Meeting of the Parliament 26 February 2026 [Draft]
The Local Government Finance (Scotland) Order 2026 may be presented by the Scottish Government as a success, but the reality for local authorities is far more troubling. Yes, the 2026-27 budget offers a modest real-terms uplift, but, in the context of the pressures that councils face after more than a decade of cuts, and financial trouble in the year ahead, the settlement does not meet the challenge that local government faces.
We will support the order tonight in order to make sure that funds reach councils, but COSLA leaders
“agreed that this year’s settlement is a very poor settlement for local government”.
Those are not my words but the words of SNP councillor Ricky Bell. If the SNP Government cannot persuade SNP councillors that this is a good deal for local government, I am not sure why we should believe it either.
COSLA projects a £392 million gap in 2025-26, rising cumulatively to £780 million by 2026-27. The Accounts Commission forecasts a further £528 million budget pressure in 2026-27. Those are structural gaps that threaten the sustainability of essential services. Health and social care partnerships are under severe strain, with funding gaps up 187 per cent since 2022-23. Despite repeated commitments, the Government has not fully funded its own real living wage policy in social care and in early years education. Workforce pressures are compounding the problem. A 1 per cent pay increase for local government costs £132 million, which means that a 3.5 per cent uplift exceeds the entire uncommitted funding in the budget. Councils cannot resolve recruitment challenges, invest in prevention or provide stability for staff under those conditions.
When those pressures are not met, councils are left with no choice but to raise council tax and charges simply to stand still. This is not reform—it is passing risk downwards to local taxpayers, while expecting services to deliver more with less.
The longer-term outlook is equally concerning. As Craig Hoy pointed out, local government’s share of the Scottish budget will fall, from 26.4 per cent to 24.8 per cent, continuing an over-a-decade-long trend of squeezing local council budgets in real terms and deprioritising the services that they provide. The Institute for Fiscal Studies reports an average real-terms reduction of 2.1 per cent per year, which will amount to £472 million in total over the term of the spending review. Flat-cash projections place core services at risk and do not offer the credible assurances for the future that are needed for local government.
The consequences are already visible. If the SNP Government thinks that it is having trouble persuading SNP councillors, it should hear what people are saying on the doorstep right now about the cuts to councils. Continued cuts to non-statutory services, particularly culture and leisure, undermine high-impact investment in health and wellbeing. The housing emergency and rising costs of temporary accommodation add further pressure. That impact is being felt by the most vulnerable—the people who rely on those local services every day—and by communities that see facilities being closed, ignored and abandoned, their roads deteriorate, their parks fall away and their libraries closed. They are talking about that on the doorstep just now when they are considering their vote.
This settlement does not empower local government—it leaves it exposed. Councils need proper investment in social care, workforce funding that matches pay commitments, sustainable capital support and a spending review that recognises local government as an equal partner in delivering national priorities and not as an area to squeeze every year. Until that happens, local government will continue to be asked to do the impossible—to protect front-line services while absorbing cuts. Scotland’s communities deserve much better than managed decline.