Publication: Local government in Scotland: Financial bulletin 2022/23

January 16, 2024 by Accounts Commission

Financial pressures push councils to make hard decisions about service cuts

Frank discussions are needed with local communities about the future of council services. Difficult decisions will need to be made. While councils received more money in total (from the Scottish Government, Council Tax and other sources) in 2022/23 than in the previous year, councils had less money to spend in real terms.

Councils received more funding from the Scottish Government in real terms in both 2022/23 and 2023/24 but some of that is directed towards certain policies. And increasing demand for services, inflation and the cost of living crisis means that the financial outlook for councils is extremely challenging.

Councils will have to make difficult decisions about cuts to services and how services are delivered.

Our bulletin looks at the money councils received in 2022/23, current funding for 2023/24 and what this means for the future.

Read the full report here

Spending on Scotland’s councils

Local government is the second largest area of Scottish Government spending, although the proportion of the Scottish budget given to local government has reduced over the last 10 years.

Local government spend (outturn) compared to other areas of the Scottish Budget, 2013/14 to 2022/23, real terms

Local government spend

Source: Scottish Budget 2023/24, Annex D: Outturn Comparison 2013/14 to 2021/22 and Scottish Budget 2024/25, Annex H: Outturn Comparison 2014/15 to 2022/23


Financial challenges facing councils

Finances

Challenging to deliver all existing services with money available

Local needs

Changes in our population, inflation and the increased cost of living mean more demand for services, but with less money

National policies

Increasing amounts of money given to councils has to be spent on specific services and policies

Capital spending

There’s less money to spend improving things like roads, libraries and schools


Looking to the future

Councils need to work with local communities and be open about the need for change. This will affect the way services are provided in the future:

  • Work with local communities Be frank about the need for change and together decide how services can be delivered in the future.
  • Save Councils need to reduce reliance on one-off savings or using money in reserves.
  • Be clear Councils need to be clear about how much money they have in reserves and how they will use this money.
  • Look to the future Councils need to ensure they can deliver services now and in the future, whilst delivering on national priorities such as climate change.
  • Budgets Councils need greater certainty in how much money they will get from the Scottish Government, helping them plan ahead. This forms part of what’s known as the Verity House agreement between the Scottish Government and all councils.

Given the funding position for councils, there is increasing reliance on reserves and savings to deliver balanced budgets. This means councils are already making difficult decisions about future service delivery and the level of service they can afford.

Ronnie Hinds Interim Chair of the Accounts Commission

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