Think tank calls more financial controls to be devolved from Holyrood to local authorities
Reform Scotland, the independent, non-partisan think tank, has today released its response to the Local Government, Housing and Planning Committee’s call for views on the sustainability of local government finances.
The think tank suggests that successive Holyrood governments have failed to create the conditions for sustainable local government, and that political discourse has been dominated by “perpetual talk without action”.
For example, nearly 15 years ago the Christie report highlighted the necessity of early intervention and preventative spending programmes. The importance of that report is regularly highlighted by politicians and policymakers, yet it has not been delivered upon.
To make matters worse, prevention programmes are often delivered by the third sector in collaboration with local authorities, and with councils’ budgets under growing strain, all too often these programmes are first in the line for cuts.
In its response, Reform Scotland calls for:
Collaboration on new approaches for financing local government activity, such as social bridging finance
The end to central government interference in the setting of Council Tax rates, and an empowerment of local authorities to consider the adjustment of bands and exemptions
More fiscal powers to be devolved to local authorities to allow them to respond to local needs
Reform Scotland Director, Chris Deerin, said: “During the 25 years of devolution, we have focused on the transfer of powers between Westminster and Holyrood, but we have taken our eye off the ball when it comes to the power of local authorities.
“Unfortunately, in that time we have seen Scotland become further centralised. This approach must end. Scotland is too diverse to presume that the solutions which can work for Edinburgh can work for Elgin, or those that work for Glasgow can work for Gairloch.
“We need to shift away from a drip-drip approach of devolving small, occasional powers, which simply encourages councils to come cap in hand to the Scottish Government, and towards empowerment and recognising that local communities are best placed to meet local needs.
“We have seen years of broad agreement that a one-size-fits-all approach cannot work, yet this has amounted to little more than perpetual talk, without action. Now is the time for action.”
Scotland’s councils are managing their money effectively, increasing reserves, with longer-term financial plans in place. Whilst no council was at immediate financial risk in 2022/23, there is no certainty this will continue, according to spending watchdog Accounts Commission’s latest financial report.
This makes an agreement between the Scottish Government and councils to secure a sustainable, longer-term funding arrangement to deliver local services all the more urgent.
Effective financial management within councils is crucial as budget gaps increase. Councils continue to rely on savings and reserves to balance budgets. Over half of councils used financial flexibilities in 2022/23. This helps with immediate budget pressures but defers costs to later years and fails to tackle underlying challenges to financial sustainability.
The Accounts Commission’s latest report assesses the financial position of Scotland’s councils during 2022/23 and the outlook for services beyond this.
While councils received more funding and income in cash terms in 2022/23, high inflation means this fell by nearly three per cent in real terms compared to the previous year.
A significant and increasing amount of funding continued to be either formally ringfenced or directed towards specific services and national policy objectives – reducing councils’ flexibility in using money to meet local needs.
Despite more core funding from the Scottish Government for 2023/24, there was a significant increase in councils’ total funding gap, due to pressures including increased demand for services, inflation and the cost-of-living.
Capital budgets were also significantly strained, risking knock-on impacts on the maintenance of key public buildings and infrastructure, for example schools, libraries and roads.
Councils recognise the risks ahead, but they need to innovate at pace and make difficult decisions about cuts to services to remain financially sustainable. Some councils have experienced opposition from within their communities when seeking to reduce services to balance budgets. This reinforces the need for frank consultation and engagement with communities when planning change.
Ronnie Hinds, Interim Chair of the Accounts Commission said: “There is intensifying pressures on council finances and services. Given the funding position for councils, there is increasing reliance on reserves and savings to deliver balanced budgets.
“This means councils are already making difficult decisions about future service delivery and the level of service they can afford. Having leadership and a workforce with the right skills will be crucial to deliver on this.
“Local government is the second largest area of Scottish Government spending, but despite rising demand for services, the proportion of funding to councils has reduced over the last decade.
“Urgent progress is needed to agree a funding framework between Scottish and Local Government. This will bring much-needed clarity and certainty of budgets for future years.”
The Accounts Commission’s Local Government in Scotland Financial bulletin for 2022/23 published today (Tuesday) reinforces COSLA’s warnings over the perilous state of Council finances over the last few years.
