Finance secretary in Scottish council funding offer

Scotland's 32 local authorities will have £11.5bn to spend in the year ahead, Finance Secretary John Swinney has said.

Mr Swinney said he would limit council funding cuts, if they deliver key SNP policies, such as freezing council tax and maintaining police numbers.

The Scottish government budget is being reduced by about £1bn next year, as a result of UK spending cuts.

The total offer is less than the £11.9bn deal for 2010-11.

Council group Cosla has already agreed to the offer, and individual councils will now have to agree to the deal, in which cuts in local authority spending would be limited to 2.6%, under the SNP government's draft budget for 2011-12.

Mr Swinney said the offer was a "very good deal" in tough circumstances, but opposition parties accused the SNP of coercing councils into accepting the government's terms.

Mr Swinney warned local authorities - who deliver vital services like schools and social work - that they would see their budgets cut by 6.4%, in line with average reductions to unprotected budgets, if they turned down the offer.

The finance secretary's comments to Holyrood came as he published funding proposals for each council in 2011-12.

He said the key elements of the local government finance settlement would:

• Continue the council tax freeze.

• Maintain free personal care for the elderly.

• Maintain pupil-teacher ratios in P1-P3 and measures to reduce teacher unemployment.

• Continue delivery of 1,000 more police officers than the number before May 2007.

• Maintain the small business bonus scheme in 2011-12, reducing tax burden for small and medium sized-firms by an estimated £128m.

• See additional rates charges for the largest retailers, affecting an estimated 225 Scottish retail properties. The measure would raise an extra £30m and redress the "imbalance" between small, city-centre retailers and large, out-of-town supermarkets.

Mr Swinney, said: "Following close dialogue with Cosla, we have delivered a very good deal for local communities under challenging circumstances.

"Councils choosing to accept the package will see an average funding reduction superior to that for local government in England, and receive greater protection than other parts of the Scottish budget."

Labour local government spokesman Michael McMahon said: "As the cabinet secretary has decided to cut budgets by 6.4% if councils don't comply with his coercion, he has merely removed the pistol that he has pressed against the heads of local councils for the past three years in order to replace it with a blunderbuss."

'Princes Street penalty'

Conservative finance spokesman Derek Brownlee pressed Mr Swinney on what he would do with extra funding from councils which rejected the settlement, to which the finance secretary said he was yet to decide and that he hoped he would avoid that situation.

Jeremy Purvis, of the Liberal Democrats, branded the large retailers tax a "Princes Street penalty", adding: "It has now been clarified that it can't be set as 'out-of-town', so it's now going to be hitting Princes Street, Union Street, and Sauchiehall Street."

The £11.548bn funding package will see £10.9bn to support revenue spending, including a further £70m for the council tax freeze.

Another £20m will pay for the previous Scottish government's commitments on school buildings, while the capital funding element of the settlement comes to £7bn and includes protections, such as flood defences in Moray.

MSPs will be asked to vote on the Scottish government's £29bn budget proposals for the year ahead at the start of 2011.