Scotland Finance

Autumn Statement 2016


Chancellor of the Exchequer Philip Hammond has delivered his first Autumn Statement to the House of Commons setting out the new administration’s spending plans and priorities for the coming year. LGiU Scotland sets out the key announcements relevant to Scottish local government and will be briefing on individual policy areas in the coming weeks.

Key announcements for local government

Barnett Formula

The government is investing UK-wide in sectors for which it retains responsibility under the devolution settlements. The Barnett formula will be applied in the usual way and where responsibility sits with the Scottish Government it will be able to use the funding to invest according to its priorities.

One of the biggest funding pots announced in the Autumn Statement was a new National Productivity Investment Fund (NPIF) which will provide for £23 billion of spending between 2017-18 and 2021-22. Many of the aims of the NPIF are devolved matters and so the money will appear via the Barnett formula.

In the detail of the Autumn Statement the actual amount received by Scotland is hard to identify. However, in his speech the Chancellor announced that “The major increase in infrastructure spending I’ve announced today will represent a significant increase in funding through the Barnet formula of £800 million to the Scottish Government.”

Scottish devolution

The government will work with local partners and the Scottish Government towards a city deal for Stirling. The government has confirmed funding for city deals in Aberdeen and Inverness, is making progress towards a deal with Edinburgh, and will consider proposals for a deal with the Tay cities once they are brought forward, meaning all Scottish cities have the opportunity to agree a city deal.

The government is also continuing to work with the Scottish Government to implement the Scottish Government’s fiscal framework and new powers set out in the Scotland Act 2016.  Over five years the allocation to ‘Scotland City Deals and fiscal framework’ is £235m.


The UK government will publish a Housing White Paper shortly, setting out a package of reform intended to increase housing supply and halt the decline in housing affordability. There is a proposal for a Housing Infrastructure Fund of £2.3 billion by 2020-21, funded by the NPIF and allocated to local government on a competitive basis. There will also be a relaxation of restrictions on grant funding to allow providers to deliver a mix of homes for affordable rent and low cost ownership. The NPIF will provide an additional £1.4 billion to deliver an additional 40,000 housing starts by 2020-21.

The Scottish Government is not under an obligation to follow this strategy and the funds are received through the Barnett equivalent calculation for the NPIF.

Housing benefit

  • Support for refugees – refugees and their family members will be exempted from the Past Presence Test, they will no longer have to be resident in the UK for 2 years before they can receive disability benefits.
  • Local Housing Allowance- (LHA) rates in social housing – the implementation of the cap on Housing Benefit and LHA rates in the social rented sector will be delayed by 1 year, to April 2019. The cap will be applied to all supported housing tenancies from April 2019, and the government will provide additional funding to Local Authorities, so that they can meet the additional costs of supported housing in their area. For general needs, the cap will now apply from April 2019 for all tenants on Universal Credit, and to Housing Benefit tenants whose tenancies began or were renewed since April 2016
  • Social rent downrating – refuges, almshouses, Community Land Trusts and co-operatives will be exempt from the policy to reduce social sector rents by 1% a year for 4 years from 2016-17.


The UK government has allocated funds of £10m per year Barnett equivalent for the building of grammar schools. As education is devolved the Scottish Government can spend this money as it wishes.

Science and Innovation Audits

The government has selected eight areas for the second wave of Science and Innovation Audits, which included Glasgow Economic Leadership.

The government is also announcing a further opportunity to apply to participate in a third wave of audits.

Dr Andy Johnston, Director of LGIU Scotland comments:

After a period of uncertainty Scottish local government will be pleased that the City Deal programme is back on track and that all Scottish Cities are encouraged to participate, putting Scotland ahead of the UK as a whole.

It is also welcome that there are additional funds for infrastructure and an appreciation of the importance of housing for rent as well as to buy. The UK government has recognised that local authorities have an important part to play in deciding how these funds are spent and it is to be hoped that this localist philosophy is matched by the Scottish Government.

The full Autumn Statement documents are available here

In the coming weeks LGiU Scotland will provide detailed briefings on specific issues raised in the Autumn Statement.