CASH-STRAPPED councils across Scotland have still not been handed the £155 million promised to them by Finance Secretary Kate Forbes amid a warning over an extra £100 million “black hole” in town hall finances, with that deficit set to rise in the coming months. 

Cosla, the umbrella organisation for Scottish councils, told Holyrood’s local government committee that authorities have received no explanation as to why the £155 million of vital funding the Scottish Government was given by the UK Government to hand over to councils to help tackle the Covid-19 pandemic has not materialised. 

Ms Forbes was due to meet with Cosla’s resources spokesperson, Gail Macgregor  on Wednesday night, with the £155 million of missing money set to be top of the agenda. 

A row erupted last month after it emerged Ms Forbes had recommended that councils drain their already-depleted reserves to plug any funding gap - while refusing to hand over the £155 million until she had been told how much councils need in emergency support. 

Once the £155 million is handed over, councils will still be out of pocket by around £100 million – and that gap is expected to rise as the pandemic continues. 

Edinburgh City Council current has a budget deficit of £56.5m for this financial year, and only after using £11.2 million from its own reserves to try and bridge some of the shortfall. 

The council’s demand for fortnightly payments for free schools meals has increased from around 6,000 at the start of the lockdown to around 8,000 – but officials in the capital have warned that “Edinburgh’s food fund allocation will be fully utilised by 15 June”. 

The Highlands Council is facing the prospect of a funding gap up to £97 million, with officials warning that the “level of risk the council faces is greater than perhaps ever before”, while adding that “the wider economic impact of Covid-19 is expected to result in increased levels of business failure and unemployment- this is expected to lead to a significantly lower level of council tax being collected”. 

Councils are also facing revenue shortfalls due to non-domestic business rates being frozen, a lack of car parking revenue and hiked costs for emergency measures and allowing staff to socially distance and work from home. 

READ MORE: Coronavirus in Scotland: Councils told to use reserves as £155m support withheld

Alison Evison, president of Cosla, said: “Unfortunately councils have not received this money. We have had an assurance that we will receive it during the month of June. 

“Prior to the Covid-19 pandemic, councils had experienced significant funding cuts and as a result, were already being forced to make difficult decisions – the current crisis has only exacerbated these challenges. 

“Cosla has undertaken a cost-collection exercise with all councils and the first iterations indicates an initial net additional cost of around £100 million up to the end of June. This figure takes into account the £80 million provided by the Scottish Government for hardship and food funding, as well as the £155 million of consequentials that have been committed to local government.” 

Conservative MSP Graham Simpson said it was “unbelievable” that councils have still not received their funding and that it was “really disappointing”. 

Mr Simpson also pointed to councils’ £100 million black hole”, which he warned would “leave local government in serious problems”. 

He said: “The UK government announced the £155m in Barnett consequentials for local government support over six weeks ago, but the SNP still hasn’t passed it on. 

“Councils came into this crisis ill-equipped to cope after years of the SNP slashing their budgets to the bone. 

“Despite this, local authorities have worked tirelessly on the frontlines keeping essential services running and supporting their residents and businesses through this crisis.” 

He added: “First the SNP made them fight for the money and now, for unknown reasons, they still haven’t handed it over. 

“Some local authorities barely have any reserves left thanks to the SNP’s botched approach to funding.

“This is a totally unacceptable situation, the SNP government must hand over these missing millions to councils now.” 

Ms Evison stressed that local authorities are “looking at collection of council tax, who’s not able to pay it anymore, where council tax payments have fallen because people can no longer pay that”. 

She said: “Services that councils provide on the ground are essential and they will carry on being essential. 

“We cannot do this without extra funding – it just cannot be done.” 

She further warned MSPs that schools re-opening on August 11, as set out by the Scottish Government, is putting further pressure on councils. 

She added: "There’s an awful lot of considerations to be made in terms of safety, in terms of school buildings and how many children you will be able to get into each classroom – there's questions about transport and how you’re going to get children to school and whether parents want to use school buses or not in future. It’s not a case of opening the school door and letting everyone in." 

READ MORE: Council leaders call for new funding model to give local authorities more power

“I can say that everyone is working towards that date, everyone is looking to start school at that point but we must not under-estimate the work that local councils are having to do to get to that stage – all in the context of challenging financial circumstances.” 

Scottish Labour local government spokesperson, Sarah Boyack, has warned that the funding delay “has only deepened the financial crisis that councils face” and stressed the money is “now too little and too late”. 

She said: “By digging their heels in and prevaricating, the Scottish Government has ensured that this money will only go to help repair the damage to council finances that the delay has caused. 

“The true cost of the intransigence of the Scottish Government can be seen in the huge financial difficulties our councils are facing.” 

She added: “When this pandemic is over people will remember how councils stepped up to the mark and delivered for their community. They are on the frontline in supporting businesses to keep going, planning to get our schools open again when it is safe and supporting the most vulnerable. 

“The Scottish Government needs to act now to stand up for Scotland’s councils, respect the importance of their work and ensure they have the funding they need now.”

A Scottish Government spokesperson said: “We have been working closely with Cosla and local governments since the beginning of the pandemic and have committed over £300 million of additional funding for Covid-19 measures, on top of the local government finance settlement of £11.4 billion from this year’s budget.

“The payment of the local government consequentials worth £155 million are being made to councils in June alongside the weekly general revenue grant payments. The first instalment will have been received yesterday.  

"In addition, following agreement with Cosla, we are also front loading the normal weekly grant payments by £300 million to ease local authorities cash flow problems.”