Local Government in Scotland - Overview 2023

Argyll and Bute Council · 20 June 2023
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Local government in
Scotland
Overview 2023
Prepared by Audit Scotland
May 2023

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Local government in Scotland: Overview 2023 | 2 |
Who we are
The Accounts Commission
The Accounts Commission is the public spending watchdog for local government. We
hold councils in Scotland to account and help them improve. We operate impartially and
independently of councils and of the Scottish Government, and we meet and report in public.
We expect councils to achieve the highest standards of governance and financial stewardship,
and value for money in how they use their resources and provide their services.
Our work includes:
• securing and acting upon the external audit of Scotland’s councils and various joint boards
and committees
• assessing the performance of councils in relation to Best Value and community planning
• carrying out national performance audits to help councils improve their services
• requiring councils to publish information to help the public assess their performance.
You can find out more about the work of the Accounts Commission on our website: 
www.audit-scotland.gov.uk/about-us/accounts-commission

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Contents
Key messages and recommendations 4
Background 7
The impact of the pandemic on councils’ performance 8
What are the current challenges facing local government? 14
How are councils responding? 27
Local government in Scotland: Overview 2023 | 3 |

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Key messages and recommendations
Councils have never faced such a challenging situation, with demand and workforce pressures
deepening after the Covid-19 pandemic and funding forecast to reduce in real terms.
Radical change, achieved through greater collaboration, is urgently needed if councils are to
maintain services.
1 Finances and resources
Budget constraints and increasing cost pressures are putting
councils’ finances under severe strain. An increasing proportion
of funding is ringfenced or directed for national policy initiatives.
While this is important to help deliver national priorities, it
prevents councils from making decisions about how funds can
be used at a local level, to meet local need. Councils have had
to make significant savings to balance their budgets. Increasingly
difficult choices about spending priorities and service provision
are having to be made.
Recommendations:
The Scottish Government and COSLA need to take
urgent action to finalise the New Deal for local government
(paragraphs 71–73) and agree:
• a new partnership agreement with councils that supports
collaboration
• a fiscal framework for local government that supports
sustainable funding and greater financial flexibility and
transparency.
The Scottish Government needs to provide more detailed
financial information (eg, breakdown of type of funding and
individual council allocations) to support councils longer-term
financial planning.
Councils need to set out medium- to long-term financial plans
that detail:
• how they will make recurring savings and reduce reliance on
reserves to fill budget gaps
• how council resources are targeted to achieve their
long-term policy and performance priorities.
Local government in Scotland: Overview 2023 | 4 |

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2 Community needs and inequalities
The pandemic has affected performance across all service areas.
There are signs of growing backlogs and declining performance
in some service areas. Councils have a clear focus on tackling
inequalities but the extent and impact of needs not being met
is unclear. Some communities are facing crisis, with persistently
high levels of poverty and increasing financial hardship putting
additional pressure on services, at a time when councils have
less capacity to support them.
Recommendations:
• Councils should be more transparent with the public
about scale of service demand, the extent of backlogs and
changes to eligibility criteria necessary to ration access to
services and any impact this has on unmet need.
• Councils should have a clear plan for strengthening their
use of data to understand needs, make decisions and direct
resources. This includes equalities data, and learning from
those with lived experience.
3 Collaboration
The scale of the challenges ahead means that radical change is
needed. It is only by working more collaboratively that councils
and their local partners, communities and the third sector will be
able to provide sustainable local services and deliver a significant
programme of national reform to tackle issues such as climate
change, child poverty and inequalities.
The pandemic demonstrated the benefits of partnership working
and shared local goals. This needs to continue. Few councils
provide services jointly or share professional support services.
Many councils engage well with communities and local partners
to better understand local priorities and needs. Now councils
must better involve service users and communities, including
those with lived experience, as they redesign services.
Recommendations:
Councils need to maximise the potential of collaboration by
demonstrating they are:
• working with other councils, the wider public sector and the
third sector to redesign and provide services
• involving service users and local communities in the
redesign of services.
Local government in Scotland: Overview 2023 | 5 |

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4 Leadership
Leaders must think radically and make fundamental changes
to how councils operate in future, building on the collaborative
and innovative ways of working many demonstrated during
the pandemic. Leaders need to be open with their staff,
communities and local partners about the difficult decisions
ahead and be clear about how change will be achieved. The
level of volatility, uncertainty (such as plans for a national care
service) and immediate financial pressures make planning
and delivering sustainable change more difficult. Ineffective
leadership and high turnover identified at several councils,
alongside tensions with central government present risks to their
ability to make fundamental changes at the pace needed.
Recommendations:
Councils’ leaders need to invest time and capacity in thinking
radically about their future operating model, and:
• be open and clear with communities and staff about the
need for change, what that means for future service delivery
and involve communities in making difficult decisions
• set out a clear vision for their long-term policy and
performance priorities, and how it will be delivered and
monitored
• work with the Scottish Government to rebuild an effective
relationship.
5 Workforce
Increasing workforce challenges, including a competitive
labour market and high sickness absence levels, are putting
councils under continued pressure. Councils need to innovate
by developing the skills and building on the agility, flexibility
and joint working demonstrated during the pandemic to make
best use of their existing workforce. Wellbeing initiatives must
continue and councils should monitor the impact of new ways of
working such as hybrid working on both performance levels and
staff wellbeing.
Recommendations:
Councils need to improve workforce planning to effectively
develop and deploy their existing workforce. This includes:
• building the capacity, skills, strategic thinking and
comprehensive workforce data needed for effective
workforce planning
• updating workforce plans to reflect new models of service
delivery and ways of working, including how they are:
– identifying and addressing skills gaps, at operational and
leadership levels
– making best use of their existing workforce by
collaborating with partners to overcome recruitment
challenges
– planning for the skills needed to deliver future services,
focusing on collaborative and flexible working, including
working with the higher education sector to plan and
develop skills for the roles needed.
Local government in Scotland: Overview 2023 | 6 |

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Background
About this report
In August 2020, the Accounts Commission agreed a strategic medium-
term approach to reporting on the impact of the Covid-19 pandemic.
This approach committed to producing a series of annual overview reports
over a three-year period.
This report:
• is the third and final overview report in the series
• builds on the previous reports in the series and examines:
– how has the pandemic affected councils and their performance? 
– what are the current and future challenges facing local
government? 
– how well placed are councils to deal with the current and future
challenges?
• draws on findings from the financial bulletin, considering these in the
context of the wider overview.
The findings of this report are drawn from 2021/22 annual audits,
performance and best value audit work carried out during 2022 and from
specific research and analysis of available data and intelligence.
Web resources
To support improvement, we have developed a set of resources for
councils which are available on our website. These resources include
two supplements:
• a collection of case studies to illustrate issues and practice
across councils
• a checklist with questions for elected members, to help in
their scrutiny and decision-making roles and in their work with
council executives.
Previous reports
This report follows the first two reports in the series:
• Local government in Scotland: Overview 2021 considered
councils’ response to and management of the initial phase of the
Covid-19 pandemic.
• Local government in Scotland: Overview 2022 considered the
ongoing impact of the pandemic and councils’ progress towards
recovery and renewal.
Each year we publish a financial overview. The most recent one, Local
government financial bulletin 2021/22, was published in January 2023.
Local government in Scotland: Overview 2023 | 7 |

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The impact of the pandemic on councils’
performance
Service performance was beginning to stall before the pandemic as a result of long-term
reductions in funding and wider pressures. The pandemic has affected performance across all
service areas. Some services are showing signs of recovery, but there are also signs of growing
backlogs, declining performance in some areas and services at capacity. The extent and impact
of needs not being met is not clear.
The pandemic has adversely impacted performance
across all service areas and there are signs of growing
backlogs, declining performance in some areas and
services at capacity
1. In our Local government in Scotland: Overview 2020, we reported
that service improvement had begun to stall or even decline as councils
dealt with increasingly challenging pressures and long-term reductions in
funding. For example:
• performance in many areas of adult social care including delayed
discharge, satisfaction and service quality had all slowed or started
to decline
• some educational attainment and early years indicators had declined
1 Local Government Benchmarking Framework 2018/19
• improvements to recycling levels had stalled and satisfaction with
street cleaning and waste collection had reduced
• costs for culture and leisure services had reduced and the number
of attendances had increased, but satisfaction had declined across
all service areas.1
2. Over the last decade, there is a clear divergent pattern of spend.
Spending on children’s services (education and looked after children)
and adult social care has been protected and increased because of
national policy directives. This means that the remaining ‘unprotected’
services have borne a disproportionate level of spending reductions
(Exhibit 1, page 9) and some services entered the pandemic already
under pressure.
Local government in Scotland: Overview 2023 | 8 |

