Budget 2019-20 – final allocations to local authorities

It’s an exciting time of year – the final funding allocations for local government in 2019-20 have been published! We wrote in a recent blog about how the timing matters for comparing local government funding figures. At this stage we know:

• The final allocation figures for local government, including individual allocations for councils, so we can compare these to the final allocations for 2018-19 and previous years.
• The final outturn figures for 2018-19, so we can now make longer term historical comparisons up to this point.

This blog will focus on the former, but keep an eye on our briefings hub for an updated version of our Local Government Facts and Figures briefing, which looks at the figures over a longer period, later in Spring.

The Budget Bill, which confirmed the overall settlement for local government, was passed on the 21 February, and the Local Government Finance Order, which set out final allocations to local authorities, was passed on 7 March. Detailed figures were published in the Local Government Finance Circular 2/2019 the same day.

Total settlement to local government

Previous SPICe briefings and blogs set out the detail of the local government finance settlement for 2019-20, and the headline figures.  With the publication of these final allocations, some of the headline figures have now changed. Therefore, the table below confirms the final overall settlement for local government in 2019-20, as set out in the Local Government Finance Circular 2/2019, compared to equivalent figures from the 2018-19 Budget (Local Government Finance Circular 4/2018).

Changes and the impact on local government were set out in more detail in our blog on Stage 1 of the Budget Bill.  As per the tables below, the revised headline figures are:

• Total revenue funding (that is, the sum of all non-ringfenced and ringfenced revenue funding) now shows an increase of 1.2% in real terms (+£121.3 million).
• Within that, the non-ringfenced revenue funding available for councils to deliver services (the sum of general resource grant and non-domestic rates income) now falls by 1.1% % in real terms (-£103.9 million). This figure has changed substantially since previous publications, as funds previously held in other portfolios have now been distributed through the general resource grant.  It should be noted that the Scottish Government states that this figure does not represent a full picture of revenue funding, given it excludes specific, ring-fenced funding.
• Once capital funding is taken into account, total funding for local authorities increases by 2.9% in real terms (+£310.0 million).
• During her statement to Parliament on the Order, Kate Forbes MSP, Minister for Public Finance and Digital Economy, stated that “the overall potential increase in spending power to support local authority services amounts to £621.4 million.” This is a cash terms figure, and includes all of the revenue and capital elements of local government funding from the Scottish Government, plus anticipated additional income from Council Tax.

Table 1 – Local Government final allocations, 2018-19 to 2019-20, cash terms

Table 2 – Local Government final allocations, 2018-19 to 2019-20, real terms

It’s important to note that there is still £62.5 million of undistributed Revenue funding to be allocated over the course of 2019-20, so final outturn figures will change, as they do every year. For more on this see SB 18-34 Local Government finance: facts and figures 2013-14 to 2018-19.

Allocations to local authorities

The chart below sets out the real terms changes to individual local authority allocations, again compared to the equivalent stage in the budget process last year. Comparisons are made between the “Revised Total” figures from Annex B of Local Government Finance Circular 2/2019 and “Total 2018-19 Revenue” figures from Annex L of Circular 4/2018. SPICe is happy to share the figures behind this table on request.

This gives us our final overview of what local government funding from the Scottish Government in 2019-20 looks like (subject to further small allocations to be made in-year).

All local authorities have now announced their decisions on Council Tax increases in 2019-20, with these ranging from 3% to the maximum 4.79%, which is likely to alter the balance of funding for some local authorities. As noted, we’ll be exploring the long-term trend in local government finance from 2013-14 to 2019-20, including Council Tax changes, in an updated facts and figures briefing, due for publication later in spring.

Ailsa Burn-Murdoch and Allan Campbell, Financial Scrutiny Unit