Budget deal for local councils is fair, insists Finance Secretary

Finance Secretary Kate Forbes has insisted the cash settlement for councils in next year’s Budget is fair – despite claims that she is “short-changing” local government.

Ms Forbes was pressed on the issue after local government body Cosla claimed councils are not getting enough cash to fully fund the Scottish Government’s public pay policy.

Cosla resources spokeswoman Gail Macgregor also warned that if the additional money authorities will receive is not maintained, Scots could be facing a council tax hike of 6% in 2022-23.

Ms Forbes refused to say if the funding can be continued, as she is “not in a position to determine what the envelope is for next year’s budget”.

But with the Scottish draft Budget for 2021-22 having allocated £11.6 billion to local government, Ms Forbes said: “I do think in short that it is a very fair settlement.”

She stressed pay for council workers is a matter for local authorities, not for ministers – although the Scottish Government has said public sector workers earning up to £25,000 should get a rise of 3%, with higher earners receiving a 1% increase capped at £800.

Cosla has already warned MSPs on Holyrood’s Finance Committee that the pay policy will cost £205 million.

Ms Forbes said: “In terms of pay, obviously pay is a matter for local government, we don’t have a role in the negotiations with unions on pay and local authorities will take that role.”

However she told the committee that there could be more cash to come to Scotland.

The ongoing coronavirus pandemic means Westminster could increase funding for Holyrood, with the Finance Secretary saying: “I think there will be further funding. Local government is on the frontline in terms of distributing grants and other supports, so yes, local government is a priority.”

With Budget talks with opposition parties now under way, she also said extra cash for councils is a priority for them and she would be “very happy to look at how we can provide additional funding”.

Tory MSP Murdo Fraser pressed her on the overall allocation to councils.

He said the Scottish Parliament Information Centre (Spice) had said that while the Scottish Government’s overall resource budget had increased by 11.2% last year, local government core funding had only risen by 0.9%.

Mr Fraser told Ms Forbes: “That looks like you are short-changing local government, who have of course borne the brunt of many of the issues and responsibilities in relation to Covid, not least rolling out business support.”

But the Finance Secretary said local government would see an increase of £335.6 million for revenue spending, with councils also getting an additional £259 million to deal with “Covid pressures”.

She went on to state that money being given to councils to make up for the loss of income they have suffered during the pandemic is being increased from £90 million to £200 million.

Ms Forbes told the committee: “Overall the funding settlement deals with the Covid pressures, there is an increase in the core settlement, that is a point that is accepted by Cosla as well as ourselves, and on top of that compensation for the lost income.”

But giving evidence to Holyrood’s Local Government Committee, Ms Macgregor said: “Within the last few years we’ve seen a significant shift from funding that can be used locally, and with local decision-making, to finding that is very much ring-fenced, and I think this year is another prime example.”

Cosla’s chief finance officer Sarah Watters said only £94 million of the £335.6 million mentioned by Ms Forbes can be used for “dealing with the pressures that are already in the system”, due to ring-fencing.

Council areas such as youth work, employability support, community learning and development are likely to be the “services that suffer” because of a lack of core funding from the Scottish Government, Ms Watters said.