- The Deputy Presiding Officer (Alasdair Morgan):
The next item of business is a debate on motion S3M-3707, in the name of John Swinney, on the Local Government Finance Act 1992 (Scotland) Amendment Order 2009.
- The Cabinet Secretary for Finance and Sustainable Growth (John Swinney):
On 11 February, Parliament approved the Local Government Finance Act 1992 (Scotland) Order 2009. The purpose of that order was to approve revenue allocations to Scotland's 32 local authorities for the forthcoming financial year. That allowed councils to set their budgets and confirm their individual decisions on council tax levels. In my opening speech on 11 February, I made it clear that we would allocate a share of a further £70 million to each local authority that took the decision to freeze its council tax.
I am delighted to say that all 32 councils have announced that they will freeze council tax levels again and have set their budgets accordingly. In the current economic climate, that is good news for hard-pressed households throughout Scotland. Accordingly, the motion seeks Parliament's agreement to allocate the remaining £70 million to councils for 2009-10. Local authorities have set their budgets on the understanding that they will get a share of the available £70 million. Were today's order not to be approved, they would face a £70 million shortfall in their funding for next year. I therefore hope that, on that basis, Parliament will endorse the order that is before it for approval.
The Government works in partnership with local government in Scotland. I was encouraged by the feedback that I picked up from the recent Convention of Scottish Local Authorities conference. In the discussions, it emerged that many of the reforms that the Government has introduced in trying to develop and improve the working relationship between national and local government in Scotland are widely approved by members of all parties in the Parliament. The partnership is delivering not only improvements in services but much-needed relief to local taxpayers in Scotland.
As we will debate further tomorrow, in these difficult economic times, the Government is doing all that it can within its powers and responsibilities to help families and households as we deliver on our six-point economic recovery plan. The total cumulative saving of £210 million in council tax payment increases in the two-year period between 2008 and 2010 is a major and significant contribution to that assistance. I am sure that it will be welcomed the length and breadth of Scotland.
- Andy Kerr (East Kilbride) (Lab):
For accuracy, can the cabinet secretary advise us what the weekly saving will be for the average council tax payer?
- John Swinney:
Mr Kerr must have been looking over my shoulder at my notes as we came into the chamber because I was about to say that, in 2009-10 alone, the council tax freeze will save a family in an average band D property more than £60. Without the freeze in both 2008-09 and 2009-10, it is clear that individuals would have been wrestling with additional difficulty in meeting their council tax bills. I have already made a commitment to work with local government to extend the council tax freeze, which is why we will continue to earmark funding to keep council tax levels frozen at 2007-08 levels for the rest of the parliamentary session until 2011-12.
- Jeremy Purvis (Tweeddale, Ettrick and Lauderdale) (LD):
Will the cabinet secretary say what the cumulative revenue cost will be in the 2011-12 budget? Given that he said in previous statements that the Scottish budget is fixed, will he confirm that cuts and savings will be required elsewhere?
- John Swinney:
It is clear that the Government has included the resources required to freeze the council tax over the three-year period of the comprehensive spending review settlement that I set out in November 2007. One of the choices that the Government has made within our fixed financial envelope is to take wise and prudent decisions to ensure that the resources are available to support that council tax freeze during the spending review period. Obviously, we have set out our desire to take those decisions—subject to parliamentary consent, of course—about the budget for 2011-12.
The £70 million in today's order confirms that the Scottish Government's funding to local government in 2009-10 will amount to £11.8 billion. That is an increase of £658 million, or 5.9 per cent, on the previous year. Of that total, £10.8 billion has been provided to local government as revenue funding to provide the first-class services on which the people of Scotland rely. That represents a year-on-year increase of £559 million, or 5.5 per cent.
Although I accept fully that, in the current economic difficulties, many local authorities have to make very difficult choices about rising costs and lower-than-expected income, a 5.5 per cent increase in revenue funding is reasonable under the circumstances. It is more than 30 per cent higher than the revenue increase in England and more than 80 per cent higher than the increase in Wales. Even excluding the additional funding for the council tax freeze, Scotland's local authorities are still receiving a higher increase in revenue funding than local authorities in both England and Wales.
It is not just about the money. Local authorities in Scotland continue to benefit from the considerable reduction in bureaucracy as a result of the removal of the majority of ring-fenced funding and from being able to reinvest their efficiency savings in service provision. The benefit of being able to reinvest efficiency savings should not be understated. It gives local authorities the opportunity to invest more in front-line services and to deliver for our citizens, but that option will not present itself with the proposed budget cuts in 2010-11. The Scottish Government will have to address the problems caused by the United Kingdom Government's decision to cut the Scottish budget from 2010-11 by around £500 million from what we announced previously and remove the ability that we have given local authorities to reinvest savings in front-line services. We will know the precise extent of the cut from the United Kingdom when the budget is delivered on 22 April. The Scottish Government continues to make representations to the United Kingdom Government to avoid those cuts taking place.
I encourage Parliament to support the motion at decision time so that the order may put in place the resources to support the delivery of valuable public services and the council tax freeze.
