However, while around 70% of the UKSPF in Scotland could be spent on resource — the day-to-day funding used to pay staff and deliver services such as employability programmes, community services and third sector partnerships — the LGF reverses that.

Only about 30% of the new fund can be spent on revenue, with the majority ringfenced for capital projects, buildings and infrastructure.

The UK Government argues that it is for the Scottish Government to fund the day-to-day spending of Scottish councils, and that ministers in Edinburgh have been awarded the largest settlement in the history of devolution to enable them to do so.

But the change has left local authorities reeling.

Douglas Alexander announced the £140m to boost economic growth

Under the previous UKSPF, every Scottish council received a direct allocation. Under the new LGF, funding will instead be channelled to five regional partnerships, with Regional Economic Partnerships expected to shape how the money is spent.

Nine local authorities fall within regions that will receive no LGF money, with the UK Government methodology prioritising areas "with the lowest living standards".

The UK Government has not yet published investment priorities or spending themes, making forward planning difficult.

Earlier this week, COSLA’s Presidential Team met with Scotland Office minister Kirsty McNeill to express their “frustrations with the announcement on Local Growth Funding, the lack of meaningful consultation with councils, and the implications it has both for areas receiving funding and those that do not”.

Details of the impact of the changes were laid bare in research by the Scottish Parliament’s information centre, commissioned by the SNP’s depute leader, Keith Brown.

It found that under the final year of the UKSPF, Scottish councils were allocated £57.7m in resource funding.

However, in the first year of the LGF, that figure falls to around £15.8m, a reduction of £41,972,874.

Overall funding across the two schemes is also set to fall. Figures comparing the three years of the UKSPF from 2023–26 with the first three years of the LGF from 2026–29 show a drop of just over £90m in total support.

The distribution is uneven. Three regions that previously received support — the North East and Aberdeen City, Highlands and Islands, and South of Scotland — are set to receive no LGF funding at all, losing a combined £54.6m compared with the previous scheme.

Glasgow City Region faces the largest cash reduction among funded areas, falling from £83.1m under UKSPF to £60.9m under LGF, a cut of more than £22m. Ayrshire will see funding drop by £7.2m, while Edinburgh and South East Scotland will lose £4.4m. Forth Valley is set to fall by £3.4m.

On Monday, councillors in Dundee will discuss a report compiled by officers which warns that the change in rules “will have particular implications for the delivery of future revenue-funded programmes and projects at local level.”

The previous UKSPF supported employability schemes, business support and skills programmes, including Dundee’s Discover Work initiative, Business Gateway start-up support, SME skills development delivered by Dundee and Angus College, and projects linked to the visitor economy.

The report says the switch “risks undermining these programmes”.

Previously, The Herald told how third sector organisations and business groups across Glasgow were already being impacted by the change and had started issuing redundancy notices to staff as a result.

Earlier this month, our sister paper the Glasgow Times revealed that St Paul’s Youth Forum was preparing to close the Molendinar Community Centre in Royston Road.

The group said the changes would leave it with a funding gap of almost £170,000.

Keith Brown said the UK Government was not listening to councils (Image: Newsquest)

Mr Brown said councils across the country were “sounding the alarm” as the changes take effect.

“Local authorities across Scotland are sounding the alarm as Labour’s £42 million cut in resource funding lands on their doorstep — but Labour simply are not listening,” the veteran MSP said.

“This new ‘fund’, which is really a cut from a previous fund, will be devastating for services, jobs and communities across Scotland, and undermines devolution by bypassing the Scottish Government entirely — it is simply one disaster after another for Scotland.

“Some of the ‘regions’ that are given this funding do not even exist in reality — the money would be better given to Scotland to give to local authorities directly, ensuring democratic oversight.”

There have been similar complaints in Northern Ireland. There charities and voluntary organisations have warned of “devastating consequences”.

The Northern Ireland Council for Voluntary Action said the shift could lead to more than 400 job losses and leave thousands of people without support services, while all parties in the Northern Ireland Executive issued a rare joint statement warning the new model would “decimate vital services which deliver economic growth and increased productivity”.

The UK Government was approached for comment.