Commenting, COSLA’s Resources Spokesperson Councillor Katie Hagmann said: “The Accounts Commission’s Local Government in Scotland Financial bulletin for 2022/23, published today, reinforces what we have been saying about council finances and the really difficult and challenging decisions Councils have had to take in recent years.
“It is vitally important that these concerns, which have been consistently raised by COSLA, are now being backed up by hard facts and evidence presented by the Accounts Commission.
“There is widespread agreement from COSLA on the Accounts Commission’s key messages on the scale and financial challenge facing Scotland’s Councils, as well as the most pressing issues facing councils now.
“Some of these key messages, whilst extremely stark, come as no great surprise to those of us in Local Government:
In 2022/23 total revenue funding from all sources fell by £619 million (2.8 per cent) in real terms to £21.3 billion compared to 2021/22.
An increasing proportion of funding is ring-fenced or provided with the expectation it will be spent on specific services.
There is pressure on capital budgets, and this presents risks to the viability of local government capital programmes, many of which impact on key services (e.g., the construction and maintenance of schools, libraries, roads).
Councils are increasingly having to rely on savings and reserves as well as making increasingly difficult decisions to reduce or stop services to help balance budgets.
“Today’s Accounts Commission Bulletin is a true reflection of where we are now. Our reality right now is extremely challenging – years of real-terms cuts to council budgets have been coupled with increasing additional policy commitments and increased ring-fencing. With so much funding still directed, the ability to take local decisions on most of our Budget is almost impossible.
Councillor Hagmann concluded: “The picture painted by the Accounts Commission illustrates why COSLA is lobbying hard on the detrimental impact to communities of the Draft Scottish Government Budget, currently going through the Parliamentary process.
“The trends highlighted by the Bulletin are why Scotland’s Council Leaders are so disappointed and furthermore highlights the need to progress the ambitions of our joint Scottish Government and Local Government Verity House agreement. We must seek a solution to these long-term issues in order to protect the essential front-line service of our communities.
“COSLA’s President, Vice President and Political Group Leaders, from all parties have written to the Deputy First Minister requesting that a meaningful negotiation takes place, to protect those who rely on essential services, support our local economies and continue to progress our net zero national ambitions.”
With yet another round of budget cuts looming, campaign group Another Edinburgh is Possible has published an interim survey which shows widespread dissatisfaction with council service provision across the city.
The group, made up of trade union and community activists, invited Edinburgh residents to share their views on council performance – and the results will make uncomfortable reading for the administration’s leaders.
Public conveniences, poor road and pavement maintenenance, housing and homelessness services came in for particular criticism and the controversial Spaces for People initiative also attracted adverse comments.
There was criticism, too, for Edinburgh’s health and social care, while community education, social work and the city’s community centres also ranked poorly.
Despite years of cuts to council services – £320 million since 2012/13 – the City of Edinburgh Council is looking to make further ‘savings’ in the new financial year. £80 million has already been identified but the council has still to find an additional £5.1 million.
Looking further ahead, the picture remains bleak. The city council has plans to make savings of £40 million overthe next three years – but it will also have to find a further £47.5 million.
Campaigners say cuts of this magnitude are unsustainable, and Another Edinburgh is Possible organisers are now urging citizens to contact their elected representatives ahead of tomorrow’s crucial budget meeting.
Another Edinburgh is Possible is one of six delegations to Thursday’s full council meeting, which starts at 10am.
Improved communications with Edinburgh’s residents
A re-ordering of council priorities
The integration of Edinburgh’s transport system under public ownership
Edinburgh is currently run by an SNP – Labour ‘Capital Coalition’ although the Conservatives are now the biggest group on the council with 17 councillors.
The council says: “We deliver a vast range of services – more than 700! – to people who live and work in Edinburgh. This year alone, we will spend more than £1 billion on services and investing in our priorities.
“We’ve committed to ending poverty and becoming a net zero carbon city by 2030, while improving the wellbeing of our whole city. Now, more than ever, we must hold on to these commitments.”
Labour councillor Cammy Day is deputy leader of the city council. He lays the blame for continued cuts on the SNP – despite the Nationalists being Labour’s partners in Edinburgh’s Capital Coalition.
He said on FaceBook: “Despite over a decade of SNP cuts to Edinburgh Council – we will deliver a budget helping people who experience poverty, challenge issues around sustainability, reduce fee increases in key areas and, in thanking our communities, we will make investments to upgrade the city’s parks and greenspaces which have been a space for enjoyment during a challenging year for us all.