That the Parliament agrees that the Local Government Finance Act 1992 (Scotland) Amendment Order 2009 be approved.
- Andy Kerr (East Kilbride) (Lab):
The cabinet secretary talked about the new relationship with local government; it strikes me that the new relationship is one in which the Government centralises credit but devolves blame for any local cuts and closures in services. That is an interesting new relationship that is being developed. The last time that we discussed local government finance matters in detail, we witnessed the most humiliating U-turn in the history of devolution when the local income tax was dumped. That false prospectus on which the Government was elected was the biggest broken promise and breach of trust since devolution.
It is interesting that we did not have another climbdown today; I had hoped to see the end of the Scottish Futures Trust. Given the cabinet secretary's previous practice, the debate would have been an appropriate time to ditch another Scottish National Party manifesto commitment. Such a move would have been welcome news to the 25,000 construction workers who have lost their jobs as a result of the SNP's inability to produce an alternative to the public-private partnership. I look forward to the cabinet secretary developing a not-for-profit trust, if he manages to do so, as was promised on page 19 of his party's manifesto. We all wait with interest to see whether that will happen—I suspect that it will not.
I will consider the local government settlement in its own right. According to the Government's statistics, the current three-year settlement is the worst ever for local government. Under Labour, local government's average share of the financial cake was 35.5 per cent. Under the SNP, that has plummeted to 33.5 per cent. Not the numbers, but the share of the cake of Government expenditure has been reduced.
The cabinet secretary has been all too fond of quoting Pat Watters—he has done so more often than I have. Perhaps he will be interested in what Pat Watters said about the current settlement, which was:
"Once you strip out money committed to agreed priorities like Sutherland and waste and unavoidable financial commitments like pensions—it is simply not true to suggest that councils will receive an increase in their budgets of 5 per cent on last year's figure—it will be a standstill at best … we should stick to the facts—there is no real terms increase all we have is an inflationary uplift which is already being used to fund significant pressures in councils."
There we have it. The cabinet secretary was happy to quote Pat Watters for several years, but Pat Watters—on COSLA's behalf—now tells the Government that the settlement is not good enough.
Why is the settlement not good enough? That relates to the commitments in councillors' manifestos and those that the Government made in its manifesto but which it has not provided the resources to realise. The SNP calculated that £500 million would be required over three years to provide for its manifesto commitments for local government, but that money was not provided. Instead, an average of £81 million a year of additional resources is being provided to meet all the requests from the SNP Government, which it is clear will not be met.
As I and many others predicted, the historic concordat is turning out to be the historic con. It would take 87 years to reduce class sizes in primary 1 to 3 to a maximum of 18. Recently, Ronnie Smith of the Educational Institute of Scotland said that school budgets were being cut and "pared to the bone". So much for the
"Government's much-touted ‘historic' Concordat",
"just isn't working."
I agree. That is shown by the schoolteacher figures that were released yesterday.
I will revisit briefly the single transferable excuse for SNP non-performance: the dishonest scaremongering about an alleged £500 million of cuts. In fact, the Scottish budget is to grow—it is £33.2 billion in 2008-09 and it will be £34.5 billion in 2009-10 and £35.6 billion in 2010-11. More than £2 billion will be added to the Scottish budget, which is by no means a cut. That is in addition to significant investment in our banks in Scotland, the £145 for every basic rate taxpayer in Scotland and the benefit of the reflation measures that the UK Government is taking.
I return to respect for local government. Week in, week out in the chamber, Cabinet ministers and SNP back benchers have a go at and slag off local government to their heart's content. Michael Matheson was the latest villain and he was—correctly—asked to retract his comments. For parity of esteem and understanding, it is simply not good enough for cabinet secretary after cabinet secretary to say that an SNP manifesto commitment is in the concordat but not to provide the resources to ensure that local government can deliver it as the situation changes over the years.
Time in the debate is short. I will finish on a serious point about the non-event that is the Scottish Futures Trust and about the SNP not allowing local authorities and health boards to use PPPs. The issue is how we stimulate and regenerate our economy. Will the cabinet secretary examine more closely how we can work more effectively? Section 75 agreements are no longer an effective vehicle for investment in communities, because the time when councils could lever in funds from the private sector on the back of large infrastructure projects is over.
There is a better way for local authorities and others to work with developers—for instance, through shared and progressive risk management—to ensure progress on house building and infrastructure projects. I hope that the cabinet secretary will examine tax increment financing more closely. From my reading of the history of the model and its implementation in America and from what construction and property organisations in Scotland say about it, it is clear that tax increment financing offers an opportunity to move forward in the regeneration of our communities.
- Derek Brownlee (South of Scotland) (Con):
Andy Kerr alluded to the fact that this debate on local government finance lacks the drama of the previous one, which may be no bad thing. The demise of the discredited local income tax will never be the subject of complaint from this side of the chamber.
