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.

Why did some councils then get more Scottish Government Grant than others?

We have seen that the distribution of the £12.7 billion was based on a funding formula. This formula was agreed in a series of discussions with councils, through their representative group COSLA.

The next step is to subtract forecast funding that they will receive from Council Tax and Non-domestic Rates. The amount each council can raise from these mainly depends on the size of their population and number of businesses. So really it is only the Scottish Government grant that can be adjusted to ensure that each council receives its calculated fair share of the total funding.

The Scottish Government grant therefore works as a balancing item, providing the remainder of the needed funding. This may mean one council receives a lot more actual grant than another.

Diagram illustrating why Council A receives much less grant than Council B

In the above example, Council A’s share of the available funding was less than Council B’s. It also received much more from Non-domestic Rates raised in its area. So Council A needs to receive a lot less Scottish Government grant.


Email: gaestatistics@gov.scot

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