Leader comment: Councils facing financial meltdown as gap widens

Growth in demand for social care makes the job of Scotland's cash-strapped councils even harder.
Growth in demand for social care makes the job of Scotland's cash-strapped councils even harder.
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It is worrying that Scotland’s 32 councils are looking at facing a financial shortfall of £550 million in just two years’ time.

A report from the Accounts Commission has shown that the gap between what local government spends and the amount of money it generates could grow from £87m in 2016-17 to an estimated £367m in the next financial year. A year later, the report warns, the figure is due to rise again to £533m in 2018-19.

It is interesting to look at what has happened to local councils since the SNP became so dominant in national politics.

The council tax freeze has stopped councils from raising any extra money, while more responsibilities have been handed to them to fund.

According to Cosla, the umbrella body for 28 of Scotland’s local authorities, Scottish Government funding for councils has fallen by over 8 per cent in real terms. Around 80 per cent of council funding comes directly from the government, while the remaining amount is generated in other ways, such as through council tax.

It has undoubtedly been a strange relationship, perhaps no less strange because while the SNP is in power nationally, it does not enjoy the same control at a local level.

Of Scotland’s 32 local authority areas, just two of them are SNP controlled. A further five are Labour, four are made up of independent elected members, while the rest have no overall control.

The government has said it wants funding to go directly to schools rather than through the councils’ budgetary procedure, taking power and control away from local authorities.

The most concerning element of this report is the growth in demand for council services in social care.

Already, we know from the report, councils will be spending more than they have cash in reserve – and the largest amount will go on social care.

As Scotland’s population ages, the money needing to be spent on social care is undeniably set to increase – and it is worth having a debate as to how much social care should be provided by the state and what people are able to pay for in taxes.

At the moment, with costs set to spiral, the current state provision is not looking viable unless taxes are raised.

It is also concerning that councils’ overall debt currently stands at £13.72 billion, costing local authorities about £1.5bn a year in interest and repayments – in the case of 22 councils, accounting for 10 per cent of spending of their revenue income.

However, what is perhaps most worrying is that some do not even have a plan in place to manage their finances, with just 14 having long-term strategies in place, while 15 claim that plans linking their spending plans to wider strategic priorities are for the “medium term”. That leaves three with no plans at all.

If those councils were people, they would undoubtedly be given debt counselling. Action needs to be taken to stop these financial problems as fast as possible.