Unsurprisingly, the Government has confirmed the second council tax freeze. Undoubtedly, the announcement will be welcomed by families up and down the country. The Conservatives have consistently supported the freeze. We reject the wilder scare stories about its impact on council finances, although we accept that other issues, which I will come to shortly, have put pressure on council budgets.
No matter the part of the country, there is no doubt that councils are experiencing the impact of the recession, particularly in terms of the amount that they receive—or could have expected to receive—through fees and charges and the disposal of capital assets. It would be wrong of any of us to pretend that that will have no impact on local authorities—of course it will. However, it would also be wrong of us to pretend that the Scottish Government's capacity to provide additional finance in compensation is anything other than limited in the extreme. Councils will have to prioritise spending and take difficult decisions. Indeed, those decisions will not be confined to local government; the Scottish Government and the UK Government will have to confront them, too, as will families and businesses.
Given the scale of support from taxpayers and the Scottish Government to local authorities, it would be wrong in any debate on council funding for members to pretend that a squeeze at UK level will have no impact at the Scottish level and, by extension, at council level. It is pretty much impossible to see how the catastrophe that is the current public finances will not have an impact at every level of government. Councils and taxpayers will have to try to find a way through the current situation. We all have to find the least painful way in which to address the concerns that lie ahead. Councils that plan ahead and which take clear and decisive action at an early stage will be the ones that will be best able to protect front-line services and focus on delivering the services that their council tax payers wish to see.
I am happy to repeat something that I have said consistently on the subject of local government finance: the Conservatives are willing to work with any and all parties to find a common way forward. We do not believe in a local income tax but nor do we believe that the status quo is acceptable. Reform is inevitable; indeed, it is desirable.
I understand the political reasons that lie behind the Government's tactic of saying that it is sufficient to have a council tax freeze until the election, at which point we will no doubt have a rerun of the arguments over local income tax, a reformed council tax and whatever other alternatives are put up in 2011. However, that would amount to a missed opportunity. Instead of kicking the issue into the long grass, which would be the impact of accepting what the Government has done, we could engage in work to reform local government finance in this parliamentary session. For example, even if we do not agree on the form of local tax, we could try to find consensus on the total sum of revenue that it should raise. Alternatively, we could try to reach consensus on aspects of council tax reform, as the Economy, Energy and Tourism Committee did at its meeting last week when it discussed the suggestion that Government should look closely at green discounts for council tax and business rates. Another suggestion would be to explore support for groups such as pensioners, as the Conservatives have suggested, or explore how best to use the £281 million of efficiency savings that the Government has told us it had in hand to subsidise the local income tax.
There are plenty of local government finance proposals for us to discuss in this parliamentary session but, in the meantime, we welcome the council tax freeze and will support the order at decision time this evening.
- Jeremy Purvis (Tweeddale, Ettrick and Lauderdale) (LD):
This year, as last year, the Liberal Democrats will not block the order, but we will use the debate to raise our serious concerns about the consequences of the freeze.
The freeze has two main consequences, the first of which is its impact on local services. Last year, the Government said blithely that all services would be healthy, with no local cuts and no local pressures. In the debate on the Local Government Finance (Scotland) Amendment Order 2008, the cabinet secretary said that he took pleasure in the fact that the Government
"delivers investment in public services above the level that local authorities could have expected".—[Official Report, 27 March 2008; c 7436-7.]
From that comment, constituents would not have expected reductions in school budgets, cuts in teacher numbers, pressures on social work budgets, confusion and delay in waste management schemes and councils frustrated by the fact that they have no support for flood prevention schemes. The list is a long one and, by and large, it is the result of smoke-and-mirrors budgeting by the Government.
In answer to each question on local government financing, the Government never takes into consideration projects that were previously funded from ring-fenced funds, challenge-funded projects or projects with central Government support, through revenue support grant. Instead it wraps up the global sum, to give the impression that that is higher than it is. Parents, pupils and local communities are seeing some of the results of that on the ground.
There is perhaps no better illustration of the likely situation for local residents, parents and pupils than the teachers census that was published this week. The Scottish Government is not reticent about putting press releases on its website but, funnily enough, there was no press release on the census. In previous debates, I have said that the SNP sees itself as almost constitutionally immune from blame. It would never say that a budget from the Westminster Government was fair for Scotland. When confronted by an issue such as the drop of 1,000 in teacher numbers over the past year, the SNP's instinct—as we have read in today's papers—is to blame a number of councils for causing the problem. Interestingly, the SNP convener of COSLA's education committee cast doubt on the Government's figures. I did not see that type of relationship represented in the historic concordat. The result is that there is confusion and blame, and parents and pupils are suffering.
As the cabinet secretary said, three-year indicative levels of funding were set last year. In the debate on the Local Government Finance (Scotland) Amendment Order 2008, we moved an amendment regretting the extent to which the settlement could result in public service cuts and closures.
