Hansard

Many of those specific national priorities are exactly the things that we, as ministers, are asked about in the chamber by Craig Hoy, his colleagues and others. That conundrum has members coming here to demand local government flexibility but then asking us about, and holding us to account on, delivery in areas that are the responsibility of local government. However, the direction of travel is towards further baselining of funding, so we jointly published the fiscal framework in October 2025. We continue to work with COSLA to develop the assurance and accountability framework—that goes some way to answering Craig Hoy’s point; it is about assurance but also accountability for delivery, which is critical for further substantive baselining of funding.

It is important to note that the total funding package for local government is already finalised, since the Budget (Scotland) (No 5) Bill was passed yesterday. Today’s debate simply seeks the Parliament’s approval for the distribution of that agreed total funding to individual local authorities.

The Local Government Finance (Scotland) Order 2026 will ensure that funding for local government will increase by 3.4 per cent compared with the equivalent order last year. Those figures are, of course, different from the ones that were outlined in the budget statement, not only as a consequence of the additional £20 million that I confirmed at stage 1 of this year’s budget bill process but due to the additional funding for employer national insurance contributions that was added during the equivalent process last year.

It is important that comparisons of budgets are made on a like-for-like basis. The order for 2026-27 will provide a real-terms increase in the local government finance settlement of 1.1 per cent compared with the position on the order for 2025-26—I am comparing order with order, and not budget with budget, just in case Craig Hoy is not following the detail.

The order that is before the Parliament seeks approval for the distribution and payment of £14.7 billion of the revenue total of £15 billion, with the balance made up mainly of specific grant funding, which is administered separately. That £14.7 billion is the combination of the general revenue grant, which amounts to more than £11.2 billion, and the distributable amount of non-domestic rates income, which has been set at almost £3.5 billion.

A further £104 million of revenue funding remains, which local authorities will be notified about once the distribution has been discussed and agreed with COSLA and included for approval in the local government finance order in 2027. That figure includes the £20 million of additional funding that was announced at stage 1 of this year’s budget bill process. Specific revenue funding of almost £222 million is also paid directly by the relevant policy areas, under separate legislation.

The Local Government Finance (Scotland) Order 2026 also seeks approval for more than £365 million of changes to funding allocations for 2025-26, and the full list of changes can be found in the report on the 2026 order.

I turn to council tax, which is set and administered by individual local authorities. We have provided full flexibility in setting rates for 2026-27, as all political leaders in COSLA had asked us to do. We have also provided an additional £253 million of general revenue grant to ensure that restraint on rates setting is affordable, and our means-tested council tax reduction scheme continues to protect household budgets from the impact of the council tax rises.