COUNCILS in Scotland are facing a £1 billion budget gap amid a financial crisis the scale of which they have never seen before, it has been warned. 

Johanna Baxter, head of local government bargaining at the trade union Unison, insisted there is a "fundamental need" for more funding and greater power over how this money is used. 

She made the comments while giving evidence at Holyrood's Local Government and Communities Committee.

Ms Baxter said councils were already facing a £205 million gap at the start of the financial year. 

Council umbrella body Cosla has since estimated the coronavirus crisis will cost local authorities £739m.

Arms-length bodies will be hit by a further £121m, Ms Baxter said. 

She told MSPs: "The financial crisis local government is now in is of a scale that we have never seen before."

She said councils require long-term financial stability from the Scottish Government and greater discretion over how they spend their funding. 

Elsewhere, Callum Chomczuk, national director of the Chartered Institute of Housing, said local authorities are now owed more than £100m in rent arrears.

He told MSPs: "We saw rent arrears in the local authority sector increase by £12m over the last four, five months. 

"That is significant. Local authorities are now managing over £100m of rent arrears.

"For every pound that we don't raise in rent, that's a pound that we can't use to keep rents low; that's a pound that we can't use to improve services; that's a pound that we can't use to actually build new homes. 

"So £100m has a significant impact on local authority services that they are going to have to manage."

Mr Chomczuk also said there has been an increase in monthly homelessness applications since the pandemic began.

He said: "Back in April, we had a little under 2,300 applications for homeless services. 

"In the most recent data set for August, there's a little under 3,000, so that's 700 more monthly applications in that time."

He said there was a "huge downward pressure" on homelessness applications due to eviction protections and the furlough scheme, meaning they may be "artificially low". 

He added: "The policies in place are keeping homelessness applications down, but as the furlough scheme ends and the eviction scheme comes to an end at some point in the future – there's no absolute date on that – we are likely to see a big impact on services."