SNP 'incompetence and cuts' blamed as 'eye-opening' report reveals 'titanic' council funding gap
The funding gap has been blamed on “incompetence and cuts” overseen by SNP ministers.
Scottish councils are facing a budget black hole of almost £650 million this financial year - caused by soaring inflation, increased costs and demands, Scotland's spending watchdog has warned.
The Accounts Commission has issued a stark warning that despite receiving more than £15 billion in their settlement from the Scottish Government for this financial year, local authorities are bracing for huge savings to balance the books.
Local authorities are required to set a balanced budget, but have hiked council tax by the largest amount in a generation to help plug a funding gap.
Councils are also wrestling with finding an extra £265m, as well as an additional £85m for adult social care services, to pay for controversial National Insurance contribution rises from the UK government.
Soaring council tax bills
Some local authorities have also hiked charges on services in a bid to tally up more funding. The average council tax bill in Scotland has soared by almost 10 per cent this year.
READ MORE: 'Brutal SNP cuts' blamed as five authorities confirm biggest council tax rise in 20 years
In its latest assessment of local government finances, the Accounts Commission reports that additional costs from wage increases, higher employer National Insurance contributions and intensifying service demands, including social care as Scotland’s population ages, mean councils must cover a budget shortfall of £647m this financial year.
The Scotsman previously reported that integration joint boards (IJBs), which commission health and social care services on behalf of councils and the NHS, is facing a funding gap of £560m.
The Accounts Commission has warned that whilst councils have partly met this shortfall through service savings and increased charges for services, continuing to use reserves and make one-off savings is not sustainable - stressing the method intensifies pressures on future budgets.
Unsustainable strategy
The document says longer-term reform to the way services are delivered is happening, but must accelerate. The Accounts Commission has added that action is also needed to better understand the impacts of the lack of funding on the most vulnerable communities.
Capital funding is vital for councils to invest in public buildings such as schools and libraries, as well as roads, and underpins the significant transformation needed in the ways services are delivered in the future amid stretched budgets.
The Account Commission has stressed that capital funding from the Scottish Government is increasing, but has not returned to previous levels. Councils remain heavily reliant on borrowing to fund their planned £4.7bn capital investment this financial year.
Derek Yule, from the Accounts Commission, said: “There’s a growing expectation gap. Councils don’t have enough money to meet current demand, at a time when local communities are being asked to contribute more through increases in council tax and charges for some services. Councils need to provide clearer budget information and work with communities to determine how services will be delivered in the future. These conversations won’t be easy.
“With public finances tightening, however, not all cost increases faced by councils can be met by government funding. Local action is needed now to find solutions to immediate and future financial challenges. This means difficult decisions on what services can be delivered and making major changes in how they are delivered.”
Scottish ministers accused
Scottish Labour local government spokesperson Mark Griffin said: “This stark report shows people right across Scotland are paying more and getting less as a result of SNP incompetence and cuts.
“Councils have faced years of budget cuts under the SNP, leaving services threadbare and making long-term reform more difficult. The UK Labour government decisively ended Tory austerity and delivered record funding for the Scottish Government, so the SNP has no excuses.
“The SNP must deliver consistently fair funding for local government and work with councils across Scotland to modernise services so they are fit for the future.”
Scottish Conservative shadow finance and local government secretary Craig Hoy said: “This eye-opening report confirms that years of chronic underfunding from the SNP is having a devastating impact on council budgets.
“It is completely unsustainable for councils to continue facing budget shortfalls of hundreds of millions of pounds. The black hole the SNP have overseen in local authority budgets means hard-pressed taxpayers are now paying more and more, but getting less and less in return.
“SNP ministers cannot keep passing the buck for their failure to properly fund our councils. Taxpayers are already being hammered by high-tax regimes from two left-wing governments and will dread bills rising even further.
“Councils cannot continue to rely on borrowing, but thanks to the SNP’s failure to give them a fair funding deal, it means local services will continue to be cut and council tax bills will continue to skyrocket.”
Scottish Liberal Democrat finance spokesperson Jamie Greene said: “Local authorities have had a raw deal from the SNP over many years and that has had a knock-on impact on the provision of vital local functions.
“This report shows there is a titanic gulf between what the SNP have provided and what councils say they actually need to maintain basic local functions. The SNP have demanded councils do more with less. As a result, we have ended up with school strikes, bin strikes and shortages of elderly care packages.
“All the while, people are seeing their council taxes rocket as councils desperately try to fill black holes in their finances.
"Local government deserves long-term central government funding deals, which adequately meet its needs and provide locally delivered public services. That is what people rightly expect.”
A Scottish Government spokesperson said: “This report confirms that the Scottish Government provided a real terms increase in funding for local government in 2025-26, building on continued increases in recent years.
“The Scottish Government will continue to work in partnership with local government to address the challenges facing council budgets and ensure we are operating sustainable people centred public services that communities expect and deserve.”
Scottish local authority umbrella organisation, Cosla, did not respond to requests for comment.
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