Barnett-style funding formula proposed for local government budgets

A new, independent system must be put in place to guarantee fair funding for councils, it has been suggested.

Scottish Labour has proposed a Barnett-style funding formula to determine local government budgets.

The party has pitched the idea in response to what it said had been a cycle of “cuts and unpredictable pots of money” set out by the Scottish Government.

It also comes amid a spat over strikes taking place in Edinburgh that has left the city’s streets covered in rubbish.

The SNP has blamed the Labour-led City of Edinburgh Council over the dispute, while Labour has hit out at the funding made available to local authorities by the Scottish Government.

Misinformation on #edinburghbinstrikes today is rife.

Strike is a national dispute—one council can’t stop it. 14 more councils tomorrow.

Local gov funding has been slashed for a decade.

Idea that 5% definitely would have stopped this is a fantasy. An insulting one at that.
— Unite CEC Branch (@UniteCECbranch) August 23, 2022

Unite the Union’s City of Edinburgh Council (CEC) branch that misinformation around the bin strikes was “rife”.

They said: “Strike is a national dispute – one council can’t stop it. 14 more councils tomorrow (Wednesday).

“Local gov funding has been slashed for a decade. Idea that 5% definitely would have stopped this is a fantasy. An insulting one at that.”

Scottish Labour leader Anas Sarwar has argued that the funding system for local government has been left “in tatters” by the SNP.

Sarwar proposed the establishment of a new Local Government Fiscal Commission, or new responsibilities and authority for the existing Scottish Fiscal Commission in relation to local government finance.

Once established, an independent process would then set local government budgets for a three-year period, with the necessary room for forecasting errors and UK budget changes.

“For years now Scotland’s councils have been cut to the bone and callously side-lined,” said Sarwar.

“The SNP and the Greens have taken Tory austerity and compounded it, siphoning money away from essential services and into ministerial vanity projects.

“Now libraries are closing, roads are crumbling, bins are over-flowing, and councils are facing even more impossible choices.

“The SNP’s relentless contempt for local government has left current funding system in tatters.

“We need to put a stop to this daylight robbery and guarantee truly fair funding for councils with a new independent system.”

A Scottish Government spokesperson said: “The Scottish Government is treating councils fairly and providing a real terms increase of 6.3% to local authority budgets this year.

“This comes against Scotland’s settlements from the UK Government having suffered a decade of austerity with average real terms cuts of over 5% equating to a loss of £18bn.

“Despite this, local authority revenue funding is £2.2bn or 22.9% higher in cash terms in 2022-23 than it was in 2013-14.”

The spokesperson said that the Scottish Government will continue to press the UK to use all levers at its disposal to tackle the cost of living crisis.

“Any fiscal framework must be developed in partnership with local government and must be workable – and crucially, must never put funding for the NHS at risk,” they continued.

“We are now working with COSLA to agree a new fiscal framework for local government in Scotland. This will give councils greater certainty and flexibility, and greater scope for discretionary local revenue-raising.

“The Scottish Government must balance a fixed budget with very significant competing demands as a consequence of the cost of living crisis and the inaction of the UK Government.

“We will continue to press the UK Government to use all the levers at its disposal to tackle this emergency on the scale required – these include access to borrowing, providing benefits and support to households, VAT on fuel, taxation of windfall profits and regulation of the energy market.”