MSPs say dealing with financial challenges facing local government will be ‘major task’ of next Parliament


Tackling the huge financial challenges facing local government exacerbated by the Covid-19 pandemic will be a "major task" and addressing them should be an early priority in the next parliamentary session, according to the Scottish Parliament’s Local Government and Communities Committee.

In a letter to the Cabinet Secretary for Communities and Local Government, Aileen Campbell MSP, the Committee stressed that the local government sector is ‘still operating in crisis mode’ and that councils need financial security "as much as possible" in the 2021-22 Scottish Budget.

The Committee noted that the public health emergency created by Covid-19 has made long-term strategic thinking more challenging, with councils simply hoping to reach April with services intact and without "dipping too deeply into their reserves".

COSLA told the Committee that councils faced an estimated a £500 million budget shortfall and have lost between 50% to 90% of their annual incomes The Committee also heard that local authority housing debt now stands at £3,8 billion. In its letter, the Committee seeks clarity on the accuracy of these figures. It also asks the Scottish Government for its assessment of the resiliency of local services, as the country enters winter with services already under strain from a second wave and a return to stricter lockdown restrictions.

The Committee also wants to hear the Scottish Government’s view on concerns, raised by Shelter and the Chartered Institute of Housing, of an "inevitable" increase in evictions when the protected period for tenants ends.  

Positive developments during the pandemic are also highlighted, such as new forms of partnership working and advances in the delivery of services online. The letter asks the Scottish Government to work in partnership with councils and the voluntary sector to ensure new ways of working are locked in permanently, with an increased focus on flexibility and getting things done for people in need.

Committee Convener James Dornan MSP said:

"The Covid-19 pandemic has reinforced the importance of local government as the sector closest to communities. People delivering local services have been under immense pressure since lockdown began in March.

"Work to address these challenges needs to be urgent. The Committee welcomes the £480 million estimated by the Accounts Commissioned to have flowed to local government since the pandemic began, however councils remain under financial strain. We want to hear whether the Scottish Government agrees that there is still a funding gap and, if so, what it proposes to do to plug it.

"We also want the Scottish Government to address concerns about a predicted rise in evictions post-pandemic.

Local government was tight well before the pandemic was on the horizon and the Committee has noted for some years now that councils have been having to do "more with less". When the worst of the crisis is over, we need a national discussion about a future framework of local government funding and whether we need a new funding formula for individual councils in the sector." 

The Convener added: 

"That essential services continued to operate during the pandemic is testament to the hard work of local government workers and the dedication of council leaders and management. We also want to applaud the efforts of third sector workers, carers and volunteers for their ability to adapt and persevere through an immensely challenging year.  

"It is important to continue new ways of thinking and working after the pandemic, and we hope central and local government can work together to support the good practice that has emerged since March."

The full letter is available here.




For more information on the work of the Local Government and Communities committee, visit the Scottish Parliament website.

The Committee issued a public call for view over the summer and received 28 responses. Pre-budget evidence was formally taken at three meetings: 

• 28 August (Accounts Commission)

• 30 September (Chartered Institute of Housing, Citizens Advice Scotland, Scottish Commission for Learning Disability, Scottish Council for Voluntary Organisations, Unison)

• 7 October (Comhairle nan Eilean Siar, Dumfries and Galloway Council, Aberdeen City Council, Cosla, the Scottish Association of Local Authority Chief Executives, Chartered Institute of Public Finance and Accountability Directors of Finance)

The call for views posed five questions: 

A. How has COVID-19 impacted the local government sector, in particular council finances? Which council responsibilities are most impacted?

B. Which parts of local government have been least affected or most resilient? 

C. What help will councils need in future from the Scottish Government or others to overcome the ongoing financial strain?

D. What can local government sector do, in the short and long term, to manage the financial impact of the crisis? What positive examples can councils and others share about the good work done at local government and community level to lessen the crisis? 

E. How soon do you think the sector will be back to normal? Or is this time for a "new normal" in the way we deliver some council services or practice local democracy? If so, what will it look like?

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