Local government finance: concepts, trends and debates

Author: Greig Liddell

PDF Published: Friday 27 Aug 2021 (SB 21-58)

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Overview
Report

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Overview
Report
- Introduction
- Executive Summary
- Local government spending and income – 2019-20 outturns
  - Services and fees income
- The 2021-22 budget and local government settlement process
  - How the funding is allocated to local authorities
- Non-Domestic Rates and Council Tax
  - Council Tax freeze
- The view from the Civic Centre – case study West Lothian Council
- Comparing and analysing local government allocation over time
  - Real terms changes between 2013-14 and 2019-20
  - Comparison with Scottish Government budget
  - Comparison with SG budget, minus health
  - LG settlement as percentage of SG budget
- Local government settlement per head by local authority
- Capital allocations
- Specific Revenue Grants or ring-fenced funds
- Ring-fencing in a nutshell
  - Ring-fenced and protected budgets
- The impact of COVID-19 on local government finance
Sources

Showing spending on main policy areas. Education received 5.3 billion. Social work received 3.5 billion. These are much higher than for any other areas.

Image: Figure 1 - what Scottish councils spent their revenue budgets on in 2019-2020

General revenue grant is the largest chunk of local government revenue funding (£7.97 billion). Council tax and NDRI are next.

Image: Figure 2 – Council Tax, NDRI and revenue grant funding allocations as a proportion of total estimated expenditure, 2020-21

Showing slight real term increases in 2014-15 and 2015-16, followed by large reductions in 2016-17 and 2017-18. Real terms increase of over 2% in 2019-20.

Image: Figure 3 - real terms % changes in revenue allocations (outturns) compared to previous year

Scottish Government Revenue DEL increases by 2.3% between 2013-14 and 2021-22, whilst Local Government revenue budget reduces by 2.1%

Image: Figure 4 - real terms changes in local government revenue allocation between 2013-14 and 2021-22, plus real terms changes in Scottish Government resource DEL

Figure 5– health resource budget increases by 16%, LG resource budget reduces by 2.1% and Scottish Government resource budget minus health reduces by 11%. Real terms changes between 2013-14 and 2021-22.

Image: Figure 5– health resource budget, LG resource budget and Scottish Government resource budget minus health. Real terms changes between 2013-14 and 2021-22.

Figure 6 shows health and local government spending as a percentage of Scottish Government resource budget in 2013-14 and 2021-22. For health it grows from 40% to 46%. For local government it falls from 34% to 33%.

Image: Figure 6 - health revenue and local government revenue allocations as percentages of total Scottish Government resource budget in 2013-14 and 2021-22

Revenue allocation per head by local authority area in 2021-22, as a percentage of the Scottish average. Shetland, Eilean Siar, Orkney have much larger allocations per head than anywhere else. Edinburgh and Aberdeen have the smallest.

Image: Figure 7 - revenue allocation per head by local authority area in 2021-22, as a percentage of the Scottish average (Scotland = 100%)

Revenue allocation per head have gone down in real terms for almost every local authority. The exceptions are North Ayrshire, Aberdeenshire, East Ayrshire and Orkney.

Image: Figure 8 - local government revenue funding per head, real terms change 2013-14 to 2021-22

Capital allocations per local authority in 2021-22 show large amounts for Edinburgh and Glasgow. Much smaller amounts for everywhere else.

Image: Figure 9 – allocation of combined General and Specific Capital grants by LA in 2021-22

Figure 10 the increase in ring-fencing as a % of revenue allocation across all local authorities between 2013-14 and 2021-22. Shows a substantial increase across all areas, but especially Shetland Islands and Orkney Islands.

Image: Figure 10 - the increase in ring-fencing as a % of revenue allocation across all local authorities between 2013-14 and 2021-22

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