The second consequence of the Government's actions has been brought into focus by the dumping of the commitment that the SNP made to the electorate to introduce legislation to abolish the council tax. The measure was a talisman of the type of society that the First Minister wanted to bring about, but his spokesman briefed that that betrayal was part of a deck-clearing exercise. The Government has said that it will lock in the unfairness of the council tax, which means that the lowest-income quarter of taxpayers in Scotland pay in tax six times the proportion of income that is paid by the highest quarter. It will also lock in people's inability to change the form of council tax bill that they pay, unless they move house, and the perpetual reduction in flexibility for councils to shape their budgets.
The Conservative party is the only party represented in the chamber that seems to believe that the principles underlying the council tax are fair. It is wrong, and constituents throughout Scotland know that. In the budget process last year and this year, the SNP lectured us repeatedly on the impossibility of making tax cuts in the Scottish budget, without making equivalent cuts, because the budget is fixed. However, the perpetual freezing of council tax baselines will lead to revenue cuts. Last year, the figure was £70 million, as the cabinet secretary said. This year, cuts of £140 million will have to be identified. In 2011-12, annual revenue of exactly £700 million will go towards funding the council tax reduction; the cabinet secretary did not respond to my intervention on that point.
The council tax freeze is a tax cut. As Derek Brownlee indicated, an argument can be made for the merits of having a tax cut, but there are problems with a tax cut resulting from a council tax freeze. The poorest make no gain from it, while those on low wages living in smaller houses gain less from it than those on high wages living in bigger houses. Those on fixed incomes living in large houses lose the most. The council tax freeze is an unfair tax cut.
In addition—as the SNP has said—cuts will have to be made to other parts of the budget. Which schools are to be closed? Which teachers are to be sacked? Which social workers are to be laid off? All those threats were laid at the door of the Liberal Democrats when we entered the debate. Now, according to the cabinet secretary, the reduction of £700 million to which I referred is wise and prudent budgeting.
We need to have a proper debate about local taxation. If it is about tax cuts, we must ensure that they are fair tax cuts—progressive and based on the ability to pay. Regrettably, the order locks in the unfairness of council tax, whereas we should be spending our time this year debating its abolition and its replacement with a fair and local income tax.
- Bob Doris (Glasgow) (SNP):
I rise to support the Local Government Finance Act 1992 (Scotland) Amendment Order 2009. I do so with the belief that, in passing the order, the Scottish Government, the Scottish Parliament and Scotland's local authorities will have worked in partnership to help hard-pressed council tax payers throughout the country, particularly during these uncertain and difficult economic times.
We should put that help in context. Council tax went up by 60 per cent under Labour, and it will increase by a further 3.5 per cent on average in England this year. In Scotland, we are moving together in a different direction. To get all 32 councils to agree to freeze their council tax for two years running is an achievement that we should not underestimate.
- Andy Kerr:
The cabinet secretary made great play of parity of esteem and of his relationship with local government. Would it not have been a greater achievement if he had not ring-fenced the funds and forced local government to make the decision?
- Bob Doris:
Andy Kerr keeps talking about giving local authorities equality of status and esteem; we are giving local authorities responsibility, and it is unfortunate that Andy Kerr does not share a desire to give them that responsibility.
Local authorities are working across political parties with the Scottish Government to ensure that financial respite is given to council tax payers. That will hopefully extend until 2012, with year-on-year council tax freezes that will save the average taxpayer more than £240 over the four years. That is surely welcomed by us all.
Further context should be given by a wider view of local authority funding. Over a number of years, local government's share of overall Scottish Executive funding fell, dropping year on year. However, since the election of the new Scottish Government in May 2007, that has been rectified and, for the first time ever, the share of the spending cake has started to increase.
- Jeremy Purvis:
Why not give councils the £70 million that we will be approving today and allow them the decision whether to freeze council tax in their areas or to invest it in local services? Why not give them the choice?
- Bob Doris:
Mr Purvis should realise that councils have that choice already. They do not have to freeze council tax; they have the option of an additional uplift, directly from the Scottish Government, of more than 3 per cent. Alternatively, they can increase council tax beyond that. Clearly, that is councils' choice, and they have opted to work with the Scottish Government. This year alone, local authorities will have a 5.1 per cent increase in revenue from the Scottish Government.
The assumed council tax contributions for 2009-10 come to £1.83 billion. Over the years, such assumed contributions have been increasing, and I have already mentioned just how sharp council tax rises have been as a direct consequence. However, by stepping in and taking the place of council tax payers, we ease the burden. It is not just a question of £70 million this year, but the embedded £70 million from last year. That is an additional £210 million over two years that council tax payers would otherwise have to pay. That should definitely be welcomed.
That funding from the Scottish Government ensures that services are protected. My local authority, Glasgow City Council, froze council tax before 2007. The difference is that, since 2007, the Scottish Government has been providing it with additional financial support to allow it to continue to freeze the council tax. For Glasgow, which I represent, that means an additional £7.78 million if the order is passed today. That is why I will be voting to accept the order at decision time later this afternoon.
- Helen Eadie (Dunfermline East) (Lab):
This is a beggar-my-neighbour approach to politics. Two years ago, when the SNP was voted into power, I never really thought that things would get quite as bad as they are getting. I shall save money, living in a lovely house on the seafront, but what about the disabled person next door to me or all the frail elderly people and others across Scotland?
