ALMOST one quarter of Scottish councils have warned of effective bankruptcy as every single council plans spending cuts to services.
New research from Local Government Information Unit (LGIU) Scotland revealed that almost one quarter of Scottish councils fear they will not be able to balance their budgets in the next financial year.
This is despite the fact that every council in Scotland said it planned to cut spending in the next year, with around two-thirds cutting spending on education, parks and leisure, and business support.
Alongside planned cuts, nearly all (97%) said that they would be increasing fees and charges, and nine in 10 (89%) that they would be spending reserves. This comes as the Scottish Budget is set to be announced next week, amid reports the Budget has not yet been finalised.
The proposed council tax freeze announced by the Scottish Government has been heavily criticised, with the research from LGIU stating that it has contributed to an increasingly poor relationship between the Scottish Government and local government.
Had it not been for the Scottish Government decision to unilaterally declare a council tax freeze, the research found every council would have raised council tax, most often by a significant amount.
Almost all (90%) of respondents said the cost of living crisis had contributed to the issues faced by councils, which impacted wages, utilities and inflation rates, putting additional demands on services.
Adult social care and children’s services were considered the greatest shortest-term pressures on council finances, and adult social care the greatest long-term pressure. LGIU is an independent, local authority membership organisation which operates across the UK, Ireland and Australia.
The organisation launched the survey to coincide with its fortieth anniversary.
Jonathan Carr-West, chief executive of LGIU Scotland, said the Scottish Government needed to work with councils to “restore trust”.
Carr-West continued: “Councils in Scotland are raising a red flag that council finances are completely unsustainable.
“With nearly a quarter of councils warning they may be unable to fulfil their statutory duties, it is only a matter of time before we see the first council in Scotland declare effective bankruptcy.
“Scottish Government must work productively with councils to restore trust, remove ring fencing, identify revenue streams and reform core funding for councils to ensure residents, and particularly the most vulnerable in communities, are able to access the services they need and pay for.”
This comes as the Scottish Trades Union Congress (STUC), Scotland’s largest trade union body, placed increased pressure on the Scottish Government to prioritise workers in the Scottish Budget.
The trade union body called for the introduction of wealth taxes to replace the council tax, with a proportional property tax and introducing a super tax on private jets.
It also published a report which concluded that changes to income and property taxes from April next year could raise an additional £1.1 billion for Scotland’s public services.
Commenting, STUC general secretary Roz Foyer said: “The Scottish Parliament must listen to the voices of workers and implement a budget that works for all of us.”
The Scottish Budget will be published on December 19.
