Accounts Commission: Councils in Scotland face uncertain financial future

Local authorities in Scotland are facing an “uncertain” financial future, according to the Accounts Commission.

A report published by the watchdog on Thursday showed there had been a 4.2% real terms reduction in funding between 2013-14 and 2020-21 when all Covid-19 related funding is removed.

Councils, the report said, would have to face the impacts of the pandemic as well as issues which pre-date it, such as poverty, in the future.

Local government funding is announced annually, which the watchdog said “makes it challenging for councils to plan and budget effectively for the medium and longer term and creates uncertainty over future funding”.

“The long-term funding position for councils remains uncertain, with significant challenges ahead as councils continue to manage and respond to the impact of Covid-19 on their services, finances and communities,” the report said.

“In the longer term, uncertainty creates challenges for councils as they seek to address cost and demand pressures that existed before the impact of Covid-19, as well as develop long-term plans with their partners to address complex issues such as child poverty and inequalities, to improve economic growth and to deliver Scotland’s net-zero ambitions.”

All of Scotland’s 32 local authorities, auditors say, will have to revise their medium term financial strategies to take into account the impact of the pandemic.

William Moyes, the chairman of the Accounts Commission, said: “Councils face serious challenges, driven by financial constraints, increasing demands on service and resource.

“Alongside these longer-term issues are the financial uncertainties caused by the impacts of Covid-19, including loss of income and additional costs.

“Now, as we look ahead and beyond council elections in May, councillors must determine how to restart services, deliver differently, save money and empower communities.

“They must do so alongside focusing on national priorities, including climate change.

“Whilst councils must address longer-term financial planning, having in place funding certainty – beyond a one-year settlement from the Scottish Government – remains a critical issue.”

Calls have been made in recent years for the Scottish Government to lay out multiple-year, spending plans to allow for local authorities and other services to plan ahead, a proposal made easier given the power sharing arrangement with the Scottish Greens that all but guarantees the passage of Government budgets.

Miles Briggs, Scottish Conservative shadow secretary for local government, said: “This report is a damning critique of how the SNP Government have undermined Scotland’s councils due to chronic, long-term under-funding. It paints a stark picture of the huge pressures they face to deliver basic services.

“A 4.2% real-terms cut is completely unsustainable – and when increasing areas of funding are ring-fenced by the SNP, councils are being forced to slash spending in other areas. This explains, for instance, why one in eight libraries have shut for good under the SNP.

“The SNP-Green coalition have cynically passed the buck to local authorities to either cut services or raise Council Tax to make ends meet because they are unwilling to give them the resources they need.”

Mark Griffin, Scottish Labour’s local government spokesperson, said: “This sobering report lays bare the scale of the damage the SNP have inflicted on local government over the years.

“Years of neglect under the SNP have left bins overflowing, roads in disrepair and libraries closing, and, with an uncertain financial future, things are set to get worse.

“Essential services are at breaking point and our economic recovery hangs in the balance. The stakes are higher than ever – but people have a chance to elect real local champions to stand up for their communities by voting Scottish Labour in this year’s Council elections.”