The total debt of Scotland’s cash-strapped councils has soared to more than one-and-a-half times the annual local government budget.
Figures released this month show that cumulative local authority debt stands at £21.8billion – a 6.1 per cent rise on a year earlier and a 19.6 per cent increase on five years earlier.
The total dwarfs the £13.9billion provided to councils in the SNP’s latest budget.
Scottish Conservative shadow local government secretary Liz Smith said the “colossal” sum was the inevitable consequence of years of SNP underfunding, which had forced councils to borrow in order to deliver key services.
She added that the SNP Government’s “unfunded” council tax freeze would almost certainly exacerbate the debt problem at a time when one in four Scottish local authorities already fear bankruptcy.
Scottish Conservative shadow finance secretary Liz Smith said: “This colossal debt is the direct consequence of years of SNP neglect and underfunding, and essential services are under enormous pressure as a result.
“It’s truly eye-watering and unsustainable that debt levels are more than one-and-a-half times the latest annual funding settlement provided by the SNP Government to our local authorities.
“Councils have been increasingly reliant on borrowing in an attempt to plug the gaps created by SNP cuts – so it’s little wonder a quarter of them fear bankruptcy.
“The debt mountain is almost certain to grow in light of Shona Robison’s savage tax-and-axe budget, which forced local authorities to impose a council tax freeze without providing them with the resources to fully fund it.
“It’s only a matter of time before a Scottish council goes bust unless the SNP Government finally agree to a fair funding deal.”
Notes
Local authorities’ debt rose to £21.8 billion in the year to March 31 2023. Total debt across local authorities on 31 March 2023 was £21.801 billion, an increase of 6.1 per cent or £1.252 billion, from 31 March 2022. Total debt has increased by 19.6 per cent, or £3.577 billion, over a five-year period. (Scottish Local Government Finance Statistics: Chapter 5, March 5 2024, link).
Local authorities have been awarded £14 billion in this year’s budget. In the budget for 2024-25, the Scottish government allocated a total of £13.9 billion to local authorities. (Scottish Budget 2024-24, pp.(21) 12, December 19 2023, link).
Local authority debt is now worth one and a half time the yearly budget for councils. Total debt for local authorities has now risen to £21.8 billion, which is nearly 160% of the £13.9 billion of total spending allocated to local councils in the Scottish budget 2024-25.
Calculation: £21.8 billion total debt / £13.9 billion total budget allocation for local councils= 156.8%
One in four local authorities in Scotland fear bankruptcy due to budget cuts. Nearly a quarter of Scottish councils fear they will be unable to balance their budget next year, according to a survey by the local government information unit (LGIU) Scotland. Almost all (97%) of respondents also said they would be increasing fees and charges. (Local Government, December 13 2023 link).