Scottish councils' budget challenges cannot be resolved by staff cuts and increased charges, Accounts Commission concludes

Councils have been effective in balancing their budgets to date but face increasingly difficult decisions to continue making ends meet, the Accounts Commission report.

In its annual overview of local government, the commission reports that councils in Scotland improved performance in areas such as educational attainment, housing and waste recycling in 2014/15, despite making savings to meet their budgets.

But it said the scale of the challenge in 2016/17 and beyond had “significantly increased” because of this year’s local government funding settlement, which would have “substantial implications” for public services, councillors and council employees.

The commission charts a five per cent drop in revenue funding in the next financial year, bringing a total real terms reduction of 11 per cent since 2010/11.

The integration of health and social care through joint boards, which the Accounts Commission describes as “the most far-reaching public service reform since the establishment of the Scottish Parliament” will be a key challenge for next year.

However, a one-year financial settlement, cost pressures, increasing demands on services from an ageing population, the Community Empowerment (Scotland) Act and elections in both 2016 and 2017 were also noted among the challenges facing local councils.

The report calls for councillors to consider all viable options and be open to fundamentally changing the way their council has provides services to deal with these demands.

“To date many councils have balanced their budgets by making incremental savings to existing services, reducing staff numbers or increasing charges. These are neither sustainable nor sufficient solutions given the scale of the challenge facing councils,” the Accounts Commission reports.

Chair of the Accounts Commission Douglas Sinclair said: "Councils have coped well so far but the scale of the future challenge requires longer-term planning and a greater openness to considering alternative forms of service delivery.

“What is important for the public is that whatever choice a council makes about how to provide a service, it can demonstrate that the choice represents best value both in terms of cost and quality”.

Councillor Kevin Keenan, COSLA’s finance spokesperson, responding by saying:  “I welcome the recognition in today’s report that councils have been effective in balancing their budgets to date, despite increasing financial pressures. 

“As the report recognises, councils not only face financial challenges, not least of which being the £350m, 3.5%, cut to their 2016/17 budgets, but they also face rising demand in services from an ageing population.  The pressure on delivering services with these challenges cannot be under-estimated.”