Scotland Finance

Scottish Budget: significant challenges lie ahead for councils


Following yesterday’s Scottish Budget, LGiU Scotland Briefings Associate George Black outlines the surprises contained in the budget and the further cuts facing local government. George Black is Visiting Professor in the International Public Policy Institute at the University of Strathclyde and former CEO of Glasgow City Council. 

On 15th December, the Scottish Finance Minister announced his draft budget plans for 2017/18, the first budget since the Scottish Parliament took on new tax powers. The headline figures indicated further cuts for local government, although the actual level will only become clear in the coming weeks.

One major surprise was the decision by Scottish Government to ditch plans to use the income from changes to higher council tax bands to increase funding for education. Instead, the money raised will now remain with councils, with the resources for schools being found within the Scottish Government’s overall budget.

But, of course, beneath the headline numbers there will be variation in how individual councils have fared in the financial settlement, and Directors of Finance will now be examining the detail to determine the actual impact on their authority. They will be particularly concerned about conditions relating to teaching numbers and council tax rises, but also the commitment to expand the provision of early learning and childcare.

Cosla had said that this “would have a disastrous impact both on local communities and services”, and that “a cut to local government means a cut in teaching assistants, a cut in levels of care for all our elderly relatives, cuts for the homeless as a freezing winter starts to bite, and cuts to the gritting of roads at a time of freezing temperatures when trains and the wider transport network is struggling to cope”. Cosla also highlighted that “the Scottish Government has a political choice here and with additional cash of £418 million for next year there should be no cut to local government”.

This focus on the impact on local government services, and political choice, is in sharp contrast to last year’s response which focussed on a predicted loss of 15,000 jobs. This change of focus may also partly be because councils have since claimed that 7,000 jobs have gone in local authorities over the past year. Still a significant number.

Scottish Government claimed that councils had been treated “very fairly” and over the medium term “have experienced the same reduction in funding as was imposed on Scotland by Westminster”, and referenced a recent Audit Scotland report covering the period 2010/11 to 2016/17 to support this claim.

Decisions will now have to be taken by individual councils about the level of cuts to services and the actual areas of service to be cut. The level of council tax increase, if any, will also have to be decided, up to a maximum of 3%. And you can expect a large number of councils to draw on “usable reserves” to balance the books. There are, after all, council elections to be fought in May 2017.

As recently highlighted in an Audit Scotland Report, how well placed individual councils are to address funding gaps will be a combination of the relative size of the funding gap, the reserves they hold, and their ability to identify and make savings and to service debt.

As a minority government, Scottish Government itself has some work to do to gain support for its plans from one of the other political parties. In this context it has already received a setback in its plans to set thresholds for income tax bands. The next couple of months will undoubtedly be a testing time for councils and Scottish Government alike.