Local government finance: concepts, trends and debates

Author: Greig Liddell

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

Expand
Overview
Report

Hide

Hide

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

Scottish Government. (2021, April 27). Local government expenditure and income in 2019-20. Retrieved from https://www.gov.scot/news/local-government-expenditure-and-income-in-2019-20/

Scottish Government. (2020). Government Expenditure & Revenue Scotland 2019-20. Retrieved from https://www.gov.scot/publications/government-expenditure-revenue-scotland-gers-2019-20/

Scottish Government. (2021). The Funding of Local Government in Scotland, 2021 -22. Retrieved from https://www.gov.scot/publications/funding-local-government-scotland-2020-21/documents/

Scottish Government. (2021). Local government finance circular 5/2021: settlement for 2021-2022. Retrieved from https://www.gov.scot/publications/local-government-finance-circular-5-2021-settlement-for-2021-2022/

Scottish Government. (2020). Grant Aided Expenditure. Retrieved from https://www.gov.scot/publications/grant-aided-expenditure/

Scottish Government. (2018). Scottish Public Finance Manual. Retrieved from https://www.gov.scot/publications/scottish-public-finance-manual/local-government-finance/local-government-finance/

Scottish Government. (2020). Local government finance circular 2/2020: settlement for 2020-2021. Retrieved from https://www.gov.scot/publications/local-government-finance-circular-2-2020-settlement-for-2020-2021/

Scottish Government. (2020). Local government finance circular 4/2020: settlement for 2020-2021. Retrieved from https://www.gov.scot/publications/local-government-finance-circular-4-2020-settlement-for-2020-2021/

Scottish Government. (2021). Letter from Cabinet Secretary for Communities and Local Government to Convener of Local Government and Communities Committee. Retrieved from https://archive2021.parliament.scot/S5_Local_Gov/20210129ACtoCon.pdf

Woods, M. (2021). Swift Read: A generous or a derisory local government finance settlement?. Retrieved from https://lgiu.org/briefing/swift-read-a-generous-or-a-derisory-local-government-finance-settlement/

Scottish Parliament Official Report. (2021). Meeting of the Parliament: Budget (Scotland) (No 5) Bill: Stage 3. Retrieved from https://www.parliament.scot/chamber-and-committees/what-was-said-and-official-reports/what-was-said-in-parliament/meeting-of-parliament-09-03-2021?meeting=13184&iob=119371

West Lothian Council. (2021). Committee Document: Item 4 - Budget Report 2021-22 & 2022-23. Retrieved from https://coins.westlothian.gov.uk/coins/viewDoc.asp?c=e%97%9Dh%97q%82%8F

Burn-Murdoch, A. (2018). Local Government Finance: facts and figures 2013-14 to 2018-19. Retrieved from https://digitalpublications.parliament.scot/ResearchBriefings/Report/2018/5/21/Local-Government-Finance--facts-and-figures-2013-14-to-2018-19#Presenting-the-figures

Convention of Scottish Local Authorities. (2021). COSLA submission to the Local Government and Communities Committee. Retrieved from https://archive2021.parliament.scot/S5_Local_Gov/General%20Documents/COSLABudget.pdf

Scottish Parliament Official Report. (2021). Local Government Funding debate. Retrieved from http://archive2021.parliament.scot/parliamentarybusiness/report.aspx?r=13151&i=119054

Scottish Parliament Official Report. (2021, February 17). Local Government and Communities Committee 17 February 2021. Retrieved from http://archive2021.parliament.scot/parliamentarybusiness/report.aspx?r=13136

Scottish Parliament Official Report. (2021). Local Government and Communities Committee 10 February 2021. Retrieved from http://archive2021.parliament.scot/parliamentarybusiness/report.aspx?r=13120

Burn-Murdoch, A. (2021). Local Government Finance: Budget 2021-22 and provisional allocations to local authorities. Retrieved from https://digitalpublications.parliament.scot/ResearchBriefings/Report/2021/2/5/f3669358-b9b8-4f1e-b9d6-08d428cbacfc

Accounts Commission. (2021, January 26). Local government in Scotland: Financial overview 2019/20. Retrieved from https://www.audit-scotland.gov.uk/report/local-government-in-scotland-financial-overview-201920

Scottish Parliament Information Centre. (2021). Scottish Government Level 4 Budget Figures. Retrieved from https://www.parliament.scot/-/media/files/spice/budget-level-4-2021-to-2022.xlsx

Scottish Parliament Official Report. (2007, November 14). Statement by John Swinney MSP on the Strategic Spending Review. Retrieved from http://archive2021.parliament.scot/parliamentarybusiness/report.aspx?r=4753&i=39195

Scottish Government. (2019). Local Governance Review: Report Summarising the Main Themes emerging from the Strand 2 Consultation. Retrieved from https://www.gov.scot/binaries/content/documents/govscot/publications/consultation-analysis/2019/05/local-governance-review-analysis-responses-ask-public-sector-organisations-outline-alternative-arrangements-public-service-governance/documents/local-governance-review-report-summarising-main-themes-emerging-strand-2-consultation/local-governance-review-report-summarising-main-themes-emerging-strand-2-consultation/govscot%3Adocument/local-governance-review-report-summarising-main-themes-emerging-strand-2-consultation.pdf

McConnell, A. (2004). Scottish Local Government, pages 184-186. (n.p.): (n.p.).

Congress of Local and Regional Authorities of the Council of Europe. (2017). Recurring issues based on assessments resulting from Congress monitoring and election observation missions (reference period 2010-2016). Retrieved from https://rm.coe.int/16806fb9a8

Accounts Commission. (2019, March 21). Local government in Scotland: Challenges and performance 2019. Retrieved from https://www.audit-scotland.gov.uk/report/local-government-in-scotland-challenges-and-performance-2019

Convention of Scottish Local Authorities. (2019). Correspondence from the COSLA Resources Spokesperson to the Convener. Retrieved from https://archive2021.parliament.scot/S5_Local_Gov/Inquiries/20190328_Budget_COSLAToConvener.pdf

Convention of Scottish Local Authorities. (2001, November 6). COSLA submission to Local Government Finance Inquiry of the Local Government Committee. Retrieved from http://archive.scottish.parliament.uk/business/committees/historic/x-lg/papers-01/lgp01-28.pdf

Scottish Government. (2021). Local Government Finance Circular 2021/5. Retrieved from https://www.gov.scot/publications/local-government-finance-circular-5-2021-settlement-for-2021-2022/

Scottish Parliament Official Report. (2021). Statement from Kate Forbes MSP on the Scottish Budget for 2021-22. Retrieved from https://www.parliament.scot/chamber-and-committees/what-was-said-and-official-reports/what-was-said-in-parliament/meeting-of-parliament-28-01-2021?meeting=13083&iob=118430

Scottish Government and COSLA. (2020). Scotland’s Wellbeing: The Impact of COVID-19 - Summary. Retrieved from https://nationalperformance.gov.scot/scotlands-wellbeing-impact-covid-19-summary

Scottish Government. (2021, February 16). Non-domestic rates relief extended. Retrieved from https://www.gov.scot/news/non-domestic-rates-relief-extended/

Last Updated: 18/5 10:58am

An error occured while loading, please try again in a few minutes.