This item was published during the term of a previous administration that ended in April 2007
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Councils receive extra £250m
13/12/2006
A package of measures worth more than £250 million of additional benefits for Scottish local authorities in 2007-08, was announced today.
It includes new funding of £201 million (£140 million for revenue and £61 million for capital), and builds on the record levels of funding councils have received since Devolution.
See a breakdown of the share for individual councils
The Executive agreed to look again at funding for councils for 2007-08 and in return, councils have given assurances to:
- Take action to increase council tax collection rates
- Continue to exert downward pressure on council tax levels
- Ensure effective asset management strategies are in place
- Increase the target level of their efficiency savings by at least £61 million
- Work with the Executive to complete a study into the costs and identify best practice in delivering free personal care
Total revenue funding provided by the Executive through the core settlement to local authorities in 2007-08 will rise to £8.7 billion - an increase of £393 million or 4.7 per cent over 2006-07, and includes an additional £17 million, which will be baselined mainly for educational services, over what was previously announced.
The extra funding of £61 million for capital means the total support for capital provided by the Executive to local authorities will be £906 million next year.
Together with various other measures, including the decision to allow councils to retain the benefits to them from successive cuts in business rate poundage levels and the benefit they will receive from Executive funding of the new 'Firelink' and e-planning systems, this means that local government will now benefit in 2007-08 from a package of measures worth more than £250 million.
Councils were already due to receive around a further £954 million of revenue grants.
In total, therefore, support from the Executive, including both revenue and capital will rise to £10.5 billion in 2007-08.
Minister for Finance and Public Services Tom McCabe said:
"Local government plays a crucial role in the delivery of local services. Scottish local authorities have received record levels of funding from the Executive since Devolution. Between 1999-2000 and 2006-07, that funding increased by 51 per cent.
"In response to representations made to me by local government, I said repeatedly that I would be prepared to look again at the funding for local government for 2007-08. I am delivering on that promise. We have re-opened the funding agreed for the final year of the Spending Review to announce £201 million of new money for councils.
"That is £201 million extra for local authorities to invest in local services and local infrastructure. We have kept our promise - and we expect local government to keep its promise to deliver increased council tax collection rates, to continue to exert downward pressure on council tax levels, to develop more effective asset management strategies, to deliver increased efficiency savings and review the delivery of free personal care.
"Assuming they do, and I know they will, the additional revenue resources of £140 million, along with the already baselined £17 million for education services, will be included in future local government budgets for 2008-09 and beyond.
"The extra funding I am announcing, when added to other measures we are providing, will increase the total value of the extra for local government in 2007-08 to more than £250 million.
"This means that the revenue funding available from the Executive to local government for the core settlement in 2007-08 will now be more than £8.7 billion, an increase of almost 58 per cent compared to 1999-00. I look to councils to use this substantial sum further to improve local services.
"I am confident that this, together with the work we are taking forward with local authorities and across the whole public sector to transform our public services, will increasingly deliver the kind of local services people expect and deserve."
See a breakdown of the share for individual councils
Background
The provisional local government finance settlement for 2007-08 announced by Ministers in February 2006 provided for revenue increases of £239 million, or 2.9 per cent, over 2006-07.
The sums announced today mean that the increase in revenue funding will amount to £393 million, an increase of 4.7 per cent, and include an additional £17 million, mainly for educational services over what was previously announced in the settlement.
The 'Firelink' system is a new communication system for Fire and Rescue Services, being rolled out in Scotland over the next two and a half years (the Executive is providing £19.6 million in support for the project in 2007-08). The new e-planning system will assist local authorities in contributing to the planning reform agenda (an additional £7 million is being provided, again by the Executive).
Together with the impact of the poundage rate cuts (worth an estimated £10 million to local authorities themselves) and the additional £17 million mentioned above, this group of further provisions is worth over £50 million in 2007-08.
Local authorities are also now taking advantage of the greater freedoms provided under the "Prudential regime" which Ministers introduced from April 1, 2004, to undertake further self-supported borrowing for capital expenditure, subject to affordability.
Forecasts show that they plan to use these freedoms to borrow a further £454 million in 2007-08 to invest in their infrastructure.
Councils between them control capital and infrastructure worth almost £21 billion. Improvements in the strategic and operational management of capital assets will have a significant impact on the financial resources available to councils.
Effective management of their asset portfolio should also be a key component in local government's drive to secure efficiency gains.