Call for evidence on the draft Budget 2017-18

Introduction and Background 

It is anticipated that the Scottish Government’s draft Budget 2017/18 will not be published until later in the year and as such the time available for the Local Government and Communities Committee to take evidence on the draft Budget will be constrained. The Committee has therefore agreed to undertake pre-budget scrutiny looking back at what has actually been spent in 2015/16 and (to the extent possible) 2016/17. 

We want to hear your views on the questions we have set out below on or more generally on the local government and housing supply budgets. We recognise that you may not wish respond to all of the questions we pose, but we would be grateful if you could reference the relevant question in your written response. 

The written evidence received will then be used to inform oral evidence taken from stakeholders later in the year and then from the Scottish Government in early 2017.  

Local Government budget 

As part of the UK-wide squeeze on public sector budgets, the Scottish Local Government budget has fallen significantly in real terms in recent years.  Since its peak in 2009-10, total like for like local government funding from the Scottish Government has fallen by around 10% in real terms.  See the SPICe Briefing on historic local government finance for more information and context.  Local authorities have therefore been making savings for many years.  The future shape of the local government settlement is unclear, but local authorities are preparing for further real terms reductions in their resources. 

Question 1: We want to hear your views on the impact of budget reductions to date on local services, etc 

As part of a long running project looking at the impact of local government budget reductions across the UK, the Joseph Rowntree Foundation and Glasgow University have developed a 'social impact tool'. This tool allows councils to examine their budget choices and look at whether their savings are weighted more on those services that are "pro-rich" or "pro-poor". 

Question 2: We want to hear your views on the extent to which local authority spending decisions prioritise funding for policies that are likely to reduce inequalities. 

The Accounts Commission reported that unallocated General Fund Reserves rose 18.5% during 2014/15. The Accounts Commission reported that there is wide variation in the level of reserves that councils hold and the levels of unallocated General Funds but noted that "finance directors tell us that they are being careful to save whenever opportunities arise, in anticipation of further funding reductions."  This reflects commentary elsewhere that (such as  from the LGiU policy briefing "Financial Outlook for Scottish Councils") that job losses may be being offset through the use of one-off savings and using General Fund Balances in order to protect local services and jobs in the short term. 

Question 3: We therefore invite written evidence on how General Fund Balances are used by local authorities and in particular the extent to which the General Fund Reserves are being used being used to offset savings in the short to medium term. 

Finally, the Scottish Government has committed to consult on and introduce, in future, a Bill "that will decentralise local authority functions, budget and democratic oversight to local communities". The Committee noted that the Finance Committee reported in its report on the draft budget 2016-17, that different figures for the revenue settlement to local government were arrived at in terms of the reduction in funding for Local authorities. These differing figures depended upon whether the comparisons were made between combined revenue and general resource grant (GRG) (5.2% reduction) or cash reductions compared with estimated total expenditure (2% reduction). 

Other funding such as whether the £250 million provided for health and social care integration (which was provided via health authorities) should also be considered as local government funding has also been highlighted. 

Question 4: What are your views on the range of local authority activities that should be considered ‘local Government budget’ as compared with funding that is provided elsewhere but which may support local government activities and outcomes? 

Housing Supply Budget 

The housing supply budget for 2016/17 was round £690 million of which the majority £572 (83%) was for spending on the Affordable Housing Supply Programme (AHSP) with the remaining £117m spent on other housing initiatives (mainly the Help to Buy (Scotland) Affordable New Build Scheme). Of this £572 million, £406 million is provided for local grant programmes with the remaining £166million is for the centrally managed programmes. See the SPICe Briefing 16/49 Housing Supply Budget for further information. The Scottish Government website also contains information about the AHSP at this link. 

Over the next five years the Scottish Government's affordable housing supply targets have increased from 35,000 over the preceding 5 years to delivery of at least 50,000 units (of which 35,000 will be social rent) for the period 1 April 2016 - 31 March 2021. 

In his response to the Committee the Minister for Local Government and Housing explained that “The Scottish Government will work with the sector to drive the best value from the Affordable Housing Supply Programme and promote below grant subsidy benchmark delivery wherever possible through e.g. innovative funding packages and procurement and collaboration. This will help achieve cost efficiencies in delivering the 50,000 affordable homes target over the next five years.” 

We therefore invite views on the value for money and the effectiveness of these centrally managed funds (£117million for other initiatives and £166 million for Affordable Housing Supply) in supporting housing supply. Centrally managed funds include the Help to Buy scheme, Open Market Shared Equity, Home Ownership Support Fund and other innovations such as the Local Affordable Rented Trust. 

Question 5: In particular we want to hear your views on: 

How well the centrally managed funding programmes are managed, what outcomes they deliver and do they represent value for money? 

To what extent are the innovative funding packages leading to a change in the way affordable housing is being delivered? (information on innovative financing is available on the Scottish Government website at this link. 

The extent to which the centrally managed funds support development of the appropriate mix of affordable housing to meet housing needs (such as mid-market rent as compared with social rent or private rent))? 

Since 2012-13, the Scottish Government has provided each council with a 3-year Resource Planning Assumption [1] which councils then use to develop Strategic Housing Investment Plans (SHIPs).The core purpose of the SHIP is to set out strategic investment priorities for affordable housing over a 5 year period to achieve the outcomes set for the LHS. SHIPs will be the key documents for identifying strategic housing projects to assist the achievement of the 50,000 target.  Priority projects may include, for example, those provided by local authorities or RSLs operating in the areas. 

SHIPs are currently submitted to the Scottish Government every two years and form the basis of Strategic Local Planning Agreements (SLPAs) which are discussed with local delivery partners and then agreed with councils. SLPAs then form the basis of individual RSL and local authority programme agreements. 

Question 6: To what extent do the Resource Planning Assumption and the Strategic Local Planning Agreements processes effectively enable local housing needs to be prioritised and resourced? 

From January 2016, affordable housing grant subsidises for Registered Social Landlords and for Local authorities were increased. In addition, the Scottish Government increased the flexibility within the subsidies such that grants can be awarded for higher cost projects. 

Question 7: We seek written responses on whether the increased subsidy levels will support new housing developments; and in particular whether the flexibility in subsidies will improve the provision of housing for older people or for people with particular needs. 

Question 8: Do you have any other comments to make about the outcomes the Scottish Government seeks from its Housing Supply Budget and how it delivers those outcomes? 

How to submit evidence 

To allow the Committee to take account of any views received, submissions should be sent to the address below, no later than 24 October 2016. 

They should be submitted electronically (preferably in plain text Word format and without graphical borders or headers) to:

[email protected] 

Written submissions will be made public on the Committee’s webpage. If you do not wish your response to be made public, please contact the clerks to discuss (you may wish to refer to the Parliament’s policy on handling information received in response to calls for evidence). 

The Committee welcomes written evidence in English, Gaelic or any other language. 

If you have any further questions regarding the Committee’s work on this inquiry, please contact the Committee clerking team at the above e-mail address or call 0131 348 6037.

Follow the Committee on Twitter @SP_LocalGovt

[1] The Scottish Government has committed to a new offer of 5 year resource planning assumptions for all local authorities following the 2016 spending review.