Mackay: Scottish local government settlement is fair

17 Jan 18

Scottish finance secretary Derek Mackay has defended the financial settlement for local government as his spending plans came under increased scrutiny by MSPs.  

Mackay said it was a “fair” settlement for local government and better than any council had been expecting, at a meeting of the Scottish Parliament’s finance and constitution committee in Aberdeen on Monday.

“Local government will always ask for more—that is councils’ right and their duty,” he said.

“However, overall, the settlement is fair, in that it represents broadly flat cash in resource terms and delivers an increase in capital.”

But Neil Bibby, at the meeting, said when specific grants were excluded councils would suffer a real terms cut of 2%, or £183m, to their general revenue grant and non-domestic rates income.

Since 2010-11, the local government revenue budget had fallen by 8.5% compared to a 5.9% drop in the budget of the Scottish Government, he added.

“How can you say that local government is being treated fairly when you are disproportionately cutting local government budgets more than your own budget?” he said.

Patrick Harvie said that local government was “consistently in the bottom half” of charts showing Scottish Government expenditure in real terms for different areas, and asked why local government was given such a low priority.

Mr Mackay said that the Scottish Government’s main priority was the health service, which was reflected in plans to invest over £400m extra in the NHS.

“Government is about choices and priorities, but I believe that we have been able to protect local government, recognising that it, too, has revenue raising ability,” he said.

Mr Mackay said that local authorities were receiving extra allocations for joint priorities such as childcare provision as part of their settlement, which translated into a small cash increase.

Additionally, if councils chose to use their powers to increase council tax, that would generate £77m, taking local government into the territory of a real-terms increase. 

“I am not saying that local government has suddenly entered the land of milk and honey—far from it,” he said.

“I have recognised that there are challenges. However, what local authorities are preparing for is better than what they might have forecast.”

Asked by Murdo Fraser how much flexibility there was in the Scottish Government’s budget, Mr Mackay estimated that £158m would be available for budget negotiations.

He added that he continued to offer an open door to opposition parties.

“It is clear that I cannot get a budget through Parliament unless there are abstentions or a proactive vote for the budget, so I will continue to negotiate with willing partners,” he said.

Mr Mackay also said he had received confirmation from HMRC that married couples in Scotland would not lose out on tax relief of up to £260 annually as a result of the Scottish Government’s planned overhaul of income tax in Scotland.

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