Briefing
No 127
Local Government Finance
Settlement 2006-2008
Introduction
The Minister for Finance and Public Service Reform
has confirmed the finance settlement for local authorities for
2006-07 and 2007-08. This document provides information about
the settlement and its implications.
Overview
The Minister for Finance and Public Service Reform,
Tom McCabe MSP, has confirmed the core revenue allocations to
local authorities, announced last year for a three year period.
The core revenue allocations are also referred to as the Aggregate
External Finance, which is the proportion of local authority revenue
expenditure that the Executive supports. This is supplemented
by council tax income, and the two combine to become grant-aided
expenditure, which is the indicative amount that the Executive
believes local government needs to spend in specific areas such
as roads and social work.
The Scottish Executive plans to distribute the following:
- £8.3 billion in 2006/07; and
- £8.5 billion in 2007/08.
Mr McCabe said that this amounts to a 5.6% increase
over two years.
The business rate is being reduced from 46.1p (in
the pound) to 44.9p from April 1 2006 as part of the Scottish
Executive's commitment to bringing the rates poundage in line
with England by 2007. It is currently 41.5p in England.
Council Tax
The Minister has already said council tax rises
should be no more than 2.5%. Local authorities are also under
pressure to improve collection rates to increase their revenue.
Efficiency Savings
The Minister said he would consider the case for
further additional resources for local government in 2007-08 only
if councils make significant progress towards a target of £325
million in efficiency savings.
Councils Warn of Cuts in Front Line Services
The Convention of Scottish Local Authorities argued
that the settlement is "extremely tight" and that to
keep council tax low and meet efficiency targets would lead to
major cuts in vital frontline services. Despite councils more
than meeting efficient government targets, COSLA said the case
they made for increased funds for local government had fallen
on "deaf ears."
Table of allocations to each local authority
in Scotland /
Aggregate External Finance Increases 2006-07 and
2007-08
| |
AEF
05-06
|
AEF
06-07
|
£
incrs
|
%
incrs
|
AEF
07-08
|
£
incrs
|
%
incrs
|
|
Aberdeen City
|
287.115
|
292.857
|
5.742
|
2.0
|
298.413
|
5.555
|
1.9
|
|
Abdnshire
|
324.749
|
342.381
|
17.632
|
5.4
|
351.624
|
9.243
|
2.7
|
|
Angus
|
165.794
|
173.235
|
7.441
|
4.5
|
177.948
|
4.713
|
2.7
|
|
Argyll & Bute
|
167.159
|
176.126
|
8.967
|
5.4
|
179.525
|
3.399
|
1.9
|
|
Cl'kmn'shr
|
71.934
|
74.105
|
2.171
|
3.0
|
76.281
|
2.177
|
2.9
|
|
Dumf & Galloway
|
241.698
|
250.685
|
8.987
|
3.7
|
256.330
|
5.645
|
2.3
|
|
Dundee City
|
249.617
|
254.562
|
4.945
|
2.0
|
258.977
|
4.415
|
1.7
|
|
East Ayrshire
|
186.614
|
193.976
|
7.362
|
3.9
|
197.908
|
3.932
|
2.0
|
|
East Dnb'tnshr
|
149.735
|
153.302
|
3.567
|
2.4
|
155.983
|
2.682
|
1.7
|
|
East Lothian
|
129.054
|
135.575
|
6.521
|
5.1
|
139.455
|
3.880
|
2.9
|
|
East Rnfr'wshire
|
130.366
|
138.082
|
7.716
|
5.9
|
141.440
|
3.358
|
2.4
|
|
Edinburgh City
|
619.047
|
634.069
|
15.022
|
2.4
|
648.241
|
14.172
|
2.2
|
|
Eilean Siar
|
94.304
|
96.189
|
1.886
|
2.0
|
97.873
|
1.684
|
1.8
|
|
Falkirk
|
218.389
|
226.169
|
7.779
|
3.6
|
232.599
|
6.430
|
2.8
|
|
Fife
|
522.454
|
538.869
|
16.414
|
3.1
|
554.254
|
15.385
|
2.9
|
|
Glasgow City
|
1,117.898
|
1,139.946
|
22.048
|
2.0
|
1,159.622
|
19.677
|
1.7
|
|
Highland
|
373.801
|
389.152
|
15.351
|
4.1
|
399.912
|
10.760
|
2.8
|
|
Inverclyde
|
141.843
|
146.499
|
4.656
|
3.3
|
149.439
|
2.940
|
2.0
|
|
Midlothian
|
124.598
|
127.763
|
3.164
|
2.5
|
131.065
|
3.302
|
2.6
|
|
Moray
|
133.281
|
137.924
|
4.643
|
3.5
|
141.746
|
3.821
|
2.8
|
|
North Ayrshire
|
215.964
|
223.456
|
7.492
|
3.5
|
