Councils Scotland: Pothole and library closure warning as funding black hole rises to almost £600 million

Opposition parties have warned the closure of more public facilities, such as libraries, along with “bins overflowing and potholes covering the roads” may be the price to pay as councils are forced to make savings, use their financial reserves and charge for certain services to make ends meet.

The report from the Accounts Commission suggests the funding gap for councils will rise even further to £780m by 2026/27, meaning “even tougher decisions” will need to be made in the future.

Willie Rennie, the Scottish Liberal Democrats economy spokesman, said: “This huge financial gap means children losing out on education, potholes left unfilled, and elderly people without support.”

Cosla, the umbrella organisation for Scotland’s 32 councils, said the Scottish Government needed to take urgent action to address the issue of underfunding in local government, saying councils were under “severe” strain in trying to balance their books and deliver frontline services.

Councillor Katie Hagmann, Cosla’s resources spokeswoman, said: “It is vitally important that these concerns, which have been consistently raised by Cosla leaders and are backed up by evidence presented by the Accounts Commission, are acted upon for the sake of Scotland’s public services and our communities who rely upon them. Now is the time to take real action.”

Cllr Hagmann said the report was an “accurate portrayal” of the challenging reality facing councils. She said: “The effect of years of real-term cuts to core budgets have been compounded by additional policy commitments and less flexibility in how we allocate increasingly directed budgets.

“This makes the ability to take local decisions on most of our budget almost impossible. We must seek a sustainable solution to these long-term issues in order to protect the essential frontline services of our communities before it is too late.”

The Accounts Commission report on council budgets for 20242/25 shows there is collectively a £585m funding gap, despite a 6 per cent increase, totalling £13.25 billion, in Scottish Government revenue funding to councils. 

However, the commission said this masked the “significant” underlying financial challenges and strain local government is under, as almost all of this extra funding is for ring-fenced policies or to cover the cost of pay increases in 2023/24. The report also warns the SNP’s council tax freeze could have longer-term financial consequences. 

Brought in by former first minister Humza Yousaf, the council tax freeze has been controversial, as council leaders say they were not informed of the decision before it was made public.

Councils have received £147m from the Government to cover the cost of the council tax freeze, but the commission report warns this could cause longer-term financial consequences as future rises will provide less income for councils. This comes after a third of councils said the funding provided does not fully cover the freeze.

Derek Yule, from the commission, said: “It’s getting harder for councils to do more with less. They have to find and then deliver significant levels of savings to address budget gaps.

“Fully engaging with local people and being clear about the different and difficult budget choices is vital, whilst understanding the impacts on the most vulnerable. Councils need to improve the way in which they present financial information, and do this in a clear, consistent and accessible way.”

Mr Yule said councils needed to be more transparent with what budget information was made available to the public.

Opposition parties are placing the blame for these stark warnings squarely on the SNP Government, saying councils no longer have the resources they need to provide vital services to the communities they serve.

Scottish Labour local government spokesperson Mark Griffin said: “Despite the SNP’s spin, local authorities across Scotland are once again facing impossible choices after getting their budgets cut to the bone. “First Minister John Swinney was the architect of this mess, taking an axe to council funding year after year as finance secretary. Another year of funding cuts will mean more libraries closing, bins overflowing and potholes covering the roads.”

Liz Smith, the Scottish Conservatives’ finance and local government spokeswoman, said: “This damning report exposes the truly eye-watering funding gap facing Scotland’s councils. Years of savage and sustained cuts have been passed down by the SNP to local authorities, pushing them to breaking point.

“Councils simply do not have the resources they need to protect vital day-to-day services that communities across the country rely on.

“The stark picture painted by the Accounts Commission highlights that things will only get worse unless SNP ministers finally back our calls and give councils a fair funding deal.”

Mr Rennie from the Lib Dems added: “The SNP Government have been loading extra responsibilities and costs onto councils whilst taking a scythe to their funds and tying their hands on council tax.”

Finance secretary Shona Robison said: “I have been clear that the UK government’s Spring Budget and Autumn Statement failed to deliver the funding Scotland needs for public services. When more support is desperately needed for public services and infrastructure, Scotland’s block grant from the UK Government is still less in real terms in 2024/25 than in 2022/23 by around £0.4 billion.

“Despite UK government decisions leaving the country in a challenging financial situation, the Scottish Government has made available record funding of over £14bn to local councils this year – a real-terms increase of 2.5 per cent compared with the previous year. We will also continue to work with Cosla to empower councils through a new fiscal framework.”