Chapter 4 Finance & Local Government
Portfolio Responsibilities
Finance and Local Government is focused on enabling our public services to become more sustainable and resilient, meeting the needs of communities across Scotland. The portfolio is responsible for delivering sound public finances and a balanced budget; and supporting our partnership with local government. Each of these combined are critical to the delivery of our priorities as a government.
As a portfolio, we will lead on the implementation of the PSR strategy which sets out our commitment to delivering more efficient, better-coordinated services and prioritising preventative investment. This includes a commitment to save £1 billion in corporate function costs by 2030, change our model of service delivery, and to increase preventative spend. Our approach to implementation will require close collaboration with key partners such as local government, public bodies, trade unions, third sector and communities.
The 2026-27 Budget delivers a real terms increase in the Local Government Settlement to £15.686.1 million compared to an allocation of £15,035.2 million in 2025-26.
The budget further consolidates the Settlement by baselining £773.8 million of funding, that’s over £2 billion since the Verity House Agreement was signed. It also allocates £5 million in 2026-27 towards a targeted Council Tax revaluation of properties worth over £1 million, to support the introduction of two new ‘high value property bands’ from 1 April 2028.
Our planning reforms will deliver a more efficient planning service and support for development delivery through improving skills, capacity and performance to provide greater certainty for investment. This includes continuing support via the National Planning Hub targeting capability and expertise in planning authorities where it is most needed to maximise impact and accelerate development.
The Exchequer continue to play a critical role in managing public finances through revenue raising, improving public value, and ensuring the overall financial position is balanced and sustainable. We will issue the first Scottish Government Bond, as part of a multi-year £1.5 billion issuance programme, to support capital investment.
We also ensure a ‘Once for Scotland’ approach to prioritise those initiatives that consistently yield high returns in the form of both cashable savings and cost avoidance across the wider public sector and are critical to achieving the £1 billion savings target in the PSR Strategy.
The portfolio spending plans are key to improving the equality of outcomes for people and communities, helping to improve public services, deliver fiscal sustainability, and contribute to the eradication of child poverty.
Finance & Local Government intended contributions to the National Outcomes
Primary National Outcomes
- Communities
- Poverty
- Economy
- Environment
- Fair Work and Business
Secondary National Outcomes
- Children and Young People
Finance & Local Government
The prior year 2025-26 Budget Comparator figures are based on the latest in-year budget numbers which were revised at the Autumn Budget Revision. The 2024-25 Scottish Budget comparator figures reflect the outturn numbers for that year.
