councils

Half of Scots councils are ‘mismanaging’ community funds

councils

Half of Scotland’s councils have been accused of mismanaging common good funds created to benefit local communities after their value collectively plummeted by nearly £8m in four years.

Common good funds are unique to Scotland and are collectively worth an estimated £860m. They are supposed to be managed separately from normal council resources and – according to a 1491 law still in force – used “for the common good of the town.”

But the Scottish Community Alliance claimed some local authorities are mismanaging “a very significant” community asset. It said common good funds were “in desperate need of reform and renewal” and claimed they had “sat in the shadows of our public finances for long enough”.

Common good assets include town halls, churches, statues, schools, hospitals, greenspaces, libraries, water bodies, golf courses, public toilets, museums, allotments, and art, such as paintings.

They include notable sites like the Inverness ​​Caledonian Thistle football ground, Edinburgh’s Calton Hill and Princes Street Gardens, Glasgow’s George Square, Glasgow Green and Kelvingrove Park, the Dumfries Midsteeple building, Dunfermline’s Carnegie Hall, and Inverclyde’s Gourock Pool.

While some assets cost money to be maintained, others – such as car parks, farms or harbours –  generate revenue and increase the value of common good funds. 

Councils ‘undervalue’ assets

However The Ferret found common good assets were sometimes used by councils in ways that suggest they are being undervalued and used to subsidise other council services, or used to buy things of little community benefit – such as limited edition £170 bottles of whisky or portraits of council officials. 

One council has failed to publish a register of common good properties, seven years since it was made a requirement by law.

Common good assets are derived from ancient burgh property such as land, buildings and investments, and held on behalf of local people by councils.

The Ferret looked at how the net value of each council’s common good fund changed in recent years. We found that the value of 16 funds collectively fell by nearly £8m between 2017-18 and 2020-21, when the 2017 value is adjusted for inflation.

Just 14 councils increased the value of their funds, by nearly £40m in total.  Shetland and Western Isles councils are the only local authorities without common good funds.

South Ayrshire’s fund fell by £2.6m – the biggest drop in value of any council. A spokesperson said the fall was due to “the revaluation of assets” which occurs every five years.

The council did not respond to a freedom of information request that sought details of the assets held in the local common good fund and spending records.

Moray council saw a drop of more than £1m. East Ayrshire and Perth and Kinross saw falls of £869,000 and £763,00 respectively. The value of West Dunbartonshire's fund dropped by £445,490.

Detailed spending records from West Dunbartonshire council show that more than £1m had been spent from the fund over the last three years, including costs for fireworks displays, Christmas lights and funding for local Citizens Advice Bureau branches and museums.

The council also took at least £25,000 each year from its common good fund for “central support” and “estates management” fees. 

A council spokesperson said that while no assets were purchased or sold between 2017-18 and 2020-21, its assets had been revalued – an action that councils are required to take every five years.

Moray Council did not respond to a freedom of information request seeking detailed spending records for its common good fund.

A spokesperson said while the council reinvests a proportion of funds annually, lower interest rates in recent years and transferring ownership of assets to community groups had impacted its growth.

East Ayrshire Council attributed its fund’s reduction to “the depreciation and revaluation” of assets. 

Lease information from the fund obtained by a freedom of information request shows that key assets on the East Ayrshire register, such as Darvel Town Hall, The Palace Theatre and Newmilns Library are leased to the East Ayrshire Leisure Trust (EALT) for just £1 per year.

The council said these and other properties were leased to the EALT for £1 each when the trust was founded. “To have set a larger charge would only have meant that East Ayrshire Council would have to fund EALT to pay a larger rent, which would not make budgetary sense,” a council spokesperson argued.

The council “still pays all maintenance costs for these assets, again because EALT is not given a budget to do so,” they added.

Perth and Kinross Council said that 68 per cent of its net assets’ value related to land or buildings, which were “revalued annually to reflect market conditions – therefore no adjustment is required for [inflation].”

Its reduction had actually been £282,000 “predominantly due to the revaluation of common good land and buildings”, a spokesperson claimed.

The Angus fund grew the most, by £12.3m, followed by Aberdeenshire’s, which grew by £5.6m, and Aberdeen’s, which grew by £5m. East Lothian grew its fund by £3.6m, Glasgow by £3.5m and both Renfrewshire and the Scottish Borders by £2m each.

Many councils are still discovering ‘new’ common good assets that should be on their registers. Angus Council said the recent transfer of council assets to its fund had led to an increase in value. Highland Council said it has added a number of bowling clubs to its asset register.

Aberdeenshire Council attributed its fund’s rise to the revaluation of assets. Aberdeen City Council said its fund’s increase was due to its annual budget “growing cash investments and supporting future income streams.” Growth was also due to the sale of land and the increase in value of other assets.