228.622
|
5.167
|
2.3
|
|
North Ln'kshire
|
496.465
|
514.782
|
18.317
|
3.7
|
527.325
|
12.543
|
2.4
|
|
Orkney
|
54.836
|
57.708
|
2.872
|
5.2
|
58.863
|
1.155
|
2.0
|
|
Perth & Kinross
|
197.062
|
206.358
|
9.296
|
4.7
|
212.361
|
6.003
|
2.9
|
|
Rnf'wshire
|
267.760
|
273.945
|
6.185
|
2.3
|
280.297
|
6.352
|
2.3
|
|
Scottish Borders
|
174.443
|
181.937
|
7.494
|
4.3
|
187.159
|
5.221
|
2.9
|
|
Shetland
|
77.608
|
79.162
|
1.554
|
2.0
|
80.548
|
1.386
|
1.8
|
|
South Ayrshire
|
164.550
|
169.810
|
5.260
|
3.2
|
173.782
|
3.972
|
2.3
|
|
South Ln'rkshire
|
456.205
|
468.441
|
12.236
|
2.7
|
478.778
|
10.336
|
2.2
|
|
Stirling
|
135.881
|
138.567
|
2.686
|
2.0
|
142.406
|
3.840
|
2.8
|
|
West
Dnb'tnshr
|
161.193
|
164.414
|
3.222
|
2.0
|
167.290
|
2.876
|
1.7
|
|
West Lothian
|
235.231
|
244.983
|
9.753
|
4.1
|
250.873
|
5.889
|
2.4
|
|
Scotland
|
8,086.647
|
8,345.027
|
258.380
|
3.2
|
8,536.939
|
191.912
|
2.3
|
Implications
The Minister indicated that the figures announced
are provisional, allowing local authorities and COSLA to comment
on the detail before a final figure is given in February next
year. UNISON Scotland has a number of concerns, as do many other
organisations and experts.
Professor Arthur Midwinter, Budget Adviser to the
Scottish Parliament Finance Committee, warned that the settlement
will put "severe pressures" on service levels and council
tax levels. In a report on Efficient Government to the Finance
Committee on 7 November 2005, he detailed the way many councils
are being forced to look at savings from much wider budget areas
than the five workstreams proposed in the Efficient Government
initiative – procurement, absence management, asset management,
shared support services and streamlining bureaucracy. In a survey
by the Committee, the ten councils which responded said they are
all undertaking budget reducing exercises, despite the growth
in planned spending in the local government settlement.
A number of councils have already said council taxes
will need to rise above inflation even with cuts to front line
services and there are fears of job losses.
UNISON Scotland has been calling for the Scottish
Executive to fund councils to carry out their legal requirement
to deliver equal pay and compensation for past discrimination
for local government staff. Scottish Secretary Matt Smith said
that the settlement reflects a much lower increase than that given
to other parts of Scotland's public sector and will not pay for
increased demands on local councils.
He added: "Any increase is better than none,
but this seems to ignore both the many increased legislative responsibilities
given to local government recently, as well as the legal need
for local authorities to deliver on equal pay and compensate low-paid
women for past discrimination. It is unfair to have equal pay
in some public services funded by central government whilst others
have to balance cuts in jobs and services and increases in council
tax to give low-paid women what they are due."
UNISON Scotland complained that local government
has had efficiency savings cut from budgets in advance, with no
opportunity to plan or redirect the money into front-line services.
It is also concerned that some councils have very little room
for improving council tax collection rates.
Further Information
Finance Minister's Speech announcing the Finance
Settlement:
http://www.scottish.parliament.uk/business/officialReports/meetingsParliament/or-05/sor1123-02.htm
Col 20965.
UNISON Scotland Briefing on Single Status &
Equal Pay in Local Government:
http://www.unison-scotland.org.uk/briefings/singlestatmsp.html
Contacts list:
Fiona Montgomery
f.montgomery@unison.co.uk
Dave Watson
d.watson@unison.co.uk
@ the P&I Team
14 West Campbell St
Glasgow G26RX
Tel 0141-332 0006
Fax 0141-307 2572
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