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COSLA Highlights Scottish Councils Reducing Funding From Scottish Government

6th September 2021

Photograph of COSLA Highlights Scottish Councils Reducing Funding From Scottish Government

Briefing highlights the financial pressures faced by Scottish Councils

The key financial challenges facing Scotland's 32 Councils are highlighted in a briefing prepared by the Scottish Parliament Information Centre (SPICe), COSLA said today (Monday 6 September 2021). The document comes as Pre-Budget Scrutiny begins.

The Local Government Finance Briefing is a factual brief prepared by SPICe and draws from various sources, including Audit Scotland to present an accurate reflection of the decisions, constraints and circumstances that Councils have had to endure over recent years.

The briefing also includes a look at how COVID-19 affected the balance of Local Government funding in 2020-21.

COSLA's Resource's Spokesperson Councillor Gail Macgregor commented: "This briefing highlights perfectly the key financial challenges Scotland's 32 Councils are facing.

"It highlights that Local Government has seen a 2.1% real term reduction in funding since 2013-14, meanwhile the Scottish Government has seen their overall budget increase.

"In addition, the briefing gives all of our MSPs a key resource that can be accurately referred to throughout the Budget Scrutiny Process.

"The SPICe Briefing also presents key questions for the Scottish Government over the use of directed spend, legacy policy commitments and the distribution of funding from the UK Government.

"The Cabinet Secretary for Finance and the Economy has recently commended Local Government for its work to support communities and businesses during the Pandemic, but we also need to recognise the vital role that Councils will play in recovery."

Councillor Margaret Davidson said, "The briefing highlights the real issues facing councils. Much of the funding we receive is ring-fenced leaving us fewer and fewer options to make savings. The total allocation of Government funding represents a 2.1% reduction in real terms since 2013-14, with many of our services cut to the bone.

"Local government has been at the front line of Scotland's response to the COVID-19 pandemic and we are far from seeing an end to the pandemic and the devastating impact on our communities. The pandemic and Brexit have severely impacted on the Highland Council's budget and on income streams in particular. We are also facing increasing prices for goods and shortages of food and construction materials.

"We are doing all we can to repair Highland roads and to improve our vast infrastructure and school estate; to stimulate the economic recovery and protect jobs. The last thing we need is another cut to our core budget in the midst of all this."

Executive Summary
This Briefing covers a lot of ground. However, the main points all Members should be aware of are:

Scotland's local authorities spent a total of £23.9 billion in 2019-20, the equivalent of 14% of Scotland's GDP.

The vast majority of local government net revenue budget goes on school education and social work services.

Local authorities receive 60% of their net revenue budget from the Scottish Government in the form of resource grants (both general and specific).

The Scottish Government also guarantees the anticipated Non-Domestic Rate income (NDRI) - the combined grant and NDRI income allocation to local government from the Scottish Government in 2021-22 is £11 billion.

The total allocation represents a 2.1% reduction in real terms since 2013-14. Most of this reduction took place in 2016-17 and 2017-18.

The last two budget allocations have seen small real-terms increases.

Over the same period (2013-14 to 2021-22) the Scottish Government's resource budget (not including NDRI) has increased by 2.3%.

The Government argues that all of this increase has been passed on to health.

Total resource allocation per head can vary significantly between local authority areas .

The level of capital funding can vary widely year-to-year depending on planned infrastructure investment.

Ring-fencing is an area of intense debate between the Scottish Government and local government.

Specific revenue (ring-fenced) grants as a proportion of overall revenue have increased substantially since 2013-14, mainly due to national commitments on early learning and childcare expansion.

Local government has been at the front line of Scotland's response to the COVID-19 pandemic.

During 2020-21 the Scottish Government allocated an additional £2.5 billion of consequentials from the UK Government to the ‘Communities and Local Government’ budget.

Much of this was business support grants delivered directly to small businesses by local authorities. The remainder helped compensate councils for loss of income, as well as helping pay for changed service delivery and increased demand.

Read the full report HERE