Local authorities receive ‘real terms increase’ in funding
Councils will share a record funding settlement of more than £15 billion subject to passing of the 2025-26 Budget, provisional allocations show.
The 2025-26 Local Government Settlement includes a £289 million increase in funding to be used by councils to meet local needs and £120.5 million additional funding for pay deals.
The Budget also includes a one-off payment of £40 million to help councils respond to the climate emergency, and additional funding to support free personal care, teacher numbers and island communities.
Finance Secretary Shona Robison said: “Our Budget is laying the foundations for Scotland’s future success, with investment to help improve the public services that people rely on.
“Local authorities provide some of the most important services to our communities – from schools to social care – which is why we’ve increased their funding by more than £1 billion compared with last year’s Budget.
“The settlement is the result of meaningful budget engagement with COSLA and Councils. While council tax decisions are a matter for individual local authorities, with record funding of over £15 billion there is no reason for big increases in Council Tax next year.
“This is a Budget that will deliver increased funding for schools, social care and other vital council services. But this funding will only reach communities if the Budget passes, so I am asking Parliament to unite behind it.”
Following a special meeting yesterday (Friday 9th February) Council Leaders are seeking an urgent further meeting with the Deputy First Minister in relation to the Budget settlement for Scottish Local Government, highlighting the dire consequences of the Government’s current spending plans on communities throughout Scotland.
Commenting following the meeting the COSLA Resources Spokesperson Councillor Katie Hagmann said: “Leaders were clear today that an urgent meeting with the Deputy First Minister is a priority.
“Leaders expressed anger at the Budget setting timetable which has left Councils unable to set their budgets due to a lack of certainty from Scottish Government and as a result of having to wait until UK Government Spring Statement before knowing what additional funding could be passed on.
“In addition, there was a clear direction from Leaders to seek restoration of the £63m cut to the core Local Government budget on behalf of their communities and the essential services they rely on at the meeting with the DFM.
“Leaders also agreedthat the council tax freeze should be on a voluntary basis with agreement that the £147m, already earmarked by Scottish Government for this purpose, is distributed to all Councils with flexibility to raise Council Tax by up to 5%. There should also be no penalty or reduction in funding in line with the principles of the Verity House Agreement.
“Leaders were clear that Councils should be given full flexibility of funding to deploy within Schools, and the wider community, to provide the right support for the diverse needs of children and young people across Scotland, therefore recognising that a wide range of people who contribute to a child’s education.
“Finally, Leaders agreed to seek a guarantee that the £45m Barnett consequentials resulting from the UK Government’s recent announcement will be passed in full to councils, also in accordance with the Verity House Agreement so it can be used to address local priorities.”
£144 million does not fully fund a council tax freeze, COSLA Resources Spokesperson Councillor Katie Hagmann has explained.
Ms Hagmann said: “Disappointingly the Scottish Budget has not provided our local authorities with a fully funded council tax freeze as expected.
“The Scottish Government has set aside £144m stating this will ‘fully fund’ a council tax freeze – this would only provide the income equivalent to a 5% rise.
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“However, Local Government’s core revenue budget was cut by £63m from the outset, essentially leaving just £81m compensation for a council tax freeze. As a result, Local Government is faced with the reality that the funding offered for a council tax freeze only equates to a 2.8% rise.
“This significantly adds to the pressures faced by councils – a recent LGIU survey found that 83% of Scottish councils were looking at a minimum increase of 5%.”
Nearly a quarter of Scottish councils warn of effective bankruptcy
EVERY SINGLE COUNCIL plans cuts to services, affecting millions of residents
New research out today from Local Government Information Unit (LGIU) Scotland reveals that nearly a quarter of Scottish councils fear they will not be able to balance their budgets in the 2024/25 financial year.
This is despite the fact that every single council in Scotland plans to cut spending on services in the next financial year, with around two-thirds of respondents cutting spending on education, parks and leisure, and business support.
Alongside planned cuts, nearly all (97%) said that they would be increasing fees and charges, and nine in ten (89%) that they would be spending reserves.
The first annual LGIU State of Local Government Finance in Scotland survey, found more than three quarters of respondents (76%) believe these cuts will be evident to the public.
Had it not been for the Scottish Government decision to unilaterally declare a council tax freeze, every council would have raised council tax, most often by a significant amount. The proposed council tax freeze has contributed to an increasingly poor relationship between Scottish Government and local government.
The current state of the economy, manifested in high rates of inflation, affects wages, utilities and food, thus making service provision even more expensive for councils and was considered to be a problem by every respondent who answered. The associated cost of living crisis – which puts additional demand on services – was also considered to be a problem by over 90% of respondents.
There was widespread agreement on the most pressing issues in council finances: in addition to inflation, ring-fencing, staff recruitment, cost of living crisis and pressures linked to demographic change were all considered to be problems by more than 90% of respondents.
Adult social care and children’s services were considered the greatest shortest-term pressures on council finances, and adult social care by far the greatest long-term pressure.
