The Scottish Government

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LOCAL GOVERNMENT FINANCE SETTLEMENT: 2005-06, 2006-07 AND 2007-08

• The Scottish Executive's Spending Review announcement on 29 September 2004 acknowledged the vital role of local government in providing services on which people rely (education, health and community care and police) and also services and facilities that improve the quality of life of their local communities. By far the largest proportion of the funding provided through the main local government settlement, including the additional Spending Review allocations, is not ring-fenced or hypothecated. It is for each local authority to establish its spending and investment priorities from its total allocations.
• This Annex sets out (see table) the GAE uplifts that have been taken into account in reaching the aggregate local government revenue (AEF) allocation totals. Apart from specific grants, these are not ring-fenced allocations. This annex is aimed only at assisting councils in understanding how the settlement totals have been calculated. Provision for 2005-06 was already set as a result of the previous three year settlement, so there have been few changes to the figures for that year (See Annex 8 for details).

Education and Young People

• For 2006-07 and 2007-08 the Education and Young People portfolio has been increased by the following amounts: Pre-school education - 4.9m/9.9m Surestart-4m/7m and Community and Residential Care for Children-2m/4m. 7.1m currently paid through the Special Educational Needs (SEN) Specific Grant will be transferred to the National Priorities Action Fund in full for 2006-07 and this will be supplemented by a further 4m in 2007-08. The remaining 1.3m for SEN in 2006-07 will increase to 2.3m in 2007-08. The Gaelic line will increase by 0.2/0.9m, this includes the increase in specific grant and the consequential additional GAE provision. The GAE line for school bursaries will be removed completely in 2007-08 (7.5m). The distribution of the resources through AEF for 2006-07 and 2007-08 includes an adjustment to reflect Ministers' commitment that the costs of the teachers' pay award should be met in full by AEF.

Health and Community Care

• The increase in Care Home Fees (37.1m/57.5m) represents the largest increase within the health and community care portfolio. The other main increases are as follows: Increased Number of Elderly - 16.3m/42m; Upskilling Workforce - 17.0m/27.0m; Faster Access to Home Care - 12.7m/15m; Voluntary Sector Care Providers - 10.3m/13.6m; Learning Disability Hospital Closures - 4.2m/5m; and Direct Payments - 1.8m/2m. Both the GAE lines for Pennington (3.1m) and Fishery Products/Shellfish Hygiene (0.2m) will be removed from 2006-07.

Justice

• The Police and Fire GAEs are increased in total by 1.0m/3.0m. This is in addition to the increase in the Police specific grant (21.2m/48.6m) which is covered in the general uplift for pay.

Transport

• The Roads Maintenance GAE line is increased by 60m/60m.

Environment and Rural Development

• The Waste Disposal GAE increases by 4.2m/18.6m and Landfill tax increases by 5.7m/1.2m.

Finance and Central Services

• GAE provision of 6.0m has been set aside to help fund the Councillor Severance scheme in 2006-07 and 10.0m has been set aside in 2007-08 costs in connection with the 2007 STV local government elections. However, final allocations for these sums and the distribution of them are still being considered.

Quality of Life

• "Building a Better Scotland" confirmed the allocation of an additional 180m (50m/60/70m) from 2003-06 under the broad themes of Improving the Environment and Supporting Children and Young People. A further 50m has been allocated for each year of the two years 2006-07 and 2007-08 to build on the local service improvements supported by Quality of Life funding consistent with the Executive's commitment to support safer, strong communities. The allocation of these resources is based on each council's share of Estimated Service Expenditure.

Pay and Prices and Efficiency Savings

• General allowances for pay and prices (excluding teachers, police officers and fire fighters) have been allocated across all service headings (except specific grants).
• The Executive is looking to local government to play its part in offsetting some of these costs through efficiency savings and as a result an efficiency savings was factored in. However, allocations for education, police and fire have been excluded from the efficiency assumptions leaving an average yearly efficiency saving of 0.7% per year. As a percentage of the overall budget, this represents around 2% over the 3 years 2005-08.

SPENDING REVIEW 2004 LOCAL GOVERNMENT GAE OUTCOME: REVENUE

Note: *The distribution of 6.0m in 2006-07 for Councillors Severance Scheme and 10.0m in 2007-08 for STV Elections will be confirmed later and is included as part of this settlement.

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