Table 4.01: Spending Plans (Level 2)
| Level 2 |
2024-25 Outturn £m |
2025-26 ABR Budget £m |
2026-27 Budget £m |
| Local Government* |
14,359.3 |
15,047.5 |
14,782.6 |
| Scottish Public Pensions Agency |
(357.9) |
3,094.2 |
3,406.8 |
| Finance |
70.4 |
70.8 |
86.1 |
| Planning |
6.4 |
10.0 |
10.2 |
| Governance and Reform |
4.4 |
35.6 |
34.9 |
| Consumer Policy and Advice |
1.3 |
0.5 |
0.5 |
| Accountant In Bankruptcy |
2.1 |
3.0 |
3.5 |
| Registers of Scotland |
9.9 |
5.6 |
7.2 |
| Revenue Scotland |
9.9 |
12.0 |
14.3 |
| Scottish Fiscal Commission |
2.6 |
2.8 |
3.1 |
| Consumer Scotland |
3.5 |
4.4 |
4.6 |
| Corporate Running Costs |
226.7 |
233.6 |
211.0 |
| Financial Transactions Repayments |
25.0 |
25.0 |
25.0 |
| Total Finance and Local Government |
14,363.7 |
18,545.0 |
18,589.8 |
| Total Fiscal Resource |
10,936.8 |
11,520.6 |
11,032.2 |
| of which Programme Costs |
10,660.2 |
11,229.9 |
10,757.6 |
| of which Operating Costs |
276.6 |
290.7 |
274.7 |
| Non-cash |
22.3 |
13.0 |
19.9 |
| Capital |
700.6 |
813.7 |
672.5 |
| Financial Transactions (FTs) |
24.9 |
25.0 |
25.0 |
| UK Funded AME |
2,679.1 |
6,172.8 |
6,840.2 |
Presentational Adjustments for Scottish Parliament Approval
| Revenue Scotland – shown separately |
(9.9) |
(12.0) |
(14.3) |
| Scottish Fiscal Commission– shown separately |
(2.6) |
(2.8) |
(3.1) |
| Registers of Scotland – shown separately |
(9.9) |
(5.6) |
(7.2) |
| Consumer Scotland – shown separately |
(3.5) |
(4.4) |
(4.6) |
| Scottish Futures Trust (NDPB non-cash) |
(0.1) |
– |
(0.1) |
| Central Government Grants to Local Authorities returned to portfolios (E&S, Justice and NZET) |
(355.7) |
(386.8) |
(315.6) |
| NHS and Teacher's Pensions – shown separately |
389.3 |
(3,058.2) |
(3,366.2) |
| Total Finance and Local Government |
14,371.2 |
15,075.2 |
14,878.8 |
| Total Limit on Income (accruing resources) |
400.0 |
|
|
* Changes at Autumn Budget revision can distort the year-on-year comparisons. Table 4.15 provides a like for like basis for the Local Government Settlement across previous years.
Table 4.02: Scottish Public Pensions Agency Spending Plans (Level 3)
| Level 3 |
2024-25 Outturn £m |
2025-26 ABR Budget £m |
2026-27 Budget £m |
| Agency Administration |
31.4 |
36.0 |
40.6 |
| Scottish Teachers Pension Schemes |
187.4 |
1,091.1 |
1,202.4 |
| NHS Pension Scheme |
(576.7) |
1,967.1 |
2,163.7 |
| Total SPPA of which |
(357.9) |
3,094.2 |
3,406.8 |
| Fiscal Resource |
28.3 |
30.7 |
35.3 |
| Non-cash |
0.6 |
2.5 |
2.5 |
| Capital |
2.4 |
2.8 |
2.8 |
| Financial Transactions (FTs) |
– |
– |
– |
| UK Funded AME |
(389.3) |
3,058.2 |
3,366.2 |
Table 4.03: Finance Spending Plans (Level 3)
| Level 3 |
2024-25 Outturn £m |
2025-26 ABR Budget £m |
2026-27 Budget £m |
| Scotland Act Implementation |
1.8 |
4.0 |
6.1 |
| Scottish Bonds Programme |
– |
– |
2.1 |
| Procurement Shared Services |
23.5 |
25.4 |
19.4 |
| Exchequer and Finance |
9.1 |
11.9 |
11.4 |
| Scottish Government Capital Projects |
17.8 |
12.1 |
32.4 |
| Public Information and Engagement |
8.3 |
10.8 |
6.2 |
| Scottish Futures Trust |
9.9 |
