Forbes warns against high council tax rises
Local authorities should not need to impose high council tax rises on households as a result of the Scottish Budget, the Deputy First Minister has said.
The Scottish Government announced funding of £15 billion for local authorities in its draft Budget in December – a figure welcomed by councils.
But years of funding worries has led to a “challenging” future, according to a report from the Accounts Commission released on Tuesday.
The watchdog said councils are becoming overly reliant on finding savings to plug funding gaps.
The findings come as the Times reports a survey from the Local Government Information Unit showing 20% of Scotland’s 32 councils could increase local taxes by 10% or more, with all of them looking at rises ranging from 5% to 12%.
The settlement is the highest that it has been in recent times and that should mean that councils do not have to increase council tax at the rate they might have been anticipating
Ministers have repeatedly warned against such increases, pointing to the record annual settlement.
Speaking to BBC Radio Scotland on Tuesday, Deputy First Minister Kate Forbes said: “The settlement is the highest that it has been in recent times and that should mean that councils do not have to increase council tax at the rate they might have been anticipating.
“It means that households are protected from higher increases because of that record settlement.
“I will not in any way dispute that the last 14 years of austerity have been extremely difficult, but right now we have prioritised in this Budget record investment for the NHS – £23 billion – record investment in councils – £15 billion – record investment to keep culture sectors, and so on.
“This is a Budget that proves that we are serious about investing in the public services that serve the people of Scotland.”
In its report, the Accounts Commission warned using reserves and other non-recurring measures is “unsustainable and is only a temporary plug for a budget gap in that one year”, with 12 authorities making unplanned use of reserves in 2023-24.
The commission said the financial outlook for councils remains challenging, despite an increase in overall revenue and capital funding for them in 2024-25 and the Scottish Government’s Budget proposals in December 2024 indicating a further real-terms uplift in funding for 2025-26.
It noted there is still uncertainty as to how increased employers’ national insurance contributions, announced by the UK Government, will be funded.
The Convention of Scottish Local Authorities estimates these will be an additional £265 million cost pressure for councils in 2025-26.
Jo Armstrong, who chairs the Accounts Commission, said: “Scotland’s councils face a challenging future, with significant financial risks and uncertainties.
“This has been compounded by pressures outwith their control, including ever-increasing demand on services and inflation.
“An expected increase in funding for the year ahead doesn’t cancel out the urgent need for transformation, at a pace and depth we’ve not yet seen.
“With services already being impacted, councils must be clear with communities the scale of financial challenge being faced. Working with communities to deliver differently is vital.”
A Scottish Government spokesperson said: “The 2025-26 Budget gives Scotland’s councils record funding of more than £15 billion, up more than £1 billion on the previous year – the highest increase in recent times.
“This increased funding settlement will allow councils to deliver pay rises agreed for all local government workers, including teachers, social care workers, refuse collectors and early years assistants.
“Alongside additional funding for local authorities to spend as they require for their communities, there is targeted investment in teacher numbers, additional support for learning and councils’ work to tackle the climate emergency.”
