A ROCK and a hard place. This is the space where Scotland’s councils can be found.
In its most recent report on Scotland’s councils, Audit Scotland (Overview 2020) notes that “demographic and social change is creating demand for services while the strain on budgets continues to intensify. National policy commitments are increasing and the stresses on other public services and third-sector partners add to the difficulties in delivering services.”
As if that is not bad enough, Covid-19 has ripped right through public services.
The bulk of council funding comes from the Scottish Government via block grant from its £49.3bn budget, a figure which represents a real-terms increase of 3.7 per cent compared with 2019/20. However, council funding from this source has declined in real terms by 3.3 per cent since 2013/14. Council funds dedicated to central government priorities have increased from £1bn to £1.5bn — a whopping 14.1 per cent of council money before deciding council priorities. This £0.5bn shortfall creates further pressure on councils.
The continuance of one-year budgets from Holyrood to councils is recognised by Audit Scotland as a real weakness in financial planning. Councils need a greater time span in order to plan for services.
Pressures mount
A good example of demographic pressures is spending on home care for older people, which has increased by 17.3 per cent, but the increase in number of hours is only 1.3 per cent, never mind the fact that the quality of that care is declining. With 10.9 per cent of Scotland’s population in 2019 in the 65 to 74 age group and forecast to increase by 23 per cent by 2043, the need for a fully funded national care service is pressing. This requires legislation and funding and needs to be a priority for Holyrood.
Alongside that demographic pressure, there are other pressures imposed on councils. A good example of this is that they have picked up the tab to pay for the living wage being paid to all workers in the care sector. It is right that it should be paid, but it is also right that it should be funded. Edinburgh has to find another £3.4m, meaning more cuts on top of cuts already made and more to come to the budget of its Integrated Joint Board.
The structural underfunding of IJBs — most are deficit run — is another strain on council finances and regularly provides real financial headaches for councils when setting their budgets. There is no sign that this will abate. This is a burden placed on councils by Holyrood but inadequately resourced.
Last year the Scottish government boasted of a £770m underspend, a huge increase from the year before, in its budget and it said that “not a penny would go back to Westminster.” It didn’t really go to Scottish councils either. The Convention of Scottish Local Authorities (Cosla) asked for fair funding for 2020/21 and instead got more cuts. It was given £495m by the Scottish government to meet its commitments but Cosla estimates that the real cost is £590m.
It is estimated that the gap for IJBs is some £200m, meaning cuts. But the topper is that it took Holyrood six weeks to agree to give the Barnett consequential money for councils to cope with COVID-19 and even then it was paid in weekly instalments over a further four weeks.
The contempt for local government could not be made any more clear, and there is no sign of any change.
Central SG control
A prime and shocking example of centralised control in Scotland by Holyrood is the reaction to COVID-19. Barnett consequentials have seen an additional £6.5bn given to Scotland. Between 18 March and 31 July, the Scottish Government announced spending and tax measures to tackle Covid of £5.3bn and at 31st July this year it expected to spend £4.8bn of which £4bn was set in the Summer budget revision.
The actual spend to date of the £5.3bn at end of July showed an underspend of £402m for business support and £178m for public services . The important point here is that not all the monies had been allocated at that date and that any underspends can be used for other purposes.
Now the City of Edinburgh has produced an interim financial report which puts the Covid bill for this year for the city at £89.6m. There are confirmed Covid monies to Edinburgh of £19.9m and taking other monies, including ‘savings’, along with using £19.6m of reserves, Edinburgh will still have a shortfall of £17.2m.
This will not be unique to Scotland’s capital but does illustrate the double bind that local government is in with COVID-19: tackling the problems created along with the cost of doing so with insufficient funding and still having to make cuts of £39m at the same time. This is where the unallocated monies and the underspend can be used especially now in this time of great need.
The fact that the money is hoarded and not distributed is telling about the views held on local government by Holyrood. The centre will not let go despite the need being articulated at a local level. This is where councils rely on Parliament to do the job for which MSPs are elected . Failure to do so will be a dereliction of duty. This is why Audit Scotland say that ‘public finances must adapt to COVID-19’. The test is there but is the will there to meet the task ?
Just Change means no change
There will be no change in council funding despite the launch of Just Change in December 2015. There will be no change except downwards in council funding from Holyrood despite the hard work on the front line against Covid-19. Councils were struggling with their budgets before the virus took hold. Cuts were being felt and services are being cut right now, whether Citizens’ Advice funding, or our friends in the third sector who are at the sharp end too. The exporting of budget cuts by councils to the third sector or their arm’s length external organisation cannot continue.
Councils are at breaking point. There is no sign that Holyrood has the political maturity, never mind the will, to recognise the predicament of local government and the peril faced by citizens who rely on the services they provide. This is a dereliction of duty on their part. When you are in between a rock and a hard place you are forced to make what Audit Scotland says are “hard decisions.”
It will take the combined effort of citizens, trade unions, councillors and parliamentarians working together to get Scotland’s councils out from between a rock and hard place.
This is an expanded version of an article first published by the Morning Star
Image: Kim Traynor via Wikimedia Commons CC BY-SA 3.0
Further reading: Local governance reform, James Mitchell on this site; Time for a rethink, Neil McGarvey, CCC
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