2024 State of local government finance in Scotland

This report and a full bibliography can be downloaded as a PDF.

Key Findings

• Confidence in the sustainability of council finances is critically low. Seventy per cent of all councils believe they could be unable to pass a balanced budget within the next five years.
• Times are increasingly hard for local authorities, with ongoing pressure from the cost of living crisis and inflation adding new burdens on top of long-term challenges: demographic change, financing of Scottish Government priorities, and pressures with recruitment and retention of staff.
• Councils are taking every measure available to balance their budgets: raising council tax when they can, reducing expenditure and increasing fees, sharing services, charges and commercial activity. However many councils believe this will still not be enough to prevent the risk of an unbalanced budget.
• Satisfaction with the Scottish Government is alarmingly poor across the sector. Not a single respondent said they were happy with the Scottish Government’s performance on delivering a sustainable funding system or considering local government in wider policy decisions.
• The sector is in favour of widespread reform, including multi-year financial settlements, ending ring-fencing, and reform of council tax.
• The sector is optimistic about the role that local government, sufficiently funded and empowered, could have to advance the prevention agenda, tackle local and national shared priorities, deliver services and empower communities.

Recommendations – immediate

• In order to address the risk of a Scottish council being unable to pass a balanced budget, there should be an agreed national convention between Scottish Government and local government to cover procedures and actions that would then be needed to set a balanced budget.
• Implement and enshrine in legislation the principles of the Verity House Agreement, and commit to an annual review by Scottish Parliament covering the key principles.

Recommendations – medium to longer-term

• Local government finance should with urgency be reconsidered as a whole system approach to funding, considering wider public finances, looking into the suitability of every aspect: council tax, the funding formula, increasing the range of revenue-raising options available for councils, methods for redistributing funding between territories and linked to a review of the role of councils in Scotland.
• The role of local government as both a key component of democracy (as per the Democracy Matters review) and part of the public sector should be set out more clearly, with an aim to confirming, and then protecting through statute, the exact roles, powers and responsibilities of local government.
• Scottish and local governments should be brought together in a standing commission or representative body, which should be defined in statute with a key role in pre-budget engagement processes, negotiation of the funding settlement, and any and all decisions that have an impact on councils. The exact responsibilities and membership of this body should be a matter for future discussions, but should at a minimum include ministerial representation.

“Staff in local authorities are increasingly in a position of gatekeeping a smaller and smaller pot of resource for a wider and wider pool of demand and increased expectations. This is fueling dissatisfaction with local government, potentially disempowering local communities as represented by their elected members and causing conflict between those with competing needs/rights.”

Local government finances in Scotland are hanging by a thread. However, the thread has not yet broken. This is the message from our survey results. These findings present a stark warning that although councils are in a precarious financial position and there is not much time until the sector starts to see potentially catastrophic consequences. Change is urgently needed.

Statistical evidence from Accounts Commission and SPICe have outlined the overall financial sustainability of local government, noting that although councils as a whole are financially sustainable in the short term, in the medium term there are rapidly increasing demand pressures, ring-fencing of funds, increased use of reserves and risks to service quality, which indicate that local authority finances are in a poor state.

LGIU research adds another perspective to this evidence: the view from the inside. We asked council leaders, Chief Executives and Chief Finance Officers a series of questions on their experiences trying to run councils in the last financial year, and their views on how councils’ financial sustainability could be assured. We had 56 responses, representing 84% of Scotland’s councils, with a roughly equal mix of leaders, CEOs and CFOs and covering a wide range of urban, rural and island geographies.

The results make for grim reading about the state of local government finances. They paint a picture of a system under continual and significant strain, with the scale of financial pressures increasing from 2023.

Councils emphasised:

• the reductions in levels of service that they will have to make;
• the tax increases;
• the burdens imposed by Scottish Government priorities;
• the ongoing strains of inflation;
• increased interest rates, and;
• the demand pressures caused by demographic changes and the cost of living crisis.

Overall, respondents were sounding an alarm on the scale of the crisis facing local governments in Scotland.

