by Bill Heaney
Funding for councils such as West Dunbartonshire and Argyll and Bute is failing to keep pace with rising costs and demand despite a small real-terms increase in funding.
Councils’ revenue funding from the Scottish Government has gone up by two per cent. However, much of it is used to cover existing commitments such as teachers’ pay increases.
Overall, Scotland’s councils face managing a budget gap of around £529 million for their 2026/27 daily operating costs – around three per cent of their revenue funding. Capital funding is down by 15 per cent. That means councils will have to borrow more to build houses and other infrastructure, which heightens long-term financial risk.
Every local authority increased council tax by an average of 7.7 per cent for 2026/27, which should raise an extra £248 million.
Councils expect to bring in around £1.2 billion from fees and other charges, such as for leisure centres and some refuse services.
They are also planning to make savings of £180 million – around 1 per cent of councils’ total revenue budget. But these savings will increasingly affect the services people rely on.
Scottish Government Finance Minister Ivan McKee did a poor job of defending the situation in an interview – it was more like a shouting match – with Colin Mackay on STV on Tuesday night.
Social care makes up a high proportion of council spending and increasing demand for these services is putting major pressure on local budgets. Anticipated reductions in Scottish Government funding over the medium term are expected to intensify these pressures and increase the risk of councils becoming financially unsustainable.
Derek Yule, a member of the Accounts Commission, said: ‘As things stand, councils will continue to face increasing financial pressures unless they stop, reduce, or significantly redesign services.
‘Savings options are limited and will have to increasingly focus on changes to services people rely on. That makes it essential that councils talk to their communities about the difficult decisions they are facing.’
Commenting on the Accounts Commission report on local government budgets for 2026/27, which shows that Councils face a budget gap of half a billion pounds, Scottish Labour local government spokesperson Joe Fagan said, “Councils have been cut to the bone by the SNP over the years and communities are paying the price.
“This stark report lays bare the impossible choices the Councils are going to have to make to plug the gaps created by SNP underfunding.
“The SNP must work with Councils to make sure services are working as they should and start delivering fair funding for local government so Scots don’t keep paying more for less.”