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In an alarming revelation, the Accounts Commission has disclosed that Scotland’s councils are currently facing a budget shortfall of £647m this year, despite an increase in government funding. The commission highlighted that the funding received by councils has failed to keep pace with inflation, escalating costs, and a surge in demand for public services. Consequently, local authorities are compelled to implement cuts, boost taxes, raise charges, and dip into reserves to bridge the financial gap.
Majority of the revenue funding allocated to councils, utilized for essential expenses such as payroll, schools, road maintenance, and waste collection, emanates from the government. For the fiscal year 2025-26, the Scottish government plans to allocate £15.2bn to local authorities, reflecting a 6% real-terms augmentation from the preceding financial year. Nonetheless, the mounting financial strains on councils are projected to result in a significant deficit of £647m between the anticipated expenditures and the funding received, as disclosed by the Accounts Commission.
To alleviate the financial burden, all local authorities in Scotland opted to augment council tax by a minimum of 6%, following the cessation of a nationwide freeze. The average increase stood at 9.6%, with Falkirk Council recording the steepest surge at 15.6%. The commission underscored that heightened bills for residents equate to greater expectations regarding local service performance, against the backdrop of an ageing populace that further stretches services such as caregiving. Notably, the gravest cumulative reductions were borne by corporate services (£68m) and children’s services (£58m). Authorities caution of impending cuts on the horizon, with the commission asserting that this course of action is untenable.
Commission member Derek Yule asserted to BBC Scotland News that council finances are presently in a precarious state, following years of grueling funding challenges. He stressed the imperative for councils to embrace transformative measures and collaborate with communities and stakeholders to usher in change swiftly. While there has been an uptick in overall capital funding primarily allocated for infrastructural projects, surging by 16% to £780m, it remains below historical levels. The commission forewarned that local authorities would heavily rely on borrowing to materialize their planned £4.7bn capital investments in 2025-26, notwithstanding the increase in capital funding
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