However, respondents were keen to suggest ways out of the current financial predicament. Chief amongst these were multi-year financial settlements, reforms to council tax, end to ring-fencing and directed spending, and further exploration of other types of fiscal devolution, such as a local share of national taxes.

Local government, if funded properly, can and does have a transformative effect on quality of life in communities. Respondents wrote about how they could improve transport, reduce loneliness, improve the long-term determinants of health, wellbeing and life opportunities, invest in prevention to tackle the route causes of issues before they arise, and harness the creativity and innovation that they have demonstrated over the years of financial strain to improve services, but only if they are funded adequately.

The challenge now is how do we move from the situation we are in now, to one where councils are able to deliver the transformative impact they are confident that they could deliver. Reform will be necessary, empowerment will be essential, and trust between Scottish Government and local government – in a critically poor state – must be restored.

The last few years have been particularly difficult for councils in Scotland, with a wide range of financial challenges driven by the Covid-19 pandemic, high inflation and interest rates, and demand-side pressures brought about by the cost of living crisis. This year, we sought to understand the problems facing local authorities in 2024.

For context, the scale of these problems are roughly similar to last year. There is no clear improvement in any of them, with the one exception of the proportion citing the cost of living crisis as an issue reducing from 92% last year to 85% this year.

Respondents explained their answers to these questions in a series of written answers that we will explore below.

Demographic change

Demographic change, the process by which the characteristics of a population of an area change over time (for example through ageing or population movement) were cited as a problem by every respondent who answered the question. This level of consensus masks the very different demographic challenges faced by different Scottish councils.

First, there were the number of respondents who referenced the growth of their populations, and the strain this was causing to their housing supply:

“Cost of supporting demographic growth – linked to LDP (local development planning) / national housing targets and a growing population at all ends of the spectrum.”

Then, there were those councils facing the complete opposite problem, a decreasing population that is having an impact on the scale of their funding settlement which is reducing, whereas the scale of their funding commitments have remained stubbornly high, particularly on teacher numbers. We will explore the question of ring-fencing and directed spend, of which teacher numbers are the key example, in the next section.

“With decreasing population and funding reductions reflecting that, mandating historic levels of inputs e.g. teachers makes no sense.”

Equally, demographic changes including depopulation were given as a key driver for complications with recruiting the workforce needed for delivering essential services, especially in the case of social care. Demonstrating how demographic change can have an impact not only on the demand side of service provision but also the supply side.

Finally, the most common single example given for the impact of demographic change was to do with its impact on demand. In the first instance, this often referred to additional demand in social care services, including adult social care (with the effect of ageing populations), and the increasing number of children with additional needs.

“Increased demand / need in areas like Additional Support Needs and Looked After Children are a significant issue at present.”

These demographic shifts are unlikely to become less pronounced with time. The population will continue to age, the areas facing challenges due to population movement will be further affected by climate change, the evolving economy and the impact of technological developments. Councils require support to manage these changing demographic trends and their impact on service delivery, as well as to ensure that they can best deliver for the new communities that come with changing demographics.

Cost of funding Scottish Government priorities and ring-fencing

One of the most consistent problems cited across local authorities is the impact of ring-fencing and spending commitments directed by Scottish Government. The scale of this issue is disputed, but there is broad agreement across COSLA, Solace, directors of finance section, Accounts Commission and the Improvement Service that ring-fencing and directed spending reduces the amount that councils can spend on local priorities, and a core part of the 2023 Verity House Agreement between local and Scottish Government was a principle that ring-fencing should be reduced. Given that there is a clear cross-organisational consensus that ring-fencing and directed spending are issues, it is unsurprising that over 90% of respondents cited both as problems.

Of the policy areas in which directed spending is causing the greatest pressures, the most prominent in this survey, as in our previous research, was teacher numbers. As reported by COSLA, this policy essentially amounts to Scottish Government requiring councils to maintain a certain number of teachers or face funding cuts. The main issue councils report arising is that because of a falling number of pupils in some areas, councils are now mandated to employ more teachers than is necessary, that constitutes a major cost.

There were two major criticisms of this policy, first that it is not sustainable, given other cost pressures councils face. Second, that it limits councils’ flexibility to implement local policies relevant to their communities.

