Severin Carrell is the Guardian’s Scotland editor.
Scotland’s local councils face a half billion pound shortfall in their operating costs this year thanks to rising costs, lower government funding and higher demand.
The Accounts Commission, the statutory body which patrols the finances of Scotland’s 32 local authorities, said the £529m gap was around 3% of their revenue funding but with much of their spending devoted to fixed costs like wages, the shortfall would hit services.
Although local authorities increased council tax charges by an average of 7.7% this year, and expect to raise £1.2bn from fees and service charges, they would need to cut or reorganise services and head count to find savings.
Their real terms funding for day to day spending from the Scottish government had risen by only 2% this year, the commission added, while funding for capital projects had fallen by 15% in real terms.
Its bulletin on spending found:
Despite a small real terms increase in Scottish government funding for 2026/27, councils still face major risks to their financial sustainability as funding fails to keep pace with rising demand and increasing costs.
Cllr Ricky Bell, resources spokesperson for the Convention of Scottish Local Authorities (Cosla), said the bulletin had correctly identified the “perilous position” they were in. He said:
Of notable concern, the ‘critical financial pressures’ facing our health and social care partnerships, and real terms reductions in the capital settlement justify and strengthen support for the resourcing Cosla called for through our budget lobbying this year.
The report quite rightly expresses grave concern for local government finance over the medium term, spanning from the Scottish spending review. [We] will continue to advocate for fair and flexible funding for our councils moving forward.
