Councils call for extra £1.5bn and 'no cap' on council tax

The coalition of local authorities has also warned that the "burden" placed on officials by dealing with emergency support grants during the pandemic "reduces councils’s ability to respond to local needs and demands".

Finance Secretary Kate Forbes is set to deliver her budget on January 28 - while Chancellor Rishi Sunak’s budget will not take place until March 3.

Councils received £10.7 billion in the 2020-21 base budget. But Cosla claims that in order for local authorities to be given “fair funding” next year, an additional £1.5 billion will be needed for revenue budgets - while councils will require a total of £637 million for capital projects, a 330 million increase from this financial year.

In a new briefing paper, Cosla has warned that this financial year, “once all Covid-related funding is taken into account, a gap of around £360 million still remains”, which it stresses is “on top of already strained budgets”.

The document adds that “loss of income this and next year remains a key concern”, highlighting that depleted revenue streams includingparking charges, sports facilities and cultural attractions brought on by Covid-19 restrictions means they are “unlikely to recover until much later in 2021/22”.

Cosla's plea for fair funding in next year's budget

Cosla says that in real terms “there has actually been a reduction in core grant funding from the Scottish Government since 2013/14, but increased policy demands” - with the organisation warning “this is not sustainable to meet growing demand”.

Councils are calling on ministers to hand over “any additional Covid-related funding for 2020-21 from the UK Government” to try and bridge the £360 million gap that exists for the current financial year.

Cosla has also demanded that “any cash increase for 2021-22 from the UK Government must be passed on”, adding that additional costs for social care should be met from health consequentials from Westminster during the 2021-22 financial year after adding an extra £300 million onto councils’s finances this year.

Authorities have also stressed that “all known Scottish Government policy commitments must be fully funded" – thought to total around £164 million outside of the core budget for next year.

In her budget last year, Ms Forbes announced that council tax increases for 2020-21 would be capped at 4.84 per cent, which she said would “increase total council tax revenues to be spent on local services by a further £135 million” if all authorities hiked the charge by the full amount allowed.

Earlier this month, Citizens Advice Scotland issued a warning that “Scotland is potentially facing an explosion of council tax debt in 2021".

The organisation revealed that for 2019/20, 2,257 people appealed for advice with a complex debt issue involving council tax, owing a cumulative £6.8million in council tax arrears.

Worryingly, the average debt owed was over £3,000– almost three times the average council tax bill of £1,201.

But Cosla’s briefing paper has now called for “no cap on council tax”, warning “this must be a truly local tax”.

READ MORE: Scottish councils draw up blueprint for tax-raising powers amid funding deficit

It adds: “The settlement should respect the efforts across ‘one workforce’ and allow councils to make a pay award that aligns with all other parts of the public sector”.

The organisation has demanded “an end to small pots of ring-fenced, highly directed funding outwith the settlement” adding that “local government’s wider role must be respected and funded - this includes adequate capital for affordable housing”.

Cosla's demands for the 2021-22 Scottish Government budget

Cosla’s resources spokesperson, Gail Macgregor, said: “This year, across every community in Scotland, local government’s essential role has been magnified and once again we have delivered for our communities.

“Nobody in Scotland has been unaffected by this pandemic and the financial impacts of Covid-19 are severe. Individuals, families and businesses have all felt the effects and continue to look to councils for support every day.”

READ MORE: Coronavirus: Top-up grants to help businesses 'weather the storm'

She added: “Sustaining this lifeline support is placing extreme pressure on already strained budgets and without fair funding for local government this year, the consequences for the most vulnerable in our communities would be unacceptable.

“That is why we need fair funding for 2021/22 that respects our communities. Without this, there will be further cuts to services, reductions in spending locally, increases in the inequalities exposed by the pandemic and a much slower recovery.”

During the pandemic the Scottish Government has passed on around £1 billion to local councils from the £8.6 billion of extra funding from Westminster.

Since March, Scottish councils have also handed out more than £1.3 billion of business grants to help traders mitigate the impacts of the pandemic.

But Cosla has warned that “the way in which Covid funding is being provided by the Scottish Government presents challenges and restrictions”.

The organisation says that “as of the end of December, there were 30 different ring-fenced/directed pots of funding” which it claims “all come with an additional administrative burden” for councils.

It adds: “This approach reduces councils’s ability to respond to local needs and demands.

“Funding has been ‘drip fed’ between April and December, creating uncertainty and instability.”

Cosla president Alison Evison

Cosla president, Alison Evison, said: “Local government’s role on behalf of our communities cannot be under-estimated anymore. The Covid pandemic has shown exactly how much the public rely on us as leaders and as providers of vital services.

“The reality is that in recent budgets, the Scottish Government has chosen not to provide enough funding for the essential services that communities rely on day in day out.

“On top of this, this year we have had to contend with Covid-19 which has seen the inequality in our society grow.”

She added: “Our ability to recover from this and continue to deliver for Scotland’s communities depends on a change of emphasis from Scottish Government that provides fair funding for council services.

“If we are to truly recover from this pandemic then Local Authorities must receive a fair settlement.”

Nicola Sturgeon told The Herald that Cosla have every right to make their case ahead of the budget being agreed. 

She said: “Cosla and our local authority partners are doing a great job just now and they are an integral part of our response – I want to t hank everybody working in our local authorities for that. 

READ MORE: Coronavirus: Nicola Sturgeon likely to extend lockdown

“The point I’m about to make is not meant in any way to minimise the financial pressure on councils – but we are in a pre-budget period right now. 

“The Scottish budget will be presented to parliament later this month, so it is usual at this time for councils and Cosla to be making financial bids and demands on government and it is perfectly legitimate for them to be doing so. 

First Minister Nicola Sturgeon

“These decisions will be taken in the context of the budget and that will include any decisions around caps on council tax.” 

The First Minister also stressed the support the Scottihs Government has provided to councils during the pandemic. 

She added: “We have made available to local authorities, over the course of the pandemic, quite significant additional funding which has been obviously for specific purposes, but we have also made some additional funding available to councils to use on a discretionary basis. 

“We also, at an earlier stage, brought forward some scheduled payments to councils to allow them to better manage their own resources. 

“We continue to have discussions with councils about how collectively and jointly we best manage the pandemic while we are in it but also as we start to recover form it as well.”