“We don’t have enough flexibility to deliver regional focussed activity and spending transformation due to Scottish Government ring fencing their priorities…”

Scotland is unusually centralised from an international perspective. Councils’ power to raise money and spend money as they see fit are even more constrained than in England, itself an international outlier because of its high level of centralisation. Ring-fencing and directed spending are manifestations of this high level of centralisation, and, as was recognised in Verity House, do not represent the most effective way for councils to serve their communities, or the most effective way for councils to deliver their shared priorities with Scottish Government.

Inflation and cost of living

Inflation and the cost of living crisis were both described as problems by the vast majority of our respondents. Neither of these are particularly surprising, given that inflation (both in the price of goods and pay inflation) makes everything more expensive, including for councils, and the cost of living crisis increases demand for council services. The important aspect to note here is that these two pressures, although they are likely to be temporary, do not mean that councils’ overall strained financial position will end when inflation stabilises.

Many of the pressures facing councils are long-term, and although the period from the pandemic to today has featured unprecedented financial complications for councils, there is no guarantee of more stable economic fortunes in the future. This is why local government’s financial issues should be viewed as a systemic problem, requiring root and branch reform of the entire system, rather than a sticking plaster to endure the most recent economic issues. The aim should be to institute more resilient council finances in the long term, rather than to see out this economic shock.

Workforce

Ninety six per cent of our respondents said that recruiting and retaining the staff for essential service provision was a problem. Although different councils have different pressures on their staffing, councils are united in finding it difficult to recruit and retain staff.

Scotland’s Local Government Workforce Report 2024, published earlier this year based on research by Solace Scotland, the Society of Personal Development Scotland (SPDS) and Improvement Service (IS), shed light on the causes and consequences of this crisis. The report succinctly summarised the series of pressures on workforce capacity in local government:

“financial pressures; an ageing workforce; increased service demand; recruitment difficulties; differing population changes across the country; skills gaps and pay competition from other sectors.” (p.4)

The results of LGIU research supports their conclusions. Senior council figures wrote about competition for staff from other local authorities and the private sector, their inability to maintain wages at competitive levels, the increasing stress of working in a local authority pushing potential and existing staff away, industrial action causing uncertainty and disruption for existing staff and depopulation in the local area meaning that their working age population has been significantly reduced.

Then, there were the answers that gave a greater insight into the scale of the issue, emphasising that across Scotland there are vacancies at every level, and filling them is increasingly difficult.

“Across both professional and non-professional occupational areas, local authorities are experiencing major recruitment and retention issues.”

The workforce shortages and retention issues ranged from high level executive roles, to professional, technical roles, such as ICT, planning, surveying, accounting, law and economic development – where competition from the private sector is severe, to the acute shortage of social care staff, who are consistently rated as one of the hardest groups to recruit.

As one respondent explained, potential social care staff and other frontline workers are put off by the relative difficulty of the job in comparison to other, less intense, work elsewhere:

“It must be recognised that despite local government pay uplifts in recent years the pay on offer for many front line local government posts which are essential to the task of supporting people and communities is easily matched in far less challenging settings such as retail and hospitality.”

Beyond the mechanisms contributing to workforce pressures, the survey also uncovered evidence of morale issues that may have another detrimental impact on the retention of core staff:

“National pay settlements have had a significant detrimental impact on morale with some parts of the local government sector feeling less valued than others (e.g. Teachers have had more of a pay rise than local government staff)…”

Equally, many of the key pull factors that in previous years have worked to incentivise taking on or staying in local authority jobs have been reduced in recent years. As one respondent put it:

“What used to make local government work attractive (jobs for life, decent pension etc) can no longer be relied upon to attract staff as they are either no longer in place or are also now readily in place in other sectors. The employment market has fundamentally changed and it’s unclear what the ‘hook’ for local government now is.”

This raises the key question when it comes to the local government workforce, which goes beyond this report’s focus on finance (although the capacity to pay more to staff would certainly help), what can be done to improve this situation?