The choices are not difficult; the choices that the cabinet secretary is forcing Scottish local authorities to make are immoral. He is blackmailing them by telling them that they can have the £70 million if they do what the Scottish Government tells them but not if they do not. Jeremy Purvis is right on that point.
All over Scotland—from the Highlands to Hawick, from Aberdeen to Aberdour and from West Dunbartonshire to Wick—councils are taking horrendous decisions to cut services to local people. The SNP Government will say that we are scaremongering, but try telling that to vulnerable folk in Cowdenbeath or Dalgety Bay, where elderly and disabled people have been hit by soaring care charges, which have gone up by 1,800 per cent. I am not making a mistake: Billy Montgomery, a disabled retired miner in Fife, told how his home help bill has risen from £4 a week for eight hours' help under Labour to £77 a week under the SNP. He is disgusted at the way that he has been treated by the SNP. I, too, am disgusted, as are the caring folks in my constituency. Billy is 59 and has speech and mobility problems after two strokes. He said:
"It's extortionate and there's no way I'm going to pay it."
Anger boiled over last week at Fife Council's social work committee, when the SNP chair decided to exclude the public from the meeting. What does that say about the SNP and democracy?
Hanover Court care home will close next week and people who are 90 years old will be forced to move from a home that they have lived in for several years.
Some of the poorest people in Scotland have been told that they must pay shocking increases as they struggle not only with the increases but with the cuts in services. Campaigners in Scotland warned that people would die as a result of the cuts, which councils blame on the SNP Government's council tax freeze.
In Alex Salmond's Scotland, some people are indeed more equal than others: the Trump Organization, Macdonald Hotels in Aviemore and Scottish Power. They are all big businesses with a special pass to the corridors of SNP power. Compare that with a letter that I got today from the cabinet secretary, who refused to meet me, the GMB, Unite and Community. We were representing Remploy workers throughout Scotland who have concerns to share with him about how cuts are affecting them.
In West Dunbartonshire, the SNP-controlled council has done the dirty on 2,500 council workers by robbing them of their promised back pay. The council is imposing vastly inferior terms and conditions on the entire workforce: longer hours, less pay, the abolition of bonuses and poorer holiday entitlements. The SNP is out to impose all sorts of horrendous deals, and collective agreements with trade unions are simply being torn up. Workers will lose up to £11,000 of their salaries under single status, while the SNP approved rises of £8,000 for directors for changing their title to executive director. All those draconian cuts in wages and conditions will be imposed without agreement this month.
There are two sides to the SNP. A wolf can sometimes appear in sheep's clothing. The SNP really is made up of tartan Tories. It is following Margaret Thatcher's agenda and we are seeing cuts in Scotland the like of which we have never seen before. I am really angry on behalf of my constituents.
- John Wilson (Central Scotland) (SNP):
How does anybody follow a speech like that? I will try my best.
In debating the Local Government Finance Act 1992 (Scotland) Amendment Order 2009, it is important to acknowledge the cabinet secretary's input in promoting key priorities for the Scottish people in terms of the key financial outcomes. Other members have stated, but it is worth reinforcing, that the Scottish Government deserves credit for creating a degree of sustainability for local government budgets. Council tax rates were frozen in all councils in 2008-09 and additional funding of £70 million has been included in the budget settlement for 2009-10. Each local authority is getting money in addition to its 2009-10 allocation. It is most noteworthy that local authorities are entitled to a share of £70 million for maintaining the council tax freeze. Especially in the current financial climate, all members should welcome the fact that the council tax is to be maintained at the current level.
There has been a continuing problem with local authorities levering in capital receipts. However, given the recessionary pressures that we are witnessing in the marketplace, it is not unusual that capital receipts shortfall is a problem for local government.
A council tax freeze ensures that councils throughout Scotland have to maintain prudent financial management and better harness the additional resources that are made available by the Scottish Government. Total capital support of £43.4 million for North Lanarkshire Council is not a sum to dismiss lightly. The base budget from my local council, North Lanarkshire, showed that for 2008-09 the authority achieved efficiency savings of £10 million. Unlike in previous situations when budget settlements clawed back efficiency savings, local authorities retain such savings, thus enabling further investment to be made in strategic priorities and increased service provision, which are determined by local authorities in their own areas.
There is always debate about whether local government has enough money, especially as we approach a new financial year. As other members highlighted, there has been much discussion of the resource allocations, although it is worth restating that local government expenditure will rise in cash terms by 4.5 per cent in 2009-10. There needs to be much more clarification from local authorities to ensure that risk management procedures are in place. Indeed, I could argue that budgets that are already in place should be prioritised and should take account of established best practice in local government.
In the chamber on 11 December last year, I highlighted my concern about the public authorities' potential loss on investments in Icelandic banks. The Scottish Government has announced that it will issue statutory guidance not to make provision in its 2009-10 budgets for any potential loss on investments in Icelandic banks. Those banks' exposure is the latest glaring example of the public pound not being protected in a sufficiently robust manner.
