Kate Forbes

The funding represents the equivalent of a 4% Council Tax rise.

Finance secretary Kate Forbes said whilst councils have full flexibility in setting local council tax rates, there is no requirement for any inflation-busting increases in 2022-23.

The money is being made available after the UK Government advised that the Scottish Government should anticipate further funding for 2021-22, funding which will be confirmed at the Spring Supplementary Estimates next month.

Speaking during the Stage One Budget Bill debate, Ms Forbes said: “I am in no doubt about the important role local authorities play in our communities and in helping manage our ongoing response to the pandemic. I also understand the financial challenges they face.

“The 2022-23 Scottish Budget remains fully allocated and for weeks the UK Government has been telling us not to expect further funding. That has now suddenly changed and the UK Government has advised that we should anticipate further funding for 2021-22 which will be confirmed at the Spring Supplementary Estimates next month.”

She added: “Consequently I now have some new flexibility and am pleased to confirm my intention to utilise the Scotland Reserve to carry forward sufficient funding to allow me to allocate a further £120m of resource to local government. Councils will have complete flexibility to allocate this additional funding as they wish in 2022-23.

“Councils asked for an additional £100m to deal with particular pressures. We have heard them and listened and we are going to go further. This will allow them to deal with the most pressing issues they face. At a time when people are understandably worried about the cost of living, I would point out this increase in funding would be equivalent to a 4% increase in Council Tax next year, so whilst councils have full flexibility in setting local council tax rates, I do not believe that there is a requirement for any inflation-busting increases next year.”

The Highland Council has given a cautious welcome to the announcement but warned that the extra funding does not rule out a council tax increase.

Council leader Cllr Margaret Davidson said: “Highland Council campaigned really hard for a fairer budget settlement for Scotland’s local authorities to address recurring pressures.

“This funding will help us to manage some one-off pressures this year, but it will not bridge the gap caused by the reduction in our ongoing core budget, and many increased costs – all of which will need to be met through front line savings and increases in fees, charges and council tax. 

“The council is working hard to find ways to manage this in a way that has least impact on those who struggle to pay, but it will be impossible to mitigate completely given the scale of the challenge.”

Depute leader Alasdair Christie added: “This is a one-off payment which won’t be recurring for future years so we will still have the same issues in 11 months’ time. It will certainly help but it’s not going to solve all the problems that local government has.

“The cabinet secretary has given this additional money to stop large above inflation increases of council tax, but it will not stop council tax increases. Unless we receive more money for local government, we cannot rule out council tax increases.

“At a time when folk are coming off periods of furlough, struggling to pay soaring energy bills and seeing prices in supermarkets move continually upwards, surely more financial help could be given by the government to support council services which underpin community well-being at these difficult times.”