This page describes overall trends for the period.
This year’s report introduces data from 2020/21 and provides an evidence-based picture of the impact of the first year of COVID-19 on Local Government services and the lives of the communities it serves. The continuity provided by the LGBF will provide vital intelligence to assist the sector to learn lessons from its response and to strengthen and redesign services around future policy priorities to support recovery and renewal. It will also be critical in helping to track progress against the National Performance Framework (NPF) and in continuing to monitor the role Local Government plays in improving the outcomes in the NPF.
The evidence also highlights that the impacts of the pandemic on our communities have been, and are likely to continue to be, borne unequally. LGBF data from 2020/21 reveals growing levels of poverty, financial hardship and inequalities. This is evidenced, for example, in the widening attainment gap in literacy and numeracy for primary pupils, and in positive destinations; increasing rent arrears and reducing Council Tax payments; and increasing levels of benefit claimants, particularly in 18-25 year olds.
In 2020/21, councils faced exceptional conditions as a result of COVID-19 which led to significant additional costs, loss of income and undelivered savings. As a result, Scottish Government made additional funding available to councils directly to help mitigate the financial impacts of COVID-19, with funding for the year totalling £1.5 billion, with a significant proportion of this announced late in the financial year.
Total revenue funding for councils in 2020/21 increased by 13% in real terms. However, when non-recurring COVID-19 funding is excluded, the increase in funding is 1.1%. Scottish Government funding has reduced in real terms over the last ten years, falling by 4.2% since 2013/14 and 6.0% since 2010/11 (excluding non-recurring COVID-19 funding).
Prior to COVID-19, funding for councils had not been increasing at a sufficient pace to keep up with demands, including: growing demographic pressures (>2% per annum); increasing costs, including the impact of living wage and pay settlements; additional impacts on demand from increasing levels of poverty; and higher public expectations. Councils have also faced increasing national policy and legislative demands, with a growing proportion of funding which has been ring fenced for these initiatives. This reduces the flexibility councils have for deciding how they plan and prioritise the use of funding to respond to local needs and the impact of new policy commitments. The continuation of single year settlements has also limited the ability to undertake, and the effectiveness of, medium to longer term financial planning.
In 2020/21, Local Government revenue expenditure increased by 3.2% in real terms.2 Since 2013/14, despite reductions in funding from Scottish Government during this period, Local Government has largely sustained real-terms expenditure levels, however there has been a relative shift of expenditure towards national priorities. Through legislation and Scottish Government policy, expenditure within social care and education continues to be sustained and enhanced. As these areas account for over 70% of the benchmarked expenditure within the LGBF, this therefore has a disproportionate effect on other council services that are not subject to the same legislative or policy requirements. This means they are increasingly in scope to bear a disproportionate share of current and future savings. Since 2010/11, in real terms this has included: 27% reduction in culture and leisure spending; 26% reduction in planning spending; 27% in corporate support service spending; 13% reduction in economic development revenue spending; 25% reduction in roads spending; 34% reduction in trading standards and environmental health spending; and 13% reduction in environmental services spending.
The evidence in this year’s LGBF highlights the extraordinary effort and achievements delivered across Local Government during this exceptional period. The workforce has adapted quickly to meet new demands, maintain essential services and implement new ways of working. It will be vital to retain and build on the positive and innovative service and structural redesign which has emerged in response to the pandemic.
The national trends across each of the key service areas for 2020/21 are presented below and show the scale of the impact of the pandemic on council services. While the COVID-19 pandemic has had an unprecedented impact on all councils, local areas experienced the impacts of this pandemic differently. Responses to COVID-19 have exemplified the importance of ‘local’, with local solutions and responses to local needs and issues, varying both between and within authorities. LGBF performance and expenditure data from 2020/21 reveal substantial variation in both the direction and scale of impacts. It is this variation that will provide the essential platform to help councils evaluate their approach during the pandemic and to inform their recovery priorities.
It remains exceptionally challenging to forecast into the future with so many external influences having a material bearing on the economy. The continued uncertainty of the pandemic, limited funding flexibility, real terms reductions in funding at a time of relatively high inflation, lack of certainty over long term funding, and significant public service reform, provide a challenging context for effective planning and decision making on recovery and the required transformational change councils need to plan to provide an efficient, effective longer-term response.
The significant upheaval resulting from the COVID-19 pandemic has introduced new complexity in relation to the 2020/21 LGBF dataset which will be important when interpreting the data and making comparison with previous years; and with other councils. These include the significantly altered delivery and operating landscapes during this period; data timeliness issues; methodological breaks and data gaps; and the impact of COVID-19 related inflation on expenditure patterns.