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Exhibit 1. 
Percentage change in expenditure (in real terms) over ten years from 2012/13 to 2021/22
-40 -30 -20 -10 0 10 20 30
Planning
Central support services
Culture and leisure
Environmental services
Roads
Looked after children
Adult social care
Education Increase in
expenditure
over 10 years
Decrease in
expenditure
over 10 years
Percentage
Note: Economic development and Tourism services have seen a 43 per cent increase over the period. We have excluded this from
the chart as year-to-year expenditure is volatile and there is not a consistent trend in spending over this period.
Source: Local Government Benchmarking Framework, 2021/22
Local government in Scotland: Overview 2023 | 9 |

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3. Since March 2020, the context councils have been operating in has
been unprecedented. While staff worked hard and adapted to maintain
the delivery of key services during the Covid-19 pandemic, performance
across all services areas was adversely impacted.
4. During the pandemic, councils gave priority to providing essential
front-line services to support the most vulnerable. Other services such
as culture and leisure were closed for extended periods in line with
Scottish Government guidance. Although councils report that all services
have restarted, some are not available to the same extent as before the
pandemic, and backlogs remain.
5. Councils state that they have a clear understanding of where increased
demand and backlogs exist and report on these publicly through
committees. We found some good approaches to managing service level
demands and backlogs, such as including them in strategic planning and
budgeting as well as joint working with local partners.
6. A lack of publicly available data means that we do not know the scale
of service demand, backlogs and, in particular, unmet need – and nor
does the public. Councils need to be more transparent with the public
about the impact of the pandemic, and pressures more widely, on service
performance, the extent of backlogs and changes to eligibility criteria
necessary to ration access to services.
7. Exhibit 2 (page 11) shows Local Government Benchmarking
Framework performance indicators two years on from the start of the
pandemic but before the recent cost-of-living crisis and inflationary cost
pressures. Nationally, performance in some services is showing signs
of recovery, eg education, but it is concerning that there are signs of
backlogs, declining performance, and systems at capacity in some of
the services that will be most in demand during the cost-of-living crisis,
eg housing, homelessness and social care.
8. Councils can make different policy choices about their service and
performance priorities. Councils also operate in different environments
and these different local factors such as levels of deprivation, population
distribution, size of council area and geography affect service demand
and performance. An ageing population increases demand for social
care services, rurality can make it more difficult to deliver services cost-
effectively, and deprivation and poverty have wide-ranging impacts which
can affect council services.
Local government in Scotland: Overview 2023 | 10 |

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Exhibit 2.
Service performance during the covid-19 pandemic against selected Local Government Benchmarking
Framework indicators up to 2021/22
Performance at risk or declining
Adult social care
There are signs that the sector is in crisis, with growing backlogs, declining satisfaction and no clear picture of
demand or unmet need. Spending increased during the pandemic, continuing the longer-term trend. Homecare hours dropped
slightly in 2020/21 before increasing to the highest levels ever recorded in 2021/22. Satisfaction continued to decline, and
2021/22 saw a drop of eight per cent in care services graded ‘good’ or ‘better’.1 Concerns have been raised about day centres
not fully reopening. Delayed discharges, an indicator of capacity in the system, dropped at the start of the pandemic but are now
at their highest levels since the current guidance came into place in 2016 (delays due to the non-availability of home care are also
at their highest).
Housing and
homelessness2
Housing performance indicators fell during the pandemic as a result of increasing financial hardship and Covid-19
restrictions limiting access to properties. Loss of income increased from rising rent arrears and voids. Maintenance
performance fell. There was a large drop in housing quality in 2021/22 but overall energy efficiency continues to improve.
This reflects Covid-19 related delays in carrying out electrical safety inspections, installing smoke and heat detectors, and
upgrading work to improve energy efficiency.3
During the first year of the pandemic homelessness fell as a result of emergency extra protections but it is rising
again. Some councils are not meeting their statutory duties in terms of homelessness. Performance in providing temporary
accommodation is worsening, with record levels of children living in temporary accommodation. Social housing supply is
insufficient to meet demand.
Environmental
services
Performance declined during the pandemic. Recycling rates fell during 2020/21 and have not recovered. Cleanliness levels
continued their long-term decline, especially in councils with the highest levels of deprivation. Against the long-term trend, parks
expenditure increased in 2021/22 largely due to reinstatement of works, following reduced expenditure/income in 2020/21
during lockdowns.
Culture and
leisure
Services were severely affected by the pandemic and future risks are significant. The impact on these services was
severe in 2020/21 and into 2021/22 as many facilities closed in accordance with Scottish Government guidelines. This impact can
be seen in lower attendances and increased costs per visit: leisure services and museums saw a partial recovery in 2021/22 but
library services saw little rebound. With little resilience in these services owing to long-term funding reductions, future challenges
are significant. A recent survey of leisure trusts suggests a high risk of closures as a result of inflationary cost pressures.4
Cont.
Local government in Scotland: Overview 2023 | 11 |

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Performance mixed or recovering
Children’s
services
Performance during the pandemic was mixed, attainment and progress towards closing the poverty-related
attainment gap stalled but has shown some recovery. Spending increased during the pandemic, continuing the longer-term
trend. This was driven by the expansion of early learning provision. Primary schoolchildren’s attainment improved in 2021/22
compared with 2020/21 but has not yet recovered to its pre-pandemic level. A similar trend is seen in the poverty-related
attainment gap, which narrowed in 2021/22 compared with 2020/21 but remains larger than pre-pandemic. S3 pupils’ attainment
fell in 2021/22 compared with pre-pandemic, and the attainment gap widened. The improvement in senior secondary school
pupils’ attainment seen during the pandemic was sustained in 2021/22 when exams resumed, most strongly in councils
with high levels of deprivation. It is concerning that the quality ratings of early learning provision continued to decline and
developmental concerns for pre-school children have risen.
Economic
development and
tourism
Performance declined during the first year of the pandemic, as activity was refocused on Covid-19 financial support,
but shows signs of recovery. Investment in economic development dropped during 2020/21 before rebounding to its highest
level in 2021/22. That period also saw a huge increase in those helped into work by council employability programmes, reversing
the previous trend. Councils’ support for business start-ups, a measure of investment in wider economic development, fell early
in the pandemic but has shown some recovery. Performance is likely to reflect the impact of councils redeploying staff from
traditional employability and business support to focus on the distribution of Covid-19 support grants as well as wider uncertainty
in the economy, labour shortages and disrupted supply chains.
Performance maintained
Corporate
services
Performance dipped slightly but activity significantly increased, as corporate support services had a critical role
in delivering Covid-19 grants, supporting financial hardship and facilitating homeworking for councils’ workforce.
Spending on the Scottish Welfare Fund and Discretionary Housing Payment rose significantly in 2020/21 and again in 2021/22.
Councils processed £72.8 million in self-isolation support grants, mainly in 2021/22.
Notes:
Indicators capture national performance before the recent cost-of-living
crisis and inflationary cost pressures. The Improvement Service advises
that the methodology for measuring satisfaction indicators through the
Scottish Household Survey has changed, so we do not have trends
available for comparison.
1. Care service quality figures should be interpreted with caution, as
the Care Inspectorate states that this may be due to a focus during the
pandemic on higher-risk or failing services.
2. Homelessness statistics are not part of the LGBF. Source is Scottish
Government homelessness statistics publication.
3. The decrease in performance against housing quality should be
interpreted with caution as higher Scottish Housing Quality Standards
were introduced in this time period.
4. Current Landscape for Leisure and Culture Charities in Scotland,
Community Leisure UK (Scotland), November 2022.
Source: Improvement Service’s Local Government Benchmarking Framework 2021/22 and Scottish Government homelessness statistics
Local government in Scotland: Overview 2023 | 12 |

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9. The impact of the Covid-19 pandemic on performance at a local level
varied as these local factors affected the levels of need and demand,
and councils’ responses and solutions. Councils should use the Local
Government Benchmarking Framework (LGBF) alongside local data and
intelligence to compare their performance with neighbouring or similar
councils to assess the effectiveness of new ways of working and to help
inform them where improvements and better outcomes for communities
can be achieved (Case study 1).
10. Given the service demand and cost pressures facing councils it is
unlikely that they will be able to maintain performance across all of the
services they currently provide without radical change.
Councils will need to make difficult choices about what their service
and performance priorities are. Strengthening the use of data and
consulting and involving communities, especially the experience of
service users, will be critical to informing these decisions.
Case study 1. 
Use of LGBF data to inform improvement
South Lanarkshire Council worked collaboratively with the
Improvement Service to achieve the most value from the
LGBF indicators in a way that helps drive its improvement
based on its strategic priorities.
In December 2021, the Improvement Service provided a
bespoke analysis of LGBF indicators for the council, structured
around the council’s new Connect Plan. Each of the council’s
services considered which LGBF indicators added value for
inclusion in a subset of indicators for future reporting. Of the
95 LGBF indicators available, 33 were identified as aligning
with the outcomes of the council’s new Connect Plan. These
were embedded within the Connect Plan’s reporting and used
to focus attention on how well the council is performing in
achieving its strategic outcomes. The bespoke approach aims to
provide greater opportunities for elected members to scrutinise
the LGBF within a council specific context and should allow for
more meaningful use when making strategic decisions.
Source: South Lanarkshire Council’s annual audit report 2021/22
In March 2023, the Improvement Service
launched a newly developed dashboard that
allows councils to explore and analyse all the
LGBF performance indicators in an interactive
data tool. This is intended to help councils better
assess and benchmark their performance.
Local government in Scotland: Overview 2023 | 13 |

