Local Government ExplainedA budget delay butterfly effect: how the late UK budget will impact Scottish councils
Martin Booth, LGIU associate
In this article, Martin Booth, former Executive Director of Finance at Glasgow City Council, explores the impact that the UK budget’s late timing will have on councils across Scotland and their own budgets.
The recent announcement that the UK Autumn Budget will not be until November 26 has set alarm bells ringing in councils. The Scottish Government depends on the UK Government budget, and councils, in turn, depend on the Scottish Government setting their budget, which allocates funds to local authorities, before they can set their own individual budgets.
Local authorities are legally required to set their budget by 11 March each year. While this is a statutory deadline, councils really need to set their Budget by mid- to late February to allow time for council tax bills to be produced and issued. This is particularly the case where authorities start collecting council tax direct debits on 1 April.
If, as planned, Rachel Reeves opens her famous red box and delivers her budget on November 26 , it is highly unlikely that the Scottish Government will be able to produce a draft budget before Christmas, which means that the process of parliamentary scrutiny will not begin until January 2026.
Given that the Scottish Government are a minority government and scrutiny process in Holyrood is vital in amending the Budget, and to be one that can gain wider support in a vote to allow the Scottish Government to set a budget. This process will have to be squeezed into a matter of weeks when, ideally, this process would occur between September and early February. This squeezing of the timetable is neither good for transparency nor for supporting good decision-making.
While this timetable has been under pressure on a number of occasions in recent years, I do not think it has ever been this late in the year and may well bring significant additional risks to councils. In recent weeks, as a Holyrood election draws closer, further uncertainty and speculation have arisen about the risk of Scottish Government setting a cap on council tax. It’s speculation right now, but LGIU will pay close attention to the possibilities.
Councils will have been working on their budget since setting last year’s budget, Officers will be updating their Medium Term Financial Strategy based on a number of assumptions. Two key assumptions that significantly impact on the savings required to balance the budget are the pay inflation assumption and the assumption on level of funding from Scottish Government. Normally the draft Budget will give a very good indication of Scottish Government Funding with generally only minor (and usually positive) adjustments occurring in the later stages of the process. Where this is provided in December, that leaves councils with around 6 to 8 weeks to finalise budgets. The majority of councils also operate as minority or coalition administrations so this time period is vital to allow negotiation to produce a legal budget within legislative timescales.
It is quite possible that councils may only get draft budgets to work on in late January or even early February which does not leave suitable time for the budget process to be properly scrutinised.
I am sure that through the hard work and commitment of both officers and members from both local and Scottish Government that councils will set legal budgets within statutory deadlines but the risks to all parties of a rushed process should not be understated and the lack of understanding of the devolved process requirements from Westminster are of deep concern.
Finally, you can read more about the finance picture in Scotland here, and there’ll be more to follow in the coming months, including the annual LGIU Finance survey.
Related content
How are Scottish council finances faring in 2025 and beyond?
Was this article helpful or relevant for you?
