By Keith Aitken in Edinburgh | 9 December 2011
Finance Secretary John Swinney yesterday urged Scotland’s 32 councils to use their capital borrowing powers to boost Scotland’s economic recovery, as he announced their funding allocations for the year ahead.
‘I don’t put any obligation on the local authorities, but what I do say is that it would help if those that are in a position to borrow sustainably would do that,’ he said.
Unlike local authorities, the Scottish government is currently debarred from borrowing, though the Scotland Bill will give it some borrowing powers. Swinney said that capital spending was ‘the engine of economic growth’.
The allocations include a renewed commitment by the Scottish government, worth £579m this year, to fund a continued council tax freeze throughout the lifetime of the present Scottish Parliament, as well as to meet government pledges on police and teacher numbers and on adult social care.
Swinney said it was up to individual councils to decide whether to accept the package, but those that did not would find their allocations cut by an average of 5.2%.
The allocations also include an extra £25m to ensure that no single authority receives less than 85% of the Scottish average in revenue support.
Swinney announced a 5.6% RPI-linked rise in business rates, but confirmed that the poundage for 2012/13 would be 45p, the same as in England. He set out measures allowing businesses to spread payment over three years, and letting councils retain part of any growth in business rates revenue that they generate.
The allocations bring total Scottish support for local government to £34.6bn over the next three years. Swinney said it meant that, despite Westminster cuts, in every year to 2015 councils would receive a bigger share of Scottish government funds than in 2007, the year the SNP took charge of the Scottish government.
But Swinney’s Labour Shadow, Michael McMahon, claimed the deal amounted to a real-terms cut of more than £700m over the next three years: ‘On top of the 14,000 job losses in local government over the past three years, this settlement will mean more job cuts, cuts to services when demographic and social pressures are increasing, and will damage our economic recovery.’