6.7 |
8.6 |
| Total Other Finance of which |
70.4 |
70.8 |
86.1 |
| Fiscal Resource |
52.5 |
58.7 |
53.6 |
| Non-cash |
15.9 |
0.1 |
10.9 |
| Capital |
1.9 |
12.1 |
21.6 |
| Financial Transactions (FTs) |
(0.1) |
– |
– |
| UK Funded AME |
0.3 |
– |
– |
Table 4.04: Planning Spending Plans (Level 3)
| Level 3 |
2024-25 Outturn £m |
2025-26 ABR Budget £m |
2026-27 Budget £m |
| Planning |
5.8 |
9.4 |
9.6 |
| Planning & Environmental Appeals |
0.6 |
0.6 |
0.6 |
| Total Planning of which |
6.4 |
10.0 |
10.2 |
| Fiscal Resource |
6.4 |
10.0 |
10.2 |
| Non-cash |
– |
– |
– |
| Capital |
– |
– |
– |
| Financial Transactions (FTs) |
– |
– |
– |
| UK Funded AME |
– |
– |
– |
Table 4.05: Governance & Reform Spending Plans (Level 3)
| Level 3 |
2024-25 Outturn £m |
2025-26 ABR Budget £m |
2026-27 Budget £m |
| Public Service Reform & Community Empowerment |
4.4 |
35.6 |
34.9 |
| Total Governance & Reform of which |
4.4 |
35.6 |
34.9 |
| Total Fiscal Resource |
4.4 |
35.6 |
34.9 |
| Non-cash |
– |
– |
– |
| Capital |
– |
– |
– |
| Financial Transactions (FTs) |
– |
– |
– |
| UK Funded AME |
– |
– |
– |
Table 4.06: Consumer Policy & Advice Spending Plans (Level 3)
| Level 3 |
2024-25 Outturn £m |
2025-26 ABR Budget £m |
2026-27 Budget £m |
| Consumer Policy and Advice |
1.3 |
0.5 |
0.5 |
| Total Consumer Policy and Advice of which |
1.3 |
0.5 |
0.5 |
| Fiscal Resource |
1.3 |
0.5 |
0.5 |
| Non-cash |
– |
– |
– |
| Capital |
– |
– |
– |
| Financial Transactions (FTs)s |
– |
– |
– |
| UK Funded AME |
– |
– |
– |
Table 4.07: Accountant in Bankruptcy Spending Plans (Level 3)
| Level 3 |
2024-25 Outturn £m |
2025-26 ABR Budget £m |
2026-27 Budget £m |
| Accountant in Bankruptcy |
2.1 |
3.0 |
3.5 |
| Total Accountant in Bankruptcy of which |
2.1 |
3.0 |
3.5 |
| Fiscal Resource |
0.1 |
0.6 |
1.0 |
| Non-cash |
1.3 |
1.4 |
1.4 |
| Capital |
0.6 |
1.1 |
1.1 |
| Financial Transactions (FTs) |
– |
– |
– |
| UK Funded AME |
– |
– |
– |
Table 4.08: Registers of Scotland Spending Plans (Level 3)
| Level 3 |
2024-25 Outturn £m |
2025-26 ABR Budget £m |
2026-27 Budget £m |
| Registers of Scotland |
9.9 |
5.6 |
7.2 |
| Total Registers of Scotland of which |
9.9 |
5.6 |
7.2 |
| Fiscal Resource |
– |
0.6 |
– |
| Non-cash |
3.7 |
4.3 |
4.2 |
| Capital |
6.2 |
0.7 |
3.0 |
| Financial Transactions (FTs) |
– |
– |
– |
| UK Funded AME |
– |
– |
– |
Table 4.09: Revenue Scotland Spending Plans (Level 3)
| Level 3 |
2024-25 Outturn £m |
2025-26 ABR Budget £m |
2026-27 Budget £m |
| Revenue Scotland |
9.9 |
12.0 |
14.3 |
| Total Revenue Scotland of which |
9.9 |
12.0 |
14.3 |
| Fiscal Resource |
8.0 |
9.5 |
10.9 |
| Non-cash |
0.7 |
0.8 |
0.9 |
| Capital |
1.3 |
1.8 |
2.5 |
| Financial Transactions (FTs) |
– |
– |
– |
| UK Funded AME |
– |
– |
– |
Table 4.10: Scottish Fiscal Commission Spending Plans (Level 3)
| Level 3 |
2024-25 Outturn £m |
2025-26 ABR Budget £m |
2026-27 Budget £m |
| Scottish Fiscal Commission |
2.6 |
2.8 |
3.1 |
| Total Scottish Fiscal Commission of which |
2.6 |
2.8 |
3.1 |
| Fiscal Resource |
2.5 |
2.8 |
3.0 |
| Non-cash |
0.1 |
– |
0.1 |
| Capital |
0.1 |
– |
0.1 |
| Financial Transactions (FTs) |
– |
– |
– |
| UK Funded AME |