“Edinburgh Labour have also ensured substantial investments in providing proper digital inclusion for all of our school pupils across the city. All of the SNP government funding required has been allocated to our Health and Social Care work, and it is woefully short.
“Edinburgh Labour will continue to press the SNP Government for full funding to support the most vulnerable in our city, and prioritise any additional funding to support this.please get in touch and show your support – we need everyone to push the SNP government to fairly fund our capital city.”
Local government elections are scheduled to take place in May.
There’s still time to have your say – you can complete the Alternative Survey of Council Services up until 21 February:
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.”
The impact of the coronavirus pandemic on Scottish council finances and whether it will lead to a “new normal” in the way some services are delivered is to be investigated by a Holyrood Committee.
The Scottish Parliament’s Local Government and Communities Committee has launched a call for views on the impact of Covid-19 on the financial sustainability of local government in Scotland.
MSPs will seek to identify which council services have been most impacted by the public health emergency, as well as exploring which parts of local government have been least affected or most resilient.
A key focus for the Committee will be what steps local government takes, in the short and long term, to manage the financial impact of the crisis. It will also ask what further help councils will need to overcome the ongoing funding pressures.
Looking beyond the crisis, the Committee is also keen to hear views on how soon the sector will return to normal, or whether it is time for a “new normal” in the way councils deliver services and what that future might look like.
Committee Convener, James Dornan MSP, said:“Councils are responsible for delivering a vast range of important services that are a crucial part of our everyday lives; from social care and street cleaning to public libraries and planning.
“When Covid-19 struck earlier this year, it had a massive impact on local authorities. They suddenly had to change basic working practices and finds ways of delivering emergency services to many vulnerable people. This has had a knock-on effect on their ability to maintain some core services.
“Council staff have risen to the challenge and there are many positive stories to share – for instance on how councils worked with others to help homeless people and rough sleepers during the lockdown.
“However, the impact of Covid-19 will likely be felt for years and the full extent of the financial implications, and the ability of councils to provide these vital public services, remains unclear. We therefore want to hear views on what can be done to help councils weather the financial storm, in the short and long-term.
“We also want to know if the crisis has also provided an opportunity for fresh thinking about how councils deliver local services and local democracy and whether there are already good practises councils can share.
The Committee scrutinises Scottish Government housing policy, as well as local government housing responsibilities, and views on the impact of Covid-19 on housing policy are also welcome.
To help with its scrutiny work, the Committee wants to hear views on these issues:
1. How has Covid-19 impacted the local government sector and, in particular, council finances? Which council responsibilities are most impacted?
2. Which parts of local government have been least affected or most resilient?
3. What help will councils need in future from the Scottish Government or others to overcome the ongoing financial strain?
4. What can local government sector do, in the short and long term, to manage the financial impact of the crisis? What positive examples can councils and others share about the good work done at local government and community level to lessen the crisis?
5. How soon do you think the sector will be back to normal? Or is this time for a “new normal” in the way we deliver some council services or practice local democracy? If so, what will it look like?
The call for views is open until Friday 4 September 2020.
“Edinburgh is not out of the woods yet and it is still early days with many of its planned actions. But it is in a much stronger position to meet the challenges that lie ahead.” – Douglas Sinclair, Accounts CommissionContinue reading Edinburgh is balancing the books – but at a price
The freeze on Council Tax by the Tory government was seen by many as a good move to help people; many others said look into the why and the consequences of that action.
The average saving brought about by the freeze was around 50p per week; the shortfall in council income would be made up – but not fully – by a government grant. This money could only be spent on issues approved by the government, with councils having no control, and that is why many people raised the questions ‘why?’ and ‘what consequences would there be?’
Government policy is to cut public services and controlling their finances: the council tax freeze was a step in that direction.
It now seems, at last, that councils are beginning to understand the government’s intention to break local services, decision-making and control.
Councils everywhere will have to pressure the Scottish Parliament to end the council tax freeze and work towards the abolition of the council tax itself, introducing a new fairer tax. In the meantime we have to make sure councils do not attempt to impose large increases but to look at other ways of easing the burden on their communities, for example:
A Tourist Tax, as in other countries
Private schools to pay tax on their income by abolishing their status as charities