The Local Government Workforce Report 2024 identified many of the imaginative ways that councils are tackling these issues, such as recruitment campaigns, upskilling and succession planning, and highlights future national campaigns and partnerships that can work to ease the pressure on workforces. Other respondents to our survey highlighted how the staffing pressures may need to be tackled using a more wholesale approach to service redesign.

“Staffing pressures are as much a reason to redesign services as our finances.”

However, looking at the issues faced with the local government workforce from a finance perspective is also instructive. If local governments were more financially resilient, with more local control over their spending on staff, greater guarantees for funding to cover spending on essential staff, and more long-term security in their finances, it would be significantly simpler for councils to align their workforce plans with their financial capacity. As is, council finances are constrained, both in the amount of resources they have and their freedom to spend it, to the point where workforce challenges are significantly exacerbated.

Local governments across Scotland are pulling every lever available to them to balance their budgets, and yet a quarter of respondents are still concerned that they will not be able to balance their budget in the next financial year, and three-quarters that they will be unable to within the next five years. To meet these challenges, councils require significantly more flexibility to raise and spend money as they see fit, and a funding formula that guarantees a minimum level of resources that ensures councils’ capacity to deliver essential services.

Local authorities in Scotland are legally required to set a balanced budget every year. Legislation requires every council to ensure that their expenditure does not exceed their available resources. In order to balance their budgets, Scottish councils only have a small number of options. On the revenue-raising side they can raise council tax (when not frozen), raise limited and highly regulated fees and charges, and undertake commercial activity. These revenue-raising options are highly constrained, and the scale of revenue a council can raise is in almost no way related to the amount that a council might need to fund its services. On the cost-cutting side, councils can reduce spending on services, but are always required to meet their statutory obligations. These options (and the corresponding small number of options that councils have to fund their capital expenditure) are very highly constrained in comparison to local government finances around the world.

We asked our survey respondents which of the following measures, which constitute the majority of possible options, they would be taking in the 2025/2026 financial year:

In addition to this, 100% of respondents said they were taking 3 or more of these options. We will evaluate each of these in turn, but the key message here is that most councils are doing everything they conceivably can in order to balance their revenue budgets, and in many cases are still not confident they will succeed.

Council tax

Council tax is the primary mechanism by which a council can raise income to cover budget shortfalls and is by far the greatest contributor to a council’s locally-generated income. Council tax is a tax on domestic properties that councils are responsible for administering, collecting and are empowered to retain (for a more full explanation of council tax and its relative merits and demerits, see this briefing).

For the purposes of understanding local governments’ financial position, the important question relating to council tax is how much councils are planning to raise it, given that we already know that every respondent to our survey said they did plan to raise council tax. To start with, we asked our survey participants how much they had planned to raise council tax before the surprise announcement of the council tax freeze last year.

Only 25% said they had planned to raise council tax by 5% or under. This is in accordance with our results last year, and implies that the increase in funds announced last year to compensate for the council tax freeze will not have met the funding needs of councils, in accordance with other analysis from the Fraser of Allander institute. This is borne out in the evidence on planned increases this year, which suggest that councils are making up for limited increases last year.

Using council reserves

Reserves are a complicated aspect of local government finance. Reserves arise from a number of different sources and have a wide range of different uses, to further describe and aid the understanding of reserves we have commissioned a full briefing on this topic. It would be wrong to assume that a council’s level of reserves directly translates into its “savings” in the same sense as a household, because reserves can be both usable and unusable, committed and uncommitted, meaning that often a council’s reserves for dealing with budget gaps are much lower than their apparent level. The important factor to note with reserves is that spending them is a short-term measure to deal with budget gaps. In an ideal local government finance system, uncommitted usable reserves would be held for emergencies, rather than spent each year.

The Accounts Commission reported that in 2022/2023 34% of councils used their reserves. The evidence we collected also suggests that use of reserves is high, including for covering budget gaps. 90% of respondents said they were using their reserves this year, compared to 84% who said they had used their reserves in the 2024-2025 financial year. 82% of respondents who answered both questions said they were using reserves both this year and intended to use them next financial year. However, as explained before, this will most likely include committed reserves that were always planned to be used. In order to get at the truth of this complicated issue, we also asked senior council figures to explain their use of reserves.

