26 Sept 2022

Councils facing ‘huge’ costs from wage bills and energy, MSPs told

Councils facing ‘huge’ costs from wage bills and energy, MSPs told

Councils are facing “huge” costs as a result of rising wage bills and energy inflation, MSPs have been told.

Sarah Watters, director of resources at local government body Cosla, said there was a “mismatch” between what councils could afford and the external pressures they are facing.

On Thursday, Holyrood’s Covid Recovery Committee heard evidence from a number of groups about the Scottish Government’s coronavirus recovery strategy.

Ms Watters said: “Not only is demand for services increasing because of all the crises that are out there: in social care, business support all sorts of areas; actually the cost of providing services because of inflationary pressures is huge.”

Councils and their associated services are “huge” users of energy, she added.

Ms Watters continued: “I think a very live issue is pay inflation, for Cosla that is a very live issue.

“We’ve got to realise that there is a mismatch between what we are able to offer our workforce and what’s happening in the external context.

“And I think what we’re going to see is that ripple right through the whole supply chain of local government.”

The increase in the “real living wage” was welcome but would also add to costs for councils, she said.

Hourly rates under the voluntary scheme are rising by £1 to £10.90 across the UK and by 90p to £11.95 in London.

Mairi Spowage, director of the Fraser of Allander Institute, also addressed the committee, saying inflationary pressures were “one of the biggest issues the Scottish Government are facing”.

For some organisations, the difficulties due to the pandemic have “paled” in comparison to the current inflation pressure and what is expected over the winter, he said.

She expected the Chancellor’s mini budget, due to be announced on Friday, would not contain as much detail as a normal Budget.

Alfrun Tryggvadottir of the Organisation for Economic Cooperation and Development (OECD) told the committee that other European countries are facing similar challenges to Scotland.

She highlighted the importance of spending reviews to analyse whether Government spending was providing benefit to citizens.

Scotland and the UK’s spending review processes are different from the OECD’s definition, as they are linked to the budget-setting system, she said.

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