February 19, 2025
Finance

Council finances are under serious pressure says watchdog


The financial watchdog said despite more cash allocated services are still at serious risk.

Glasgow City Council will set its budget next month, once the Scottish Government has finalised the country’s budget at Holyrood.


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The city has faced a spending gap of more than £100m over three years.

The report, by Audit Scotland, states “Despite an overall increase in funding in 2024/25 and a further funding increase announced for the year ahead, intensifying demand for services, greater borrowing and depleting reserves pose ongoing challenges.”

Last year, according to the watchdog councils borrowed more to invest in buildings and infrastructure, whilst Scottish Government money to support capital investment continued to decline.

It led to increased borrowing by more than £400 million leading to almost all councils now facing higher levels of debt and annual interest costs.


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Jo Armstrong, Chair of the Accounts Commission, said: “Scotland’s councils face a challenging future, with significant financial risks and uncertainties.

“This has been compounded by pressures out with their control, including ever-increasing demand on services and inflation.

“An expected increase in funding for the year ahead doesn’t cancel out the urgent need for transformation, at a pace and depth we’ve not yet seen.

“With services already being impacted, councils must be clear with communities the scale of financial challenge being faced. Working with communities to deliver differently is vital.”

Opposition parties said years of cuts to the local government budget have led to a reduction in services.

Mark Griffin, Scottish Labour local government spokesperson, said: “The SNP cannot ignore this stark warning and continue to bury its head in the sand about the timebomb in local government finances.

 “Years of brutal budget cuts by the SNP and growing demands has left councils across Scotland at breaking point.

“Now there is a real risk that Scots are going to pay the price for the SNP’s incompetence through Council Tax hikes.”

Craig Hoy, Scottish Conservative finance spokesperson, said: “This stark report paints a bleak picture about the financial position faced by Scottish councils.

“The SNP has been starving councils of resources for years and Scots have seen public services crumble as a result.

“It’s simply not sustainable for local authorities to be using savings or reserves to plug the gaps left by the SNP’s lack of funding to deliver day-to-day services.”





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