Coronavirus costs councils in Scotland almost £800m

Covid-19 has cost local authorities in Scotland almost £800m, a new report has estimated.

In a financial overview report of Scotland’s local authority finances, the Accounts Commission said half of the £767m projection is due to lost income, 23.6% due to the closure of council facilities and 16.2% due to fees and charges.

As of November, funding increases covered between 60% and 70% of the pressure of Covid-19, but final figures are not yet known.

Before the onset of coronavirus, councils were set for a 1.4% real-terms rise in funding, equivalent to £10.7bn, in 2020-21.

Local authorities also saw an increase in funding from the Scottish Government during the 2019-20 financial year of £500m, although the report said this came against a background of cuts in recent years.

However, 40% of the extra funding provided has been ring fenced to fulfil the Scottish Government pledge of expanding childcare to 1,140 hours per child by August.

In its report, the commission added: “It is also important to recognise that although funding in 2019/20 improved, reductions in local government funding over the past six years are still larger than in other areas of the Scottish Government budget.”

Capital funding, which rose by 33% in the past three years, is due to reduce by 30% in real terms this year, according to the report, a move which “will have an impact on councils’ future investment plans”.

Local authority body Cosla said the report shows a “full picture” of local authority finances and called for Thursday’s draft budget to provide “fair funding” for councils.

Cosla resources spokeswoman Gail Macgregor said: “This report lays out why we need fair funding for local government in Thursday’s budget.

“The trend of recent settlements for local government needs to change because on top of existing pressures, the Covid-19 pandemic – as the Accounts Commission report recognises – has placed unprecedented strain on the finances of Scotland’s councils this year.

“This year, across every community in Scotland, local government’s essential role has been magnified and once again we have delivered for our communities.”

Accounts Commission interim chair Elma Murray said: “Councils and integration joint boards play a vital role in supporting Scotland’s communities. Even before Covid-19, the pressures and demands on council services had intensified.

“At the same time, reductions in local government funding over the past seven years have been greater than in other areas of the Scottish Government budget.

“Covid-19 has fundamentally affected local government services, increasing their reliance on working with their partners and communities.

“The financial impact of the pandemic on our public services is extreme and creates increased uncertainty of how those services will be provided in the future.

“Good governance, strong financial management and transparency of decision making will be critical as councils and IJBs deal with the impact and consequences of the pandemic.”