LOCAL councils have been told to drain their reserves to cover millions of pounds set to be lost amid the Covid-19 pandemic - as the Scottish Government has refused to hand over cash from Westminster until authorities prove they need the extra funding.

Last month, the UK Government announced an additional £1.6 billion was being handed over to local authorities - with £155 million given to the Scottish Government as part of funding conesquentials.

But Finance Secretary Kate Forbes is refusing to hand over the money to Scottish councils until she is satisfied with how much they need.

Ms Forbes has written to COSLA, the umbrella organisation representing Scottish councils, suggesting that authorities dip into their reserves instead.

Edinburgh City Council has warned it faces increased costs and loss of cash of more than £53 million if the shutdown last for six months, while Highlands Council has also stressed it could see an extra £60 million added to its financial pressures.

The issue was raised by Conservative MSP, Graham Simpson, who told Ms Forbes that local councils were "hopping mad" about the situation.

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Mr Simpson said: "On April 18, Robert Jenrick announced that councils in England were to get an extra £1.6 billion to help in the effort against Covid-19.

"Scotland would get £155 million in consequentials from that - but councils here haven’t yet heard if they are going to receive a penny of that money and to put it mildly, they are hopping mad about that."

Labour local government spokesperson, Sarah Boyack, said it was "critical" that councils are given certainty from the Scottish Government.

She added: "They have already transformed their services for our communities and staff  through the pandemic, their incomes have already been reduced and they already had existing budget pressures. Can’t we just get that trust from the Scottish Government?"

"They are working together and we need to make sure that our local authorities have that certainty going  forward so they can plan now for the future we are all needing them to deliver for us."

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Ms Forbes said the Scottish Government is "committed to deploying any consequentials we receive in a way that is helpful to local government and to the wider Covid response".

But she has not guaranteed if or when the £155m will be handed over to Scottish councils.

She said: "I don’t dispute the financial challenges facing our public services just now and working closely with COSLA. I do think it’s only right that we understand what the costs are before we come to conclusions on how we use those consequentials to support local authorities.

"I do think it’s remarkable that we are being pressed just now to provide funding in advance of COSLA confirming what their cost pressures are.

"It seems to me perfectly reasonable that if COSLA has committed to a cost-gathering exercise, and clearly there are cost implications, that we understand what that funding need is before we come to a settled conclusion on the funding available."

But in a letter sent to Gail Macgregor, COSLA's resources spokesperson, Ms Forbes stressed that she wants to "understand how those costs are being mitigated by the funding measures we have already committed" before the cash is handed over.

She added: "I also want to consider what further reprioritisation we could undertake jointly to free up resources to meet the cost challenges now and in the future, along with the use of local government reserves and applications to the Coronavirus Job Retention Scheme to help contain the costs."

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Conservatives have criticised the pressure put on councils to dip into their reserves, which are already under pressure and dwindling in a bid to meet day-to-day costs, by the Scottish Government.

Scottish Conservative leader Jackson Carlaw said: “Councils came into this crisis ill-equipped to cope after years of the SNP slashing their budgets to the bone.  

“Now, instead of passing on the money they need, the Finance Secretary is telling them to raid their reserves even further.  

“Some local authorities barely have any reserves left thanks to the SNP’s botched approach to funding.  

“And rather than hand over all the Barnett consequentials in full – money that was specifically targeted for local authorities – the SNP wants to short-change councils even more severely." Labour finance spokesperson, Jackie Baillie, has accused SNP ministers of a "cash grab" on local councils.

She added: "Even the SNP's own councillors say that this money, which is supposed to fund highly pressured council services to weather this national emergency, should go to councils. But ministers seem determined to centralise control of these funds.

"This is emergency funding which should go directly to councils to help fund social care without any further delay. It is outrageous that the Scottish Government is sitting on its hands." 

COSLA is calling for the money earmarked for local council to be handed over immediately.

Ms Macgregor said: "Council leaders were clear yesterday that the reaction of councils to the Covid-19 epidemic, ensuring essential services are secured, and that our most vulnerable people are protected has been a remarkable effort and as such the £155 million of consequentials should be passed to local government immediately.  

“Councils are working hard to keep a huge range of essential services running to meet the needs of communities and to be responsive locally.  But the bottom line is that protecting people and providing services costs money."

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She added: “That is why, when the £1.6billion of funding was announced by the UK Government for councils in England over two weeks ago, we immediately wrote to the Scottish Government in relation to the £155million of consequentials for Scottish councils. I will continue to keep discussions going with Kate Forbes on this issue.  

“Whilst we fully appreciate the pressure facing the Cabinet at this time, councils are facing an extremely challenging situation on the ground, with significant additional costs being incurred on a daily basis, as well as massive losses of income as a result of the lock down. The response from Scottish Government so far does nothing to alleviate the collective concerns of Scottish Local Government and we call on the consequentials to be passed to Local Government immediately.”