Financial challenges facing local government will be ‘major task’ of next Parliament, MSPs warn

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.

James Dornan MSP

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 Scotland 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 £480m estimated by the Accounts Commission 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.”