Scottish councils face tough spending choices amid ‘fragile’ budget shortfalls

Local authorities across Scotland could cut vital services in a bid to make up £400m budget shortfall.

The Accounts Commission warns local authorities may have to cut services to deal with inflation, the cost-of-living and living with Covid. The Commission claims two thirds of councils will have to use cash reserves to balance their budgets.

According to the official watchdog, the budget shortfalls have been labelled ‘increasingly fragile’.

The watchdog said total debt had increased by £0.3bn to £19bn across the country’s 32 local authorities, while 16% were considering council tax increases to make up for the deficit following the emergence from the pandemic.

The report shows councils received £20.3bn in combined revenue funding and income from other sources in 2021-22, with this down by £0.3bn on the previous year.

Almost a quarter of revenue funding was ringfenced for spending on specific areas or projects last year, the report added, with this up from 18% in 2020-21.

However, a ‘budget gap’ between income and spending rose to £0.4bn, which the Scottish government said was a result of ‘real terms’ UK government cuts to Scotland’s overall budget.

William Moyes, Accounts Commission Chairman, said: ‘Council are having to deal with the effects of inflation, the increasingly desperate cost-of-living impacts and rising demand for services, whilst at the same time delivering vital day-to-day services to their communities.

‘To be financially sustainable, councils must deliver savings and reduce reliance on non-recurring reserves to fill budget gaps.

‘If they are to find a safe path through the difficult times ahead, councils need to focus more on service reform, alongside meaningful engagement with their communities, about what services can be provided given the financial pressures they’re facing.’

The Scottish government have said local authority funding was 22.9% higher in the current financial year than it was in 2013-14, equalling to an estimated £2.2bn additional funding.