Councils granted financial powers to aid Covid recovery

Councils in Scotland have been given “game-changing” financial powers to aid their recovery from Covid-19, finance secretary Kate Forbes has said.

Local authorities will be able to use capital receipts to relieve pressure on day-to-day spending, including those caused by the pandemic, as well being allowed to extend the repayment period for loans.

The Scottish Government has said the estimated value of the new powers is £600m.

A lost income scheme also makes £90m available to local authorities and £49m open to trusts delivering services on behalf of councils, taking the total estimated value of the package to £750m.

The package was created in consultation with Cosla, the body which represents local authorities in Scotland.

The powers provided to councils by the Scottish Government are similar to those demanded by Forbes from Westminster.

She said: “I have been clear that the Scottish Government needs appropriate fiscal levers in order to respond effectively to the Covid-19 pandemic.

“That is equally true for local government, which is why I am very pleased that we have been able to deliver a package of support for local services worth up to £750m.

“Working in partnership with Cosla, the Scottish Government has delivered on our commitment to support councils across Scotland with a game-changing package of financial flexibilities, giving them the powers they need to make informed decisions about spending at a local level.

“In addition, we are close to finalising the details of additional financial support through a lost income scheme, worth an estimated £90 million subject to confirmation of the funding from the UK Government. For trusts delivering services on behalf of councils this can also be topped up with £49 million of additional funding already confirmed.

“This support will help councils and their trusts manage the loss of income they are facing from local services due to Covid-19.

“These measures are excellent examples of how the Scottish Government is working together with Cosla and local authorities to ensure that we are doing everything within our power to save jobs, protect our public services and reboot our economy.”

Gail McGregor, the resources spokeswoman at Cosla, welcomed the announcement and added: “Responding to Covid-19 whilst continuing to deliver essential, everyday services has put extreme pressure on local government finances this year.

“The pandemic has also meant substantial losses of income across a range of council services including leisure, sport, culture, and planning.

“Balancing budgets will be a real challenge and this has been fully recognised by Scottish Government who we have worked with constructively and positively.”