08 September 2006
Councils in Scotland are in line for extra funding of around £100m to ease pressure on budgets and limit council tax rises in the year of elections to the Holyrood Parliament and local authorities.
Ministers, anxious to avoid a repeat of last year's bitter conflict between councils and the Scottish Executive, have indicated to local government leaders that a 'significant sum' will be available.
Although no final figure has been officially agreed, local government and parliamentary sources have confirmed to Public Finance that a sum of around £100m is likely. A further £50m may be provided to finance extra capital expenditure.
An announcement is due to be made by Finance Minister Tom McCabe in November. Scotland's councils, which failed to persuade him to allocate extra resources last year, will welcome the additional funding, arguing that it is an indication that ministers now recognise the scale of the budget problems they face.
Opposition parties, however, will see the move as an election 'bribe'. Scottish National Party finance spokesman John Swinney said it was significant that McCabe had woken up to the chronic problems councils face in an election year.
It is not clear at this stage where the extra money will come from. However, McCabe has already announced that an extra £800m will be made available for public spending in Scotland next year by drawing it down from the £1.5bn held in reserves by the Treasury.
The minister is likely to seek an undertaking that councils will make further efficiency savings.
A report on the efficient government programme revealed this week that the Executive had made £440m in savings this year, exceeding its original target by £35m.
PFsep2006
