Scottish Budget Delay Puts Councils Under Strain As Officials Warn of Squeezed Timetables and Unclear Funding

8th October 2025

With the Scottish Government shifting its 2026-27 Budget announcement to 13 January 2026, councils across Scotland are bracing for a tighter financial planning process and deeper uncertainty over funding levels.

While ministers argue the delay is forced by constraints from Westminster, local authority leaders and public sector auditors caution that compressed timelines could weaken oversight and hamper service delivery.

Finance Secretary Shona Robison has described the move to mid-January as "unavoidable," citing the late scheduling of the UK government's Autumn Statement on 26 November as leaving Holyrood with insufficient time to absorb Westminster's tax, spending, and social security changes.

In defending the decision, she appealed to political rivals, “We don’t want to draw out the drama through the various stages of the budget, because local government needs to know its envelopes.”

Earlier, Robison had already warned a December budget was “highly unlikely” once the UK’s timetable became clear.

She also criticised the Treasury for failing to provide advance notice of its own schedule, saying that the delay makes it “incredibly difficult” to plan a Scottish Budget in the usual timeframe.

Still, Robison stressed that her government would not “randomly take an axe to services” as it balances fiscal pressures.

She also hinted that the Scottish Government would rule nothing in or out prematurely, including on the contentious possibility of a council tax freeze.

Councils caught in a tighter squeeze
The Scottish Government’s Local Government Settlement typically follows swiftly after the Budget, giving councils time to consult, model options, and pass their own budgets before the new financial year in April. But with the settlement now delayed to mid-January, many councils will have only five or six weeks to make critical decisions.

A COSLA (Convention of Scottish Local Authorities) spokesperson voiced strong concern:
“This delay puts councils in an impossible position. Local authorities need time to plan properly, to consult their communities, and to set budgets that are both balanced and sustainable.”

The risk is more than procedural as councils may be pressed to rely on provisional figures or make assumptions about grant levels before the formal settlement is confirmed.

Already, many local authorities face large fiscal gaps. According to Audit Scotland, councils identified a combined budget shortfall of £647 million for 2025/26, after accounting for funding, council tax, and charges.

The Accounts Commission has also warned of a “growing expectation gap” between what communities expect from services and what councils can realistically deliver under current financial constraints.

Councils have increasingly turned to reserves, service cuts, or deferred investment to bridge gaps. But compressed timelines make those strategies riskier. When funding arrives late, long-term projects especially in education, social care, transport and housing may be delayed or scaled back.

The Audit Scotland / Accounts Commission budget briefing for 2025/26 further underlines the stakes. It notes that although the Scottish Government is increasing core funding to councils, “additional costs and inflationary pressures will remain challenging to manage.”

Even larger grant allocations may not give councils the breathing room they need when they are already stretched.

Delays also have implications for democratic oversight. With less time to scrutinise proposals, MSPs, auditors, and civic actors may have less space to interrogate the assumptions behind spending plans. In response Robison has committed to working with the Finance Committee to adjust the timetable and ensure meaningful scrutiny.

From the oversight side the Accounts Commission and Audit Scotland warn that weaker scrutiny increases financial risks. In prior bulletins, the Commission has emphasised the danger of relying on non-recurring measures to balance budgets and the need for transparency about assumptions and service impacts.

Persistent reliance on reserves, short-term cuts, and uncertainty over funding all erode long-term sustainability.

As one Commission member, Derek Yule, put it “Councils don’t have enough money to meet current demand. Local communities are being asked to contribute more. These conversations won’t be easy.”

One-off disruption or structural challenge?
The Scottish Government has so far presented the delay as a tactical response to Westminster’s late timetable rather than a intentional shift in its annual legislative cycle. But some local leaders and analysts see a deeper structural tension: Scotland’s fiscal schedule remains tightly bound to UK-level timing, limiting Holyrood’s ability to act independently.

For council leaders, the immediate task is to manage risk. They will press the Scottish Government for early indicative figures, push for flexibility in local planning, and engage communities about possible trade-offs and cuts. But in practice, the late schedule may force some councils into sub-optimal decisions reducing public consultation, deferring investment, or prioritising short-term balancing over long-term transformation.

As Scotland moves into 2026, council finance officers may be setting budgets “in the dark” awaiting final figures until too late. The stress test isn’t just technical and it will be political as local authorities weigh how far services can be cut without eroding core public services.