According to the Local Government in Scotland Overview 2023, councils worked well with their partners to address the impacts of Covid-19. They need to implement the lessons learned during the pandemic in order to now cope with reducing budgets, growing demographic and workforce pressures, and declining performance across some services.

The Commission said the Scottish Government and COSLA urgently need to finalise the planned ‘New Deal’ settlement for local government, allowing for more long-term planning, flexibility and transparency in councils’ budgeting process. Currently, an increasing proportion of funding is ringfenced for national priorities; this constrains councils from making decisions about how to best use money to address the local needs of their citizens and communities.

According to the report, councils must now rethink how they work together, and with local partners and communities, to provide financially sustainable services whilst tackling national issues such as climate change, child poverty and inequalities. Few councils provide services jointly or share support services across different councils.

Councils also need better data in order to ensure that they can demonstrate their services are meeting their citizen’s needs.

Tim McKay, acting chair of the Accounts Commission, said: “The New Deal for local government, agreed between the Scottish Government and COSLA, is long overdue. Putting this in place will give councils longer-term financial stability, supporting them to make decisions and make the fundamental changes that are urgently needed.

“Councils have gone beyond the point where making savings is enough. If the change needed doesn’t happen now, some services will continue to get worse or deeper cuts will be made. This will impact communities and individuals that are already at crisis point with the effects of inequality and persistently high poverty.

“Councils need to have open and honest conversations with their communities and staff about the future of council services.”

COSLA president Shona Morrison has said that councils are already at the forefront of service provision and are probably the most transformative and collaborative part of the public sector in Scotland.

The president also called on other parts of the public sector to be as radical and transformative as Scottish local fovernment and praised how well it collaborates with partners in particular.

Councillor Morrison said: “As today’s report recognises, Councils worked well with their partners to address the impacts of Covid-19.

“The report also recognises the huge challenges Councils face due to budget constraints, increased cost pressures and demand, and increases in directed and ringfenced funding. As we have all seen, increasingly difficult choices are required about spending priorities and service provision given reducing budgets coupled with growing demographic and workforce pressures.”

Councillor Morrison added: “In addition, we are working with the Scottish Government on a ‘New Deal’ for Local Government, which will enable more long-term planning, more transparency in the budget setting process and a reduction in ring fenced funding for national priorities which constrains councils from making decisions about how to best use money to address the needs of their local communities.

“Only on Monday of this week, in our response to the Finance and Public Administration Committee’s call for views on public service reform, we highlighted the significant efficiencies and reforms that councils across Scotland have already made in response to successive real-terms cuts to core funding for over a decade.

“We also welcomed the Scottish Government’s renewed commitment to work collaboratively with Local Government to deliver on shared priorities, including tackling child poverty and achieving a just transition to net zero.

“Today’s report from the Accounts Commission and our response to the Finance and Public Administration Committee deliver exactly the same message. Councils are uniquely placed to be the key partner in the Scottish Government’s public service reform programme and should be further empowered to better support local service delivery.”