Perhaps I could do so. Thank you, convener, and good morning.
The Accounts Commission for Scotland welcomes the opportunity to discuss its 2015 local government overview report with the committee.
For a number of years now, councils have had to cope with reducing resources, rising demand and ever-increasing public expectations. Our audit work tells us that councils have generally coped well so far. Until now, they have dealt with reductions in income largely by cutting employees, but that alone is not sustainable in the longer term. Councils will face pressures beyond next year on a scale that has not previously been experienced, as budgets are expected to become even tighter and demands on services continue to increase.
Many councils are now reporting a budget shortfall—that is, a shortfall between their projected income and their expenditure. Over and above the known reductions, the Conservative Government is—as members know—committed to reducing the deficit in the lifetime of the current Parliament. The Chancellor of the Exchequer will announce where the expenditure reductions are to be made in the emergency budget on 7 July and in the public spending review in September. They are bound to have implications for Scotland’s finances and, in turn, for Scotland’s councils.
In the commission’s view, councils need to have effective long-term financial plans to give them a good understanding of their finances and future pressures, and they need to identify all practical options for addressing those pressures and funding shortfalls partly by making better use of benchmarking data and increasing the involvement of service users and local communities in developing ways of improving services and helping to save money. The challenge for councillors is to make best use of the money that is available and to take difficult decisions now to avoid storing up problems for the future.
Many changes are going on in council staffing, management and delivery structures, including the integration of health and social care and the continuing use of arm’s-length external organisations to deliver services. In the commission’s view, it is crucial that governance and scrutiny arrangements keep pace with all those changes.
Community planning and health and social care integration require a continuing focus on governance and partnership working, in which the responsibility for good governance is shared. That depends crucially on building a culture of trust between partners.
My colleagues and I are happy to answer questions.