Funding gap puts local services at risk
Scottish councils are warning that they could go ‘bankrupt’ unless the government increases its funding to meet the rising costs and demands of local services. According to a report by the Scotsman, the Convention of Scottish Local Authorities (Cosla) has estimated that councils need an extra £1.5bn over the next three years to maintain the current level of services.
Cosla, which represents all 32 Scottish councils, said that the funding gap was caused by a combination of factors, such as inflation, public sector pay deals, demographic changes, and the impact of the Covid-19 pandemic. The group also said that councils had faced a real-terms cut of 8.5% in their core grant from the Scottish government in the past three years.
Cosla’s president, Alison Evison, said that the situation was “critical” and that councils had “nothing left” to cope with the financial pressures. She said that without additional funding, councils would have to make “unthinkable” cuts to vital services, such as education, social care, housing, and transport.
Scottish government defends its budget
The Scottish government, however, has defended its budget allocation for local authorities, saying that it had provided “a fair and flexible settlement” that increased the total funding available to councils by £335.6m in 2023-24. The government also said that it had given councils more powers to raise their own revenue, such as the ability to introduce a tourist tax and a workplace parking levy.
The government’s finance secretary, Kate Forbes, said that the government was “committed to working with Cosla and local authorities to ensure they are supported to deliver essential services”. She also said that the government was “aware of the challenges” facing councils and that it would “continue to make the case to the UK government for a fair share of funding for Scotland”.
Councils across the UK face similar challenges
The financial woes of Scottish councils are not unique, as councils across the UK have been struggling to balance their books amid rising costs and reduced funding. According to a survey by the Special Interest Group of Municipal Authorities (Sigoma), which represents 47 urban councils in England, at least 26 councils in some of the most deprived areas are at risk of effective bankruptcy within the next two years.
Sigoma said that the most common cause of financial pressures was increased demand for children’s social care services, which the government had said should be given equal priority with adult social care and funded accordingly. Other significant factors cited were soaring inflation costs and related wage rises, and the imminent increase in the cost of borrowing.
Sigoma’s chair, Sir Stephen Houghton, said that the government needed to recognise the “significant inflationary pressures” that local authorities had to deal with and provide “adequate and sustainable funding” to support them.
Some of the largest UK councils have also been warning that they may have to declare themselves effectively bankrupt unless the government agrees to further support. In February, the government provided emergency funding to four English councils – Croydon, Luton, Peterborough and Southend-on-Sea – to help them deal with their financial difficulties.
