Capital’s financial situation is still ‘challenging’ despite £25m boost

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EDINBURGH’S financial situation remains “challenging” despite a £25 million funding boost from the Scottish Government, council chiefs warned today.

Finance Secretary John Swinney handed the Capital a 3.2 per cent increase in funding for next year – by far the biggest rise in Scotland – as part of his share-out of cash for local authorities.

The city’s allocation rose slightly as a result of the normal funding formula, but most of the extra cash – around £22m – was thanks to a new guarantee that no council’s funding should fall below 85 per cent of the average.

The “funding floor” was an SNP election pledge to compensate councils whose per capita funding from the government was well below other local authorities because of the distribution formula.

Up until now Edinburgh has been at a disadvantage, receiving government grants this year of just £1661 per head, compared with £2369 per head in Glasgow and the all-Scotland figure of £2008.

Council leader Jenny Dawe, said: “This will help us in achieving the savings that the council is still required to find.

“The situation remains challenging. Despite this council making a record £90m savings over the last three years and ensuring that all departments deliver on budget, we now need to work out the savings we need to make.”

The government said as a result of the extra cash Edinburgh had ended up at 85.5 per cent of the average and its increase of 3.2 per cent was more than double the next nearest council, Moray, which got a 1.5 per cent increase.

But Lothians Labour MSP Kezia Dugdale claimed Mr Swinney had effectively scrapped Edinburgh’s Capital City Supplement – the special payment to help pay for the costs of being the Capital which Independent Lothians MSP Margo MacDonald won.

She argued the supplement – currently £3.9m – should have been taken out of the equation before officials calculated how much extra Edinburgh needed to meet the 85 per cent funding floor. She said: “People in Edinburgh recognise the importance of that money when they have the expense of the Queen being here or the Royal wedding and the other costs associated with being the Capital.”

A government spokesman said the Capital City Supplement was included in the revenue baseline before the floor mechanism was applied.

Ms MacDonald said she discussed the supplement with Mr Swinney after his announcement. She said: “I’m satisfied he still appreciates Edinburgh’s unique role and the Capital City Supplement still enjoys a separate budget heading.”