Fears for 1000s of Scots jobs over £1bn council budgets black hole

Its president Shona Morrison has warned it is “inevitable that current spending plans will lead to job losses” and said that current Government spending plans could see council services “either significantly reduced, cut, or stopped altogether”.

An analysis prepared before the very latest round of expensive public sector pay increases and in response to the soaring cost of living, by Cosla, the Society of Local Authority Chief Executives (SOLACE) and the Chartered Institute of Public Finance and Accountancy raised the spectre of thousands of job losses and service cuts in the wake of the Scottish Government’s Resource Spending Review earlier this year which indicates there will be no increase to local government’s core funding in the next three years.

They said that what they consider is an effective 7% cut alone would mean there will be £743m less in real terms to spend on frontline services that matter most to communities – equivalent to 20,000 fewer local government jobs. This equated to 10% of the current workforce.

"As around 60-70% of local government’s budget is for workforce costs, the real terms pressure on core funding means councils are faced with tough choices –reducing or cutting services, closures with impacts within communities, job losses, or losing highly trained and well-developed staff to other sectors.

"Any additional 1% pay rise (over and above what councils have been able to budget for) could mean cuts of around 2,100 jobs across the local government workforce. That not only reduces the level of essential services that can be delivered, but it increases the pressure and demand on those left behind and means potentially a significant loss of experience and knowledge from the workforce."

Cosla, which represents Scotland’s 32 local authorities, has issued an “SOS call” to “save our services”.

The £1 billion shortfall council leaders say they are facing is equivalent to local authorities’ entire budget for early learning and childcare, or total net revenue spending on roads, transport, sport and culture combined.

It would also pay for about 17,500 teachers – around 30% of the current total – Cosla said.

Deputy First Minister John Swinney will reveal how much funding councils will get in 2023-24 in the Scottish budget on December 15.

In September, it emerged taxpayers were forced to foot a further £200m every year to fund huge local authority staff pay rises and within days the Scottish Government said savings of £500m would have to be made following the pay awards.

Union sources said Cosla increased the pay pot from Scotland's 250,000 local authority workers from around £400m to £600m at the 11th hour allowing the lowest paid staff to get a pay increase of around 10 to 11% following the intervention of the First Minister.

A strike mandate which resulted in bin workers striking and a threat to shut schools through industrial action came after an initial 2% pay offer was presented earlier this year. A subsequent 5% offer was also rejected before the final agreement.

The increase in funding raised questions about how the pay rise was able to be funded days after Nicola Sturgeon and the Deputy First Minister John Swinney insisted there was "no more money".

The Scottish Government admitted it had effectively providing an extra £120.6m additional capital annually to fund the increase in salaries. In stating there was no more money ministers pointed out that the Scottish Fiscal Commission highlighted the overall 2022-23 Scottish Budget is 2.6% lower than last year in cash terms and 5.2% lower after accounting for inflation, primarily because of reduced Covid-19 funding and falling capital funding from the UK Government.

Cosla remains at the centre of a row over teachers' pay and the Educational Institute of Scotland (EIS) has announced it will strike on a further 16 days.

The consecutive days of action - split across every council in the country - are due to take place in January and February next year. Teachers in two local authorities will strike on each of the 16 days.

The union said members had been "forced to escalate" measures describing a revised pay offer as "insulting".

Education Secretary Shirley-Anne Somerville said their demand for a 10% pay rise was "unaffordable".

A new pay offer from employer Cosla - which would see rises of up to 6.85% for the lowest paid - was fair, Ms Somerville said. The EIS rejected an initial 2.2% pay deal in the summer.

Ms Morrison said council leaders appreciate “money is extremely tight”.

But she added: “With little room left to manoeuvre, the Scottish Government’s spending plans as they stand will see council services either significantly reduced, cut, or stopped altogether.

This, combined with the prospect of job losses, means the “critical work council staff do on prevention and early intervention will reduce significantly”, she added.

A leaked dossier from October predicted nearly 6,000 job losses in Scots councils in the next few years.

A Cosla survey conducted before the latest public sector pay rounds found that in the current year, 26 of the 29 councils reported funding gaps, ranging from £1m to £47m, with pressures arising from pay awards coming to £130m.

Councils were also estimating black holes of between £5m and £119m next year.

Eighteen councils predicted job losses, while nine local authorities expected a headcount reduction of 5,872 by 2026.

The study warned that the 5,872 figure may only be a third of projected job losses.

Cosla vice-president Steven Heddle said the flat cash deal “looked difficult for us” when it was announced in May, but rising energy costs and inflation since then mean “local government is now on extremely dangerous ground”.

Finance directors from all 32 Scottish local authorities have already written an “unprecedented” letter to Mr John Swinney to highlight their “immediate concerns”.

Mr Heddle warned: “Make no mistake, what we will now face is councils struggling to deliver even the basic, essential services that communities rely on.

“To put this into perspective, the estimated £1 billion gap for councils in 23-24 is the equivalent of the entire budget for early learning and childcare across Scotland, or 17,500 teachers.

“A funding gap of this magnitude will have an impact on all our communities, with the most vulnerable who rely on these services suffering the worst consequences.

Cosla resources spokeswoman Katie Hagmann said councils “are at a crisis point like never before”.

She added: “The impact for communities is serious and needs to be reconsidered. The financial impacts for other parts of the public sector are also serious.

“When councils can’t focus spend on prevention, for example on preventing ill health, services like the NHS will end up spending significantly more money when issues become more serious.

“This really is an SOS call from Scotland’s councils – people in communities across Scotland will be pulled into further poverty and uncertainty without adequate funding for the vital services that support them.”

Responding to Cosla, Mr Swinney said: “The Scottish Government recognises the crucial role councils and their employees play in our communities across Scotland and the challenging financial circumstances they face.

“The Scottish Government’s settlements from the UK Government have suffered a decade of austerity with average real terms cuts of over 5% equating to a loss of £18 billion.

“Despite this, local authority revenue funding is £2.2 billion or 22.9% higher in cash terms in the current financial year than it was in 2013-14.

“Future spending decisions will be outlined as part of the 2023-24 Scottish budget on December 15.”

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