Glasgow City Council hits ‘critical’ moment, watchdog warns

Scotland’s largest council has entered a “critical period” and faces a budget gap of at least £110m, the Accounts Commission has warned.

Glasgow City Council serves more than 630,000 people and has a workforce of 27,400.

But rising homelessness, persistent high poverty levels and growing demand for services are placing “significant” pressure on the local authority.

The council’s SNP administration recently voted in favour of a new pay grading system which is intended to resolve a decades-old wage row.

The city has paid out £770m to settle claims after staff in majority-female roles, such as cleaning, were put on a lower rate than equivalent roles with mostly male employees, such as refuse collection.

The row dates back to 2006, when Labour was in power, and the council has said the new deal – reached after eight years of talks – will benefit 63 per cent of staff, but 11 per cent will lose out.

Under an agreement struck in 2023, new equal pay claims against the council were paused until 2027. To stop such cases occurring, the public sector watchdog has warned that delivery of the new pay and grading structure by April next year is vital and officers, councillors and trade union reps must take “collective responsibility” for its success.

That’s against an overall budget gap set to hit £110m between this financial year and the next.

Transparency and clarity about the scale of the problem must improve to help councillors make better decisions, the Accounts Commission has said, and, with eight months to go until the next local government elections, the council must show “sustained leadership”.

A report published today said its strategic plan is “not supported by aligned strategies” or “underpinned by detailed medium-term financial planning”, the body found. It said more detailed projections and stronger scenario planning on risks is needed.

Andrew Burns, deputy chair of the Accounts Commission, said: “There is no doubt about the scale and complexity of the challenges that Glasgow City Council faces, particularly equal pay and homelessness.

“The council is at a challenging point; decisions made over the coming months will have a significant bearing on financial sustainability and on the services that communities receive in future.  

“We need to see leadership, responsibility and robust oversight by councillors. The council must also prioritise its medium-term financial planning, setting out the choices the council needs to make to live within its means. There must be clear plans to redesign services, the resources needed, costs and savings and the impact on communities and budgets. These are vital to ensure the council and its services are sustainable for the future.”

Demand for services is exacerbated by entrenched poverty in the city, where 45 per cent of datazones are in the country’s poorest 20 per cent, as measured in the Scottish Index of Multiple Deprivation.

With acute pressures on local housing, Glasgow’s spending on homelessness is expected to hit £56m in this financial year, an increase of £18m.

Council leader Susan Aitken has told Deputy First Minister Jenny Gilruth that homeless is “the most pressing and urgent issue facing the city”, saying refugee homelessness in particular is “an issue that is not of Glasgow’s making and which is significantly beyond our control, but which poses an immediate and untenable threat to financial sustainability, public services and community cohesion in our city”.

City treasurer Councillor Ricky Bell said the situation improved in the period before the report was published.

He said: “The issues and challenges called out in this report are not a surprise to us – they are things that we are planning for and working to address every single day.

“The Accounts Commission recognises that many of those challenges are not unique to Glasgow – and that others, such as the pressure on homelessness budgets, are not of the city’s making.

“It’s unfortunate that the period when the commission received and considered this report really straddled the point where we took papers to committee on our new pay and grading system and setting out a new financial forecast.

“I’m confident that, if they were to look again today, they would recognise that areas where we maybe couldn’t give them the certainty they would have liked even a month ago have really moved on quite significantly.”

The news comes days after the launch of a new promotional body, Destination Glasgow, which aims to boost its international reputation and create opportunities for its economic, cultural and visitor assets.

The city staged 530 conferences last year, generating £207m for the local economy, and received £500m in foreign direct investment.

Around 31.5m visitors travelled to the city in the same period, generating £2.74bn in direct expenditure.