Highland Council's Budget Boost Why "More Money" Still Feels Like a Squeeze

23rd January 2026

When the Scottish Government unveiled its latest Budget, ministers were quick to stress a clear message: local government funding is rising in real terms. On paper, that sounds like good news for councils across Scotland, including Highland. But dig beneath the headline figures and a more complicated — and less comfortable — reality emerges.

At a national level, the 2026-27 Budget does allocate additional resources to local government. Once inflation is taken into account, overall funding for councils is higher than in the previous year.

In simple terms, this means Holyrood is not cutting council budgets in real terms across Scotland as a whole. For a sector that has faced more than a decade of pressure, that is a significant political claim.

However, for Highland Council, the lived experience of this settlement looks very different.

Highland's costs are rising faster than the funding it receives. Pay awards, contract inflation, energy costs and, above all, demand for services such as adult social care continue to climb.

These pressures are not abstract: they are built into the council’s day-to-day spending. Even with a modest real-terms uplift from the Scottish Government, Highland Council projects a multi-million-pound budget gap for 2026–27. In other words, the money coming in still does not fully cover the cost of maintaining existing services.

This gap explains why council leaders continue to talk about "difficult choices". Highland’s geography alone drives higher costs than many urban authorities — longer roads to maintain, more remote schools, and greater challenges in delivering care services. These structural factors mean that a national funding increase, averaged across all councils, does not translate neatly into financial comfort on the ground.

The warning signs are echoed by COSLA, the body representing Scotland’s councils. While acknowledging that the settlement is better than feared, COSLA argues it still falls short of what is needed to keep services running at current levels once inflation and demand are factored in. From this perspective, the issue is not whether cash funding rises, but whether councils’ spending power is genuinely protected.

For residents in Highland, this tension is already visible. Council tax rises are being used to plug funding gaps, reserves are under strain, and services face ongoing pressure to find efficiencies or savings. None of this fits easily with the idea of a budget “boost”, even if the national figures technically support that claim.

So does Highland Council face a real-terms cut? The honest answer is nuanced. In strict accounting terms, no — funding is not being reduced once inflation is applied at the national level. But in practical terms, yes — because rising costs and demand mean the council’s ability to deliver services still feels squeezed.

The Scottish Government can legitimately say it has avoided real-terms cuts to local government. Highland Council can just as legitimately say that the money still is not enough. Both statements can be true at the same time — and for communities across the Highlands, it is the second truth that will matter most.