This evidence suggests that reserves are being used to plug budget gaps, and are another example of a system under significant financial strain.

“We expect to use our usable reserves to help balance budgets over the next few years. This is pragmatic since we have reserves but is not a sustainable way to fund public service provision.”

“They are getting very close to a minimum level as prescribed in the Councils Reserves Strategy (2% of revenue budget).”

“They are running out fast.”

There was also a response that pointed to the misunderstandings about reserves, which have been reported as growing in recent years, as evidence of a greater lack of understanding about the sustainability of council finances and a way to pressure councils into short term spending decisions:

“There appears to be a choiceful misunderstanding by Scottish Government about Council reserves. Many are not cash backed. It feels this is just about finding a way to passport funding pressures by forcing Councils to borrow more.”

Equally, respondents were keen to share their view that councils do not have significant reserves that can be used to fill budget gaps indefinitely.

“There is a misconception that the level of usable reserves is significant across councils. This is not the case. The council has a prudent level of uncommitted reserve, in the line with the Financial Strategy, to be used sustainably and in line with the Council’s Reserve Strategy in assisting with balancing the council’s budget. ie to manage lead in times linked to the delivery of approved savings or to smooth budget shortfalls to allow for a longer term approach to be taken in relation to budget setting.”

The evidence from this survey corroborates the findings in other research, that councils usable reserves make up only a small and falling proportion of their running costs, and cannot be relied upon to make up for long-term gaps between the funds councils are able to raise and their expenditure.

Services

“It is soul destroying when we want to make a big difference but the financial situation means we are left to consider horrendous cuts.”

98% of respondents to our survey said they would be reducing spending on services. Of these, the most common services (picture below) that would be cut were back office/corporate services, which are essential for the running of all council services, discretionary services – such as business support, parks and leisure and arts and culture, and then a number of statutory services – education and social care. Overall, a large number of different services were due to be cut.

However, it is not enough to know which services are due to be cut. In the current fiscal climate, where councils have been cutting services for years, the more important question now is whether the services that are being cut are still at satisfactory levels. The graph below shows the extent to which our respondents believed each service is satisfactory.

There are a few conclusions we can take from this graph. First, homelessness support, the service which is deemed to be unsatisfactory by the largest proportion of respondents, is also the one where the smallest proportion of respondents (29%) plan cuts. There are two ways to interpret this. Either councils are protecting a service which has reached critically poor levels from further cuts, or – perhaps more likely – there is no way councils can cut more from homelessness support. On the other hand, there is business support, which is already deemed to be satisfactory by a relatively low proportion of respondents, and where expenditure will be further reduced in the coming years.

On the other end of the spectrum, there is education. This is an area where satisfaction is relatively high (67%), but councils are prevented from making significant cuts to the core areas of expenditure (staffing costs). As one respondent put it:

“Given the continued national direction on a large proportion of our budgets (circa 70-75%) there is a disproportionate impact on cuts within the remaining services many of which are supporting national outcomes, wellbeing and early intervention. Cuts in this way will have a long term detrimental impact on society as a whole and likely to cost the public sector more in the long run.”

Other respondents were clear in their written answers about the likely impact of cuts on service.

“The current arrangements, funding levels and requirements/restrictions are leading to the gradual decline of the quality of local services. Improved funding settlements and greater flexibility for councils to determine how funding is used are required to prevent further decline and to improve these services.”

One limit of the collected data is that it does not show us how much each service area will be reduced, but we were able to ask about service quality as a whole. In order to get at this final question we asked senior council figures their opinions on the impact of cuts on council services.

There are two major conclusions we can draw from this. First, that the vast majority of senior council figures believe that cuts will have a negative impact on quality of life in their council and increase the risks to vulnerable people. Combined with the previous answers, we can assume that the areas with high dissatisfaction and where cuts are most likely are also most probably the ones where these cuts will have the greatest impact. As one respondent put it:

“The impact on services has not yet emerged for communities in Scotland but that time is at an end”

And, as another respondent explained, service spending is being concentrated in a small number of areas:

“Council budgets are increasingly being concentrated towards meeting individual, high cost needs leading to significant reductions in funding available for basic service provision across wider groups.”

