The latest State of Local Government Finance in Scotland report shows the majority of Scottish councils are planning council tax rises and service cuts.
Seven in ten Scottish councils could be unable to balance their budgets within five years, according to new research from the Local Government Information Unit (LGIU).
The third annual State of Local Government Finance in Scotland report found that all councils that responded plan to increase council tax and reduce spending on services this year.
Despite these measures, not a single respondent expressed confidence in the long-term sustainability of local government finance.
Strain on resources
Chief executives, leaders and directors of finance representing 81% of Scottish local authorities took part in the research, highlighting the strain on councils trying to meet rising service demands.
Adult social care was found to be the area under the most financial pressure. The report also revealed strong support among councils for increased powers to raise revenue, including the ability to levy other local taxes – 70% backed a local share of national taxes being made available.
Jonathan Carr-West, chief executive of LGIU, said: ‘Local government finance in Scotland is still not fit for purpose. Despite recent changes, the underlying problems that threaten councils’ financial sustainability have not been resolved.
‘Financial pressures on councils continue to move in only one direction as service demands increase and local leaders have ever-diminishing budgets with which to respond. Local government is in a precarious position. With 70% of respondents indicating that they are close to effective bankruptcy, something has to give very soon.’
‘Our latest research, released as we approach the 2026 Scottish Parliament election, serves as a stark warning: councils overwhelmingly feel their current funding situation jeopardises their ability to protect vulnerable citizens, increases the risk of insolvency, and diminishes the quality of life in their communities,’ Carr-West continued.
‘However, this negative trajectory is not inevitable. Councils across Scotland are ready and willing to collaborate with the Scottish government to implement meaningful and lasting reform. Our research clearly defines the necessary changes and presents the sector’s solutions for achieving them.
‘While the complexities of local government finance mean there is no single simple fix, the sector shares near-universal agreement on the problems and offers a wealth of ideas on how they can be solved.’
The report can be read in full here.
Image: engin akyurt/UnSplash
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