Jonathan Carr-West, Chief Executive, LGIU Scotland,said: “Councils in Scotland are raising a red flag that council finances are completely unsustainable. With nearly a quarter of councils warning they may be unable to fulfil their statutory duties, it is only a matter of time before we see the first council in Scotland declare effective bankruptcy.
“Councils are pulling every lever available to them to balance their books. Every respondent said they were cutting spending on services, 97% that they would be increasing fees and charges, 89% that they would be spending reserves. But it is not enough. Councils have little to no confidence in local government finance and the issues behind the crisis are not going away.
“Scottish Government must work productively with councils to restore trust, remove ring fencing, identify revenue streams and reform core funding for councils to ensure residents, and particularly the most vulnerable in communities, are able to access the services they need and pay for.”
A COSLA Spokesperson said: “Following an emergency meeting of Leaders today (Friday) Council Leaders have agreed that COSLA approach the Scottish Government seeking urgent further discussions around their expectations for education. There was agreement that Scottish Government expectations cannot be met unless additional necessary resources are provided.
“Council Leaders re-emphasised their great disappointment with the approach taken by Scottish Government on this matter which is neither in the spirit of partnership working nor recognises councils’ legitimate authority to make decisions on the services they deliver on behalf of their local communities.”
“A mandate has been provided to open discussions to consider how the government’s priorities might be delivered, including considerations on the flexibilities and the overall quantum of funding in the Local Government settlement and establish a shared understanding of the best path forward, to achieve our shared objective of closing the attainment gap and maintaining other vital local services.”
“Leaders remain committed to improving attainment and closing the poverty related attainment gap and achieving the best outcomes possible for all young people. Local Government has made good progress in the last few years and have seen the biggest ever decrease in the gap.
Leaders acknowledge this is down to the partnership working between local and central government pulling together for a shared outcome, which always provides the best opportunity to achieve our ambitions in difficult circumstances.”
The Salaries Committee of the EIS has highlighted that the First Minister has it within her power to bring an end to the current dispute over teacher pay.
This follows a question at First Minister’s Questions in Parliament, where the First Minister said that she “very much hoped” that a resolution to the pay dispute could be reached “soon”.
Commenting following a meeting of the EIS Salaries Committee on Thursday afternoon, where the ongoing dispute over pay dominated the agenda, EIS Salaries Convener Des Morris said, “While the EIS Salaries Committee very much shares the First Minister’s ‘hope’ that a resolution to the pay dispute can be reached ‘soon’, we would also point out that the ability to settle the dispute is very much within the First Minister’s power.
“The only thing that will settle this dispute is an improved offer to Scotland’s teachers, one that is both fair and affordable to them, which will involve additional new money from the Scottish Government.
“This is what was done to settle disputes with other local government workers. It is the First Minister who has ultimate control over the purse strings so, if she wishes this dispute to be settled soon, the First Minister should authorise the Cabinet Secretary and her officials to release the comparatively modest additional funding needed to end this dispute.”
Mr Morris continued, “The truth is, that little or no progress has been made towards an agreement for several months. There are currently no further pay negotiations scheduled within the Scottish Negotiating Committee for Teachers (SNCT).
“Negotiating meetings through the SNCT have become profoundly frustrating affairs, as Scottish Government negotiators are coming into talks with their hands effectively tied and with no additional money to offer. We have been extremely clear that the current 5% offer on the table – which was itself simply a repackaging of a previously rejected 5% offer – will not be accepted by Scotland’s teachers.
“We have now rejected sub-inflationary 5% offers twice, and underlined this rejection through three days of strike action by most EIS members, so only a fresh offer which is good enough to put to our members for consideration can hope to halt strike action in our schools.”
Mr Morris added, “As ever, the EIS remains ready and willing to re-enter discussions with the Scottish Government and Scottish local authorities to discuss a new pay offer for teachers.
“We are not, however, willing to continue discussing the same offer that has now been rejected by teachers twice. The Scottish Government and COSLA must come up with an improved offer to allow pay discussions to progress towards an agreement that genuinely reflects both the soaring cost of living and the value of Scotland’s teachers.”
Scotland’s Council Leaders have written to the First Minister expressing their collective deep concern about the impacts of the financial settlement that Scottish Government has proposed for Local Government as part of this year’s Scottish Budget.
At a special meeting of Leaders on Monday 16th December, it was unanimously agreed that the budget settlement as it stands means another real terms cut to Councils’ core funding, at a time when many in our communities are struggling with the impact of rocketing prices across fuel, food and other bills, and facing unprecedented levels of poverty in a modern era, in an era where Local Government continues to provide the targeted and ongoing support deemed so vital to those most in need.
Council Leaders feel that this budget settlement will have a detrimental impact on vital local services, on our ability to focus the necessary resources and supports to our communities and on those who are already impacted by this cost-of-living crisis.
Leaders added that significantly, it will lead to the loss of jobs, both within Local Authorities and within the local companies who supply goods and services to councils and are reliant on their contracts to employ local people.
In the letter Leaders did acknowledge the impact of inflation, the UK Government’s mini-budget and global economic factors that are continuing to weigh heavily on the Scottish Government’s budgets and spending plans.