– |
– |
– |
Table 4.11: Consumer Scotland Spending Plans (Level 3)
| Level 3 |
2024-25 Outturn £m |
2025-26 ABR Budget £m |
2026-27 Budget £m |
| Consumer Scotland |
3.5 |
4.4 |
4.6 |
| Total Consumer Scotland of which |
3.5 |
4.4 |
4.6 |
| Fiscal Resource |
3.5 |
4.4 |
4.6 |
| Non-cash |
– |
– |
– |
| Capital |
– |
– |
– |
| Financial Transactions (FTs) |
– |
– |
– |
| UK Funded AME |
– |
– |
– |
Table 4.12: Corporate Running Costs Spending Plans (Level 3)
| Level 3 |
2024-25 Outturn £m |
2025-26 ABR Budget £m |
2026-27 Budget £m |
| Corporate Running Costs |
226.7 |
233.6 |
211.0 |
| Total Corporate Running Costs of which |
226.7 |
233.6 |
211.0 |
| Fiscal Resource |
226.5 |
229.0 |
211.0 |
| Non-cash |
– |
4.0 |
– |
| Capital |
– |
– |
– |
| FTs |
– |
– |
– |
| UK Funded AME |
0.2 |
0.6 |
– |
Table 4.13: Local Government Spending Plans (Level 3)
| Level 3 |
2024-25 Outturn £m |
2025-26 ABR Budget £m |
2026-27 Budget £m |
| General Revenue Grant |
10,313.3 |
10,876.2 |
10,440.7 |
| Non-Domestic Rates |
3,068.0 |
3,114.0 |
3,474.0 |
| General Capital Grant |
614.1 |
659.1 |
493.7 |
| Specific Resource Grants |
286.6 |
258.2 |
222.4 |
| Specific Capital Grants |
74.1 |
136.2 |
147.7 |
| Local Government Advice and Policy |
3.2 |
3.8 |
4.2 |
| Total Local Government of which |
14,359.3 |
15,047.5 |
14,782.6 |
| Fiscal Resource |
10,603.1 |
11,138.2 |
10,667.2 |
| Non-cash |
– |
– |
– |
| Capital |
688.1 |
795.3 |
641.4 |
| FTs |
– |
– |
– |
| UK Funded AME |
3,068.0 |
3,114.0 |
3,474.0 |
Table 4.14: Local Government Specific Grant Funding (Level 3)
|
Portfolio |
2024-25 Outturn £m |
2025-26 ABR Budget £m |
2026-27 Budget £m |
| Criminal Justice Social Work |
Justice and Home Affairs |
86.3 |
86.5 |
86.5 |
| Pupil Equity Fund |
Education and Skills |
130.7 |
130.7 |
120.0 |
| Gaelic |
Deputy First Minister, Economy and Gaelic |
4.5 |
4.7 |
4.6 |
| Inter Island Connectivity* |
Finance and Local Government |
65.1 |
36.4 |
11.4 |
| Total Specific Revenue Grants |
- |
286.6 |
258.2 |
222.4 |
| Vacant and Derelict Land |
Finance and Local Government |
5.0 |
7.6 |
7.6 |
| Transfer of Management Development Fund (TMDF) |
Housing |
92.2 |
92.2 |
92.2 |
| Regional Transport Partnership |
Transport |
(23.2) |
12.4 |
12.4 |
| Cycling Walking and Safer Routes** |
Transport |
– |
23.9 |
– |
| Inter-Island Connectivity*** |
Finance and Local Government |
– |
– |
15.5 |
| Climate Emergency*** |
Finance and Local Government |
– |
– |
20.0 |
| Total Specific Capital Grants |
- |
74.1 |
136.2 |
147.7 |
* Prior year funding has been consolidated into the General Revenue Grant from 2026-27
** Now included as part of table 4.15 - Active Travel Infrastructure
*** The equivalant funding was paid as part of the General Capital Grant in 2025-26
Table 4.15: Revenue Funding within Other Portfolios to be Transferred In-Year
|
2024-25 £m |
2025-26 £m |
2026-27 £m |
| Local Government Budget Settlement* |
14,356.1 |
15,043.7 |
14,778.5 |
| ABR/SBR Adjustment |
(1,658.9) |
(1,471.8) |
– |
| Baseline Restatement |
772.0 |
772.0 |
– |
| Total |
13,469.2 |
14,343.9 |
14,778.5 |
| Additional Adult Social Workers |
22.0 |
22.0 |
22.0 |
