Glasgow City Council’s budget for 2025/26 will be set this week and it will be done amid the ruins of the budget for 2024/25. The council has already overspent by £38m which the City Treasurer, Ricky Bell of the SNP, said was the only option in the face of all the pressures the council faces. There was, he said, “no other way”, which sounds a lot like a slogan from the old days. Careful Ricky, sounding a bit like Maggie there.
The main factors which the council is blaming for the overspend are higher energy bills, agency staff costs, an increase in the number of kids enrolling for school, and increased rents, rates and repairs in council properties. Mr Bell said a lot of the factors were outwith their control and that the overspend would be covered by the council’s “Budget Support Fund”, a reserve created in 2022. The only alternative, he said, would be “very, very large” increases in council tax.
I have some sympathy with what Mr Bell says. Not only was the council for a long time a victim of the SNP’s ridiculous, regressive council tax freeze, the Government cut council budgets and ring-fenced a lot of the money for its own priorities, such as free school meals. Higher energy bills have also been unavoidable, and staff costs are on the up (we still don’t know yet how councils are going to pay for the increased employers’ national insurance contributions introduced by the UK Government).
So yes, some of the factors which have led to the £38m overspend were outwith the council’s control, but some of it less so. The issue with agency staff, for example, goes all the way back to 2018 when the number of cleansing staff started to fall in Glasgow. The council tried to plug the gaps with agency workers and seven years on they’re still doing it, which not only costs more, it postpones fixing the city’s number one problem: the litter, the mess, the mankiness.
The crisis we’re talking about is also underlined by the recent plans, now scrapped, to cut 450 teaching and support jobs over the next three years. The plans were to have formed part of next week’s budget. But after a threat of strikes, the council backed down and now says £17m over two years will be found elsewhere to cover the costs.
The problem is that word: “elsewhere”, a place that keeps on shrinking and cannot be relied on for much longer. Councils can use reserves. Councils can try to make savings. But using reserves and making savings becomes progressively more difficult year-on-year if revenue and income are falling. Eventually, councils have to change what they’re doing and transform how they operate to sustainably maintain the services they provide. And as the Accounts Commission said in its most recent report on local government, the transformation needs to progress “at scale and pace” which is official speak for “get a bloody move on”.
Some of the signs are not good. The Accounts Commission also said in its report that delivering transformation requires councils to commit resources towards the process, and it said most councils have done so. A few have not though. Orkney. Shetland. And Glasgow I’m afraid. One of the commission’s other recommendations is that councils explore new ways to generate income which Edinburgh has done with their 5% visitor levy. Glasgow could go the same way, and probably should, but another obvious choice for the city would be its free museums. At some point, a city that can’t pay its way is going to have to start charging for entry to Kelvingrove, the Transport Museum and the others.
A lot of the other change that’s needed is bigger in scale though, and requires councils, the Scottish Government and the UK Government and others to work together to reform the way we do local government. The Accounts Commission suggests councils take a look at which services could be more effectively delivered by other partners and that’s fair enough. It also says Glasgow and other councils should identify how economies of scale can be achieved by sharing services, and again: fair enough.
But some of the reasons Glasgow is in financial distress go way beyond the city’s control and the extent it can save money by sharing services or whatever. It has a relatively small council tax base, for example, based on a relatively deprived population and needs to get the population growing again. To be fair, it does have a plan for this, the City Centre Living Strategy which aims to increase the population to 40,000 by 2035. And fair play, it may be starting to work: the latest figures for the city centre show that 28,341 now live there, up from 21,185 in 2011. This is all good stuff.
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However, the bigger structural stuff still looks like it’s a long way off. Most of Scotland’s councils are basically the wrong size. In the Highlands for example, it’s become obvious that one council covering 10,000 square miles is not working. In Ayrshire by contrast, you have three councils covering a relatively small area. And the problem in Glasgow is the council does not include the suburbs full of people who use the services but don’t pay towards them. Glasgow alone cannot fix this problem; it will require action by government and it will happen, eventually, I’m sure.
The other thistle that needs grasped – and almost everyone appears to be afraid of getting their soft little hands stung by it – is council tax. The Scottish Government could, and probably will, leave councils to introduce big increases in council tax and take the potential flak for it. Borders Council has already said it will increase its council tax by 10% and other councils aren’t far behind. No one will be surprised if Glasgow also orders an increase of 10% or something close.
But everyone in local government, or at least everyone who cares about progressive taxation, knows piling 10% on council tax will most affect those who can least afford it. The tax applies the most pressure in the weakest places because the gap between those who pay the least and those who pay the most is too narrow. The other problem for Glasgow is large numbers of residents are exempt or pay in the lowest bands so pulling the 10% lever will only go so far.
The answer is reform: a property tax for example with a greater number of bands. Or a hybrid model combining an assessment of where you live with an assessment of how much you earn. This would deal with the “granny problem” i.e. the single woman with a small income who pays a lot of council tax because she lives in the old family home.
All of this means there is another way, an alternative to ramping up council tax, or cutting services, or even raiding reserves to the tune of £38m. Some of it Glasgow could do itself, such as raising income through a visitor tax or introducing charges for its museums. Some of it only government can do by reforming the council tax and the structure of local government.
The only option that isn’t possible is to carry on as we are. As the Accounts Commission put it, there is an urgent need for the local government sector to transform how it operates if it is to sustainably maintain services. In plainer language: we can’t go on like this can we?