West Lothian’s common good fund is only worth £23,000, while Midlothian Council has the smallest fund, worth just £9,369 in 2022. Yet 13 years ago, Midlothian’s fund was valued at £72,000. All other local funds are worth at least £1m.

Midlothian Council said it inherited two funds from the former burghs of Dalkeith and Penicuik. “These are historic funds, and their value reflects the sums and assets vested in them, and decisions taken over a number of decades, on how they should be used for the benefit of residents,” a spokesperson said.

West Lothian Council said it held a community consultation in 2021 to assess what assets should be included in its common good register. It was now working to “assess a number of properties”, and expected its asset list “to change in the coming months”.

Some council common good funds show a long term decline. Both the North Lanarkshire and North Ayrshire common good funds are worth less now than they were 13 years ago.

‘Desperate need’ for reform

Professor Richard Kerley, an expert in public services management at Queen Margaret University and a director of the Centre for Scottish Public Policy, said it can be tough for councils to accurately value common good assets.

As some assets are seen to have historical importance or be key to local leisure, such as statues or parks, their true value is almost “incalculable”. He said some changes in the value of funds will be due to different assessments given by various surveyors and auditors.

The Scottish Community Alliance (SCA) said The Ferret’s investigation demonstrated that common good funds were “in desperate need of reform and renewal.”

“The fact that the key piece of legislation that regulates these funds is over 500 years old tells its own story,” said Angus Hardie, the SCA’s director.

“The discrepancies in the performance of the funds in different local authorities suggests very different approaches are being adopted – many of which appear to be to the detriment of what is in effect a very significant class of community asset,” he added.

“As the Scottish Government is now talking in earnest about community wealth building, with legislation on the horizon, we need to have a major rethink about how we treat this particular aspect of community wealth going forward.

“The common good has sat in the shadows of our public finances for long enough.”

Accusations of mismanagement

Some councils faced accusations of mismanaging their funds in 2019 after The Ferret revealed spending patterns which critics argued did not benefit the common good.

Aberdeen City Council spent £38,280 of its fund on “civic drinks” for events while Highland Council spent £4,439 on “civic hospitality” drinks. Dundee City Council used £5,500 of its fund to pay for a portrait of the city’s Lord Provost in 2018 while Highland and Aberdeen councils spent £2,000 and £1,350 respectively on flights.

Despite this criticism, councils with large common good funds continue to use it to subsidise similar costs. In 2019-20 Aberdeen City Council, which has by far the largest common good fund, spent £10,000 on a portrait of the Lord Provost.

It also spent £13,193 between 2018-19 and 2021-22 on the Lord Provost’s travel expenses. 

Similarly, in 2018-19, Highland Council continued to spend thousands of pounds each year on hospitality, catering and travel, including £1,708 on 10 bottles of specially labelled single malt whisky.

A Highland Council spokesperson said: “The Inverness common good fund grant sub-committee meets quarterly to make decisions on how funds are spent for the benefit of communities and to assess applications made to the common good fund.

Minutes of the sub-group committee meetings are included in the city of Inverness area committee meeting papers for the scrutiny [of] Inverness councillors.” Common good-funded “civic duties” in Inverness were agreed by city councillors, in which “expenses are accrued – such as hospitality,” they added.

South Ayrshire Council has not published a register of common good properties, seven years since it was made a requirement by law.

Kerley said it was “pretty inexcusable to have not produced a register”, as most common good asset holdings “are not extensive” compared to that of general council assets. “Transparency is essential,” he added.

Joseph McLachlan, head of finance for East Ayrshire Council said it approach to accounting for Common Good assets was agreed with auditors, Audit Scotland, where it was agreed “all of the costs in maintaining the assets would be met from the Council’s budget rather than from the respective Common Good fund”.

"As a consequence of this approach any income from the Common Good assets would also be retained by the Council but it is important to highlight that the cost of maintaining the assets far outweighs any income that is generated,” he added.

A South Ayrshire Council spokesperson said: “Finalising the list is a substantial piece of work which involves a time consuming process to ensure all information is correct. However the process will continue to be progressed.”

Are Councils Working? is an investigation by The Ferret, co-published with The Herald, exploring local issues, services, communities and more.

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Illustration by David Peter Kerr.

This article was corrected at 09.56 on 27 June 2022 to remove a paragraph stating East Ayrshire Council had failed to publish a register.

This article was further amended at 22.51pm on 27 June 2022 to correct the figure for West Dunbartonshire Council.


2 comments
  1. Our Community Counvil was advised by Perth & Kinross Council that work on the register is proceeding and should be complete by late summer. Then there’s a public consultation period. We were also told that
    “Common Good Assets is a very complex legal area and Perth and Kinross are fortunate to have secured the services of the solicitor who is the author of the only legal textbook on the subject to lead on the work of drawing up our register.”

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