Saturday 23 September 2017

Councils can't make ends meet but still write off €113m in debts

Paul Melia

Paul Melia

LOCAL authorities wrote off more than €113m in outstanding debts last year despite struggling to make ends meet.

Councils are owed more than €1.3bn in outstanding loans, levies, rates and water charges, with 20 of the 34 technically insolvent and relying on bank borrowings to fund essential services.

And a report from the Department of the Environment says there are major concerns about loans drawn down to buy land for housing, with councils also accused of making an "inadequate" level of provision for bad debts.

Developers also owe councils €751m in development levies, with much of this money unlikely to be repaid.

Grim

The report, which reviews the finances of our 34 city and county councils, paints a grim picture of local government which has slashed €375m from day-to-day spending over the past four years while cutting capital spending by more than €4bn.

It reveals major concerns about how big-ticket items including the Poolbeg incinerator in Dublin and refurbishment of Eyre Square in Galway spiralled out of control, with local authorities still unwilling to write off debts they are unlikely to recover.

The 'Local Government Audit Service Activity Report' deals with local authority finances for 2011, and covers the 34 city and county councils.

It shows:

• There is an "increased reliance" on bank borrowings for capital works, with €561m borrowed in 2011 – or 22pc of all funding.

• But almost €580m in additional money is needed for projects under way or completed.

• Some 20 of the 34 councils are operating in the red, and are technically insolvent.

• Despite this, they are owed €555m in unpaid rates, water charges, housing rents and housing loans. The Department of Environment has also confirmed that councils are owed another €751m by developers.

• Some €90.7m was written off in rates, and €1.4m in housing rents, €20.8m in commercial water charges and €643,000 in housing loans in 2011.

• There are also concerns about loans taken out to purchase land, with many of these sites no longer required for housing and no source of funding identified to meet the repayments.

• Major concerns remain about a lack of proper tendering procedures, despite repeated warnings over the years.

The report also warns that the Local Government Audit service is under-staffed, with just 34 people in place, which means that fewer audits can be carried out.

But the Department of the Environment has also warned about the precarious state of local government finances.

"A number of auditors expressed concern regarding the financial position of individual local authorities," it said.

"Auditors also referred to the level of long-term debt in local authorities, and the increased burden of repaying loans. In particular, loans taken out to purchase land were identified in audit reports as problematic."

Concerns

There are also concerns about how public contracts are awarded, with rules not being followed.

"The absence of proper tendering tendering procedures and the use of outdated procurement policies were highlighted by auditors. The procurement of legal services has also been specifically raised by a number of auditors," it said.

In Donegal, approval was given for 21,000 purchases after the goods and services had been received – more than half of all orders – and general legal services were not tendered for.

Figures supplied to Fine Gael TD Simon Harris in response to a parliamentary question also show that councils are owed €751m in development levies – €438m of which is due to be repaid by the end of the year.

The highest amount is owed to Fingal County Council at €131m, followed by Dublin City (€106m), Dun Laoghaire-Rathdown (€91m) and Cork County Council (€52m).

However, the councils disputed the figures, saying the total amounts did not reflect phased payment arrangements, meaning the levies are paid as units are built.

Irish Independent

Editor's Choice

Also in Irish News