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Scottish Government’s draft Budget 2017/18 will not be published until later in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.