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What are the current challenges facing
local government?
Councils are operating in an increasingly volatile and uncertain landscape, as pressures increase
after Covid-19 and funding is forecast to be reduced in real terms. Some communities are facing
crisis, with increasing poverty and financial hardship putting additional pressure on services at a
time when councils have less capacity to support them.
Financial
Budget constraints
and increasing cost
pressures are putting
councils’ finances under
severe strain.
Local needs
Changing
demographics, the
pandemic and the
cost-of-living crisis
increase pressure
on council services
and people already
experiencing inequality
are most affected.
National policies
Councils are managing
an increasing
programme of national
reform, including
plans for a national
care service, which
comes with substantial
funding implications and
increased uncertainty.
Workforce
Increasing workforce
challenges such as
difficulty recruiting
and high sickness
absence levels are
putting councils under
continued pressure.
Leadership
While many councils
demonstrated strong
collaborative leadership
during the pandemic,
ineffective leadership
and high turnover
identified at several
councils present a risk.
Local government in Scotland: Overview 2023 | 14 |

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Budget constraints and increasing cost pressures are putting councils’ finances
under severe strain
Councils’ funding has been constrained for many years
11. Councils receive the majority (over 70 per cent) of their funding from
the Scottish Government.
12. Exhibit 3 (page 16) shows funding from the Scottish Government
over the last decade. Over this period (comparing 2023/24 to 2013/14),
revenue funding to local government has increased by 2.6 per cent in
real terms.
13. In 2021/22 (excluding Covid-19 funding elements which are
non-recurring) revenue funding from the Scottish Government to councils
increased by 5.2 per cent in real terms compared to 2020/21. This
increase brought funding back to a level similar to what it was in 2015/16.
14. Total revenue funding saw small real terms increases in both 2022/23
and 2023/24 when non-recurring elements of the settlement are removed.
15. Despite additional Covid-19 funding amounting to £1.8 billion
during the first two years of the pandemic, councils continued to face
significant financial challenges, requiring substantial savings to deliver
balanced budgets and increasingly difficult choices to be made about
spending priorities.
16. An additional pressure is that the funding of local government has not
kept pace with other parts of the Scottish budget for many years.
17. Our Local Government in Scotland: Financial Bulletin 2021/22
provides further detail on councils’ financial position.
Funding is forecast to reduce in real terms
18. In May 2022, the Scottish Government published its Resource
Spending Review 2022. This is the first multi-year spending plan in
Scotland since 2013. It set out high level spending plans up to the end of
this parliament in 2026/27, which show that ‘core’ funding is set to reduce
in real terms (Exhibit 4, page 17).
19. The recent 2023/24 Scottish Budget allocated £10,933 million ‘core’
funding to local government for 2023/24 which is higher than what was
forecast in May 2022. There was no update on whether future years will
also see similar uplifts.
We expect an updated funding outlook for 2024/25 and subsequent
years to be published as part of the Scottish Government’s
medium-term financial strategy in May 2023.
20. While a multi-year spending plan is welcome, the financial information
within the plan is not sufficiently detailed (nor is it broken down to
individual council allocation) to fully support long-term planning purposes.
Local government in Scotland: Overview 2023 | 15 |

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Exhibit 3. 
Scottish Government revenue funding to local government (in real terms) and year-on-year percentage change,
2013/14 to 2023/24
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Non-recurring funding1Total recurring revenue
2023/242021/222019/202017/182015/162013/14
Revenue funding
(£ million)
% change including
non-recurring funding
% change recurring funding only
0.5 0.4 -5.2 -1.9 -0.6 2.7 0.7 5.2 0.6 0.5
12.5 -1.6 -1.5 -1.7
Notes:
1. Non-recurring funding refers to Covid-19 related funding in 2020/21 and 2021/22 and cost-of-living support for council tax bills in 2022/23.
2. We use the finance circulars to compare the funding position year-on-year as we believe this is the most accurate comparison.
These figures include funding for national policy initiatives and transfers from other portfolios. Figures calculated at 2023/24 prices.
Source: Scottish Local Government Finance Circulars
Local government in Scotland: Overview 2023 | 16 |

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Exhibit 4. 
Resource Spending Review financial outlook
to 2026/27
The plan projected real-term reductions to ’core’ funding
for local government.
(£000s) 2023/24 2024/25 2025/26 2026/27 2027/28
Cash terms 10,6161 10,616 10,616 10,616 10,716
Real terms 10,6161 10,452 10,352 10,230 10,158
Percentage
change cash
0.0% 0.0% 0.0% 0.9%
Percentage
change real
-1.5% -1.0% -1.2% -0.7%
Notes:
1. Since publication of the Resource Spending Review the 2023/24
Budget has been agreed which saw local government’s allocation
increased to £10,933 million for that year.
2. These figures represent funding before transfers from other portfolios.
Real terms figures calculated at 2023/24 prices.
Source: Audit Scotland using the Resource Spending Review, May 2022
and the Scottish Budget 2023/24
Increasing cost pressures jeopardise the sustainability of local
services
21. At a time when councils and their communities are still feeling the
impact of the Covid-19 pandemic, councils are now also having to manage
increasing cost pressures including:
• inflationary pressures, including rising energy costs, which are having
a significant impact on the cost of providing services
• managing the ongoing recovery from Covid-19 and its longer-term
impact, now that one-off Covid-19 funding has ended
• meeting the cost of new pay awards and Real Living Wage
• increasing demand for services from a population that is ageing,
less healthy and facing increasing financial hardship
• higher costs of capital programmes as a result of inflation, slippage
due to the pandemic and shortages in construction materials.
These increased costs may affect councils’ ability to deliver
on capital transformation programmes, which are a necessary
component of modernising services to deliver improved outcomes
for local communities. We report further on capital pressures in our
Local Government in Scotland: Financial Bulletin 2021/22.
22. These significant cost pressures alongside forecasted reductions
to funding are leading some chief executives to be concerned about
the sustainability of councils. This could lead to cuts to services and job
losses, particularly in the absence of a radical reform of services.
Local government in Scotland: Overview 2023 | 17 |

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23. A UK-wide survey by the Society of Local Authority Chief Executives
(SOLACE) found that 78 per cent of council chief executives and senior
managers responding to the survey stated that they were facing a large or
very large budget gap in 2023/24.1 Those services they identified as at risk
of cuts included:
• Environmental service (identified by 75 per cent of respondents)
• Libraries, leisure and tourism (67 per cent)
• Regeneration (50 per cent)
• Adult social care (44 per cent)
• Transport (38 per cent)
• Children’s services (37 per cent)
• Housing (33 per cent).
24.  While there is no doubt that cost pressures and budget constraints
are putting pressure on services, there is no clear picture yet of the scale
and impact of service cuts or reductions.
Councils are relying on reserves to bridge budget gaps
25. In 2022/23 councils’ total budget gap stood at £0.4 billion. COSLA
estimates that the budget gap for 2023/24 will be £1 billion. There is a
large gap between what COSLA states councils need and the Scottish
Government’s funding allocation and it warns this could mean fewer jobs
and cuts to services.
1 SOLACE Autumn statement survey, November 2022.
26. Two-thirds of councils intended to use reserves to bridge the 2022/23
budget gap and target recovery activity. While this is understandable
as some of this was Covid-19 funding carried forwards via reserves to
spend in the following year, these funds were one-off payments. It is not
sustainable to keep using reserves to meet financial pressures.
27. It is important that councils maintain overall reserve levels in line with
local strategies to ensure longer-term resilience and sustainability. Having
robust medium- and longer-term financial plans in place will continue to be
key to maintaining financial sustainability. Councils will also need to make
difficult choices about spending priorities.
Increasingly ring-fenced and directed budgets reduce financial
flexibility
28. An increasing proportion of local government funding is now either
formally ring-fenced or provided with the expectation it will be spent on
specific services.
29. In our Local Government in Scotland: Financial Bulletin 2021/22,
we calculated this to be 23 per cent of total revenue funding in 2021/22
compared to 18 per cent in the previous year. Ring-fenced and directed
funding helps support the delivery of key Scottish Government policies
but limits local discretion and flexibility over how these funds can be used
locally by councils.
30. Exhibit 5 (page 19) details how we calculated ring-fenced
and directed funding and how the Scottish Government and COSLA
interpretations differ.
Local government in Scotland: Overview 2023 | 18 |

