Nearly three quarters of senior council figures in Scotland who took part in a new survey have warned their local authorities are ‘close to effective bankruptcy’.
The findings come from the Local Government Information Unit’s (LGIU) third annual State of Local Government Finance in Scotland report, which shows every council that responded plans to raise council tax and cut spending on services this year.
Despite these measures, seven in 10 senior figures said they do not believe their authority will be able to balance its budget over the next five years, while none expressed confidence in the long-term sustainability of council finances.
Around 70% of respondents indicated that they were close to effective bankruptcy, according to the LGIU.
The research drew responses from chief executives, council leaders and finance directors representing 81% of Scotland’s local authorities. It highlights a sector facing rising demand with shrinking resources.
Adult social care was identified as the greatest immediate and long-term financial pressure. Many councils also called for greater revenue-raising powers, including new local taxes and a share of national taxation, alongside a comprehensive review of local government finance.
Jonathan Carr-West, chief executive of the LGIU, said that local government finance in Scotland was ‘still not fit for purpose’, and warned ‘something has to give very soon.’
He continued: ‘Our latest research, released as we approach the 2026 Scottish Parliament election, serves as a stark warning: councils overwhelmingly feel their current funding situation jeopardises their ability to protect vulnerable citizens, increases the risk of insolvency, and diminishes the quality of life in their communities.’
A spokesperson for the Convention of Scottish Local Authorities (COSLA) said: 'The upcoming Scottish Budget is a pivotal moment. The Scottish Government must deliver a settlement that matches the scale of the challenge. Without fair funding, communities will see services reduced and inequalities deepen, and we will struggle to meet national targets in key areas such as child poverty, housing, and net zero.'
