Call for GERS dividend for councils

Friday 23 August 2019

A Scottish council leader is calling for an end to cuts to local government budgets after Scottish Government figures revealed that the economy grew by £3bn.

Inverclyde Council Leader, Councillor Stephen McCabe, said that the council area on the clyde coast has suffered a reduction in funding of £8m in real terms, the equivalent of £104 for every resident in the past six years.

Councillor McCabe said: “It is welcome news that the economy has grown, that tax income is up and that unemployment is down across Scotland according to the Government Expenditure and Revenue Scotland (GERS) figures released by the Scottish Government.

“Now is the time to spread the benefit of that across local government trying to deliver essential services in communities across Scotland against a backdrop of cuts and reduced funding.

“Communities like Inverclyde and many others across Scotland are crying out for real investment in local services.   It is time to spread the benefit of the £3bn extra in the economy to local government. This would allow local elected representatives and communities to have a real say in what it’s used for, to set our local priorities and to see local government on the road back to being properly and fully funded.

 “As an area Inverclyde has delivered cuts to services to make up for the shortfall which amounts to a conservative estimate of £8m in a recent Scottish Parliament review and we are now at the point where future cuts are going to be severe enough that large scale essential services will be in the firing line.

“In a country where our Government is boasting about how well the economy is doing, it is a national scandal that we are facing cuts estimated to be as much as £19m in the coming years just to balance the books and other councils are facing similar crises.

 “This week we heard that from the finance secretary that the economy grew by £3 Billion.   With an extra £10m each year as part of the three year budget settlement covering the financial years 2020/21 to 2022/23 that wasn’t ring-fenced we could start to protect essential services and invest more in communities.  That modest increase would only account for one per cent of the growth revealed by the finance secretary.

“Across the country and here in Inverclyde we are seeing services under threat, we are seeing investment curtailed where it should be prioritised and we are seeing local government being reduced to a delivery agent for the national government instead of setting and delivering on the priorities that matter to our communities.

“Investment in local government is investment in the economy.  Councils are, in most areas, the largest employer and the biggest spender.  If the Government reverses the cuts agenda and delivers a real, honest investment budget for local government, the local and Scottish economy will be the real beneficiaries.”

According to Government Expenditure and Revenue Scotland (GERS) figures releases on 21 August 2019, Scotland’s notional deficit is falling faster than the UK’s, with onshore revenues increasing by 5.1% to reach £61.3 billion in 2018-19 as a result of continued economic growth.

The report shows that Scotland benefitted from a £3 billion increase in onshore revenues in the last year.

The Scottish Parliament’s research service, SPICE, report Local government finance: facts and figures 2013-14 to 2019-20 published in July 2019 showed the scale of cuts to local government in Scotland.

During that time Inverclyde Council’s funding was reduced by the equivalent of £104 for every resident.  Nationally the report highlights that the real terms reduction in revenue settlement for Scottish Local Government was 7.5% or £810 million.

SPICE, report Local government finance: facts and figures 2013-14 to 2019-20:

https://digitalpublications.parliament.scot/ResearchBriefings/Report/2019/7/2/Local-government-finance--facts-and-figures-2013-14-to-2019-20# 

Government Expenditure Revenue Scotland (GERS):
https://www2.gov.scot/Topics/Statistics/Browse/Economy/GERS  

Page last updated: 23 August 2019