BLOG: Money for local councils... with strings attached

Derek Mackay delivers the budget. Credit: Scottish Parliament TV

I don't know if Derek Mackay, the finance secretary, is a member of the Magic Circle, but SNP government is behaving today as if he is.

With all the build-up to this budget about cuts to local government, Mr Mackay, has - it appears - pulled a financial rabbit out of his metaphorical top hat for local government.

Here is how Mr Mackay explained it to MSPs this afternoon:

Today’s budget delivers a strong settlement for local government.

The measures I have announced today mean that the total support from the Scottish Government and through local taxation provides an increase in spending power on local government services, not of £59.6 million, but of £240.6 million or 2.3 per cent.

Local government will receive £120 million from central government to fund our shared ambitions to close the attainment gap.

In addition we will maintain councils’ share of capital spending with an increase of £150 million compared to 2016-17.

Councils will keep the full value of the revenue from Council Tax re-banding – every penny raised locally will be spent locally as councils see fit.

And local authorities will also be free to increase the Council Tax generally by up to 3% next year, generating - if they so choose - a further £70 million.

Last year, we transferred a quarter of a billion pounds from the NHS to support health and social care partnerships. I can announce today that on top of that transfer, we will provide additional funding of £107 million from the NHS next year."

– Derek Mackay, Scottish Government Finance Secretary
Local authorities including Dumfries & Galloway Council have been critical of funding cuts in the past. Credit: ITV Border
  • Money... with strings attached

Now it is worth noting that in this calculation, the councils have to put up council tax by the maximum the Scottish government will allow them, 3%.

And the figure includes £120m that councils will have to give direct to headteachers in schools.

Originally the Scottish government was going to take £100m off councils and give it to headteachers, but they have done a U-turn on that after pressure from local authorities.

So this is money which has strings attached.

And it is still an innovation in Scotland for money to go direct to heads. The Scottish government insist councils cannot spent it any other way. It is, in the jargon, 'ring-fenced', as is the money for health and social care.

Scottish Labour, led by Kezia Dugdale, are questioning the figures. Credit: PA

However, as ever with a budget, the figures are disputed.

Labour say that Page 91 of the budget document - they been looking very hard very quickly - confirms that funding for local authorities will fall by £327m in real terms in 2017/18.

The 'Local Government' budget will fall from £10.094 billion in 2016/17 to £9.646 billion in 2017/18 - a cut of £448m, Labour claim.

The 'Central Government Grants to Local Authorities' budget will increase from £218.7m to £339.5m - an increase of £121m, they say.

The combination of these two figures Labour say means a £327m cut to local councils.

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