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Exhibit 5.
Views on ring-fenced or directed elements of the Scottish Government’s revenue funding to local government
Scottish Government’s view COSLA’s view Our calculation
Only the specific revenue grant is formally
ring-fenced to fund identified policies.
Other funding commitments are directed
for national policy commitments but are
not formally ringfenced.
In 2021/22, the specific revenue grant was
£776 million, representing seven per cent of
total revenue funding for local government.
This included funding for early learning and
childcare expansion, Pupil Equity Fund and
criminal justice social work.
Includes the specific revenue grant plus
obligations created by current and past
Scottish Government policy initiatives and
fixed obligations such as loan charges.
In 2021/22, COSLA estimated that these
represented 65 per cent of local government
revenue funding. As part of their estimate
COSLA include all school teaching staff
costs (due to the national commitment to
maintain teacher numbers), all adult social
work costs devolved to IJBs alongside other
policies such as universal Free School Meal
provision for P1–5.
We include the specific revenue grant
and funding outlined in local government
finance circulars and Scottish Government
budget documents as being directed for
national policy initiatives.
For 2021/22, we estimated that ring-fenced
and directed funding totalled £2.7 billion,
representing 23 per cent of total revenue
funding for local government. A large amount
of this was to support elements of education
and social care service provision.
Source: Local government in Scotland: Financial overview 2018/19, Local government in Scotland: financial bulletin 2021/22
and information from COSLA including their submission to the Scottish Parliament’s Finance and Public Administration Committee
work on The Impact of the Cost of Living and Public Service Reform, August 2022
Local government in Scotland: Overview 2023 | 19 |

Page 20

Changing demographics, the pandemic and the cost-of-living crisis increase pressure on
council services and people already experiencing inequality are most affected
31. While the local impact of national demographic trends varies, for
many years we have been reporting how changes in the structure of the
population affect the need for and demands on many council services.
These changes include:
• a declining population that is also ageing, with the proportion aged
over 65 projected to increase by a third by mid-20452
• falling life expectancy and falling healthy life expectancy. The gap in
healthy life expectancy between the top and bottom socio-economic
groups is about 25 years.3 4
32. The legacy of the Covid-19 pandemic and now the cost-of-living
crisis have brought new pressures or exacerbated existing ones
(Exhibit 6, page 21). The situation faced by some is stark, with
increasing financial hardship and a decline in levels of mental wellbeing.
Low-income households and people already experiencing inequalities are
most affected.
33. Child poverty remains persistently high. In 2019–22, 24 per cent of
children were living in relative poverty, the same level as five years ago.5
Two issues should be taken into consideration when considering this
year’s child poverty statistics:
2 Projected Population of Scotland (2020-based), National Records of Scotland.
3 Life Expectancy in Scotland, 2019–2021, National Records of Scotland.
4 Healthy Life Expectancy 2019–2021, National Records of Scotland.
5 Poverty and Income Inequality in Scotland 2019–22, March 2023.
• As noted in our Tackling child poverty briefing paper the main
indicator – relative poverty – is based primarily on income rather than
outgoings and so does not fully capture the impact of the cost-of-
living crisis on children and families.
• Two key policies that may have a positive impact on child poverty
figures – the rollout and increase in value of the Scottish Child
Payment and the expansion of funded early learning and childcare to
1,140 hours – are not yet fully captured in the data.
34. Councils have a key role in tackling these issues and providing support.
These growing pressures affect:
• the demand for services, including social care, education, financial
support such as Scottish Welfare Fund grants and discretionary
housing payments, housing and homelessness, and employability
• council income in terms of rent and council tax arrears.
35. At a time when councils are under severe financial strain, finding the
capacity and resources to respond to these pressures in the short and
longer term will be a challenge.
Local government in Scotland: Overview 2023 | 20 |

Page 21

Exhibit 6. 
Examples of growing pressures
Persistently
high levels of
child poverty
In 2019–22, 24 per cent of children were living in
poverty, affecting every aspect of their wellbeing and
life chances. This is at the same level as five years
ago, and the ongoing increases in the cost-of-living
crisis risk more children experiencing poverty.
Increasing
financial
hardship for
people living
with a disability
Sixty-four per cent of respondents to a small survey
by Inclusion Scotland in September 2022 said that
they are cutting down on or going without items or
services used directly to manage their impairment or
health condition.
Increasingly
stark situation
for low-income
families
Almost one in five low-income families are unable
to afford food or heating. Eighteen per cent of low-
income households have skipped or reduced the
size of meals and not heated their home due to
the cost-of-living crisis (Poverty in Scotland 2022,
Joseph Rowntree Foundation).
Increasing food
insecurity
In 2021, nine per cent of adults were worried about
running out of food, six per cent were eating less,
and three per cent were running out of food (The
Scottish Health Survey, 2021). 45 per cent of children
living in poverty live in households that lack food
security (2019–22 Child Poverty Statistics).
Increasing rent
arrears
Over 110,000 council tenants were in arrears as
of March 2022 (an increase of 6.6 per cent since
March 2021).
Ethnic minority
households
more likely
to experience
deeper levels of
poverty
Ethnic minority households are likely to spend a
greater proportion of their income on essentials
that are subject to inflation. The proportion of
children in relative poverty after housing costs
in minority ethnic households is 39 per cent
(2019–22 Child Poverty Statistics).
Increasing
financial
hardship for
single parent
families
Three in five single parents find it extremely difficult
or are no longer able to afford utility payments, and
two out of five say the same about food (One Parent
Families Scotland research, March 2022).
Declining
average levels
of mental
wellbeing
Levels were lower in 2021 than in 2019, following a
decade in which levels had remained fairly constant.
Women’s average mental wellbeing fell by more
than men’s during the pandemic, and those people
living in more deprived areas continue to report
lower wellbeing. The lowest mental wellbeing
scores were reported for young adults in the most
deprived areas (Scottish health survey, 2021).
Local government in Scotland: Overview 2023 | 21 |

Page 22

Councils are managing an increasing programme of national reform, including plans
for a national care service, which comes with substantial funding implications and
increased uncertainty
36. Councils have a unique role in shaping local communities. They
provide many of the key local services that individuals and communities
rely on. They also have a key local and, in many cases, regional role
working with partners to set local priorities and improve long-term
outcomes for their communities.
37. Alongside local priorities, councils play a leading role in delivering
many national policies. Current areas of national policy or reform affect
nearly every aspect of local government, such as education, early
learning provision, tackling child poverty, adult social care and achieving
net zero targets.
38. These policy initiatives will see fundamental changes in how council
services are provided, come with substantial funding implications, and
increased uncertainty. National policy initiatives also take up an increasing
amount of council budgets which brings challenges in delivering
local priorities and sustaining other service areas. This context makes
longer-term financial planning challenging yet vital to ensure financial and
service sustainability.
Plans for the new National Care Service are uncertain and
divide opinion
39. The social care sector is under severe pressure from high demand and
persistent workforce challenges, and a lack of action now presents serious
risks to the delivery of care services for individuals. The Independent
Review of Adult Social Care (IRASC), published in February 2021,
sometimes referred to as the Feeley Report, proposed the formation of
a National Care Service stating that the potential of social care support
in Scotland cannot be achieved without a new delivery system and that
a National Care Service is needed to achieve consistency, drive national
improvements, ensure strategic integration with the National Health
Service, set national standards and terms and conditions, and bring
national oversight and accountability by bringing together everyone with a
role to play in planning and providing social care support.
40. The National Care Service Bill is at stage 1 but has been postponed
until at least September 2023 because of concerns about the adequacy
of parliamentary scrutiny based on only a framework Bill. There are still
many unknowns. Details of the arrangements have yet to be determined
and the scale of the costs involved in the financial memorandum are
estimates with many caveats. The affordability of the vision set out is not
certain given the actual scale of the costs are not yet clear. It is difficult for
councils to plan current services with such uncertainty.
41. While there is consensus that fundamental reform is essential for
long-term sustainability, there is not agreement about what that reform
looks like and how it will be implemented.
Although local government agrees that reform is necessary, it
disagrees that centralising services and structural reform will achieve
the improvements needed. While the Scottish Government wants
consistency of service across the country, stakeholders have raised
concerns about the scale of reform and the time it will take to
implement it.
Local government in Scotland: Overview 2023 | 22 |