We can also conclude that nearly half of all councils believe they may not be able to fulfil their statutory obligations in 2025/2026. This would open councils up to legal challenges, would represent a failure of the current local government finance system to deliver for communities, and would ultimately contribute to – and be symptomatic of – councils being unable to balance their budgets in the coming years.

As one respondent succinctly stated:

“The quality of services matches what the level of funding will permit. “

The issue here is, what happens when the level of funding does not permit services to reach the minimum legal quality, or to deliver for the most vulnerable members of a community?

Capital budgets

Alongside revenue budgets – which pay for day-to-day costs – councils also have capital budgets, which provide for the construction and maintenance of assets. According to the Accounts Commission, capital budgets across the public sector are under strain. This was notable in the evidence from our respondents, many of whom spoke about the link between council capital programmes and the quality of services:

“The cuts in capital funding over the past 5 years have been significant and in the medium to long term will have a lasting detrimental impact to local infrastructure and services.”

“Cost of capital is a very big concern going forward.  Assets are deteriorating, capital grant is reducing and borrowing is becoming more expensive and adding to the budget gap.”

“The level of capital funding is now insufficient even to maintain current assets which, if not adjusted, will lead to more and more revenue pressures in the form of borrowing or the cost of ’emergency’ repairs.”

Capital spending is difficult to avoid, assets deteriorate over time, and new adjustments are required by law – such as accessibility requirements for disabled residents, as one example given by a respondent. Equally, cuts in capital budgets now can make it more difficult to deliver services in the long-term, and increase pressure on revenue budgets.

“Capital budgets are having to be frozen due to revenue costs to fund them being so much under pressure.”

Equally respondents were keen to point out that the pressure on capital budgets today, primarily as a result of the nationwide fiscal picture, the reduction in capital grants, and the deterioration of assets, will be compounded by upcoming costs such as climate change mitigation and the costs associated with energy transition.

Borrowing

Linked to capital budgets is local authority borrowing. Recent evidence (p.13) suggests that borrowing has overtaken capital grants as the main means by which local authorities fund capital projects. Local governments are not able to borrow to fund their revenue spending without explicit permission from Scottish Government ministers, they can  usually only borrow to fund capital expenditure and primarily borrow through the Public Works Loans Board – a public sector lender. Only 29% of respondents said they would be increasing borrowing in the next financial year, so in comparison to many of the other measures councils are taken, it does not appear to be one of the major ways councils are seeking to shore up their finances.

“The planned actions of Scottish Government to restrict local authority borrowing are concerning. Local government needs flexibility and borrowing is a key factor.”

Scottish Government are in the process of consulting on proposed changes to the guidance on local authority borrowing. Respondents to the survey were keen to indicate their view that local authorities should have control over their borrowing, and that in their view prudential borrowing is an essential fiscal flexibility for financing capital projects.

 “Lower interest rates would be welcome to help on affordability.”

However, borrowing, although an important part of sound financial management and investment in capital assets, does also pose a potential risk for long-term revenue budgets, particularly in a financial environment where interest rates are high. Repayments on debt interest are made out of revenue budgets, and can become a larger proportion of a council’s revenue expenditure over time, as has been the case in several councils in England. This does not mean that council borrowing is necessarily a poor use of funds, as it can be used to prevent further deterioration of assets or to increase the value of assets, both of which have a positive impact on revenue budgets in the long term. Borrowing and council debt are complicated, and should not be viewed in a wholly negative or positive light regardless of local context.

“Scottish Government obsession on debt levels and controls on Capital accounting are damaging to the sector.  S95 Officers are all naturally prudent but must be allowed to take a long term and pragmatic approach to funding and repaying Capital.”

Although borrowing is a multifaceted phenomenon, the recent trends do point towards a simple conclusion: that councils have to fund their capital expenditure somehow, and that in the absence of capital grants, or significant fiscal flexibilities, borrowing has presented itself as the only viable option in many cases.

