Spectre of savage cuts over Scots councils' £1bn budget black hole

But despite Deputy First Minister John Swinney's budget, Cosla says they have only ended up with £38m and they that this is "simply not good enough".

An escalation of teachers strikes over a pay dispute which will see a 16-day programme of strike action across local authorities starts today (Mon) with schools expected to close in the Glasgow and East Lothian council areas. It came after talks broke down when the Scottish Government and COSLA failed to come up with new money to end the dispute.

The Educational Institute of Scotland (EIS), the country’s largest teaching union, has announced a further escalation of action which include two days of national strike action in all schools and sectors on 28 February and 1 March, followed by a rolling programme of strikes for 20 days between 13 March and 21 April.

READ MORE:Scots teacher strikes to escalate after pay talks breakdown

Teaching unions have rejected a 5% pay increase, arguing for 10%. The latest offer includes rises of up to 6.85% for the lowest-paid staff.

Mr Swinney announced in his draft Budget that local government will get a funding boost of £570 million next year and the freedom to set its own rates of income tax.

But COSLA says that only £38m of this can go towards pressures such as inflation, pay and service demand with the rest committed to policy commitments that are already in the system, including £100m to meet Real Living Wage commitments in social care.

And it indicated concerns of further pay disputes to come as it pointed out that a just 1% pay increase to local government workforces next year would equated to £100m - over two-and-a-half times more than they money they have to play with.

They say that councils that provide services across Scotland from education, social care, roads and transport to housing, environmental protection, waste management and leisure services has seen a real terms cut in funding.

In its analysis in 2013-14, the Local Government funding settlement was worth £10.3 bn while in the current financial year, the Scottish Government has provided £12.5 bn.

The group said that while does equate to a £2.2 bn cash increase, it is heavily ring fenced and directed funding for core services and local priorities has stayed the same.

An analysis prepared before the very latest round of expensive public sector pay increases and in response to the soaring cost of living, by COSLA, the Society of Local Authority Chief Executives (SOLACE) and the Chartered Institute of Public Finance and Accountancy raised the spectre of thousands of job losses and service cuts if there was no inroads into filling the £1bn black hole.

Any additional 1% pay rise, over and above what councils have been able to budget for, could mean cuts of around 2,100 jobs across the local government workforce, they warned.

One council official told the Herald: "Unless more money is found I cannot see anything other than pain in terms of jobs and service cuts now."

COSLA said that to avoid socially harmful cuts, there needs further discussions with ministers to avoid an annual public argument about the reality of what can and cannot be afforded by councils.

It has spoken out saying that the way local government finances are being presented by Scottish Government is "potentially confusing for the general public" which can lead to "raised expectations and lack of clarity in our communities about the reality of what is now possible to deliver on the ground".

COSLA resources spokesman Katie Hagmann said: "The reality of having the same amount of money this year as 10 years ago for core services is a real terms cut. As well as increasing costs, this money is also now required to deliver more services than it was 10 years ago - Scotland’s population has increased, the number of households has gone up, COVID has left a legacy of support needs for the most vulnerable and as people live longer, their care needs have become more complex. This is just a snapshot of the demands being faced by councils, not to mention inflation and energy costs.

“This year, demand for services like social care is at an all-time high but given the range of pressure facing councils, they simply don’t have the resources they need to work towards keep people out of hospital.

"Each day during winter, there is quite rightly a focus on getting people out of hospital to free up beds – currently councils support just over 97% of patients to be discharged without delay. The problem is not just getting people out of hospital but stopping them going in. Councils simply don’t have the resources they need to provide the care packages or the interventions that prevent ill-health."

The £1 billion shortfall council leaders say they are facing is equivalent to local authorities’ entire budget for early learning and childcare, or total net revenue spending on roads, transport, sport and culture combined.

It would also pay for about 17,500 teachers – around 30% of the current total.

Ms Hagmann said: "COSLA’s key concerns are not only the socially harmful impact of cuts on our communities, but the way in which Local Government finance has been presented to them. The messaging is that there is more money for essential services each year despite this not being the case with councils asking communities about where they want to see cuts and reductions if essential services, like schools, roads, waste collection, child and adult protection, environmental health and social care are to continue to be delivered, every day of every year.”

The public spending watchdog has said that councils face their "hardest spending choices in years" to make up for budget shortfalls.

The Accounts Commission says local authorities may have to axe services as they struggle with inflation, the cost of living and the impact of Covid.

It says two thirds will have to use cash reserves to bridge the £400m gap.

The Scottish government said it had boosted council funding in real terms by £2.2bn since 2013-14 but this has now been refuted by COSLA.

Ms Hagman said: “Given the significance of our council services to the lives and livelihoods of everyone across Scotland, communities deserve clear and consistent facts in relation to local government finance rather than a yearly debate on how much money is or is not available. All our communities are concerned about is the level of service they can expect that there is support for the most vulnerable and want to ensure their local environment looks and feels as good as it can – all of these things are under threat because of successive years of underfunding.

"We owe it to our communities to be clear, consistent and transparent about the starting point and how much less, in reality, councils have to spend year on year on the services that our communities rely on.

The Accounts Commission, the independent body that holds councils to account, said that even with additional Covid-19 funding during 2021-22 councils had to make significant savings last year to balance their budgets.

Its report, prepared by Audit Scotland, warned many councils have also used reserves to bridge funding gaps and fund vital services. This is also expected to be the case in 2022-23.

The commission noted that £570m in additional funding for 2023-24, announced by the government in its December budget, will help councils address future cost challenges. But the report said further change and reform is required to ensure longer-term financial sustainability across all councils.

A leaked dossier from October predicted nearly 6,000 job losses in Scots councils in the next few years.

In September, a local government workers pay dispute which saw bins unemptied across Scotland and the threat of schools being shut in another strike, led to a further £200m every year being found to fund a huge pay rise.

Within days the Scottish Government said savings of £500m would have to be made.

Union sources said the local authority group COSLA increased the pay pot from Scotland's 250,000 local authority workers from around £400m to £600m at the 11th hour allowing the lowest paid staff to get a pay increase of around 10 to 11% following the intervention of the First Minister.

The increase in funding raised questions about how the pay rise was able to be funded days after Nicola Sturgeon and the Deputy First Minister John Swinney insisted there was "no more money".