Meeting of the Parliament 27 February 2025
The 2025 local government finance order that is before us today seeks parliamentary approval for the guaranteed payment of £13.9 billion in revenue support to be paid to Scotland’s 32 local authorities.
Next year, the Scottish Government will provide local authorities with a total funding package that is worth more than £15 billion, delivering an increase of more than £1 billion—or 8 per cent—which is a real-terms increase of 5.5 per cent, despite the challenging circumstances that I outlined in my opening statement.
In addition, almost £867 million of further Scottish Government support is provided outwith the local government finance settlement. That includes the funding that is paid to local authorities for the attainment Scotland fund, the schools for the future programme, area-based schemes, regeneration programmes and city deals. That brings the Scottish Government’s total investment in local authorities to almost £16 billion.
We have listened to the requests of COSLA and others, and we acknowledge that a council’s decision on tax provides important financial and administrative accountability to its local electorate. As well as accounting for local needs, we expect councils to consider the impact of council tax increases on local people and their household finances.
Along with COSLA, we have announced a joint programme of engagement to build consensus on reforms to make council tax fairer. Because there are differing and competing views on what that reform should look like, we will engage transparently, through our partnership approach, to build a consensus on a modernised, fairer local taxation system that can support the local services that communities across Scotland expect and deserve.
The settlement also provides continued fiscal certainty through our policy of guaranteeing the combined general revenue grant plus non-domestic rates funding that is set out in the order. That means that any loss of non-domestic rates income will be compensated for by increased general revenue grant, which, in effect, underwrites that critically important revenue stream.
Bearing in mind that the overall quantum was confirmed when the Budget (Scotland) (No 4) Bill was passed by Parliament, Opposition members should note that failure to approve the order would result in Scotland’s local authorities and, as a consequence, all our local communities, being deprived of more than £618 million of additional funding in this financial year and more than £1 billion of additional Scottish Government investment next year.
I encourage Parliament to unanimously support the local government finance order before us today.