Our survey last year was conducted at an unusual time, when the relationship between Scottish and local government was in a state of flux. In the summer of 2023 a new agreement was signed between Scottish and local governments called the Verity House Agreement. This was designed to usher in a new partnership between the two. Then, shortly before our survey was launched, then-First Minister Humza Yousaf announced a surprise freeze on council tax. This was considered a contravention of the principles of Verity House by many respondents to our survey, and coloured the attitude towards Scottish government that we saw, which was near-universally negative.

In the year since we conducted that survey, it seems that the overall perception of Scottish Government has not significantly changed. The graph below shows the level of satisfaction with Scottish Government’s performance on a number of issues. The highest level of satisfaction was only 12% and that was on understanding the scale of the problems facing local government finances. For three questions, measuring satisfaction on honouring the terms of Verity House, delivering a sustainable funding system and considering local government in wider policy decisions, not a single respondent answered that they were happy.

“It is not only underfunding but a lack of respect and understanding on the role of local government.”

In addition to these stark figures, only a single respondent agreed with the statement that “The Scottish government has listened to the needs of the sector when forming the budget.” And only two agreed that “The Verity House Agreement has improved the working relationship between Scottish and local government.”

“The Verity House Agreement can only work as a well-intentioned agreement if both sides have good intentions. The Scottish Government have not acted with good intentions, have sacrificed the sustainability of local government finances for short-term political expediency and have demonstrated little understanding of the real pressures councils face.”

“What actually transpires in practice is far more important than any agreement.”

However, there was one way in which the Verity House Agreement was said to be important by one respondent:

“The Verity Housing Agreement is really important. Without it , there is nothing to hold the government accountable to.”

This is a useful point, because of the clear principles in Verity House: local by default, the removal of ring-fencing, and “no surprises,” it is now possible to hold Scottish Government and local government to these principles in a way that was previously more difficult. This is a view that was supported in the recent Verity House Stocktake. However, given the institutional strength of central government in comparison to local government in Scotland, a real outlier in international terms, it is fairly simple for Scottish Government to take actions that contravene the letter of Verity House without local government having any means to seek redress.

Finally, we asked respondents to examine the impact that local government could have in a situation where they were sufficiently resourced. There was a huge range of different answers, focussed on prevention, community empowerment, and achieving the shared objectives of local and Scottish Government.

To start with, there were answers that echoed the principled outlined in the Christie Commission on the future delivery of public services, which emphasised the importance of prevention activities as a means to improve citizens’ lives, tackling problems (in health, crime etc.) before they begin, and reducing the costs of “failure demand” that arises from focus on the symptoms of issues rather than their causes.

“If properly resourced Councils could undertake much more preventative activity which would reduce upstream (and more costly) demand on Council and other public services such as health and police.”

Second, there were answers that focussed on the potential councils have as the stewards of place.

“It’s not enough for us to just be providing statutory duties, our communities rightly expect their Local Authority to be more than just the sum of its parts, they want it to reflect their goals and ambitions. That’s the added value you get when you have jobs in your communities, the cost of providing services is only a reflection of the value it provides.”

This is the place-shaping power of local government. Councils are closer to their citizens than the Scottish Government or certainly the UK government, and as such they have the potential to shape places in the way that communities want them to be shaped. But, although they have the potential to do this, the reality is that they do not have the resources, and will instead spend their time and resources on coping with outstanding pressure from a small number of core statutory services.

Finally, there were responses that spoke to the potential of local government to deliver their shared priorities with Scottish government.

“If properly resourced, local government can play a key part in delivering joint priorities including growing the economy and supporting healthy lives.”

“I appreciate the challenges that the Scottish government face but they need to prioritise local government if they want to achieve their objectives.”

The recent programme for government, which focussed on eradicating child poverty, economic growth, tackling the climate emergency and improving public services, made this abundantly clear, as did the Verity House Agreement before it: Scottish and local government want to deliver for their citizens, their core priorities are one and the same. The evidence from this survey suggests that local government has the motivation to tackle these shared challenges, but lacks the resources, resilience or sufficient flexibility to do so.