A number of issues are worth further examination—for example, I am concerned about performance related pay in local government. Scrutiny of the parameters that are set for PRP makes it look increasingly self-serving. In terms of setting the right tone, that area needs to be addressed, particularly with the current financial backdrop. As witnessed recently in the Treasury Select Committee hearing at Westminster, people have rightly criticised the level of executive pay in the banking sector. However, performance management and executive pay in local government merit future analysis and detailed scrutiny. Sometimes, perception is reality.
To provide some context to the debate, an increase in cash terms in local government revenue allocations by 5.15 per cent for South Lanarkshire Council and by 5.03 per cent for North Lanarkshire Council merits praise. The Government is taking account of reality outside the chamber, with real money for public services.
I commend the amendment order and look forward to the benefits that the new funding arrangements for local authorities will deliver for vital services throughout Scotland.
- Alison McInnes (North East Scotland) (LD):
I recognise that, in the current economic climate, many people will welcome a council tax freeze. Who does not like a cut in tax? However, as my colleague Jeremy Purvis said, the tax freeze locks in the unfairness of the discredited council tax for another year. The council tax freeze was supposed to be a temporary measure, easing difficulties while a fairer local income tax system was developed. In that light, we did not oppose it. In the same way, it has been tholed by councils across the country on the understanding that it heralded a major reform of how local services are funded. However, of course, that is no longer the case. The situation changed when the Government announced that it would not take forward any such reform in the current session of Parliament.
With the LIT having been ruled out for this session, it is unlikely that change will happen within the next five years even if there is a majority for reform in the next session of Parliament. I am concerned that that is a missed opportunity to strengthen the role of local government. Councils should be responsible for raising a significant proportion of funds locally—we can argue about what that level should be—and they deserve to have that autonomy. We have been happy to lobby for fiscal autonomy for our Parliament, but I hear less about applying the same principle to local government.
Rather than an increase in the share of funds that is raised locally and, importantly, accounted for locally, we are seeing the erosion of the principle of locally elected people being responsible for local services. Local government is in danger of morphing into local administration these days. John Swinney has said that he wants a new, equal relationship with local government, yet he has in effect removed local discretion to raise additional revenue for locally needed services. That is not my idea of a new relationship.
In a similar debate last year, I said that a council tax freeze must be fully funded by central Government and must not impact on other budgets for local government services in the current year or in future years. We now face the real prospect that the on-going council tax freeze will adversely impact council services in coming years. The Government has made a commitment to freeze the tax until 2011, but at what cost to local services? Is the tax to be frozen for all time? If not, what kind of hike in council tax will be needed all at once? A massive increase will be required just to provide the same level of funding for local authorities. Perpetually freezing council tax helps no one. It is irresponsible to do that without demonstrating that there is an exit strategy, so the Government is piling up trouble for future years. Of course, the SNP is fond of grand gestures—leaving the pieces to be picked up by the next Government—but it has dug itself into a big hole with the council tax freeze.
Liberal Democrats believe in strengthening local government. Devolution should not stop here at Holyrood. The SNP's increasing tendency to exert control over spending contrasts with its assertion that it is giving more control to local government. Although the move to single outcome agreements has some merit, the demands of the concordat coupled with the council tax freeze mean that councils have less control over their spending than ever before. Indeed, there is a good deal more confusion, which makes the need for a review of the distribution formula more pressing.
I thank John Swinney for insisting, in the face of worrying resistance from COSLA, that the distribution formula will be reviewed, but I continue to press for an interim solution to help the five councils that currently receive less than 90 per cent of the Scottish average. When I proposed that such councils should be protected through a top-up fund, John Swinney responded:
"the current distribution formula—whatever we might think of it—is broadly accepted by all elements of local government"—[Official Report, 11 February 2009; c 14934.]
I disagree. The current distribution formula is accepted by the majority of councils, which have a vested interest in resisting change. Since local government reorganisation, the funding system has contained an in-built unfairness that the majority has been unwilling to address. As a minority Government, the SNP should have some sympathy with the difficulties that a minority can face in bringing about change.
I will not hide the fact that I campaigned for such a review when my party was in government—I like to be consistent—or that, to its credit, the Executive had started to tackle the issue. However, the freeing up of ring fencing has reversed that trend, with the result that five councils have been pulled even further below the Scottish average. I believe that that was an unintentional consequence. It is to John Swinney's credit that he is pushing COSLA to consider the distribution formula—COSLA does not want to do that—but I ask him to go one step further. To ease the problems facing Aberdeen City Council, Aberdeenshire Council and the others, he should put in place an interim measure to introduce a safety net that stops councils receiving less than 90 per cent of the Scottish average.
- Gavin Brown (Lothians) (Con):
We support the order and will vote for the motion at decision time. By increasing the sums that are given to local authorities, the order will allow councils to freeze the council tax. The Scottish Conservatives support the council tax freeze, which is indeed a good Conservative policy. As my colleague David McLetchie said not too long ago, the next best thing to a Conservative Government is a Government that implements Conservative policies. We supported the council tax freeze last year and this year, and we hope that the freeze will be continued into next year.
