§ Mr. Ernie Ross
To ask the Secretary of State for Scotland if he will make a statement on Scottish local authority expenditure constraints in 1998–99. 
§ Mr. Dewar
The 1998–99 local government finance settlement is extremely tight and councils will have to make difficult choices when they set their budgets for next year. There is no scope to increase overall support for councils but, following discussions with the Convention of Scottish Local Authorities, I am pleased to announce a scheme which will allow many councils throughout Scotland to increase spending on front-line services by a further 0.25 per cent. of base budgets on top of the limits determined by my provisional capping principles. I hope that councils will direct this additional spending at our shared priorities, such as education. To offset this increase they will have to reduce their capital expenditure by the same amount.
I am also determined to keep council tax levels down, so local authorities will be allowed to take up this flexibility only if they keep their Band D council tax increase next year below £60. Councils will continue to face difficult decisions but this scheme will allow them the flexibility to make their own choices suitable to their local circumstances.
I have placed a copy of Scottish Office Finance Circular 3/98, which describes the details of the scheme, in the Library.405W