Scottish local government finance - Green Book: 2023-2024

Scottish Local Government Finance Settlement 2023-24: Funding Allocation Formula.

2 Changes Since the Last Settlement

2.1 Comparison to 2022-23 settlement

The needs-based indicators used in assessments have, where possible, been updated to use the most up-to-date data available, though a few elements are fixed, for example, the 2011 population census data, and in some areas Covid restrictions have affected data availability.

Since several lines have merged, and some individual totals have not remained at the same levels as the 2022-23 settlement.

2.2 Data issues

The Data Issues Working Group (DIWG) is the technical advisory group, comprising of representatives of the Scottish Government and local government (including COSLA), which exists to assist the analytical work undertaken in support of the allocation calculations. The work programme of the DIWG is directed by the Settlement and Distribution Group (SDG), which was established to oversee all matters relating to the local government finance settlement. Data issues dealt with through the DIWG, and agreed by the SDG, since the last settlement are listed below.

Dual Indicator Review 2022

The Dual Indicator Review is undertaken for two reasons. The first is to establish whether or not pairs of indicators currently used in the settlement calculations, and determined mathematically, continue to be valid by displaying a statistically significant relationship with past expenditure. The second is to produce updated regression coefficients – the measure of the relationship between expenditure and the indicators – for use in the next Settlement. The coefficients determine the amount of funding distributed on each indicator.

The expenditure data used for modelling would have been 2020-21 data, however upon analysis the DIWG felt that it was likely to be affected by Covid restrictions, and that, together with similar issues with some of the key indicator data, meant that regression modelling would be unreliable. It was therefore agreed to use the previous year's models, but to still re-price and average the results. The averaging was done with the values used in the 2021-22 settlement, so as to maintain the pattern of weighting on each year's modelling.

Early Learning and Childcare (ELC)

Following on from last year's merger of eight ELC lines into one, two further adjustments were made. Firstly, it was agreed that the data used in the Equity and Excellence part of the deprivation element should be regularly updated, including the unit costs. Secondly, £5 million was transferred from the School Meals GAE quantum to the ELC quantum. Prior to the 1140-based increases, about £5 million was spent on pre-school meals, accounted for by the School Meals GAE. However, the increased spend on meals due to 1140 provision was accounted for in the ELC expansion funding, and so moving the £5 million brings all the funding together.


Two homelessness-related funding lines, namely £23.5 million Temporary Accommodation redetermination and the £7 million Former Hostels Grant, were merged and distributed based on a composite indicator of equal shares, homelessness indicators, market pressures, population dispersion, and deprivation. The combined line is known as Preventing and Responding to Homelessness.

School Meals

The expansion of universal free school meals to P4 and P5 during 2021-22 means that the expenditure data used to model the weights between the different elements of the formula did not match those categories. It was agreed to model demand based on data from the 2022 Healthy Living Survey which was carried out after P5 had been included in the universal provision.

Blue Badge Scheme

The formula was changed to the number receiving disability allowance (mobility), i.e. Disability Living Allowance cases in payment plus Personal Independence Payments claims with entitlement.

Special School pupil numbers

Where special school pupil numbers need to be split into primary and secondary, this has historically been done using pupil age, as no stage-information was collected. However, stage data are now reported and so these are used.

Data sources

Several datasets used in funding formulae were unavailable or considered unsuitable due to the effect of the Covid pandemic, and so the previous year's data were rolled forward. The main dataset affected were as follows:

  • Tourism data, including those used in adjusted populations
  • Expenditure data for 2020-21 used in Dual Indicator Reviews.
  • Road usage

Supplementary Table 9 gives a list of the changes to formulae and methodology made during 2022.

2.3 Local Authority naming convention

Please note that City of Edinburgh and Na h‑Eileanan Siar have been placed in their alphabetical order, which differs from the order used in the Finance Circular.

2.4 Capital Allocations

In order to give a fuller coverage of allocations to Local Authorities we have again also included the Capital Grant Allocations.



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