spending is expected to fall over the next two years and plans beyond that are uncertain.

Accounts Commission chairman John Baillie said: "Councils invest more than any other part of the public sector in developing services for local communities. We all benefit from new and refurbished schools, sports facilities and other buildings and infrastructure delivered by councils.

"With continued pressures on public finances, it is important that councillors and officers have effective plans and controls in place over their capital investments to ensure the money is well spent. There are many complex challenges in delivering these projects and I strongly encourage councils to use our good practice guide."

'Severely bloated'

The president of council umbrella body Cosla, David O'Neill, said: "The explanation for the rise in borrowing is two-fold: firstly and straightforwardly, building things like schools and other capital projects actually costs money and requires big investment.

"Secondly, during the period of this report the capital grant from government was reduced, investment was therefore being undertaken through prudential borrowing which, therefore, means more debt for councils.

"Also, there was a real drive from the Scottish government and local government to increase capital investment to stimulate economic recovery at the local level on the back of the downturn."

Scottish Building Federation executive director Michael Levack said local authorities needed to do more to improve their planning and control of capital budgets.

He added: "From the perspective of the construction industry, a crucial element of those improvements must be streamlined and more transparent processes for procuring services from building firms.

"The procurement process remains severely bloated, with tender shortlists often running to 15, 20 or even more individual firms for even quite modest contracts.

"Price is frequently the overriding priority in awarding contracts, often to the detriment of other important criteria such as quality and skills."

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