Page 23

42. Immediate concerns in the sector are that current issues (such as
workforce and financial sustainability) in social care are in a critical state
and these need addressed now.
43. We highlighted in our Social Care briefing (January 2022) that lessons
need to be learned from past restructuring and public service reform,
for example health and social care integration, police and fire reform,
college sector regionalisation, and the development of social security
responsibilities in Scotland.
44. Our reports in these sectors have found that reform is challenging,
and public bodies have experienced difficulties implementing elements of
reform – expected benefits are not always clearly defined and, even if they
are, reform does not always deliver the expected benefits, particularly in
the short term. Any difficulties in implementing social care reform could
have a significant negative impact on vulnerable people who rely on care
and support.
Our recent reports on other national policy areas:
Child poverty: in September 2022 the Accounts Commission
and Auditor General for Scotland produced a briefing
Tackling child poverty.
Education: in March 2023, we published a blog Encouraging
progress on education data but still a long way to go.
Early learning and childcare: in June 2023 we will publish our
third performance audit on the expansion of early learning
and childcare.
Councils have a critical role in meeting national climate
change goals
45. Councils have a critical role in achieving Scotland’s national climate
change goals and contributing towards the national target of net zero by
2045. This includes councils:
• managing their own activities, estates, and assets to reduce
their greenhouse gas emissions and achieve net zero – councils’
corporate emissions are the largest element of all public sector
emissions in Scotland
• demonstrating leadership to tackle climate change across their local
area, supporting behaviour change by helping their communities to
adopt low carbon lifestyles and working with local partners to help
communities adapt to the impacts of climate change.
46. In September 2022 we published Scotland’s councils’ approach to
addressing climate change which set out that there are big differences
in the targets that councils have set and their timescales for reaching net
zero. We also found that councils need to be more transparent about their
targets, their plans to meet them and the challenge ahead. Successfully
addressing climate change is a huge challenge and will only be achieved
with collaboration across all parts of government and society.
47. Financial constraints and a lack of specialist skills risk net zero
ambitions not being realised. Failure to act early enough, however, will
increase costs in future years. It could also make existing health and
social inequalities worse, because the impacts of climate change, such as
extreme weather events, can have a disproportionate effect on vulnerable
groups and those living in poverty.
Local government in Scotland: Overview 2023 | 23 |

Page 24

Increasing workforce challenges such as recruitment difficulties and high sickness
absence levels are putting councils under continued pressure
48. Staff worked under unprecedented strain during the pandemic
to adapt and maintain services and support communities. That same
workforce is still under pressure.
49. Despite a focus on wellbeing, overall absence levels for
non-teaching staff in 2021/22 were the highest on record (Exhibit 7).
The Improvement Service highlight stress and burn-out as contributing to
high absence levels.6
50. Recruitment and retention continue to be a challenge in both senior
and front-line roles across Scotland as the employment market remains
highly competitive (info box, page 25).
51. In our 2022 Social care briefing, we reported that the sector
faced ongoing recruitment and retention challenges, with high vacancy
rates. This situation has worsened since, with 47 per cent of services
reporting vacancies in 2021 compared with 36 per cent the previous
year and 11 per cent across all sectors in Scotland. The whole-time
equivalent vacancy rate in 2021 was 8.1 per cent, up from 5.1 per cent
the previous year. In comparison, the vacancy rate across all sectors in
Scotland was 1.9 per cent.7 Our briefing highlighted issues such as poor
terms and conditions and staff not feeling valued as contributing to these
recruitment difficulties.
6 National Benchmarking Framework Overview Report 2021–22,
Improvement Service, March 2023.
7 Care Inspectorate and Scottish Social Services Council (SSSC),
Staff vacancies in care services 2021 report, Scottish Government’s
Employer Skills Survey 2020.
Exhibit 7. 
Sickness absence levels over ten years from
2012/13 to 2021/22
Staff absence levels (excluding teachers) were the highest ever
recorded in 2021/22. Teacher absence levels also increased in
2021/22 but remain lower than pre-pandemic levels.
0
2
4
6
8
10
12
2021/222018/192015/162012/13
Days 12.2
Sickness absence days per
employee (non-teacher)
5.8
Sickness absence days
per teacher
Note: Covid-19 absences are recorded separately and do not
contribute to the trends.
Source: Local Government Benchmarking Framework 2021/22
Local government in Scotland: Overview 2023 | 24 |

Page 25

52. The Society of Personnel and Development Scotland (SPDS) and
the Improvement Service state that councils are also reporting emerging
recruitment problems in new areas such as accountancy and corporate
services, which may present risks to financial management.
53. The cost-of-living crisis, driven by inflationary cost pressures, led to
industrial action by refuse workers and teachers over pay. While pay
claims increase the pressure on budgets, prolonged negotiations adversely
affect staff morale and service delivery.
54. Councils showed considerable flexibility in redeploying staff and
adopting remote or hybrid working during the pandemic. However, it
is still unclear exactly what impact hybrid working has on productivity
or future models of service delivery. Recent research undertaken by
the Scottish Government on this presents mixed findings.8 Our recent
report Resourcing the benefit service: A thematic study found that
remote working may present a risk to claims processing performance
and recommended that councils regularly review flexible location
working arrangements to determine the impact on service delivery
and performance.
8 Working from home during the COVID-19 pandemic: benefits,
challenges and considerations for future ways of working,
Scottish Government, October 2022
Reasons for recruitment and retention issues
Hybrid working has changed the way people work: they can
now work remotely for an organisation in England or further
afield. Private sector firms are offering hybrid working and
looking to offer further improvements in quality of life.
Senior roles: bottom loading pay deals have narrowed the
gap between junior and senior roles and made the latter less
desirable. Public sector pay at senior levels has not kept pace
with other sectors, so staff are leaving for better paid positions.
Retirement: the workforce is ageing and people are retiring, but
now councils are seeing people retiring earlier.
Source: Audit Scotland using information from the Improvement
Service, SPDS and Local Government Information Unit (LGiU)
Local government in Scotland: Overview 2023 | 25 |

Page 26

While many councils demonstrated strong collaborative leadership during the pandemic,
ineffective leadership and high levels of change in senior officers identified at several
councils present a risk
55. During the Covid-19 pandemic, many councils demonstrated strong
collaborative leadership, working at pace with communities, the third
sector and partners to provide the response needed. Councils’ response
was quicker where good partnership arrangements were already in place.9
Leaders used their local knowledge and set out clear priorities for working
towards a common purpose.
56. Despite this, the following leadership risks have been identified in
recent audit work:
• Ineffective strategic leadership: of the four Best Value Assurance
Reports (BVARs) completed last year, in three (Moray, Shetland and
Eilean Siar) we found that elected members were not demonstrating
effective strategic leadership alongside senior management. This
included leaders needing to better coordinate and drive forward
plans, to have a stronger focus on strategic issues and elected
members needing to work better together to deliver priorities.
• Ineffective governance or scrutiny: our 2021/22 annual audit work
identified leadership risks relating to ineffective leadership in nine
councils, often linked to ineffective governance, scrutiny, or both.
• High levels of turnover: most councils reported changes in
senior leadership during 2021/22. Six chief executive or depute
positions saw changes. Recent BVARs highlight that some
councils are experiencing persistent difficulties in recruiting to key
leadership posts.
9 Community empowerment: Covid-19 update, Audit Scotland, Octobert 2021
57. The growing scale of the challenges facing local government requires
leaders to make decisive and fundamental changes to how councils will
operate in future. The leadership and strategic vision of elected members
and senior officers will be crucial. Ineffective leadership and high turnover
put at risk councils’ leadership capacity to bring about fundamental change
at the pace needed.
The pandemic and cost-of-living crisis have exacerbated tensions
in central and local government relations
58. Effective partnership working between the Scottish Government
and local government, built on a foundation of mutual trust, is essential
for councils to be able to perform their key role in leading and shaping
communities.
59. The pandemic and cost-of-living crisis has exacerbated tensions
in central and local government relations. While local government
demonstrated the positives of localism during the pandemic, and
the Scottish Government is committed to local self-governance and
community empowerment, local government feels that it should be
involved in policymaking as well as implementing those policies at a
local level.
60. There is appetite to rebuild an effective relationship between local
and central government so that the strengths and capacity of both can
be maximised to meet the challenges. Meaningful steps to realising
these potential benefits would include Scottish Government and COSLA
agreeing the New Deal (paragraphs 71–73).
Local government in Scotland: Overview 2023 | 26 |

