Crucially, only around 30% of the new fund can be spent on revenue — the day-to-day funding used to pay staff and deliver services.

The UK Government argues that funding for core council services is devolved and should come from the Scottish Government rather than the Treasury, and also that they have provided the largest block grant in the history of devolution.

However, that marks a clear shift from the UK Shared Prosperity Fund, which the LGF replaces.

Under that scheme, capital spending – buildings and infrastructure – made up just 23–28% of funding for Scottish local authorities, leaving far more available for frontline services.

Earlier this week, we told how third sector organisations and business groups across Glasgow were already being impacted by the change and had started issuing 90-day redundancy notices to staff as a result.

While Scotland’s version of the LGF is predominantly focused towards capital from the start, the English model begins with a largely revenue-funded settlement — before shifting towards capital later in the programme.

A UK Government methodology note for Scotland setting out the total LGF budget for 2026–27 to 2028–29 shows capital allocations of £36.3m out of £52.1m in 2026–27, around 70%, £33.9m out of £49.4m in 2027–28, around 69%, and £27.4m out of £38.4m in 2028–29, around 71%.

The contrast with England is set out in the UK Government’s LGF policy statement, which publishes allocations for 11 Mayoral Strategic Authorities across the North and Midlands.

National totals show England’s fund starts with £50m capital out of £202m total in 2026–27, about 25%, rising to £76m out of £211m in 2027–28, about 36%, and £151m out of £262m in 2028–29, about 58%.

In Greater Manchester, for example, the LGF allocation in 2026–27 is split £24 million revenue and £8 million capital, meaning three-quarters of the funding can be used for day-to-day programmes.

In 2027–28, it’s £21m revenue, £12m capital, before flipping in 2028–29, when capital, £24m, overtakes revenue, £17m.

Andy Burnham is the mayor of Greater Manchester, where the majority of cash can be spent on revenue (Image: NQ)

A similar pattern applies in the West Midlands, England’s single largest recipient. Its £32m allocation in 2026–27 comprises £24m revenue and £8m capital.

The split moves to £21m revenue and £12m capital in 2027–28, before switching in 2028–29 to £24m capital, £18m revenue.

In a briefing, the Industrial Communities Alliance said the shift “takes a sledgehammer” to revenue-funded services currently supported by UKSPF.

It also argues the new structure risks job losses, estimating that UKSPF spending directly supports an average of seven local authority jobs per £1m of funding, and that around 530 council jobs across Scotland are presently supported by the programme.

A senior Glasgow source told The Herald: “The questions we urgently need answered are why this funding deal hammers Scottish businesses, third sector groups and employability schemes while our peers south of the border are spared, and what role the Secretary of State for Scotland has had in this.

“Either Douglas Alexander fought to retain the support for getting people in our hardest-pressed communities into work and he’s lost. Or he’s prioritised photo opportunities which he reckons can help Labour politicians save their skins. Either way, it’s rank incompetence and our communities suffer.

“The Secretary of State must wake up to the fact that his decisions are going to be damaging businesses and putting people out of jobs.”

A Labour source hit back at the council and the Scottish Government.

“The blame for Scotland’s local government funding crises lies firmly at the SNP-led Scottish Government’s door,” they said. “Susan Aitken should be asking John Swinney why the SNP-led Scottish Government has over decades centralised powers while cutting funding levels for Scottish local government.

“It is simply wrong to suggest that the UK Government is cutting funding for the Glasgow City Region. Taken together our package of four new local growth programmes will invest up to £103m in Glasgow City Region over the next three years, this is up to £15m more than under the UKSPF levels in 2025/26.

“Thanks to increased direct funding for local authorities in England the Scottish Government will receive an additional £163m over the next three years.

“What they put forward in their 19th budget this week is a sticking plaster set against £7.8 billion of SNP cuts to core local government funding since 2013. The question for the First Minister is ‘Where’s the money gone, John?’”

The funding supported a wide range of activity across Glasgow. The council said that this included 17 third sector organisations delivering community programmes that helped safeguard almost 200 jobs, grants to around 500 businesses, and advice delivered through the Glasgow Business Growth Framework.

They added that employability programmes backed by UKSPF engaged more than 5,500 people, with more than 2,100 progressing into work, 2,400 gaining new qualifications or skills, and more than 2,500 entering education or training.

Many of the schemes funded by SPF were directed towards those “furthest away from the labour market”, including young people, those with disabilities and BAME groups.

The row over the LGF was recently raised at First Minister’s Questions, with John Swinney criticising the UK Government for failing to work with the Scottish Government on the fund.

“The Labour government has engaged in no dialogue with us whatsoever about the delivery of this funding and it has been deployed in a way chosen by the UK Government with no regard to the priorities that are democratically agreed by this parliament and worse than all of that people in Scotland are losing jobs just now because of the decisions of a Labour government.”