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Fiscal Framework and Local Government

Letter from Cabinet Secretary for Finance and Economy, 8 December 2021

Dear Convener,

I am writing in response to your letter of 15 November in which you asked about discussions with local government on a fiscal framework and whether the UK Government’s publication of a multi-year spending review would enable the Scottish Government to publish multi-year settlements for local government.

As the Committee will be aware, and indeed as I described when I gave evidence in August, work on a fiscal framework to support future funding settlements for local government was necessarily delayed at the onset of the pandemic. However, the Scottish Government and COSLA are committed to work together to develop such a framework and Scottish Government and COSLA officials have now recommenced discussions. More substantive work will be taken forward in the first part of 2022, with the development of a fiscal framework also having a direct relevance to the Scottish Government’s Resource Spending Review for which I will set out further details about the process and timeline, as well as publishing a consultation framework, alongside the budget on December 9th. 

As I said in my evidence to the Committee, a fiscal framework cannot be imposed by the Scottish Government, and as COSLA and the Scottish Government take this work forward, it will be important for local government to bring forward proposals that can then be explored in partnership. The development of a fiscal framework is also an important part of the ongoing work on the Local Governance Review, which considers how powers, responsibilities and resources are shared across national and local spheres of government, and with communities.

In your pre-budget letter to the Deputy First Minister, you rightly highlight the benefits of multi-year local government finance settlements. We are committed to providing local authorities with as much certainty as we can to help their long term financial plans. In this respect, the UK Government’s spending review for the next 3 years does indeed enable us to embark on our own spending review to provide the certainty we all aspire to. As I mention above, I will set out further details of this process alongside the budget on 9 December.

Although both of these issues are very much work in progress, I hope this provides the update the Committee was seeking.

Yours sincerely,

Kate Forbes