Page 27

How are councils responding?
Councils must focus urgently on solutions that will deliver a sustainable future for
local government.
Councils need to challenge old ways of doing things
and take urgent action to reform
61. The scale of the challenge that lies ahead is greater than anything local
government leaders (elected members and senior officers) will have ever
experienced. Councils must work on three planning horizons: continue
to deliver services here and now, identify and make improvements in
the short term and plan for the longer-term radical change. This is an
incredibly hard thing to do with an exhausted workforce but with councils’
future funding position forecast to reduce in real terms, radical change
is necessary so that councils can continue to serve their communities,
respond to needs, meet demand and improve outcomes for people
in the future.
62. Delivering services differently should be focused on improving
performance and outcomes in ways that are innovative, affordable, and
sustainable. A decade on, the four pillars in the Christie Commission
report – people, prevention, performance, and partnership – are just as
important and councils should embed them into their long-term visions
and priorities.1
63. The Commission recognises the challenges, complexities, and
uncertainties that local government faces. In our Local Government
in Scotland 2019 report, we emphasised the need for councils to
urgently consider making fundamental changes in how they provide
1 Christie Commission on the future delivery of public services, June 2011
services. No one could have predicted the years that were to follow,
nor the pressures that councils would face, yet evidence that councils are
delivering radical sustainable reform is limited.
64. In this section, we set out how councils are placed to respond to the
challenges they face and to move towards adopting a sustainable future
model of local government. We consider the following themes:
Finances and resources
Leadership
Collaboration
Workforce
Community needs and inequalities
65. To achieve radical change, leaders need to build on the
innovative ways of working demonstrated during the pandemic.
Exhibit 8 (page 28) draws on lessons learned from the pandemic
response based around the five themes above as well as outlining where
we judge that more still needs to be done.
Local government in Scotland: Overview 2023 | 27 |

Page 28

Exhibit 8. 
Lessons learned from the pandemic and what more needs to be done
The pandemic demonstrated what can be
achieved when councils:
To deliver radical change councils need to build
on the innovative ways of working seen during
the pandemic and take further action to:
Flexible finances
and resources
• are given local flexibility
• incorporate digital technology in service redesign
• reconfigure or repurpose their estate
• finalise New Deal for local government
• set out medium to long term financial plans
Driven
Leadership
• show strong collaborative leadership with clear
priorities
• use data to understand needs, make decisions
and direct resources
• are agile and work at pace to provide the response
needed
• think radically, set a clear vision and make difficult
decisions
• improve relations with the Scottish Government
• be open with communities and staff about challenges
and changes ahead
Greater
Collaboration
• work with partners, third sector and communities
to reshape services and respond to need
• work towards common goals
• adopt place-based approaches
• work with other councils and partners to provide
joint services
• better involve communities in service redesign
Resilient
workforce
• adopt new ways of working, including flexibility
redeploying staff
• focus on physical and mental wellbeing
• promote shared values and a caring culture
• make best use of their existing workforce
• continue to monitor wellbeing
• update workforce plans to reflect future models of
service delivery
A focus on
community
needs and
inequalities
• focus on areas of greatest priority and demand
• identify and support the most vulnerable
• take a ‘whole systems’ approach
• strengthen the use of data and involve those with
lived experience
Local government in Scotland: Overview 2023 | 28 |

Page 29

Councils need to balance immediate financial pressures with planning for and delivering
long-term sustainable services
66. As the whole public sector faces the most difficult financial outlook
seen for many years, councils need to make increasingly difficult choices
about their spending priorities and balance short-term pressures with
planning fundamental reform to provide long-term financial sustainability.
67. In the short term, councils have focused on immediate budget
pressures. In our Local Government in Scotland: Financial bulletin
2021/22 we reported that for 2022/23 the majority of the estimated
budget gap (that is the gap between anticipated expenditure and revenue)
was planned to be bridged by:
• Recurring savings: these savings were expected to meet about
37 per cent of the budget gap. For 2021/22 (the most recent year of
accounts), councils’ savings performance continued to improve but
some chief executives and COSLA are concerned that forecasted
reductions to funding will mean reductions or cuts in services and
job losses.
• Use of reserves: two-thirds of councils intended to use reserves to
help bridge the gap. This reliance on non-recurring reserves is not
sustainable in the medium to long term.
• Increasing council tax rates: the Scottish Government lifted the
freeze on council tax in December 2021. For 2022/23, the majority
of councils increased council tax rates by three percent (in 2023/24,
the majority increased rates by five per cent).
• Use of financial flexibilities: about four per cent of the gap
was expected to be met by councils reprofiling their loans funds
repayments by extending the repayment period. This generates
one-off savings and is not sustainable in the long term.
• Increasing income through fees and charges: the scope for
increasing income and the scale that can be achieved is currently
limited but options being explored include councils introducing
charges for garden waste, a transient visitor levy (‘tourist tax’) and
tariffs for public electric vehicle charging.
68. The achievement of recurring savings and a movement away from the
reliance and use of non-recurring savings and reserves will be important to
ensuring longer-term financial sustainability.
69. Councils also need to focus on making increasingly difficult choices
about their spending priorities and medium- to long-term financial planning
must mature as councils look to make more fundamental change.
70. In May 2022, the Scottish Government published the first multi-year
resource spending review in Scotland since 2011, outlining its resource
spending plans up to the end of this Parliament in 2026/27.
While welcome, the financial information was not sufficiently detailed
for planning purposes, with spending plans expressed at ‘level 2’
for the four years of the spending review period without individual
council allocations indicated.
Local government in Scotland: Overview 2023 | 29 |

Page 30

Agreeing the New Deal will be an important step forward
71. The May 2022 Resource Spending Review also set out plans to agree
a New Deal for local government. The Scottish Government, COSLA and
SOLACE are working together to advance this, building on the work of the
paused local governance review (which was launched in 2017).
72. In its Programme for Government 2022/23 (published in September
2022), the Scottish Government reinforced its commitment to agreeing
a New Deal including a fiscal framework for local government. The New
Deal was expected to be agreed by April 2023.2 However, the Cabinet
Secretary for Social Justice, Housing and Local Government indicated
in January 2023 that it was likely to be delayed by several months.3
Since then there has been a new First Minister and changes to senior
posts in the Scottish Government and COSLA.
While it is important to get the New Deal right, action is now urgently
needed to agree this. Further delays present considerable risks to the
wider urgent action that councils need to take.
73. The New Deal is an important step in developing a partnership
agreement that supports collaboration and trust, as well as developing
a new fiscal framework that supports more certainty of funding, greater
transparency and more flexibilities for local government. This should
enable councils to better plan their long-term priorities and future service
delivery models, and to manage council resources more effectively to
deliver them.
2 Investing in Scotland’s Future: Resource Spending Review,
Scottish Government, May 2022.
3 17 January 2023 Local Government, Housing and Planning
Committee.
The New Deal is anticipated to include three elements:
• a partnership agreement with councils
• a fiscal framework to support greater transparency and
accountability
• a working group to explore different options for the funding of
local government in the future.
The aims of the New Deal include:
• balancing greater financial flexibility with accountability for
delivering national priorities
• increased flexibility in and scope for revenue raising powers,
such as the ‘tourist tax’ and workplace parking levy
• exploring how best to transform the digital administration of
the non-domestic rates system
• increasing the flexibility available to councils for existing
service concession arrangements, such as PFI- or
NPD-funded projects
• a comprehensive capital accounting review.
Source: Audit Scotland using information from the Scottish
Government’s Resource Spending Review, May 2022 and
updates from Letter from the Cabinet Secretary to the Social
Justice, Housing and Local Government, July 2022 and
Committee report, Net Zero, Energy and Transport Committee,
January 2023.
Local government in Scotland: Overview 2023 | 30 |

