The leading finance official at Aberdeen City Council has revealed “surprise” at the Scottish Government’s budgeting on business rates.
In a briefing note seen by The P&J, Jonathan Belford raised concern about the expected £255 million the local authority is expected to rake in from city firms in 2021-22.
Nationally, councils are expected to collect 7.4% less in rates, at around £2.6 billion – but Aberdeen has had its target increased by 2%.
Breaking down the proposed government budget, chief finance officer Mr Belford, said the Scotland-wide figure took account of relief that ministers introduced to keep businesses afloat through the Covid crisis.
Business rates – or non-domestic rates – is a major revenue stream for the local authority but due to the much-needed aid, the total collected this year was £86m under the £250m target.
Mr Belford said: “It is surprising that the collectable amount in Aberdeen is forecast to be greater in 2021/22 than a normal 2020/21 would have been, given the relief and reduced poundage.
“This appears to be because of the formula used to distribute the Scotland total of £2.6bn across local authorities.”
The Scottish Government revealed its £11.6 billion council funding package last week, earmarking £376m in revenue funding for Aberdeen.
That’s the money which funds the day-to-day running of vital council services.
Ministers have heralded the £11.4m increase in revenue funding as a 3.1% rise on last year.
But Mr Belford has calculated that £40.1m of next year’s funding has come with strings attached – be it to pay for a promised council tax rise, new social care commitments, the expansion of free nursery services or other government commitments.
He wrote: “It is important to compare apples with apples.
“When £335.9m is compared with the funding the council has for the same set of services in 2020/21 (£334.9m) then the settlement for 2021/22 has increased revenue funding by 0.3%, or £1m.”
Aberdeenshire Council is expecting an extra £19m on last year, Highland stands to gain £13.3m and Moray is down for an extra £6.6m – though those figures do not reflect similar forensic examination of Mr Belford’s counterparts.
During a heated meeting last week, the Conservative, Aberdeen Labour and independent ruling administration branded the proposed council budget for the coming year “woefully inadequate”.
Council chief executive Angela Scott is also to write to local government minister, and Aberdeen Central MSP, Kevin Stewart to highlight the “complex and inconsistent” means the Scottish Government has used to pay out emergency cash during the pandemic.
A Scottish Government spokesman said: “The £255m is not what Aberdeen is expected to collect, but the amount of non-domestic rates income that is being guaranteed by the Scottish Government, which demonstrates the advantage of our commitment to do so for the council.
“In 2021-22, Aberdeen City Council will receive a total funding package of £395.5m to support local services, which includes an extra £11.4m to support vital day-to-day services, equivalent to an increase of 3.1% compared to 2020-21.
“The day-to-day service funding includes £4.2mto compensate the council for its decision to freeze council tax levels, helping to protect household incomes.
“Aberdeen City Council will also receive its share of the £259m in 2021-22 to support Covid-19 pressures, which it will be able to spend as it sees fit for the maximum benefit of their community.”
Cosla concerns as funding “falls short”
It comes as negotiators working for councils across Scotland said they were being left short of nearly £900m for the coming year – and claimed the settlement “falls short of the fair funding local government requires”.
Cosla had asked for £770m in additional funding to cope with the costs of the pandemic but were granted £511m less than that.
The requested sum had been calculated by officials, totalling up the spending on the coronavirus response by all local authorities so far.
Revenue funding was £362m less than what the negotiators, Cosla, the umbrella body working for the country’s 32 local authorities, had asked for too, while capital grants were £20m under the ask.
Speaking to the Cosla concerns, a Scottish Government spokesman said: “In these exceptional circumstances, the £11.6 billion of funding for 2021-22 announced, including an extra £335.6m for day-to-day revenue spending, represents a fair settlement.
“A further £259m will be added in one-off funding to support ongoing Covid-19 pressures, which taken together will mean an additional revenue funding allocation of almost £600m to support vital local government services in 2021-22.
“The Scottish Government will also increase a scheme which compensates councils for the loss of income from sales, fees and charges due to the pandemic from £90m to £200m in 2020-21.”