For local authorities in Scotland, the 2021-22 year will be filled with the need to take action to help businesses and residents through the issues caused by the pandemic, as well as all the usual pressing concerns.

The Scottish Government's latest budget allocates over £11 million to local government, made up mainly of General Revenue Grant and Non-Domestic Rates income.

Whilst the Scottish Government has been keen to point out that the budget provides for a significant increase in local government funding, as usual there has been mixed responses to the budget. COSLA's Budget Reality document records various shortfalls in the amounts they requested on behalf of Scottish local authorities against the terms of the Scottish Government settlement.

Regardless of one's views of the merits of the local government settlement, the stark reality is that some local authorities will be struggling for cash to carry out their responsibilities and ambitions for this year.

It is open to Scottish local authorities to borrow money to carry out their functions through commercial borrowing, bond issues and private placement. (See my previous blog here). But the most common type of borrowing by local authorities continues to be via the Public Works Loan Board (PWLB).

Local authorities considering this option for 2021-22 should note that the PWLB lending terms were updated in November 2020. An example of a new term is that the PWLB will ask for confirmation that there is no intention to buy investment assets for yield at any time over the next three years.

At Brodies, we have extensive experience working with local government and in advising on financing possibilities. We are always keen to share our thinking and ideas, so if a confidential chat would be useful as you consider your options for your local authority this year do get in touch.