Fiscal Framework between Scottish Government and Local Government

Roles and scope

11. As set out in the Verity House Agreement, Scottish Government and Local Government are partners with a relationship based on mutual trust and respect, recognising the need for effective and joint leadership on shared priorities. This Fiscal Framework applies directly to the Scottish Government and should be considered in the activities of all Scottish public bodies where their activities impact upon Local Government.

12. Local authorities are independent corporate bodies with their own powers and responsibilities for the delivery of a wide range of national and local services, both statutory and non-statutory. Local authorities are also independent of each other and are not accountable for the delivery of other local authorities.

13. Local authorities are not the only local partners who lead delivery of services - health, police, fire and the third sector also have statutory and/or essential roles in local public services. Many of these bodies are required to work collectively and with councils as set out in the Community Empowerment (Scotland) Act 2015.

14. The Scottish Government provides local authorities with block grant funding to operate independently and to take locally appropriate decisions, openly and transparently. Local authorities also have their own sources of revenue including the raising of Council Tax, discretionary local fiscal levers (for example the Workplace Parking Levy), and the setting of fees and charges for a range of services.

15. It is the role and responsibility of each individual local authority to manage its own budgets and to allocate the financial resources available to it based on local needs, the fulfilment of any statutory obligations, and jointly agreed national and local priorities. The management of the available local authority budget and the effective utilisation of funds to deliver services to local communities are decisions to be determined by locally elected representatives. Any decisions on ringfencing and/or restrictions on funding should routinely be taken jointly in accordance with the Verity House Agreement.

16. The respective roles of Scottish Government and Local Government, as they pertain to national outcomes and policy direction, will be set out in the planned assurance and accountability arrangements underpinning the Verity House Agreement. This policy cooperation is central to the financial relationship, and this Fiscal Framework should be read alongside that Agreement once finalised.