Local government funding 2020-2021: process overview

Overview of the process to determine the Local Government Finance Settlement for 2020 to 2021. The figures used are set out in Finance Circular 2/2020, which was agreed by Parliament prior to the COVID-19 pandemic, and so do not take account of additional COVID-19 funding.

How were Capital Projects funded?

All of the funding referred to so far has been for day-to-day running costs, called ‘revenue spend’. In addition to that, councils also spend on longer-term capital projects, such as flood defences, town centre renewal and road building.

In the past this was funded by borrowing, with the Scottish Government providing a grant to fund repayments. But now the Scottish Government provides a Capital Grant to fund capital projects.

The Capital Grant was also distributed by means of a funding formula, based largely on population and road-length. Some funding was ring-fenced for specific projects such as flood defence.

In 2020-21 the Capital Grant was £778 million. Capital funding cannot be used on day-to-day running costs, but councils can use some of their revenue funding to pay for capital projects.

Pie chart showing the proportions distributed on different indictors


Email: gaestatistics@gov.scot

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