Analysis: Have Scottish councils been uniquely hit hard by cuts from government?

All councils across the UK have suffered from cuts to budgets.

As Scottish councils begin to set their budget and after Labour-run North Lanarkshire reversed planned closures of sport and leisure facilities amid fiery pre-by-election opposition, how does local government funding stack up in Scotland?

There is a significant degree of disingenuousness around the debate on who is most to blame for council cuts and the pressures being faced when they come to set their budgets.

The truth is different political decisions in different parts of the UK have had varying effects on how local authorities have been funded.

In Scotland, the picture is clear. For several years from 2013/14, councils faced relatively significant real-terms cuts to funding – a trend only recently reversed in the 2021/22 budget by the Scottish Government.

This was as much down to Covid grants beefing up local expenditure as it was additional direct funding for councils, and the 2023/24 allocation of funding is at its highest since 2015/16.

However, pressures on council expenditure have grown in that period due to an aging population increasing demand on services, higher wage bills following strike action securing high public sector pay deals, and inflation eating into how far money goes.

Scottish Government priorities have also not been focused on council funding. Since 2013/14, the Government’s budget has risen by 8.3 per cent, double the increase of the local government budget.

This is partially due to additional responsibilities such as social security. But ministers have repeatedly made the decision to spend more on social security than it is allocated from the Barnett Formula on policies such as the Scottish Child Payment and, with a budget that is relatively fixed year-on-year and the unpalatability of significant tax rises, that additional money has to come from somewhere, with local government one casualty.

Councils have also faced additional constraints on their revenue, notably the ringfencing of funds from government on ministerial priorities and the council tax freeze that ran for the vast majority of the SNP’s time in government.

Both approaches have reduced flexibility in how councils raise and spend their own revenue, concerns raised by councillors nationwide and the local government representative body Cosla.

But is this unique? The short answer is no. But the more complex answer is, partially, yes.

In Wales, local authorities were also hit hard by real-terms cuts to funding from 2010 onwards, becoming acute from 2013 and dropping to levels last seen in 2003 by the year prior to the pandemic.

This has recovered significantly since, with 2022/23 budgets for Welsh councils sitting closer to 2013 levels and exceeding pre-austerity levels in 2020/21 and 2021/22 when Covid grants are included in calculations.

Overall funding will rise to above 2013 levels only by 2026/27, a Cardiff University study suggests.

The same study shows council tax rises in Wales were also introduced at a faster rate than in Scotland and England, despite cuts, with the Welsh council tax ‘burden’ sitting proportionately well above Scotland and England.

However, constraints on spending from the Welsh government are not as tight. The Welsh Local Government Association is significantly happier with council funding than Cosla, despite the overall picture of real-terms cuts being slowly reversed.

In England, councils saw very similar, if deeper, cuts to funding. Real-terms cuts to funding since 2010 reached a nadir in 2015/16 and barely shifted until the pandemic in 2020 and the resultant boom in Covid grants.

Funding in England remains below 2010 levels, an issue caused by government cuts, according to the Institute for Government. It has been worsened still by the Localism Act 2011, which constrained how much councils could raise council tax without a local referendum.

These lean times has led several councils to go bankrupt, most recent Birmingham City Council, but also Northamptonshire in 2018, Slough in 2021, Thurrock and Croydon in 2022, and Woking earlier this year.

Due to the way funding for devolved administrations works, these real-terms cuts on English local authorities are also passed on by their proportionate impact on the Barnett Formula, limiting funding in Scotland and Wales.

Councils across the UK, therefore, have been hit hard by cuts and Scottish councils are not unique in being in difficult financial situations. Much of this blame sits with the Conservatives and their austerity agenda, despite funding beginning to recover following Covid-19.

But other parties are not blameless. Politics is fundamentally about priorities and choices and the SNP in Edinburgh have decided to prioritise elsewhere than local government, resulting in deeper and harsher cuts to council income than elsewhere in the UK such as Wales.

Suggesting a change of government without wholesale changes to the structure of local government funding will solve the problem, however, is also disingenuous.

Labour’s record in Wales, where cuts were also passed on to councils, demonstrates this, while the SNP have failed to reform council tax meaningfully.

Councils face significant pressures across the UK and any difficult decisions they make are likely to be weaponised by opposition parties in an election year.

However, political parties such as the SNP cannot pretend that everyone else but those in charge of council funding are responsible for decisions made in government.

Opposition parties, such as Labour, also cannot claim they will sort local government funding overnight while simultaneously claiming there will be no tax increases or spending cuts elsewhere in the budget.

Such a response to the structural problems facing council funding is not credible and should be highlighted as such.

Political parties are yet to grasp the thistle of local government funding. And, while they evade that central challenge, anything else they say on difficult local decisions and broader council funding questions should be taken with a giant bucket of salt.