e brief – New report says council funding “completely unsustainable”

thumbnail of Local government funding e-briefing Dec 2023

The Local Government Information Unit report warns of a risk that some Scottish councils could effectively go bankrupt.  

It details anonymous survey responses from senior council officers across more than 75% of the 32 councils in Scotland.

Their concerns starkly confirm UNISON’s longstanding warnings about the threats to vital council services from unsustainable local government financing – with a council tax freeze (which we oppose) adding to the funding pressures.

It is the first annual LGIU report on the state of local government finance in Scotland. Key points include: 

  • Local government finances in Scotland are in a critically poor state
  • Respondents from eight councils said that there was a danger financial constraints could leave them unable to fulfil their statutory duties, unable to set a balanced budget and effectively meaning their council would go bankrupt
  • Without significant changes to funding, councils risk falling into the same cycle of declining service quality, rising costs for taxpayers & eventual effective bankruptcies that has been the operating model across English councils for several years
  • A total of 73% had planned to raise council tax by between 5 and 10%, and 11% had planned to raise it by more than 10% – the 2024/25 council tax freeze was widely condemned – the claimed ‘full funding’ seems very unlikely to match those plans
  • Respondents said the freeze took away one of the most important local controls over their finances & that it would erode financial sustainability in the long term by reducing the council tax base
  • There was widespread agreement on the most pressing issues: inflation, ring-fencing, staff recruitment, the cost of living crisis and demographic change
  • All respondents said their councils were making cuts to services: 97% increasing fees and charges and 89% would be spending reserves. “Even the less popular measures – increasing commercial activity and increasing borrowing – both of which are heavily regulated in Scotland, are being pursued by 67% and 45% of councils.”

The report lists some of the key issues and funding pressures, and dissatisfaction with the Scottish Government and COSLA Verity House Agreement (VHA), intended to improve joint work and relations, but totally ignored by the First Minister’s council tax freeze decision.

Read the full e brief by clicking the document picture link above.