The order provides a sum of approximately £70 million to allow all 32 local authorities to freeze their council tax at 2007-08 levels. If the Parliament were not to agree to the motion, councils would need to increase council tax by 3.2 per cent to raise the same amount of money. Such an increase would not be popular in Scotland at the moment and would not go down well with householders in any local authority area or constituency. The council tax freeze represents a break to the hard-pressed taxpayer and a tiny piece of good news at a time of general gloom about the nation's finances and fiscal abilities.
That said, we need to look at the system of local taxation, as my colleague Derek Brownlee pointed out. It is not good enough simply to kick the issue into the long grass of 2011. I reiterate Mr Brownlee's point that the Scottish Conservatives are willing to work with any party to consider positive ways of changing the status quo because, like many other parties in the Parliament, we do not think that it is acceptable.
If the £281 million that the Government said that it could have found for the local income tax—which the Liberal Democrats must have accepted—is still available, that money could be used for a council tax cut across the board or, as we have suggested in the past, for a discount of 50 per cent for pensioners.
I want to focus on a proposal that could achieve cross-party support and which could be implemented far more quickly than any of the more fundamental changes—that of a green rebate on council tax. Such rebates are already available in England, Wales and Northern Ireland. The concept involves giving householders who invest in energy efficiency measures or renewable heat a discount or a rebate on their council tax. The measure would be fairly straightforward to implement, would give householders a break by cutting fuel bills and would, at the same time, help us to improve our carbon emissions figures.
The issue was considered recently at a meeting of the Economy, Energy and Tourism Committee, at which the Energy Saving Trust made extremely positive noises about it. The EST said:
"council tax incentives have, in theory, a big role to play in encouraging consumers to take action … Talking to people about tax rather than energy efficiency is much more exciting for them and has a big impact."
Northern Energy Developments Ltd said:
"There must therefore be innovative thinking about financial incentives, and in that respect, council tax rebates are interesting."—[Official Report, Economy, Energy and Tourism Committee, 4 February 2009; c 1571.]
In its written evidence to the committee, Scottish and Southern Energy said:
"all avenues should be explored, such as using local and national tax incentives to reward energy efficiency or microgeneration."
The evidence that was put to the committee was compelling, and it led to the proposal receiving cross-party support. All members of the committee—Scottish National Party, Labour, Liberal Democrat and Conservative members alike—felt that the idea ought to be explored. The committee recommended
"that the Scottish Government investigates and reports back to the Committee, if possible before stage 2"—
of the Climate Change (Scotland) Bill—
"on whether some form of rebate through local taxation systems to incentivise the take-up of energy efficiency, renewable heat"
would be possible,
"drawing on the experience and the success of such schemes in other parts of the UK."
The order that we are debating will allow there to be another council tax freeze this year. As we support the freeze, we will vote for the order, but I ask the cabinet secretary to respond to the green rebate on council tax initiative, which I think could have cross-party support.
- David Whitton (Strathkelvin and Bearsden) (Lab):
We debated local government finance only last month, and here we are again. However, today is different. No big announcement has been sneaked out in the final few paragraphs of a speech, as happened with the dumping of the flagship local income tax policy.
I am a bit disappointed in Mr Swinney, in that, like Mr Kerr, I half expected that he would go the whole hog and tell us that the policy of creating the Scottish Futures Trust was dead in the water, but no such luck. Let us look at the facts. That so-called organisation was to be the answer to a nation's prayers on how to fund capital projects, but it has still not put one project in place. The SFT might have a chairman in the shape of Sir Angus Grossart, but one would be hard pushed to find any public utterances by him on the matter.
What about the much-anticipated appointment of a chief executive for the organisation? Only yesterday, the Finance Committee was told by the head of the Government's pay policy unit that he could offer no information on the salary structure for the post and that he had not been involved in drawing up any contract of employment. If the SNP is serious about the SFT, surely it should have had someone in place by now. When he sums up, perhaps the cabinet secretary can tell us how many applications there were, what the current state of play is on the making of an appointment and what the salary level will be. I am sure that we are all interested to know, just as we are interested to know whether the five civil servants who are working on the SFT have been transferred to the organisation under the Transfer of Undertakings (Protection of Employment) Regulations.
As my colleague Mr Kerr pointed out, the SNP Government is responsible for £1.6 billion of cuts in local government finance over the three-year period from 2007—which the cabinet secretary describes as "cash-releasing savings". We know that councils are cutting staff numbers in order to make some of those savings, yet the same cabinet secretary, when asked whether, in these times of economic difficulty, he would relax the demand for 2 per cent efficiency savings that have been imposed on Scottish councils, said no.
