Scottish local authorities receive real terms increase in funding

Councils in Scotland will share a record funding settlement of more than £15 billion subject to passing of the 2025-26 Budget, provisional allocations show.

The 2025-26 Local Government Settlement includes a £289 million increase in funding to be used by councils to meet local needs and £120.5 million additional funding for pay deals. The Budget also includes a one-off payment of £40 million to help councils respond to the climate emergency, and additional funding to support free personal care, teacher numbers and island communities.

Finance Secretary Shona Robison said:

“Our Budget is laying the foundations for Scotland's future success, with investment to help improve the public services that people rely on.

“Local authorities provide some of the most important services to our communities – from schools to social care – which is why we've increased their funding by more than £1 billion compared with last year's Budget.

“The settlement is the result of meaningful budget engagement with COSLA and Councils. While council tax decisions are a matter for individual local authorities, with record funding of over £15 billion there is no reason for big increases in Council Tax next year.

“This is a Budget that will deliver increased funding for schools, social care and other vital council services. But this funding will only reach communities if the Budget passes, so I am asking Parliament to unite behind it.”

Background

Local government finance circular 10/2024: settlement for 2025 to 2026 - gov.scot

Scottish Budget 2025 to 2026 - gov.scot

This publication starts the formal consultation period on the 2025-26 Local Government Settlement. Final allocations will be published following approval by the Scottish Parliament, expected in February.

Funding of £441.5 million has yet to be considered by the joint Settlement and Distribution Group so remains undistributed at this stage. The majority of this funding will be allocated in full to local authorities ahead of the Local Government Finance (Scotland) Order.

Of the 2025-26 Local Government Settlement, at least £1,463.3 million is initially contained within other portfolios. As is standard practice, this funding will be moved to the Finance and Local Government portfolio at the Autumn or Spring Budget Revision.