Council finances under pressure

January 16, 2024 9:03 am

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The Accounts Commission has said that councils in Scotland will have to make hard decisions about service cuts owing to financial pressures.

The report just published assesses the finances for this year to April 2023 and looks at the way services can be funded beyond that. Although the commission found that councils received more funding in cash terms for the current financial year high inflation means that there was a three per cent cut in real terms. More than half of the 32 local authorities are using their savings and reserves to balance budgets which only pushes back the costs to a future time.

In spite of more core funding from the Scottish Government for next yea there is a gap between that and what councils will have to spend as there is an increased demand for their services as well as inflation and increases to the cost of living. Capital budgets for buildings and infrastructure are also under strain.

The Accounts Commission report found that: “Councils recognise the risks ahead, but they need to innovate at pace and make difficult decisions about cuts to services to remain financially sustainable. Some councils have experienced opposition from within their communities when seeking to reduce services to balance budgets. This reinforces the need for frank consultation and engagement with communities when planning change.”

Ronnie Hinds, Interim Chair of the Accounts Commission said: “There are intensifying pressures on council finances and services. Given the funding position for councils, there is increasing reliance on reserves and savings to deliver balanced budgets. This means councils are already making difficult decisions about future service delivery and the level of service they can afford. Having leadership and a workforce with the right skills will be crucial to deliver on this.

“Local government is the second largest area of Scottish Government spending, but despite rising demand for services, the proportion of funding to councils has reduced over the last decade. Urgent progress is needed to agree a funding framework between Scottish and Local Government. This will bring much-needed clarity and certainty of budgets for future years.”

Read the full report on the Audit Scotland website.