Scottish councils' financial woes show no sign of easing, reports watchdog

Local Authorities in Scotland continue to struggle to plug financial gaps, despite the end of the council tax freeze, spending watchdog the Accounts Commission has reported.

Councils could raise council tax in the last financial year, which raised an additional £189m and allowed councils to manage their budgets, the report said, but it was offset by a 2.3 per cent real terms cut in funding from the Scottish Government.

The report increases pressure on finance secretary Derek Mackay to address local government funding in next month’s budget.

The Accounts Commission found local authorities had used savings and reserves to manage funding gaps of 4 per cent. Increases in funding for education and social work had led to cuts to other services.

Graham Sharp, chair of the Accounts Commission, said: "Councils did a good job last year in managing resources as budgets are tightened and demands on them rise.

“The position varies from council to council but there is clearly need for continuing change in the way services are provided.

“It's not been easy but the pressure on them - and the key services we all rely on - shows no signs of easing.”

A Scottish government spokesman said: “Despite continued UK government real terms cuts to Scotland's resource budget, we have treated local government very fairly - and in the current financial year councils received a real terms boost in both revenue and capital funding.”

However, the Scottish Government needs support of at least one other party to pass its budget.

The last two Scottish budgets have passed with the support of the Scottish Greens, who said this year’s budget would need commitments on local taxation reform if the party was to support it.

The party’s Andy Wightman said the time had come to replace the council tax.

“This report confirms what we’ve been telling Derek Mackay for years now – local government funding needs a complete overhaul if councils are going to meet rising demand for vital public services and pay the staff who deliver them fairly,” he said.

“We’ve done our best in recent years to reverse planned cuts but it’s clear now that services are at breaking point and it’s no longer acceptable for national government to keep tying the hands of local government.”

There was a similar warning from the Scottish Liberal Democrats, who may also enter into negotiations with Mackay over his budget.

Leader Willie Rennie said: “The Scottish Government has a duty to ease the pressure on struggling local authorities. Ministers must provide them with the funding and economic levers necessary to properly tackle local priorities.”