COUNCIL bosses are preparing for potentially thousands of job losses in the new year in the aftermath of John Swinney's budget announcement last week.

It is understood the Convention of Scottish Local Authorities (Cosla), the umbrella body which represents councils, is working on an assessment of the reductions across their workforce and how they will impact on communities' economies, with the document expected to be published in January.

Councils had asked for £1billion more in funding but were given £550 million leaving them, they say, with a shortfall of £450m.

Mr Swinney unveiled a raft of headline policies in Holyrood on Thursday, including the rising of Scottish-controlled benefits in line with inflation (10.1%), increasing income tax on higher and top earners, and a six month pilot scheme scrapping peak time fares on rail travel.

He also set out plans to give local authorities complete flexibility in council tax, with no cap placed on what local authorities can seek to raise from their constituents.

But following a meeting to consider the draft settlement on Friday council leaders hit out on over a "massive real-terms cut in councils' core funding" which they said would lead to "socially harmful cuts to vital local services and the loss of jobs within local authorities”.

In a statement council chiefs said that “most of the supposed £550m additional funding is for existing commitments and added: “The £71m of uncommitted funding goes no way towards meeting the identified budget gap in council funding of £612m due to inflation, energy prices, and demand pressures.”

In a SOS message earlier this month, Cosla President, the SNP councillor Shona Morrison warned: "Seventy per cent of local government’s budget is spent on staffing, so it is inevitable that current spending plans will lead to job losses."

One initial analysis seen by The Herald calculated potential job losses could be up to 9700.

The figure was obtained based on the average council salary of £32,500. With 70 per cent of £450m amounting to £315m, if savings were made by targetting staff cutbacks, councils would have to lose 9700 posts to fill their funding shortfall.

In June, The Herald revealed that Scotland’s largest trade union Unison feared up to 40,000 jobs across Scotland's public sector under the four-year spending review unveiled by Finance Secretary Kate Forbes with the axe falling heavily on local government which includes frontline staff such as social workers.

Meanwhile, plans to cut the housing budget by £215 million will mean the Scottish Government will fail to deliver a joint pledge to deliver 111,000 new affordable homes, ministers been warned.

The reduction in spending in the sector has been highlighted by opposition politicians who say it will put vital construction jobs in the country at risk.

A report by the Fair Work Convention, published in April, found that some 79,000 more building workers would be needed by 2029 to insulate and retrofit properties with energy-saving devices in order to meet climate change targets.

Under the Bute House Agreement, signed last year, and which saw the Scottish Greens enter government with the SNP, the two parties agreed on a common policy programme. One of their shared commitments was to deliver 111,000 new affordable homes by 2032.

The Programme for Government set out an ambition for at least 70 per cent of the new properties would be available for social rent and 10 per cent would be in remote, rural and island communities.

According to the latest housing official figures, published in October, there has been a total of 2,362 completions so far against the 110,000 target, across the period 23 March 2022 to 30 June 2022, consisting of 2,068 homes for social rent, 127 for affordable rent, and 167 for affordable home ownership.

Statistics published in June found the Scottish Government missed the timetable of building 50,000 affordable homes by March 2021 but met the goal a year later.

They found that the ambition was achieved in March 2022, after 9,757 affordable homes were delivered in 2021/22,

Ministers said the original timescale of delivery was affected by “significant challenges” presented by the pandemic and subsequent lockdowns.

Scottish Labour Housing spokesman Mark Griffin last night told The Herald on Sunday: “Scotland is in the grips of a growing housing crisis that has been pushing house prices and rents through the roof for years.

“The SNP-Green government are still playing catch up after missing their last housebuilding target, and these cuts will wreak even more havoc with this vital programme.

“This will not only put our housebuilding targets at risk, but could undermine Scotland’s construction sector and put jobs at risk. "

Conservative MSP Miles Briggs pressed Mr Swinney on the issue during the debate on the Scottish Budget in Holyrood on Thursday.

"The Deputy First Minister mentioned the Bute house agreement, which states that the SNP-Green Government will deliver 110,000 affordable homes," said Mr Briggs.

"Today’s budget cuts the housing budget by £215 million in real terms, which comes on the back of last year’s cut to the housing budget. That decision will undermine jobs in the construction sector.

"The SNP Government is now driving a housing crisis in Scotland. Why has the Government today ripped up its housing policies, and what is it going to do to make sure that affordable homes are actually delivered?"

Referring to the former Prime Minister Liz Truss's mini budget which caused interest rates hikes, Mr Swinney said the housing crisis was being driven by increases in interest rates "that have been fuelled by the economic mismanagement of the United Kingdom Government".

He insisted the Scottish Government is supporting sustained investment in housing infrastructure over the long term.

"Very good progress has been made—indeed, in previous sessions of Parliament, the Scottish Government has delivered on all of our housing targets," said Mr Swinney.

"We are determined to ensure that we do that. I have been candid with Parliament about the challenges in our capital programme. Capital projects and anything that relies on input prices will be more difficult in terms of cost because of the energy crisis, energy prices, the rise in interest rates and the effect of inflation. Those are all substantive issues that have been fuelled by the actions of the United Kingdom Government."

On Friday the leading think tank the Institute for Fiscal Studies (IFS) accused the Scottish Government of overstating spending increases in its budget.

Mr Swinney pledged a £1 billion increase in health and social care spending and also announced a change to Scotland’s tax rates that will put more of the burden on those earning more than £43,000.

Ahead of the Budget the STUC unveiled research, carried out by Landman Economic, which found the Scottish Government could raise £3.3 billion by making more use of its devolved tax powers via the introduction of measures like wealth and land taxes as well as a reform of council tax by April 2026.

Yet none of these policies were given Mr Swinney's support on Thursday.

Responding, the STUC General Secretary Roz Foyer: "This budget, whilst progressive in some areas, simply does not go far enough and falls short on targeting the wealthy in our country. The Scottish Government has given workers the cold shoulder by not following up on STUC proposals to introduce wealth and land taxes in addition to raising and then reforming council tax.

“On the wider aspect, the impacts of not adequately using the budget to fund our public services will be stark with the settlement for local authorities is still far too low. Our public services are already on their knees; they needed further, sustained investment to ensure that we are all able to rely on them and the workers who uphold the services.

“We absolutely welcome the direction of travel on income tax and scrapping peak rail fares and investment in the NHS. We need to see this go further, to invest in all public sector workers, through progressive taxation of those with the most in our society. Scotland’s workers can ill afford any further half measures or delays.

But the Scottish Government rejected the claims by Cosla, with a spokeswoman saying: "We have protected councils in the most challenging budget since devolution to provide more than £13.2 billion in the 2023-24 local government settlement.

"This represents a cash increase of over £550 million, or 4.5 per cent, which is a real terms increase of £160.6 million, or 1.3 per cent."