Tag: Accounts Commission report

Scotland’s councils face severe challenges to balance the books

Scotland’s councils faced a collective gap of up to £585 million between the money needed to deliver services and the money available when setting their budgets this year. This is estimated to increase to £780 million by 2026/27. Ever tougher decisions must be made to ensure councils are financially sustainable.

Councils are addressing this most commonly by making ongoing savings, using reserves and raising money through charging citizens for some services.

An Accounts Commission report on the budgets set by councils for 2024/25 says that a near six per cent increase in Scottish Government revenue funding to councils – totalling £13.25 billion – masks significant underlying financial challenges and strain. Almost all the increases in funding have been ring-fenced for policies and to cover the costs of pay increases in 2023/24.

Whilst councils received £147 million of government funding to mitigate the impacts of this year’s council tax freeze, there are longer-term financial consequences as future rises will provide less income for councils. Also, a third of councils say the government funding does not fully-fund the freeze.

The full impact of proposed savings by councils on service delivery and communities is unclear. There has been significant public opposition in some council areas to cuts to services, with new and increased charges also affecting people.

We will continue to monitor this area closely, as councils must meet savings in full this year. Failing to do so will intensify and exacerbate the impacts on services in future years, as further savings will be needed.

Councils must look to the future as they make increasingly difficult decisions to deliver savings, at scale, to address projected budget gaps. Planning and delivering on transformational change are vital if councils are to be financially sustainable.

Derek Yule, Member of the Accounts Commission said: “It’s getting harder for councils to do more with less. They have to find and then deliver significant levels of savings to address budget gaps.

“Fully engaging with local people and being clear about the different and difficult budget choices is vital, whilst understanding the impacts on the most vulnerable.

“Councils need to improve the way in which they present financial information, and do this in a clear, consistent and accessible way.

“The Accounts Commission calls on councils to increase the accessibility and transparency of publicly available budget information. This will allow for improved comparison between councils, particularly around key information including actions to tackle existing and future budget gaps, as well as savings plans.”

Council plea for fair funding following Accounts Commission report

Local councils have seen greater reductions in funding over the last seven years than other areas of the Scottish Government budget.

Funding received by councils from the Scottish Government increased by £500 million in 2019/20, but Covid-19 will drive large rises in costs and spending, combined with falling income.

An overview of local government finances in Scotland, published today by the Accounts Commission, reports that councils received higher revenue and capital funding than in previous years and many were able to increase their financial reserves. However much of the additional funding councils received from the Scottish Government must be used for specific purposes, including over £200 million for expanding early learning and childcare. And capital finance funding will drop by 30 per cent in 2020/21.

Looking ahead, Scotland’s councils face significant additional pressures due to Covid-19. This includes substantial and ongoing reductions in income, increased costs and the administration of business support grants and other measures of support to their communities during Covid-19.

The Commission has also repeated its serious concerns about the financial stability and leadership of Integration Joint Boards (IJBs), the bodies set-up to manage local health and social care services. Most IJBs couldn’t deliver services within their budgets and needed extra money from health boards and councils. There were also changes of chief officer in 12 IJBs, and this leadership instability makes it harder to manage both finances and the major changes needed in health and social care.

Elma Murray, Interim Chair of the Accounts Commission, said: “Councils and Integration Joint Boards play a vital role in supporting Scotland’s communities. Even before Covid-19 the pressures and demands on council services had intensified. At the same time reductions in local government funding over the past seven years have been greater than in other areas of the Scottish Government budget.

“Covid-19 has fundamentally affected local government services, increasing their reliance on working with their partners and communities. The financial impact of the pandemic on our public services is extreme and creates increased uncertainty of how those services will be provided in the future.

“Good governance, strong financial management and transparency of decision making will be critical as councils and IJBs deal with the impact and consequences of the pandemic.

Councils have seen greater reductions in funding over the last seven years than other areas of the Scottish Government budget a report from the Accounts Commission states today (Tuesday).

The report also highlights that Scotland’s councils face significant additional pressures due to Covid-19. This includes substantial and ongoing reductions in income, increased costs and the administration of business support grants and other measures of support to their communities during Covid-19.

Commenting on the report today and ahead of the Scottish Government’s Budget on Thursday, COSLA’s Resources Spokesperson Councillor Gail Macgregor said:  The messages in today’s Accounts Commission report paint a full picture – on the face of it, there looked to be increases in Local Government funding in 19/20 but much of this was for Scottish Government’s OWN commitments, and came after years of reductions.  

“These messages should be listened to AND ACTED UPON as they come from an independent, well respected non Local Government body.

“This report lays out why we need fair funding for Local Government in Thursday’s Budget.  The trend of recent settlements for Local Government needs to change because on top of existing pressures, the COVID pandemic – as the Accounts Commission report recognises – has placed unprecedented strain on the finances of Scotland’s Councils this year.

“This year, across every community in Scotland, Local Government’s essential role has been magnified and once again we have delivered for our communities.

“Nobody in Scotland has been unaffected by this pandemic and the financial impacts of COVID-19 are severe. Individuals, families and businesses have all felt the effects and continue to look to Councils for support every day.

“Sustaining this lifeline support is placing extreme pressure on already strained budgets and without fair funding for Local Government this year, the consequences for the most vulnerable in our communities would be unacceptable.

“That is why we need fair funding for 2021/22 that respects our communities. Without this, there will be further cuts to services, reductions in spending locally, increases in the inequalities exposed by the pandemic and a much slower recovery.”