Page 31

Leaders need to invest time and capacity into thinking radically about their councils’
future operating model, how it will be achieved and be open with communities and staff
74. Leaders (elected members and senior officers) must respond to the
immediate pressures while also providing a long-term vision for their local
areas and how services will be delivered differently in future. Leaders
are vocal about the challenges ahead, and there is an increasingly clear
appetite for change. However, the level of uncertainty and volatility faced
by councils makes planning for the future more difficult.
75. In our Best Value reports on individual councils, we have seen that
the quality of leadership and the pace and appetite for change varies. The
current challenges may reinforce this gap with the risk that some councils
will be left behind. The experience of leading through the pandemic and
building on the lessons learned; reducing bureaucracy, working with
partners and communities, focusing on the vulnerable, pivoting to digital and
using the workforce in flexible ways must be consolidated and built upon.
76. In our 2022 report, we outlined important leadership principles
that enabled councils’ response to the pandemic – communication,
collaboration, emotional intelligence, data-driven, agile and flexible, culture-
focused, and enabling community empowerment. Leaders should draw
on these to overcome the challenges now faced.
77. The challenging context needs leaders to invest time and capacity
into thinking about radical changes to their council’s future operating
model. It is important that leaders are clear about their long-term policy
and performance priorities, are managing council resources effectively to
deliver them and are open with communities about what range and levels
of services they can expect to receive in future.
78. It is important that councils with identified leadership risks develop
the leadership skills needed to respond to this complex and uncertain
environment. It is positive that most councils have undertaken an
assessment of senior leadership skills and developed action plans to
address any skills gaps. High turnover at leadership level presents a risk to
delivering change, and councils will need to continue to assess how best
to recruit, pay and keep the talent needed.
79. Councils have structured induction programmes for new
elected members and many also have further training programmes
or development opportunities. Several councils have personal
development plans to provide bespoke training for elected members
(Case study 2, page 32). Elected members have a crucial role in
engaging with their communities to explain future priorities and what
that means for services and the local area, and to manage expectations.
Many councils have been working on this through participatory
budgeting and consultations on spending and service priorities
(Case study 3, page 32).
80. Leaders recognise the need to engage with staff and trade unions
on the implications of fundamental reforms for the workforce. They also
recognise the need to involve them in developing solutions, innovating,
and committing to a clear vision and aims for the council, its services,
and the way it works with partners, the third sector and communities
to make the most of scarce resources in their places. It is recognised,
however, that this is particularly challenging in an environment of potential
job losses.
Leadership is the focus of the Commission’s annual Best Value
thematic work this year and will be covered in all council annual
audit reports published in Autumn 2023.
Local government in Scotland: Overview 2023 | 31 |

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Case study 2. 
Elected member training and induction
West Lothian Council has an elected member development
programme, which includes an online structured induction
programme. Key topics include climate change, emergency
planning and quality assurance procedures. Members are also
supported to complete a personal development plan to enable
them to identify and discuss specific and individual needs.
Members are encouraged to review their role and consider what
will help them to improve their performance and develop their
knowledge, skills and abilities. This could be through training
events, coaching, working with an experienced colleague or
project work.
An evaluation of the induction programme was undertaken
in July 2022 and positive feedback was received from elected
members.
Source: Audit Scotland auditor data return and information from
West Lothian Council
Case study 3. 
Community budget consultations
Perth and Kinross Council asked residents for their views on the
council’s 2023/24 budget and priorities for the next five years via
an online survey accessed through the council’s consultation
hub. The council also held several in-person and online budget
and corporate plan engagement events where communities
could voice their views on the proposed new vision for Perth
and Kinross. Residents were presented with the council’s seven
draft priorities and asked whether they agreed that these are the
key issues that the council should focus on.
A summary of the responses from the survey and the
engagement sessions was included in the report considered by
the council when agreeing the corporate plan and budget.
Source: Audit Scotland using information from Perth and
Kinross Council
Local government in Scotland: Overview 2023 | 32 |

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Councils need to collaborate with communities, other councils and the wider public
sector to tackle the challenges
Collaboration with communities
81. Our 2022 overview report outlined how communities were a vital
asset in the response phase of the pandemic but that more needed to be
done to involve communities and service users in the recovery and the
redesign of services. As councils take steps to fundamentally change how
they provide services, the involvement of service users and communities
will be critical to redesigning services that meet community needs and
tackle long-term issues such as climate change and inequalities while also
being sustainable.
82. Councils regularly consult with their communities to inform decision-
making, including on setting annual budgets, redesigning services, and
priorities for strategic plans. Reflecting the exceptionally challenging
funding context this year, we have seen examples of councils engaging
with their communities to explain the gaps in their budget and how they
intend to bridge them (Case study 3, page 32).
83. We found good approaches to consulting communities to better
understand the impact of the pandemic and inform decision-making on
emerging challenges such as community impact assessments, research
focused on the impact of the pandemic and establishing lived experience
panels for the cost-of-living crisis (Case study 4).
84. Councils could still do more to empower communities and work more
with them on the redesign of services. Our Community empowerment:
Covid-19 update report brings together the learning points from the
community response to the pandemic to help public bodies develop their
longer-term approaches to supporting and empowering communities.
Case study 4. 
Community engagement to better understand
community needs and inform decision-making
East Renfrewshire Council uses a wide range of consultation
and engagement approaches to understand community needs
and issues and uses this intelligence to identify local priorities
and inform strategic plans and service redesign. For example,
it recently commissioned research on the impact of the
pandemic to inform strategic decision-making and the redesign
of services.
Source: Audit Scotland using information from East
Renfrewshire Council
Local government in Scotland: Overview 2023 | 33 |

Page 34

Collaboration with local partners
85. Councils have a good history of working with local partners and a
statutory duty to do so through community planning partnerships.
86. The Covid-19 pandemic showed what can be achieved by working
closely with local partners, including the third sector. Councils led a ‘place-
based approach’ (info box, page 35) that worked across organisational
and functional boundaries with aligned objectives and outcomes. This
should now be consolidated into service delivery but there is concern that
the momentum could be lost. Many organisations are facing their own
funding and demand pressures that could threaten their ability to provide
services and limit their capacity to explore new partnership working.
87. A recent report exploring barriers to effective collaboration between
the third and public sectors identified four main themes: funding,
meaningful collaboration, procurement and the cross-cutting issue of
lack of trust.1 All partners need to work with each other to overcome
these barriers if councils are going to meet the challenge to deliver
sustainable public services going forward.
88. Despite the barriers there are many positive examples of collaborative,
place-based approaches and existing partnerships for councils to build
on (Case study 5). The scale of the challenges mean that it is only by
working together that councils and their local partners (including their
communities and the third sector) will be able to provide sustainable public
services and tackle long-term complex issues such as climate change,
child poverty and inequalities.
1 Supporting collaboration between the third and public sectors:
evidence review, Scottish Government, COSLA, SCVO and TSI
Scotland Network, October 2022.
Case study 5. 
Local partnership working
Clackmannanshire Council works with local public sector
partners and relevant third sector partners to deliver
the STRIVE (Safeguarding through Rapid Intervention)
programme.
Sharing crucial pieces of information at the earliest opportunity
between trusted partners means practitioners are better able
to ‘join the dots’ to understand the overall vulnerability of cases
and share knowledge of existing support and interventions
underway: this better informs the most appropriate action,
reduces the likelihood and impact of people experiencing crisis
and reduces the intensive resource required by services.
An evaluation of STRIVE was undertaken in March 2021 and
identified many benefits including preventing homelessness,
improving financial security, providing rapid and direct access to
mental health support, keeping families together and reducing
alcohol and drug use. Building on the success to date, an
early intervention approach has been added to other Family
Wellbeing Partnership work in the area.
Source: Audit Scotland using information from COSLA and
Clackmannanshire Council
Local government in Scotland: Overview 2023 | 34 |

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Collaboration with other councils
89. Councils need to radically rethink how they work with other councils
to move towards a more sustainable model of service delivery. Shared
services and shared professionals offer efficiencies and can help to
manage recruitment pressures and skills shortages.
90. Councils have made limited progress in this area. Few councils are
sharing services. Only six out of 26 councils reported sharing services and
four of these were sharing internal auditors (Case study 6).
Case study 6. 
Working with other councils
Scottish Borders Council and Dumfries and Galloway Council
are working with other regional partners to develop and deliver
a south of Scotland regional economic strategy. Through a
Regional Economic Partnership, the councils have developed
a long-term vision to guide and coordinate efforts to recover
from the impacts of the Covid-19 pandemic, adjust to the UK’s
withdrawal from the EU, address the climate crisis and capitalise
on new opportunities.
Source: Audit Scotland using information from Dumfries
and Galloway Council and the South of Scotland Regional
Economic Partnership
A place-based approach is about understanding the issues,
interconnections and relationships in a place and coordinating
action and investment to improve the quality of life for
that community. The Scottish Government and COSLA
have adopted a Place Principle. This promotes the need for
communities, public organisations and businesses to work
collaboratively with the assets and services in a place to achieve
better outcomes.
Local government in Scotland: Overview 2023 | 35 |

