Scottish Government

This item was published during the term of a previous administration that ended in April 2007

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Local government funding package

05/02/2004

Speaking as the Local Government Finance Order 2004 was discussed in the Scottish Parliament, Finance and Public Services Minister Andy Kerr asked MSPs to approve an adjusted increase of 6.5 per cent in revenue grant funding for Scotland's local authorities next year, totalling almost £7.7 billion.

Mr Kerr also confirmed that the non-domestic rate poundage would be set at 48.8 pence for 2004-05 and that the Small Business Rate Relief Scheme supplement would be reduced from the current 0.6 pence to 0.3 pence from 1 April 2004. The Minister said:

"This funding package has real significance as it helps local government fund better public services for the people of Scotland. That is a priority we share with councils.

"The additional resources available will help maintain the existing levels of service and also provide more teachers and reduce class sizes, provide fresh fruit and more nutritious meals for our children and help support youth justice teams.

"It also underlines our commitment to local government in Scotland. Whilst Councils will make their own budget decisions, I believe the resources confirmed today should mean that Councils will able to set their council tax at levels similar to those announced provisionally last February."

Andy Kerr announced in December provisional general grant allocations for each local authority for the next two years. Today's Order seeks Parliament's approval for the 2004-05 allocations. The settlement includes full support for existing key priority initiatives, as well new allocations for more teachers, reduced class sizes, fresh fruit and nutritious school meals for children, and support for youth justice teams.

Most councils will confirm their budgets and council tax levels for next year (plus indicative levels for the following year) later this month. Over recent years average council tax increases in Scotland have been lower than in England. The increases for this year were 3.9 per cent in Scotland as compared with 12.9 per cent in England.

A national business rate per pound (poundage rate) for Scotland is set annually by Scottish Ministers. The poundage rate for 2004-05 is 48.8p.

The Small Business Rate Relief Scheme provides rate relief for non domestic subjects with a rateable value of £10,000 or less. Properties with a rateable value greater than £10,000 and less than or equal to £25,000 will pay the standard poundage rate.

Properties with a rateable value greater than £25,000 are currently paying a supplement of 0.6p on the poundage rate to fund this rate relief scheme. This will be reduced to 0.3p in 2004-05.

Full tables giving adjusted year-on-year allocations for each local authority in Scotland are attached below for total revenue support. Also attached is a ranked table showing grant allocations per head of population.

The transfers of resources include money transferred in from HM Treasury for 2003-04 and the next two years to cover teachers' pension contributions and money transferred out to the Department of Work and Pensions (DWP). The transfer out will mean that, in future, local authorities will get back from the DWP, pound for pound, whatever they pay out in housing and council tax benefit claims. This is a simplification on the current system and has been warmly welcomed by all the local authorities and other stakeholders. The figures in the table are adjusted to remove the effect of this transfer.

RANKED GRANT (AEF) PER CAPITA