Glasgow faces a severe debt crisis, reaching £1.6bn, with overspending nearing £40m and rising council tax.
That sum could have built 2500 affordable homes while the city faces a housing emergency where many homeless people live in temporary housing. Debt costs rose by 27% since 2019/20, increasing from £96.242m to £122.377m. The current overspend is nearly £40 million, covering the first nine months of 2024/25, which is close to the last two years combined.
The council expects a £50 million budget gap in 2025/26. One source hopes to reduce that amount while a council officer feared bankruptcy in November and requested more funds from governments.
The council agreed to settle equal pay claims. They sold and leased back properties to raise money, involving Kelvingrove Art Gallery and the City Chambers with the help of a special company and funding.
Legal and General financed £285m, with a 30-year loan to City Property Glasgow in 2019, securing nearly 500 properties including landmarks like the SEC Armadillo. Assured Guaranty provided a £195m loan, backed by the Riverside Museum.
City Property also secured a loan with Canada Life Investments. This £166m deal lasts 30 years, securing the Emirates Arena and Scotstoun Stadium. In 2022, equal pay claims totaled £770m, with payments for 19,000 people.
Councils borrow money for big projects, including new buildings and repairs, when taxes don’t cover costs. It lets them invest without cutting services. Most loans come from a government board.
The council used a budget support fund, a safety net started in 2022/23, which at first had £105m but will drop to £39m soon. The fund now covers homelessness costs.
The Integration Joint Board, combining council and NHS services, is overspending. Their overspend is £17.5m for 2024/25. Council officers find these pressures very high due to factors like inflation, energy costs, and pay.
Scottish Labour says the council is underfunded and wants more money to help services. The UK also increased employer national insurance. The council says this isn’t fully funded, leaving a £10m budget gap.
Glasgow’s overspend hit £37.9m in nine months, on top of prior overspending. Essential services are at “very high risk” related to “fiscal uncertainty.” Cutting poverty and educational goals also rated high risk.
Educational goals rated very high risk means students may not reach their full potential. Child and adult care were rated very high risk too.
A council director wants to monitor spending closely. Savings must happen to deliver services on budget. Scottish Labour says cuts harm local services, and underfunding causes dire financial situations.
Councils can use reserves for overspending. Glasgow has £26.3m in usable reserves, below the 2% target and less than before the pandemic. Council tax will rise 7.5%.
The council tax increase will pay for more cleaning staff. It will allow free school meals for more kids, with some funds to repair roads and parks. A Liberal Democrat member is skeptical about spending.
The council would have preferred to use funds on reform, instead addressing the impact of inflation. One source mentioned other councils using reserves, claiming some had double-digit tax hikes.