Local government facing ‘biggest’ cut in funding, expert says

Councils will receive record funding next year, Finance Secretary Shona Robison has insisted, despite experts warning that cash for local government could fall by almost £500 million over four years.

Economics experts at the Scottish Fiscal Commission said local authorities would see the “largest reduction in real-terms spending” over the period 2025-26 to 2028-29.

While real-terms funding for health and social care is expected to increase by more than £1.1 billion over this period, the SFC said local government could expect to see a fall of £472 million.

SFC chairman Professor Graeme Roy said the Scottish Government’s “limited funding” for day-to-day spending was “primarily being pushed towards health and social care, so into the NHS” as well as into social security.

Social security spending is forecast to increase from £7.4 billion in 2026-27 to £9.2 billion in 2030-31, the SFC stated.

Prof Roy said this showed the “relative priorities for the Government”, with other policy areas “seeing much less growth or actually cuts in real-terms over the period, the biggest one in that context being local government”.

With Cosla, the body which represents Scotland’s councils, saying they are getting less cash then they requested, local authorities could now be forced to consider both cutting services or hiking council tax charges – although the Finance Secretary has already appealed to them to make “reasonable decisions on council tax”.

Dr Eleanor Ryan, of the SFC, said: “Local government funding is falling in real terms, it is also falling as a share of the overall day-to-day funding.

“And, yes, that will mean there will need to be a combination of savings and local government looking at its other funding sources.”

Councils are due to receive 26.1% of the Scottish Government’s resource budget in 2026-27 – with this down from 26.4% this current year.

However, by 2028-29 the share going to local government could be less than a quarter (24.8%) of the Government’s day-to-day spending pot.

Cosla had hoped to get £16 billion of revenue funding from the Scottish Government for 2026-27, although Ms Robison insisted the almost £15.7 billion settlement is a record deal for local authorities.

The Finance Secretary said the “record settlement is the result of meaningful budget engagement with Cosla and councils”.

She added that ministers “recognise the financial challenges that local authorities face” and said they would “continue to collaborate with local government to ensure everyone has access to services that are efficient, good quality and effective”.

With council leaders due to meet on Thursday to consider the situation, a Colsa spokesperson said: “Ahead of the budget, we called for an additional £750 million to meet pressures in social care which this Budget does not deliver.”