Introduction
Scottish councils have been grappling with financial challenges exacerbated by the ongoing Covid-19 pandemic. Despite increases in council funding, a recent report from the Accounts Commission reveals that the majority of this money has been ring-fenced and lacks the necessary flexibility. As a result, councils face significant pressure to deliver balanced budgets while meeting high service demand. This blog explores the key findings of the report and highlights the urgent need for a new deal for local government in Scotland.
The Accounts Commission Report
The Accounts Commission, an audit body overseeing authorities in Scotland, has concluded that councils are facing a double-edged sword of high service demand and multi-decade high inflation. This combination puts tremendous strain on their financial resources, necessitating “substantial savings” to maintain fiscal balance. The report highlights the urgency of the situation and urges the Scottish government to expedite a new deal for local government.
The Call for Reform
The proposed new deal for local government aims to empower the sector by granting more control over grant spending and revenue raising powers. This includes the introduction of measures such as tourist and workplace parking levies. Tim McKay, acting chair of the Accounts Commission, emphasizes that the current funding trajectory adjusted for inflation indicates a reduction, which limits the flexibility of councils to address local needs. The new deal would provide councils with longer-term financial stability, enabling them to make the necessary changes and collaborate effectively across councils.
Impending Funding Cuts
A concerning aspect highlighted in the report is the projected real-terms funding cuts from 2024-25 up to 2028. These cuts coincide with rising energy and construction costs, increased demand resulting from an ageing population, and the long-term impact of Covid-19. Additionally, rising pay awards further strain council budgets. The combination of these significant cost pressures and forecasted funding reductions raises concerns about the sustainability of councils and the potential impact on services and jobs.
Councils’ Response and Concerns
Shona Morrison, president of the Convention of Scottish Local Authorities, emphasizes that councils have already implemented cuts to offset a decade of funding constraints. However, with diminishing budgets and growing demographic and workforce pressures, increasingly difficult choices must be made regarding spending priorities and service provision. Councils play a unique role as key partners in the Scottish government’s public service reform program, and Morrison asserts that they should be further empowered to better support local service delivery.
Government’s Commitment to Reform
In response to the report, Joe FitzPatrick, the Minister for Local Government Empowerment, acknowledges the vital role of both local and national government in delivering sustainable public services. The Scottish government is committed to working with the Convention of Scottish Local Authorities (COSLA) to negotiate and establish a new deal for local government. This new deal aims to promote empowerment, providing councils with greater flexibility over local funding, and ensuring clear accountability for the delivery of shared priorities and outcomes.
Conclusion
The financial challenges faced by Scottish councils require immediate attention and a proactive approach to reform. The report’s findings highlight the pressing need for the new deal for local government, which would offer councils the necessary financial stability to address urgent changes. It is crucial for councils to collaborate and work closely with local communities to ensure the provision of high-quality services. By empowering local government, Scotland can build a stronger foundation for sustainable and effective public service delivery.