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Workforce planning must improve so that councils have the staff, skills and leaders
needed to bring about change and create a resilient workforce for the future
91. Councils and their leaders need to respond to the direct pressures
facing their workforce in terms of wellbeing and recruitment while
managing the impact of pay demands and balancing the budget.
Councils must invest in workforce planning to ensure a resilient workforce
in the future.
92. Staff wellbeing was a priority during the pandemic and councils
continue to take measures to promote staff health and wellbeing. With
rising absence levels and persistent recruitment issues, some councils
are looking at making roles more attractive by improving work-life balance
through new ways of working (Case study 7).
93. Lessons learned from the pivot to remote working and then hybrid
working during the pandemic indicate there are many potential benefits.
For example, the flexibility to work remotely attracts more people and
from a wider geographic spread, potentially bringing in more skills, it can
support increased wellbeing and work life balance for existing staff, as
well as reducing the carbon footprint through less travel to work. However,
councils should continue to monitor the impact of new ways of working
on employees’ wellbeing and on service users’ experience, productivity,
and the local economy.
94. In future, councils’ workforces may look and work quite differently as
a result of job losses (fewer staff), increased digital processes, changing
population demographics (an ageing workforce) and new service delivery
models. Councils should embed the approaches they took during the
Covid-19 pandemic which saw them adapt to working flexibly and being
agile in how they deployed staff and working more closely with partners
and communities.
Case study 7. 
Wellbeing initiatives
Angus Council runs a resilience programme to promote staff
wellbeing and a programme for leaders is in development.
Dumfries and Galloway Council has created a robust wellbeing
framework that includes cross-council and cross-sector
collaboration.
North Lanarkshire Council updated its wellbeing
communications to reflect new working practices and is also
working closely with partners and providers to make sure the
council’s wellbeing offering meets staff needs.
South Lanarkshire Council has developed a ‘New Deal for
Employees’ which encourages and supports employees to
prioritise their own health and wellbeing. South Lanarkshire
Council is the first in Scotland to ensure employees have the
‘right to disconnect’ outside of working hours.
More information is available on our website.
Source: Audit Scotland using information from the
Improvement Service
Local government in Scotland: Overview 2023 | 36 |

Page 37

95. The severe financial situation facing councils inhibits their ability to
recruit and brings the risk of job losses. To meet rising demand and to
deliver new Scottish Government policies, councils need to innovate to
make the best use they can of their existing workforce to continue to
provide sustainable services.
96. Effective workforce planning will be essential to:
• address current workforce challenges in recruitment, retention and
skills shortages
• look ahead at longer-term capacity and skills requirements as
councils fundamentally change how they deliver services
• ensure that councils reduce their workforce in an informed way so
that skills and knowledge are not lost.
This requires sufficient capacity and skills, strategic thinking and
comprehensive workforce data. See Audit Scotland’s workforce planning
maturity matrix (Exhibit 9).
97. For several years we have reported that workforce planning needs
to improve. Our auditors have told us that 16 out of 26 councils have
updated their workforce plans since the Covid-19 pandemic and a further
three have plans in development. Some councils have also been working
to include succession planning in their workforce plans to develop future
leaders or specific skills required across their workforce. Some are also
now working with a three-year, rather than five-year, workforce planning
cycle reflecting the more uncertain context.
98. However, councils continue to report that they lack the resources
to support workforce planning, and that they are looking at ways
to try and address this. Councils have been collaborating with one
another, the Improvement Service and SPDS to share practice and
to make improvements. The SPDS has suggested that COSLA have
a role in engaging with the Scottish Government to develop a more
holistic approach.
99. Workforce planning is the focus of the Commission’s annual
Best Value thematic work next year and will be covered in all council
annual audit reports published in Autumn 2024, followed by a national
thematic report.
Exhibit 9. 
Workforce planning maturity matrix
Basic Developing Mature
• Short-term
operational focus
• Limited workforce
data and analytics
• Workforce plan not
linked to priorities
and delivery of
strategic plans
• Medium-term
focus
• Aligned to
delivering priorities
• Workforce and
recruitment plans
• Some workforce
analysis
• Annual review
• Long-term focus on
strategic priorities
• Workforce and market
analysis
• Recruitment,
development,
retention and
succession included in
workforce planning
• Workforce plans
reflect new ways of
working and scenario
planning of future
models service
delivery and demands
• Real time monitoring
including of
performance levels
and staff wellbeing
Source: Audit Scotland
Local government in Scotland: Overview 2023 | 37 |

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Councils have a clear focus on tackling inequalities and strengthening the use of data will
help them to better understand community needs and focus fundamental change on
improving long-term outcomes
100. Councils have a clear focus on tackling inequalities. We found
evidence of data-driven approaches, partnership working, and community
engagement being used to understand community needs and to develop
plans and programmes to target inequalities and poverty. Positive findings
include councils:
• setting up specific committees focusing on tackling poverty and
inequalities (Case study 8, page 39)
• working with partners, especially community planning partnerships,
to understand need and develop place-based plans to tackle
inequalities
• involving people with lived experience to better understand needs
and demand.
101. Using lessons learned from the pandemic, councils have moved
quickly to offer support to people in their communities most affected by
the cost-of-living crisis. Many councils are working closely with third sector
partners to help distribute crisis grants and provide support and funding
to third sector partners directly to increase their support work. Some
exceptional data-driven approaches are being used to identify and offer
support to those most in need (Case studies 9 and 10, page 39).
102. Data can help councils to understand need, inform decision-making
and service redesign, and drive improvement. Making better use of local
data is still challenging especially the availability of equalities data and data
sharing. Councils should supplement national datasets with local data and
insight. Information from Scotland’s Census 2022 is expected later in 2023
and should provide a valuable source of intelligence.
103. While we are seeing the emergence of some positive approaches
to involving people with lived experience to better understand their
needs, councils can do more (Case study 4, page 33). As councils
take steps to radically change how they deliver services, the needs of the
most vulnerable or people living in poverty must be at the centre. A key
objective from the Christie Commission is that reform should ‘prioritise
prevention, reduce inequalities and promote equality’. While the pressures
facing councils are immediate, they must not lose the focus on prevention
and improving outcomes in the long term. A loss of preventative services
will increase demand in the long term.
‘Children growing up in poverty are at risk of poorer outcomes
in the short and longer term’
Tackling child poverty
Accounts Commission and Auditor General for Scotland
Digital exclusion
104. The Covid-19 pandemic accelerated the shift to online services. While
essential during the pandemic to allow the continued delivery of some
services, the shift has increased the risk of digital exclusion. Councils have
a variety of initiatives to reduce digital exclusion, such as working alongside
the third sector to develop place-based approaches to reducing digital
exclusion via library services or providing devices with internet access.
105. Digital technology will be a central component of future service
delivery. Councils need to understand the needs of people experiencing
digital exclusion and develop strategies to ensure that no one is left
behind. We are currently undertaking a performance audit on digital
exclusion. Our findings will be published later this year.
Local government in Scotland: Overview 2023 | 38 |

Page 39

Case study 8. 
An approach to tackling
inequalities
Aberdeen City Council has set up an
anti-poverty and inequality committee
to determine steps the city can take
and to help key groups such as
children, disabled people, women,
people from black and ethnic minority
communities, and those of pensionable
age. The committee will also seek the
views of those with lived experience
and consider in-work poverty, youth
employability, community food
provision and energy costs. Several
external advisers have been appointed
to the committee. The expected
benefits of the new committee include
centralising all poverty and inequalities
information which should allow elected
members to thoroughly scrutinise
reports, question council managers
and directors and engage with the
external advisers.
Source: Audit Scotland using
information from Aberdeen City Council
Case studies 9 and 10. 
Supporting vulnerable communities
Inverclyde Council’s Warm Hand of
Friendship initiative was set up to help
ensure that spaces, resources, advice
and support are available throughout the
council area for those who need them.
Working with its partners and voluntary
organisations, the council offers warm
spaces or hubs and have delivered more
than 400 activity sessions for adults
and children such as book clubs and
classes on IT skills. This has resulted in
over 3,500 people being provided with a
warm space, food and social interaction.
Two thousand ‘Warm Boxes’ packed
with useful items such as tea bags and
blankets to help the most vulnerable keep
comfortable throughout the winter were
also distributed free to people receiving
homecare support in Inverclyde.
Source: Audit Scotland using information
from Inverclyde Council
Glasgow City Council: last year we
reported on the council’s innovative
approach of using administrative data
to identify and target resources at the
most vulnerable communities during the
pandemic. The council has continued this
approach to target resources at those
most affected by the cost-of-living crisis.
The council distributed gift cards worth
£105 to 85,000 to households who receive
council tax reductions. They have also
used data to identify people potentially
eligible for Attendance Allowance and
other benefits and used this provide an
income maximisation service to clients
over the age of eighty. Over the last year,
571 clients have been contacted by the
service and over £1 million of financial
gains have been secured on behalf
of clients.
Source: Audit Scotland using information
from Glasgow City Council
See our website for more examples of councils’ approaches to reducing inequalities and
better understanding the impact cuts have on people experiencing inequality.
Local government in Scotland: Overview 2023 | 39 |

Page 40

Local government
in Scotland
Overview 2023
Audit Scotland’s published material is
available for download on the website in a
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www.audit-scotland.gov.uk/accessibility
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