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Local government revenue

We provide a block grant to local authorities that makes up around 85% of their net revenue expenditure, with the remainder coming mostly from local taxation, i.e. council tax.

This arrangement was agreed as part of the joint service delivery relationship established under the Concordat agreement of 2007, and updated as part of the agreement reached on the 2010 spending review and 2011 spending reviews. The Concordat gave councils greater control over their budget and the management of their services.

The block grant is made up of three parts:

Additional support is available through the Bellwin Scheme.

General Revenue Grant

We pay local authorities a General Revenue Grant (GRG), previously known as a Revenue Support Grant, to support their general net revenue expenditure.

The size of the grant is calculated to make up the difference between a local authorities' standard spending assessment (how much it will need to spend to provide a standard level of service), and the sum of resources obtained from national non-domestic rates and council tax.

We decide how much each local authority will receive as a GRG by using Grant Aided Expenditure (GAE) calculations and projections. GAE figures determine what share of the total revenue funding each local authority should receive on the basis of relative need.

We agree the GAE calculations and projections in consultation with the Convention of Scottish Local Authorities (COSLA), using indicators such as population, pupil numbers, and deprivation. Find more information in the GAE statistics.

Non-Domestic Rates Income

Non-Domestic Rates Income (NDRI) is set centrally and pooled centrally but generated locally, and is distributed back to local authorities through a distribution formula agreed with COSLA as part of the local government finance settlement. Each council's share of the estimated NDRI for the year ahead is distributed proportionately on the basis of councils' latest mid-year income returns net of prior-year adjustments. Find more information on non-domestic rates.

Specific Revenue Grants

We set the allocation and distribution of Specific Grants in connection with specific policy initiatives and expectations. The grants can only be used for specific services, so are known as ring-fenced funding. The 2018 to 2019 Specific Grants are for Gaelic, the Pupil Equity Fund, the early learning and childcare expansion, and criminal justice social work. The amounts each local authority receives for these Specific Grants are detailed in the local government finance circulars.

Bellwin Scheme

The Bellwin Scheme is discretionary and exists to give emergency financial assistance to local authorities who would otherwise suffer an undue financial burden as a result of providing relief and carrying out immediate work due to large-scale emergencies. There is no automatic entitlement to assistance, and local authorities are expected to reserve a small amount of their annual budget for dealing with unforeseen emergencies.

Find more information in the Bellwin Scheme: guidance and application form.