Scots braced for huge council tax rises as local authorities ‘struggling to cope’ with cost pressures

Scotland’s 32 local authorities face a budget gap of £1 billion at a time they are planning to reveal council tax rates for the year ahead.

Scots councils are “struggling to cope” and risk becoming financially unsustainable, auditors have warned.

The latest bleak assessment comes as town hall chiefs debate how much to increase council tax in April following huge hikes last year.

The Accounts Commission said today the country’s 32 local authorities face a budget gap of almost £1 billion by 2027 as the cost of delivering key services continues to climb.

The budget blackhole comes despite councils undertaking sweeping cuts in recent years that has seen numerous community centres, swimming pools and other facilities sold-off or closed permanently.

Auditors warned local authorities met 90 per cent of their savings targets last year but still reported a collective overspend on the costs of delivering services.

It comes after council leaders warned the recent SNP Government “does not deliver” for local authorities. Shona Robison, the Finance Secretary, announced a “paltry” two per cent rise in funding for town halls.

John Swinney later claimed there was no reason for council tax rises of eight per cent or more and insisted his Government and delivered a fair deal.

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Derek Yule, a member of the Accounts Commission, said: “Despite increased funding and income, councils are struggling to cope with the financial pressures they face. A growing gap between costs to deliver services and funding available is risking the financial sustainability of councils.

“We’re already seeing the impact on services – the pace of improvement is slowing, some services are being cut or are harder to access and there are growing levels of dissatisfaction from communities. Councils must fundamentally reconfigure how they operate and deliver services.”

David Phillips of the Institute for Fiscal Studies (IFS) has warned local authorities face seeing real terms cuts in future years and council tax rises of around eight per cent “just to hold budgets constant”.

Speaking to the Record, Swinney previously said councils had been given a “very strong settlement”.

He added: “The Finance Secretary said that we’d given an above inflation settlement to local government, and she encouraged local authority leaders to apply reasonable increases in the council tax. And I don’t think a figure of eight per cent would be a reasonable increase in the council tax.”

The First Minister suggested council tax rises of three per cent would be “reasonable”.

A Scottish Government spokeswoman said: “We recognise the financial challenges that local authorities face which is why the draft 2026-27 Budget provides Scotland’s councils with record funding of almost £15.7 billion, building on continued increases in recent years as confirmed by the Accounts Commission.

“The Scottish Government will continue to work in partnership with local government to address the challenges facing councils and ensure we are operating sustainable public services that communities expect and deserve.”

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