Supporting Local Government Recovery

9th October 2020

Additional spending powers and funding for councils.

A package of financial flexibilities and extra funding for councils which could be worth up to £750 million has been agreed by the Scottish Government in partnership with COSLA.

To address the financial pressures caused by the coronavirus (COVID-19) pandemic over the next two years, councils will be granted additional spending powers which could be worth around £600 million.

In addition to this, a Lost Income Scheme will be established to help compensate councils and council trusts for lost sales, fees and charges from services such as sports centres and parking charges.

Councils and their trusts will have access to an estimated £90 million of funding with council trusts delivering services on behalf of councils able to receive a share of a further £49 million of support through the scheme.

Added to additional funding already committed, this brings the value of the overall COVID-19 support package for councils to more than £1 billion.

Finance Secretary Kate Forbes said:"I have been clear that the Scottish Government needs appropriate fiscal levers in order to respond effectively to the COVID-19 pandemic. That is equally true for local government, which is why I am very pleased that we have been able to deliver a package of support for local services worth up to £750 million.

“Working in partnership with COSLA, the Scottish Government has delivered on our commitment to support councils across Scotland with a game changing package of financial flexibilities, giving them the powers they need to make informed decisions about spending at a local level.

“In addition, we are close to finalising the details of additional financial support through a Lost Income Scheme, worth an estimated £90 million subject to confirmation of the funding from the UK Government. For trusts delivering services on behalf of councils this can also be topped up with £49 million of additional funding already confirmed.

“This support will help councils and their trusts manage the loss of income they are facing from local services due to COVID-19.

“These measures are excellent examples of how the Scottish Government is working together with COSLA and local authorities to ensure that we are doing everything within our power to save jobs, protect our public services and reboot our economy."

COSLA's Resources Spokesperson Cllr Gail Macgregor said:“We welcome this substantial package of measures from which councils can choose, depending on local circumstance.

“Responding to COVID-19 whilst continuing to deliver essential, everyday services has put extreme pressure on Local Government finances this year. The pandemic has also meant substantial losses of income across a range of council services including leisure, sport, culture, and planning. Balancing budgets will be a real challenge and this has been fully recognised by Scottish Government who we have worked with constructively and positively.”

In addition to the £90 million of new funding to support the Lost Income Scheme, the Scottish Government has already committed £382.2 million of additional funding to local authorities to support them during the COVID-19 pandemic.

This includes the allocation of additional consequentials of £49 million confirmed to councils in September. The Finance Secretary has stipulated that additional support for trusts - including those delivering leisure and cultural services – can be sourced from each local authority’s share of the £49 million.

The new funding levers open to councils are:

enabling the use capital receipts to meet one-off revenue funding pressures, including COVID‑19 related costs

extending the debt repayment period over the life of the asset rather than the contract period

allowing local authorities to take a repayment holiday in either 2020-21 or 2021-22 to defer loan fund repayments