Scotland’s councils make cuts to plug £650m finances hole

Scotland’s councils are going through a £647m finances shortfall this 12 months in spite of an build up in govt investment, a watchdog has mentioned.

The Accounts Commission warned that investment had now not stored tempo with inflation, upper prices and greater call for for public products and services.

Local government are making cuts, mountain climbing taxes, elevating fees and drawing on reserves to hide the finances hole, the fee discovered.

It warned of additional monetary power on councils from public sector pay offers and a UK govt build up in employers’ National Insurance.

Most of councils’ income investment – used for daily prices similar to wages, colleges, highway upkeep and bin collections – comes from the federal government.

The Scottish govt is to offer £15.2bn of investment to native government in 2025-26, a 6% build up in genuine phrases at the earlier monetary 12 months.

But mounting monetary pressures manner there shall be a £647m hole between councils’ predicted spending and the investment and source of revenue they obtain, in step with the Accounts Commission.

This is up through £52m from 2024-25, with the fee forecasting a cumulative income finances hole of £997m over the following two years.

To lend a hand plug the space, each native authority in Scotland has greater council tax through no less than 6%. It got here after a national freeze was once lifted.

The moderate build up was once 9.6%, with Falkirk Council enforcing the steepest hike of 15.6%.

The fee mentioned upper expenses for native other people intended there was once a “greater expectation on the performance of local services”, whilst an growing old inhabitants added additional pressure on products and services similar to care.

The record discovered that the largest cumulative cuts have been falling on company products and services (£68m) and youngsters’s products and services (£58m).

With native government caution they’re going to must make additional cuts at some point, the fee mentioned this manner was once unsustainable.

Commission member Derek Yule instructed BBC Scotland News: “Council finances are precarious at the moment after years of funding challenges.

“We’re having a look on the techniques through which councils have balanced their budgets and suggesting that that can’t proceed in its present shape.

“So councils need to look at how they can work with communities and work with partners to deliver change and to deliver change at pace.”

The fee reported that whilst general capital investment – basically used for structures and infrastructure – had greater through 16% to £780m, it had now not risen to earlier ranges.

It warned native government could be closely reliant on borrowing to fund their deliberate £4.7bn capital investments in 2025-26.

While general capital investment has greater, 3 councils have been projected to obtain much less, in genuine phrases, than remaining 12 months.

In two of the ones native government, East Lothian and Stirling, discounts in capital investment have been forecast to offset will increase in income investment, leading to a real-terms aid of their general finances.

Scottish Conservative finance spokesman Craig Hoy mentioned: “The black hole the SNP have overseen in local authority budgets means hard-pressed taxpayers are now paying more and more but getting less and less in return.”

Labour native govt spokesman Mark Griffin advised ministers to ship “consistently fair funding for local government” and to paintings with councils to “modernise services so they are fit for the future”.

Liberal Democrat finance spokesman Jamie Greene claimed there was once a “titanic gulf between what the SNP have provided and what councils say they actually need to maintain basic local functions”.

A Scottish govt spokesperson mentioned ministers had supplied a real-terms build up in investment for native govt in 2025-26, “building on continued increases in recent years”.

They added: “The Scottish government will continue to work in partnership with local government to address the challenges facing council budgets and ensure we are operating sustainable people centred public services that communities expect and deserve.”