| Additional Support for Learning |
15.0 |
43.0 |
43.0 |
| Appropriate Adults |
1.0 |
1.0 |
1.0 |
| Building Standards Fees |
(1.5) |
(2.1) |
(2.1) |
| Carer's Act |
60.5 |
60.5 |
60.5 |
| Children’s Social Care Workforce Development |
– |
33.0 |
44.0 |
| Discretionary Housing Payments |
92.7 |
99.2 |
108.5 |
| Early Learning and Childcare (ELC) Private and Third Sector Pay |
– |
25.7 |
36.7 |
| Educational Psychologists |
(0.9) |
(0.9) |
(0.7) |
| Free Personal Nursing Care |
– |
– |
7.0 |
| Free School Meals (Holiday Provision) |
21.8 |
21.8 |
21.8 |
| Free School Meals Intervention |
22.0 |
37.0 |
40.0 |
| Homelessness Support |
7.0 |
7.0 |
– |
| Local Government Attainment Grants |
10.5 |
10.6 |
10.6 |
| Rapid Rehousing Transition Plans |
8.0 |
8.0 |
8.0 |
| Real Living Wage |
– |
– |
160.0 |
| Removal of Curriculum Charges |
8.0 |
8.0 |
8.0 |
| Removal of Music Tuition Charges |
12.0 |
12.0 |
12.0 |
| School Clothing Grant |
13.9 |
13.9 |
14.6 |
| School Workforce |
145.5 |
186.5 |
186.5 |
| Scottish Disability Assistance – Child Disability Payment |
3.5 |
3.2 |
3.3 |
| Scottish Welfare Fund |
40.9 |
40.9 |
40.9 |
| Self-Directed Support |
3.7 |
3.7 |
3.7 |
| Sensory Impairment |
0.3 |
0.3 |
0.3 |
| Whole Family Wellbeing Fund |
32.0 |
32.0 |
38.1 |
| Total Revenue Funding within other Portfolios |
517.9 |
666.3 |
867.7 |
| Active Travel Infrastructure |
– |
– |
40.0 |
| Playpark Renewal |
– |
25.0 |
– |
| Expansion of Free School Meals |
40.0 |
– |
– |
| Total Capital Funding within other Portfolios |
40.0 |
25.0 |
40.0 |
| Total Local Government Settlement in Local Government Finance Circular |
14,027.1 |
15,035.2 |
15,686.1 |
* This can be derived from Table 4.13 by removing Local Government Advice and Policy from the Total Local Government figure.
Table 4.16: Analysis of Baseline Transfers
|
2024-25 £m |
2025-26 £m |
2026-27 £m |
| Customer First Digital Public Services |
1.4 |
1.4 |
– |
| National Trauma Training |
1.6 |
1.6 |
– |
| Community Mental Health & Wellbeing |
– |
15.0 |
– |
| 2024 Teachers’ Pay |
– |
43.0 |
– |
| Living Wage |
230.0 |
125.0 |
– |
| 2024-25 Free Personal and Nursing Care |
11.5 |
10.0 |
– |
| Homelessness Prevention Fund |
23.5 |
23.5 |
23.5 |
| 2025 Teachers’ Pay |
242.8 |
242.8 |
243.8 |
| Health and Social Care |
257.2 |
257.2 |
257.2 |
| Care at Home |
124.0 |
124.0 |
124.0 |
| Health, Social Care and Mental Health |
120.0 |
120.0 |
120.0 |
| School Counselling |
4.0 |
4.0 |
4.0 |
| Tobacco Related Issues |
1.3 |
1.3 |
1.3 |
Table 4.17: Estimated Local Government Funding outwith Core Settlement
In previous years, the funding that is estimated to flow to Local Government during the financial year outwith the core Local Government Settlement was published in the budget document. The published figures represent best estimates at the time of the Scottish Government Budget although the actual sums payable will be notified by the relevant policy team at the earliest opportunity. In order to ensure the data represents the most accurate estimation at the time of the budget, the data has been removed from the budget document and will be published as supplementary disclosure.
