PracticePeople In PracticeScots get three year budgets

Scots get three year budgets

New rules say council should have medium-term financial plan.

All 32 Scottish councils could be drawing up three-year budgets for the first time next year if new guidance is endorsed by council finance directors later this summer.

The new guidance from the CIPFA directors of finance section in Scotland is a direct result of recommendations from the joint Scottish Office, Convention of Scottish Local Authorities and Accounts Commission best value taskforce. Its first report in 1997 identified ‘meaningful budgets over three forward years’ as an integral part of the best value regime.

Until now, finance leaders have dismissed the idea of three-year budgets given ministers’ preoccupation with annual settlements.

But according to Brian Livingston, leader of the group’s work on budgeting and area finance manager at Fife council, Scottish Office plans to issue town hall spending guidelines for future years means the scene is now set to make forecasts.

‘The indicative spending guidelines coupled with the certainty of the Comprehensive Spending Review on the funding side should enable local authorities to plan with less uncertainty than they have in the past,’ he said.

But Livingston said a number of difficulties still remained if medium-term financial planning was to be a success.

‘We didn’t find a single costed service plan in Scotland,’ he said. ‘We need planning to drive the allocation of resources.’ The group has also called for greater flexibility for councils to carry forward unspent funds to end the current ‘use it or lose it’ system.

The continuing mixture of single and two-tier local authorities in England makes the introduction of three-year budgeting more complicated and the government has so far given no instructions to councils to move in that direction.

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