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Scottish councils face bankruptcy without cash boost, say Cosla

LOCAL authorities in Scotland could face bankruptcy without a Scottish government funding boost, council leaders have warned.

The stark message from the Convention of Scottish Local Authorities (Cosla) comes after two English councils issued section 114 notices over the last month.

The notices, which amount to a declaration of bankruptcy, mean that Birmingham and Nottingham councils have now entered financial special measures, under which only statutory services will receive cash.

There are less than three weeks until Scotland’s SNP-Green government publishes what is expected to be the toughest draft budget since devolution.

And Scottish councils, in many cases already struggling to meet their statutory duties, have put Holyrood leaders on notice.

A new Cosla briefing paper says: “Last year, councils faced a £1 billion funding gap just to keep services going.

“This year there have been increased costs and greater demand on services, meaning councils have had to prioritise spend away from libraries, community and leisure centres.”

The retreat from non-statutory services could become even more marked if First Minister Humza Yousaf’s council tax freeze pledge made at SNP conference earlier this year is not fully funded as promised.

Mr Yousaf made the pledge despite his government facing an estimated £1bn black hole in its finances; Cosla has now estimated councils would need an extra £14.4bn just to stand still if it is to be implemented.

Cosla resources spokeswoman Cllr Katie Hagmann said: “Sadly, our reality right now is an extremely challenging financial climate coupled with years of real-terms cuts to council budgets, while additional policy commitments are continually being introduced.

“If this situation doesn’t start to improve soon, it will mean tough choices being made and the many essential services councils currently provide will cease.”

In an apparent ripost to Finance Secretary Shona Robison’s remarks last week that there was “no doubt” that “the size of the workforce will have to reduce,” Cllr Hagmann added that “cutting front-line staff isn’t the answer.”

The Scottish government said: “Scotland is facing the most challenging budget settlement since devolution as a result of sustained high inflation and a UK government Autumn Statement that failed to deliver the investment needed in Scotland’s public services.

“Decisions on local government budget allocations for future years are subject to the outcome of negotiations with Cosla, the results of which will be confirmed in future Scottish budgets.”

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