Submitted by Bill Fernie
7th August 2026
Highland Council's financial pressures explained ahead of the by-election in East Caithness.
When people hear that a council has rising debt, it can sometimes seem like a distant financial issue.
But council finances are not just about balance sheets and accounting.
They directly affect decisions about roads, housing, care services, schools, libraries, waste collection and the support available to communities.
With Highland Council facing continuing financial pressures, the question for communities across Caithness is simple:
How does the council's financial position affect the services people rely on every day?
Why are councils under pressure?
Highland Council, like many local authorities across Scotland, is dealing with a difficult combination of pressures:
increasing costs
higher wages and pension costs
inflation
rising demand for services
pressure on government funding
The council says it is facing a challenging financial environment where budgets are being squeezed while demand for services continues to increase.
This is particularly difficult for Highland because it has a unique set of challenges.
It covers a huge geographical area, has many small communities, thousands of miles of roads, and a population spread across one of the largest council areas in the UK.
Providing services over such a large rural area is naturally more expensive.
Why does council debt matter?
Borrowing is not automatically a bad thing.
Councils often borrow to invest in major projects such as:
new schools
housing
infrastructure
roads and bridges
energy efficiency improvements
Just like a household taking out a mortgage to buy a home, borrowing can allow investment that would otherwise be impossible.
The important question is:
Can the council afford the repayments while still protecting day-to-day services?
Debt becomes a problem when increasing repayment costs reduce the money available for other priorities.
How can debt affect local services?
A council with financial pressures has fewer choices.
It may have to consider:
1. Reducing services
Councils may look at reducing opening hours, changing how services are delivered or withdrawing some activities.
These decisions are often unpopular because local services are highly visible.
2. Increasing charges
Councils may increase fees for services such as:
parking
leisure facilities
waste services
other council activities
3. Increasing council tax
Council tax is one way councils raise additional income.
However, increasing taxes is politically difficult, especially when households are already facing higher living costs.
4. Delaying investment
A council under financial pressure may have less ability to invest in future improvements.
That can affect:
housing development
infrastructure upgrades
community facilities
Highland's particular challenge
Highland Council faces a problem that many urban councils do not experience to the same extent.
Distance matters.
A council maintaining roads in a compact city can spread costs across many residents.
Highland must maintain services across a huge rural area with smaller populations in many communities.
The council has previously highlighted that it has more than 4,000 miles of roads to maintain and significant additional costs because of its geography.
This is one reason why debates about council funding are particularly important in areas such as Caithness.
Transformation: changing how the council operates
Highland Council has responded by looking at ways to change how it works.
The council says it has delivered significant savings over recent years and is developing a new operating model aimed at reducing costs, improving efficiency and making greater use of technology.
The argument is that councils cannot simply continue doing everything in the same way while finances become tighter.
However, transformation programmes can also create concerns.
Communities often worry that efficiency savings may mean reduced local presence or fewer easily accessible services.
The housing connection
Council finances are also closely linked to housing.
More homes can create additional council tax income and support population growth.
Highland Council has identified increasing housing supply as one way of helping address both economic and financial challenges.
For areas such as Caithness, where attracting and retaining workers is a major issue, housing is not just a social issue.
It is an economic issue.
Why this matters in the Caithness East by-election
A new councillor will face many local questions:
How can rural services be protected?
How can roads and infrastructure be maintained?
How can housing shortages be tackled?
How can communities have a stronger voice?
How should limited council money be prioritised?
These are not easy questions.
A councillor can argue for more funding, but they must also deal with the reality that local government budgets are under pressure.
The bigger question: what should councils provide?
The debate about council debt raises a wider question.
What should people expect from local government?
Should councils concentrate on protecting essential services only?
Should they invest more to encourage economic growth?
Should some services be delivered differently?
There are no simple answers.
But one thing is clear:
The financial decisions made in council chambers eventually appear in people's everyday lives.
They determine whether roads are repaired, houses are built, care services are available and communities receive the support they need.
Finance is not just numbers
Council debt can appear complicated and remote.
But behind every financial decision is a practical consequence for local communities.
For Highland Council, the challenge is balancing today's services with tomorrow's investment.
For voters in Caithness East, the by-election will not only be about who represents them.
It will also be about how local government responds to one of the most difficult financial periods in its history.
Note
Bill Fernie was formerly a councillor in Wick and East Caithness and was for a period Chairman of the Corporate Resources committee and the Budget Leader and in an earlier period chairman of the Education committee.
Timetable for Ward 3 Wick and East Caithness By-Election confirmed
A Highland Council by-election is being held for Ward 3 Wick and East Caithness following the resignation of Willie Mackay.
The Notice of Election and timetable for this election will be published on the Council’s website on Friday 14 August 2026.
Prospective candidates will have until 4pm on Monday 31 August 2026 to submit their completed nomination forms.
If the seat is contested, voting will take place on Thursday 1 October 2026 with an electronic count taking place on Friday 2 October 2026.
Anyone over 16 years old who is living in the Ward is eligible to vote in this by-election if they are registered. Register here or alternatively, phone the Electoral Registration Office on 0800 393783 to request a paper application form.
The last date to register to vote in this by-election is midnight on Tuesday 15 September 2026.