£14 billion for councils

Councils will receive a record £14 billion funding settlement, according to provisional details that have been published today.

Local authorities have each been allocated a share of £13.9 billion to fund their day-to-day activities, including £6 million to support the expansion of free school meals, £242 million for teacher pay rises and more than £266 million for local government pay deals.

Ministers have also made available a further £144 million to enable local authorities to freeze Council Tax rates at their current levels, equivalent to an above-inflation 5% rise in council tax nationally. The Scottish Government is in talks with COSLA over how this will be allocated.

Deputy First Minister and Cabinet Secretary for Finance Shona Robison said:

“In the face of a profoundly challenging financial situation, we are making available record funding of over £14 billion to councils – a real-terms increase of 4.3% on the previous year – should they agree to freeze council tax. The £144 million for the council tax freeze would be equivalent to an above-inflation 5% rise in council tax nationally.

“We recognise the crucial role councils play in their communities, which is why we have increased their overall share of the Scottish Budget.

“We have made no secret of the tough choices that have been required to balance our Budget, after an Autumn Statement that failed to provide the funding Scotland needs for its public services. While I know councils had sought more funding, the settlement confirmed today represents a fair and sustainable offer.

“We have chosen to invest in our people and public services. This is a Budget that reflects our shared values as a nation and speaks to the kind of Scotland that we want to be with a record settlement for local councils at its heart.”

Background

The publication starts the formal consultation period on the 2024-25 local government settlement. Final allocations will be published following approval by the Scottish Parliament, expected in February.

Funding of £365.3 million has yet to be considered by the joint Settlement and Distribution Group so remains undistributed at this stage. This funding will be allocated in full to local authorities ahead of the Local Government Order.

The Office for Budget Responsibility’s projection for inflation in the coming year is 3%.

The Scottish Government recently consulted on plans to raise the higher council tax band multipliers but chose not to proceed with the proposals in light of the consultation responses. The £144 million made available for the Council Tax Freeze is comparable with the £148 million figure the Fraser of Allander Institute estimate local authorities require to fund the council tax freeze, minus the potential multiplier income.