Councils across Scotland are facing a collective hole in their finances amounting to nearly half a billion pounds for the coming year, as a trade union warns the shortfall will threaten further cuts to services. New research by Unison found that across the nation’s 32 local authorities, the predicted funding gap for 2024/25 stands at £487.8 million.
It is one of the biggest shortfalls of any nation or region across the UK, with only London and the south east of England facing bigger shortfalls in their finances. However, when measured as a proportion of predicted net revenue budget, Unison said the situation in Scotland means the gap in Scotland accounts for three per cent of the expected budget . That is the lowest proportion of any UK nation or region, and well under the UK average of 4.
96 per cent. Across the UK, Unison said that the predicted funding gap facing all councils is in excess of £4 billion, a figure it said was “way beyond” any previous estimates. It warned that “massive cuts” were likely to essential services and public sector jobs as a consequence, with local authorities also forced to sell off land, buildings, and other capital assets in an attempt to balance the books.
The analysis, detailed in the union’s report, Councils on the Brink, shows Scotland’s most northerly local authority is among those UK councils faced with one of the largest predicted funding gaps as a proportion of its predicted net revenue budget. The estimated £48.8m gap at Shetland Islands Council accounts for 23.
7 per cent of its predicted revenues. Elsewhere, Scotland’s largest local authority, Glasgow City Council, is said by Unison to be squaring up to a £50m funding gap for 2025/26, although with a predicted net revenue budget of almost £2bn, that accounts for around 2.6 per cent of the city’s budget.
The funding gap measures the difference between each council’s income and the amount needed to maintain their promised service levels. But as the shortfall grows between the funding local authorities need and what they actually have to spend, Unison pointed to a “potentially catastrophic and far-reaching effect upon communities.” Its UK-wide report warned that failure to rectify the growing problem facing councils up and down the country could lead to “the widespread collapse of local government,” with vital services such as refuse collection, recycling, libraries, and leisure centres hit even harder.
Without urgent support from the UK government and devolved administrations, the union is warning that the combined funding shortfall across the UK could balloon to £8.5bn by 2026/27. All of the councils facing the largest funding gaps are in England.
Hampshire County Council, for instance, which has already closed 70 children’s centres between 2010 and 2023, must reckon with a predicted gap of £132m, according to Unison. Bradford Council, which closed 14 council-run youth centres over the same period, has a predicted gap of £126.2m.
Birmingham City Council, which is currently delivering major service and job cuts after issuing a section 114 notice, is facing a £118.8m shortfall. The Scotland-wide funding gap identified by Unison is lower than the figure cited earlier this year by the nation’s public spending watchdog.
In May, the Accounts Commission said local authorities would have to deal with a collective gap of up to £585m in 2024/25, and said a near six per cent increase in Scottish Government revenue funding to councils totalling £13.2bn masked “significant underlying financial challenges and strain,” with almost all the increases in funding ring-fenced for policies and to cover the costs of pay increases in 2023/24. The commission also predicted that the Scotland-wide collective gap would increase to £780m by 2026/27.
Unison’s general secretary, Christina McAnea, said: “Councils are teetering on the brink of financial disaster. Countless essential services and very many vital jobs are at risk, with terrible consequences for communities across Britain. “After 14 years of ruthless austerity, the very fabric of local society is under threat.
Councils are quite simply the linchpin of local areas, so when services go, many people are left vulnerable, with no one to pick up the pieces. “Local authorities were clobbered by the previous government, whose harsh financial settlements left councils with no option but to sell off the family silver, auction off green spaces, close key community facilities and let thousands of workers go. Only swift and decisive action to stabilise local finances will do.
” She added: “Labour has inherited a mess, with essential services battered and bruised. The new government understands the value of healthy public services and the role they can play in generating economic growth, in a way its predecessors simply didn’t. So as tough as the financial situation may be, ministers cannot ignore the terrible plight of authorities of every political persuasion.
There’s an unquestionable need to turn the page on the destructive cuts of the past and invest in services and staff to help councils rebuild Britain.” Unison’s report, which coincides with the first full day of the Trades Union Congress in Brighton, was compiled using an analysis of councils’ own financial forecasts and responses to freedom of information requests sent by the union between May and September..
