A new Improvement Service report suggests that Scottish councils would have needed to spend almost £10 billion more in 2024-25 to keep pace with population-driven demand pressures. The analysis comes at a time when councils continue to face financial constraint while managing the demands of a growing and ageing population.
Since 2010 Scottish local authorities have faced enormous financial pressures, with a real terms flatlining of the revenue funding they receive over this period. As a result, spending by local authorities has been squeezed between 2010/11 and 2024/25, rising by just 0.3% in real terms. In contrast, in the period between 1996/97 and 2009/10 real terms spending increased by over 76%, demonstrating the scale of change between the pre- and post-austerity years.
While spending growth has stalled, council services have also faced new demands in the form of a growing and – perhaps more significantly – ageing population. The result is that council spending has been unable to keep pace with this new demand. Councils have therefore had to manage growing demand through a number of means, such as efficiency savings, charging, use of reserves, and ultimately some unmet need, meaning some people who would like to access a service have been unable to. It is also expected that the population will continue to grow and age in the coming years, placing further demands on a range of council services.
The report, Demand and Spending in Scottish Local Government, estimates how demand for local government services changes as the population grows and ages, using the relationship between population and spending observed before 2010. The goal is to show what levels of spending might have looked like had the link between population size and local government spending that was seen in the pre-austerity period continued. While the model does not account for wider factors driving demand, such as complexity of need or policy changes, it provides an indication of the scale of the demand pressures that councils have had to manage. In total, the model estimates that in 2024-25 this unmet need was equivalent to an additional £10 billion of spending by Scottish local authorities. The report also looks ahead to 2029-30 and suggests demand will continue to rise, driven by further growth in older populations and increasing numbers of households.
The report includes analysis at a national level and is accompanied by local authority-level applications of the model. Councils interested in receiving their own data and analysis can contact research@improvementservice.org.uk