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The article by the BBC’s Douglas Fraser is peppered with references to the Institute for Fiscal Studies (IFS). They include: ‘.. the Institute for Fiscal Studies, that London-based hotbed of tax and benefit analytics. It has recently been taking a close interest in Holyrood’s divergence on income tax and welfare. You may have seen its warnings about the pressures on council budgets.’

With Holyrood opposition parties ‘outraged’ at the proposed SG settlement for Local Authorities, it’s (perhaps!) surprising that the BBC failed to highlight this from a very recent report on public finances in Scotland from the ‘favoured’ IFS :

‘Scottish councils received approximately £1.8 billion in COVID-19 grants during 2020– 21 and 2021–22 to address pandemic-related pressures. Net expenditure did increase for a range of services, often reflecting the fact that additional grant funding had to make up for the loss of income from sales, fees and charges (such as parking charges).

‘But COUNCILS ALSO INCREASED THEIR GENERAL FUND RESERVES BY AROUND £1.3 BILLION OVER THE SAME TWO YEARS, WHICH SUGGESTS THAT THE ADDITIONAL FUNDING THEY RECEIVED EXCEEDED THE SHORT-TERM FINANCIAL PRESSURES THEY FACED, OR THAT THEY STRUGGLED TO SPEND FUNDS WELL.’

And £1.3 billion is a substantial sum relative to the total settlement as the IFS report notes: ‘In the original 2022–23 budget as passed by the Scottish Parliament, THE SCOTTISH GOVERNMENT ALLOCATED £10.6 BILLION to councils as part of the main local government portfolio, with further funding from other portfolios increasing the amount initially provided in the ANNUAL LOCAL GOVERNMENT FINANCE SETTLEMENT FOR RESOURCE (I.E. NON-CAPITAL) SPENDING TO £12.0 BILLION.’

Interestingly, the IFS report also tells us:

‘Within the overall cuts to councils’ funding, some services have seen spending increase. For example, after initially falling, REAL-TERMS SPENDING ON EARLY-YEARS CHILDCARE AND SCHOOLS IS LIKELY TO BE AROUND 19% ABOVE 2009–10 LEVELS BY 2021–22. This partly reflects a big boost to teachers’ pay in Scotland in 2019–20, as well as the aforementioned expansion of free early-years childcare.’

And for comparison: ‘As a result of these spending increases, SCHOOL SPENDING PER PUPIL AGED 3–18 IS ESTIMATED TO HAVE BEEN 17% HIGHER IN SCOTLAND IN 2021–22 THAN IN 2009–10. THIS IS IN STARK CONTRAST TO ENGLAND WHERE IT IS ESTIMATED TO HAVE BEEN 2.5% LOWER THAN IN 2009– 10.

Adding: ‘Spending per pupil in 2021–22 is estimated to be 25% higher in Scotland (£8,800) than in England (£7,100), up from 4% higher in 2009–10.’

Source: IFS (3 February, 2023) Council and school funding (Scotland), Report R241