Scotland's councils face 'hardest spending choices in years'
- Published
- comments
Local authorities are facing a funding gap of £400 million, according to a new report
Scotland's councils face their "hardest spending choices in years" to make up for budget shortfalls, a watchdog has warned.
The Accounts Commission says local authorities may have to axe services as they struggle with inflation, the cost of living and the impact of Covid.
It says two thirds will have to use cash reserves to bridge the £400m gap.
The Scottish government said it had boosted council funding in real terms by £2.2bn since 2013-14.
The Accounts Commission, the independent body that holds councils to account, said that even with additional Covid-19 funding during 2021-22 councils had to make significant savings last year to balance their budgets.
Its report, prepared by Audit Scotland, warned many councils have also used reserves to bridge funding gaps and fund vital services. This is also expected to be the case in 2022-23.
William Moyes, chair of the Accounts Commission, said some council services may have to be reduced or cut as local authorities grapple with the "increasingly desperate" cost of living crisis and rising demand.
"They're going to have to dig into reserves, many councils, just to balance the budget which is what they're required to do," he told BBC Scotland.
"But digging in to reserves to run day-to-day services is not a sustainable strategy. So overall it's a tough settlement, it's a tough future."
Under pressure services
The commission noted that £570m in additional funding for 2023-24, announced by the government in its December budget, will help councils address future cost challenges. But the report said further change and reform is required to ensure longer-term financial sustainability across all councils.
Mr Moyes said: "I'm sure councils are very grateful to receive it. It means the government has heard the concerns they have expressed.
"But I think it would be to delude ourselves if we thought that it was a solution."
The commission chief said charges for some services may have to be introduced or increased, while some services could be reduced or cancelled altogether.
"From the beginning of the next financial year, I think people will undoubtedly notice that their services are under pressure," he added.
Some council services may have to be cut
The commission found the 2021-22 government revenue funding to local government represented the first real-terms increase in six years, when compared to the 2013-14 rate and excluding one-off Covid-19 payments.
Councils received £20.3bn in combined revenue funding and income from other sources in 2021-22, down by £300m on the previous year in real terms.
Almost a quarter of revenue funding (23%) was ring-fenced for spending on specific areas or projects last year, the report added, up from 18% in 2020-21.
Overall, Scotland's 32 councils had a budgeted net expenditure of £15.2bn in 2021/22.
At the time of budgeting, the report said, they identified budget gaps totalling £400m. This compares to £500m in 2020/21 and 2019/20.
Councillor Katie Hagmann, Cosla's resources spokesperson, said local authorities had faced "extremely difficult financial choices" in recent years due to real-terms cuts and wider economic pressures.
She added: "It was for this reason that Cosla's budget campaign this year was an 'SOS call' to Scottish government, highlighting the socially harmful impact of not funding local government adequately.
"It is disappointing that our request has not been met. The independent report out today reflects this extremely precarious financial situation in which councils across Scotland find themselves.
"There is a real danger that, as well as cuts, some essential services may stop altogether."
'Challenging circumstances'
The Scottish government said it recognised the "challenging financial circumstances" facing councils.
A spokesperson said: "The Scottish government's settlements from the UK government have suffered a decade of austerity, with average real-terms cuts of more than 5% equating to a loss of £18bn.
"Despite this, local authority revenue funding is £2.2bn or 22.9% higher in cash terms in the current financial year than it was in 2013-14.
"While ring-fenced funding is for increased investment in services like our schools and nurseries, local authorities will have autonomy to allocate over 93% or £12.3bn of the funding we will be providing in 2023-24, plus all locally raised income."
Scottish Conservative shadow local government spokesperson Miles Briggs said the report "must be a wake-up call for ministers to finally address the increasingly precarious position for our councils, and ensure they receive a fair funding deal".
Scottish Liberal Democrat economy spokesperson Willie Rennie said: "When local services are cut, libraries closed, or cars get damaged by ever-larger potholes, local people need to know that it is the SNP government that is responsible."