Given the pressures facing Councils, Leaders are keen this year to meet with Ministers so they can hear concerns first-hand, look at possible solutions and to work collaboratively with Government to enable Local Government to continue to deliver vital services to our communities.
Local Government spending decisions are being increasingly directed by Scottish Government, and the way Local Government finances are presented by Scottish Government is potentially confusing for the general public.
This can lead to raised expectations and lack of clarity in our communities about the reality of what is now possible to deliver on the ground, COSLA said today (Monday 16th January).
COSLA was clear that this year we needed and asked for a £1bn extra in real terms however we have ended up with £38million and that this was simply not good enough.
COSLA added that to avoid socially harmful cuts, the finances of Local Government need early and proactive discussions to avoid an annual public argument about the reality of what can and cannot be afforded by Councils.
Councils also need more freedom to address local priorities and the ability to focus on improving outcomes.
Commenting today, COSLA’s Resources Spokesperson Councillor Katie Hagmann said: “Given the significance of our council services to the lives and livelihoods of everyone across Scotland, communities deserve clear and consistent facts in relation to Local Government finance rather than a yearly debate on how much money is or is not available.
“All our communities are concerned about is the level of service they can expect that there is support for the most vulnerable and want to ensure their local environment looks and feels as good as it can – all of these things are under threat because of successive years of underfunding.
“Last week saw the publication of the Accounts Commission’s report on the health of council finances. The report makes it clear that councils are going to have to take very tough decisions over the next few years to balance the books, given the financial pressures they face.
“Responding to the Accounts Commission report, Scottish Government has quoted both real and cash terms increases of £2.2 bn between 2013-14 and 2022-23, but this is contradictory.
“We owe it to our communities to be clear, consistent and transparent about the starting point and how much less, in reality, councils have to spend year on year on the services that our communities rely on.
“In 2013-14, the Local Government funding settlement was worth £10.3 bn. Looking to 22-23 the Scottish Government provided £12.5 bn. This does equate to a £2.2 bn cash increase. However, that increase is heavily ring fenced and directed funding for core services and local priorities has stayed the same.
“The reality of having the same amount of money this year as 10 years ago for core services is a real terms cut. As well as increasing costs, this money is also now required to deliver more services than it was 10 years ago – Scotland’s population has increased, the number of households has gone up, COVID has left a legacy of support needs for the most vulnerable and as people live longer, their care needs have become more complex. This is just a snapshot of the demands being faced by councils, not to mention inflation and energy costs.
“For 2023-24, Scottish Government has stated that councils have seen a “£570m increase in their budgets” but the reality is, that only £38m of this can go towards pressures such as inflation, pay and service demand with the rest is for policy commitments that are already in the system, for example £100m to meet Real Living Wage commitments in social care.
“To put this into perspective, a 1% increase in pay across the Local Government workforces equates to around £100m. £38m will not go very far, especially when combined with energy price hikes, supporting the most vulnerable and our commitments to tackle the climate emergency.
“This year, demand for services like social care is at an all-time high but given the range of pressure facing councils, they simply don’t have the resources they need to work towards keep people out of hospital.
“Each day during winter, there is quite rightly a focus on getting people out of hospital to free up beds– currently councils support just over 97% of patients to be discharged without delay.
“The problem is not just getting people out of hospital but stopping them going in – councils simply don’t have the resources they need to provide the care packages or the interventions that prevent ill-health.
“COSLA’s key concerns are not only the socially harmful impact of cuts on our communities, but the way in which Local Government finance has been presented to them. The messaging is that there is more money for essential services each year despite this not being the case with councils asking communities about where they want to see cuts and reductions if essential services, like schools, roads, waste collection, child and adult protection, environmental health and social care are to continue to be delivered, every day of every year.”
Councils across Scotland faced significant financial challenges during 2021/22 and are now entering the most difficult budget setting context seen for many years. Increasingly difficult choices about spending priorities will need to be made.
The Accounts Commission, the independent body that holds councils to account, said that even with additional Covid-19 funding during 2021-22, councils had to make significant savings last year to balance their budgets.
Many councils have also used reserves to bridge funding gaps and fund vital services. This is expected to be the case in 2022/23. The £570 million of additional funding for 2023/24, announced in the December budget, will help councils address upcoming cost challenges, but further change and reform across all councils is required to ensure longer-term financial sustainability.
When compared to the 2013/14 Scottish Government revenue funding position to local government, 2021-22 represented the first real-terms increase in six years (excluding one-off Covid-19 money). But an increasing amount of council funding is either formally ringfenced or provided on the expectation it will be spent on specific services and national policy objectives. This supports the delivery of key Scottish Government policies yet removes local discretion and flexibility over how these funds can be used by councils.
William Moyes, Chair of the Accounts Commission, said: “It’s clear the financial situation of councils is increasingly fragile. Councils 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 are facing.”
Most of Scotland’s 32 councils are increasingly relying on money from reserves to keep up with demand for services and balance their budgets. A report from the Accounts Commission, Scotland’s national watchdog for local government, says the financial pressures are likely to get worse.Continue reading Skint! Council finances ‘unsustainable’
