Page last updated at 11:16 GMT, Thursday, 26 November 2009

Council funding increases by 2.9%

John Swinney
Mr Swinney said the settlement was good for householders and businesses

Local councils are to receive nearly £12bn from the Scottish government next year, Finance Secretary John Swinney has announced.

Mr Swinney said it was "a fair settlement" in the tightest financial times since devolution.

He said it would have been £174m higher were it not for a funding cut of £500m "imposed on the Scottish budget by the UK government".

But Labour said he had "picked the pocket of local government".

The settlement includes £70m for local authorities to freeze their council tax.

Mr Swinney said: "The settlement is good news for Scottish householders and businesses.

"By working in partnership with local councils and providing the funding for a third successive council tax freeze, we are easing the financial strain on households feeling the effects of these tough economic times."

Council funding statement: From BBC Democracy Live

The total of £11.984bn compares with a figure of £11.830bn last year.

Within that total, money for capital spending goes down from just over £1bn this year to £870m next year.

Mr Swinney said that reflected the fact that councils have already been allowed to bring forward some capital spending earmarked for future years.

The bulk of next year's settlement is "revenue" spending, such as running costs and wage bills.

This goes up from £10.788bn to £11.114bn, a rise of 2.9%, he told MSPs.

Mr Swinney also told MSPs the business rate poundage would remain in line with England, 40.7p with a 0.7p supplement for larger businesses, and would be the lowest national poundage ever set for Scotland.

CBI Scotland's director, Iain McMillan, said: "The Scottish government's continued commitment to retain business rate parity is very welcome, and will ensure that the business rate in Scotland does not exceed that levied in England.

"The competitiveness of and prospects for Scots firms are greatly strengthened when government keeps a tight lid on those costs under its control that affect business.

"Continued rates parity, coupled with the rates reductions for smaller firms, is welcome recognition of this."

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