Local Government Finance (Scotland) Order 2024 debate: Public Finance Minister speech

Presiding Officer, today’s debate on the Local Government Finance Order seeks Parliament’s approval to the guaranteed allocations of revenue funding to individual local authorities for 2024-25.

It also seeks agreement to the allocation of additional funding for 2023-24 which has been identified since the 2023 Order was approved on 1st March last year.

We cannot ignore the hugely challenging circumstances in which we have had to agree the Scottish Budget this year.

Our block grant funding for this Budget is derived from the UK Government's spending decisions and has fallen by 1.2 per cent in real terms since 2022-23 – a real terms drop of half a billion pounds.  And our capital spending power is due to contract by almost 10 per cent in real terms over 5 years.

The reality is that the amount Scotland has available to spend is still largely driven by the block grant set by successive UK Governments whose constraint of public expenditure prolongs the austerity felt by public services.  

Scotland and the rest of the UK required more money for infrastructure, public services and fair pay deals. The UK Government did not deliver for Scotland in the Autumn Statement, and we have no advanced information on what lies ahead with the Spring Statement on 6 March.

However we will always do our best with the powers that we have, and the 2024-25 Scottish Budget is a budget built on our values - setting out, in tough times, to protect people, sustain services, and take pragmatic steps to addressing the climate emergency.

Presiding Officer, the Scottish Government is providing over £14 billion in the 2024-25 local government finance settlement. The revenue funding of almost £13.4 billion includes £147 million of funding for councils who have chosen to freeze council tax in 2024-25.  We are also providing almost £0.7 billion of support for capital expenditure.

Including the funding to freeze council tax,  we are increasing the resources available next year by over £574.6 million.

The 2024-25 local government finance settlement provides an additional 4.3 per cent or a real terms increase of 2.5 per cent, compared to 2023-24. 

In addition, as outlined yesterday, the Deputy First Minister has confirmed her intention to pass on up to £62.7 million of Barnett consequentials following the UK Government’s Spring Budget as a result of the recent announcement on ring-fenced Adult Social Care funding in England. 

This funding will be available to councils who protect their households by freezing council tax and local authorities will have full autonomy to allocate the additional funding based on local needs and priorities without the need to produce productivity plans as required in England.

The Deputy First Minister also confirmed her intention to pass on any consequentials associated with increased teacher pension employer contributions and to prioritise a £4 million increase in the Islands Cost of Living fund in direct response to concerns raised by some island authorities on the costs of living and delivering services in island communities.

The budget also invests in the Verity House Agreement by baselining almost £1 billion of funding across Health, Education, Justice, Net Zero and Social Justice, prior to agreement on an assurance and accountability framework.

As we do every year, to reach this number we have compared  budget to budget. This provides the best like for like comparison of available funding, adopting any other approach would be to mislead Parliament.

It is important to note that the total funding package is already finalised following the passing of the Scottish Budget Bill.  Today’s debate seeks Parliament’s approval for the distribution of this approved total funding to individual local authorities.

The Order seeks approval for the distribution and payment of almost £12.8 billion of the revenue total of almost £13.3 billion, with the balance mainly made up of specific grant funding which is administered separately. This £12.8 billion is the combination of General Revenue Grant of over £9.7 billion and the distributable amount of Non-Domestic Rates income which has been set at almost £3.1 billion. 

There remains a further £201 million of revenue funding plus the funding for the Council Tax Freeze that will be notified to local authorities once the distribution has been discussed and agreed with COSLA. This will be included for approval in the 2025 Order. 

There  is also specific revenue funding that is paid directly by the relevant policy areas under separate legislation amounting to over £263 million.

The 2024 Order also seeks approval for over £403 million of changes to funding allocations for 2023-24.  The full list of changes can be found in the Report to the 2024 Order. 

Presiding Officer, this Government recognises the financial challenges that local authorities across Scotland – and indeed, the whole public sector – are facing.

The fiscal constraints we share also emphasise the need to focus urgently on improving delivery of public services, designed around the needs and interests of the people and communities of Scotland.

But we must also continue to press the UK Government for additional funding for our shared priorities and pressures. I would welcome support from across the Parliament in this respect.

The Budget Bill passed by Parliament yesterday ensured that total funding from the Scottish Government to local government next year increased in cash terms, but also in real terms.   

This Order confirms the distribution to individual councils and the proposals reflect the crucial role that local authorities and their employees continue to play in our communities.

Presiding Officer, I now move that Parliament approves the Local Government Finance Scotland Order for 2024.