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Chamber and committees

Finance and Public Administration Committee


Local Government Finance Circular 9/2021

Letter from the Cabinet Secretary for Finance and the Economy to the Convener, 22 December 2021

Dear Kenneth,

I am writing to alert the Finance and Public Administration Committee to the fact that Local Government Finance Circular 9/2021 was published on Monday evening outlining the provisional details of the Local Government Settlement for 2022-23 and Redeterminations of General Revenue Grant for 2021-22. The Circular can be found at Local government finance circulars - gov.scot (www.gov.scot).

These statistics provide provisional estimates of the funding to be allocated to each Local Authority and the publication marks the commencement of the annual statutory consultation process between the Scottish Government and COSLA ahead of the Local Government Finance (Scotland) Order 2022 being introduced to the Scottish Parliament.

In recent years these figures have been published alongside the Scottish Budget but due to the pre-announced publication of Education statistics that are key to the distribution formula on 14 December that was not feasible this year. However, we have published them as swiftly as feasible following the publication of those statistics to maximise opportunities for councils to engage in the consultation process.

Whilst this publication represents a standard part of the annual budget process, I would like to draw the Committee’s attention to two key issues identified in the Circular. Firstly, due to the challenging UK Budget settlement, Ministers were required to take a number of late decisions on priorities and as consequence a number of spending lines have not been subject to consideration by the joint Scottish Government and COSLA Settlement and Distribution Group and therefore remain undistributed at this stage. This is standard practice although the magnitude of undistributed sums is larger this year than it would typically be meaning that the individual council allocations outlined in the Circular are £483 million lower in aggregate than councils will actually receive in 2022-23.

The majority of these undistributed lines, including £200 million for Health and Social Care Integration and £94 million for Free School Meals, will be considered by the Settlement and Distribution Group in January prior to incorporation into the Local Government Order for introduction.

On a related note, Table 5.16 of the budget document includes £30 million of additional capital to support the expansion of Free School Meals. Since the budget, Ministers have also confirmed to COSLA that an additional £64 million of resource will be allocated in-year. This decision has no impact on the Education Portfolio totals but does increase the total funding allocated in-year to £1,367 million. Consequently, the overall Local Government Settlement has increased to £12,538.3 million, an increase of £917.9 million compared with 2021-22. This is equivalent to a 5.1 per cent real terms increase, up from 4.5 per cent on 09 December.

I hope you find this information helpful.

Yours sincerely,
KATE FORBES