Some of his SNP colleagues in local government—and he should listen to this bit—clearly have not heeded what he said and are taking their new-found freedom under the concordat to new lengths. For example, take SNP-led Stirling Council, which hired consultants KPMG to review the council's activities—a review, incidentally, that included a plan to close care homes. That plan was supported by the SNP's natural allies in this Parliament and in Stirling—the SNP's good friends, the Tories.
Today's Stirling Observer carries an apology from both parties. Apparently, they had not realised what distress the decision would cause. Talk about being out of touch. However, there is no apology for wasting around £1 million on the services of KPMG, which is doing what the council's own officials are probably capable of doing for themselves. What a cost. The charge for a KPMG director is £2,244 a day—five times more than the chief executive and 31 times more than a senior carer in one of the homes earmarked for closure. The lead consultant is a snip at £1,637 a day, more than four times more than the director of community services and 25 times more than a carer. I respectfully suggest to the cabinet secretary that he has a word with the SNP leader of the council and offers some advice on how to make a very quick saving for the council tax payers of Stirling.
- John Wilson:
Will Mr Whitton speak to his colleagues in North Lanarkshire Council, who, in the past two years, have spent more than £15 million on consultancy fees?
- David Whitton:
We just have to look at the facts in Stirling. What savings have been made? I do not know. Perhaps Mr Wilson can tell me. Was the policy abandoned?
Facts are facts. As we have heard, using the Government's own figures, the current three-year settlement for local government is the worst ever, yet we are hearing once again from Mr Swinney that he will push for a zero per cent council tax increase again next year, using the blunt instrument of a threat to councils that, unless they sign up, they will not get a share of whatever sum he decides to set aside to support the policy.
Mr Doris extolled the virtues of the zero increase and claimed that Labour does not respect council decisions. How, then, does he square his views with his opposition to school closures in Glasgow? Under Labour, Glasgow City Council has spent more than £500 million on new schools in the past 10 years. It cannot do that now because no funding mechanism is in place. The SFT does not exist.
- Bob Doris:
Does Mr Whitton accept that the Labour leader in Glasgow, Steven Purcell, has said that the school closure scheme is not financially driven? In that case, what does the issue have to do with the budget debate?
- David Whitton:
I am not sure that I follow Mr Doris's line of argument. How can new schools be built without finance? They certainly cannot be built without a financial model, and no financial model is in place.
As I was saying, Mr Swinney is still pursuing his zero per cent increase. If he continues on that line, he might be guilty of putting local councils under economic duress.
We know now that the concordat with local government is "just not working". Those are not my words, but the words of Ronnie Smith, the general secretary of the teachers union the Educational Institute of Scotland—and he should know. As my colleague Rhona Brankin revealed yesterday, the number of teachers in Scotland has fallen by 1,000 in the past year, 23 of them in my constituency.
The First Minister is fond of pinching other people's election slogans, so let me offer him another one: "It's time"—time for him and his Government to sit down again with local government and negotiate a new deal, because zero per cent council tax increases next year just will not work.
- John Swinney:
There was something all-too-familiar about Helen Eadie's contribution to the debate, but there was also something missing. I do not consider it a Helen Eadie speech unless it contains a vociferous assault on Willie Rennie or Jim Tolson, who appear to be two of her bêtes noires. Her speech was therefore very different from normal.
I must correct a couple of points that Mrs Eadie made. She said that an SNP councillor had been in the chair when the Fife Council meeting was unable to take place. I am reliably advised that it was, in fact, Councillor Tim Brett, who is a Liberal Democrat. If Mrs Eadie had wanted a Liberal Democrat to single out for attack in her speech, Councillor Brett would have provided a suitable substitute for Mr Tolson. However, I see that Mr Tolson has now turned up in the chamber—I am glad that I was able to give him a name check.
- Helen Eadie:
The minister will know that all the politics in Fife Council are led by Peter Grant, who is an accountant. He knows the cost of everything but the value of nothing, and he is a member of the SNP.
- John Swinney:
I am well acquainted with Councillor Grant, who gives fine leadership to Fife Council. I point out to Mrs Eadie that 400 people who previously paid care charges when the Labour Party ran Fife Council now pay nothing under the SNP-Liberal Democrat administration. If Mrs Eadie had put all the issues on the record properly, she would have made it clear that the approach to care charges that Fife Council has taken is also taken by numerous Labour councils throughout the country. That is reminiscent of the problem that Mr Whitton got himself into when he attacked the use of consultants by Stirling Council and my colleague Mr John Wilson was able to point out a similar use of consultants by North Lanarkshire Council. Members should be a tad careful about the examples that they choose.
Mr Whitton had more than a little brass neck criticising me on the subject of efficiency savings. He was probably the author of the "hungry caterpillar" speech—he used to write all the speeches. He may want to correct the record on that. I was chastised for having modest aspirations for efficiency savings, but the Secretary of State for Scotland is now demanding that I ask for more efficiency savings. I am the first finance minister—one of the previous guilty men is sitting beside Mr Whitton on the Labour front bench—who has allowed local authorities to retain their efficiency savings for reinvestment in front-line services.
- Andy Kerr:
Mr Swinney is also the first cabinet secretary to give his manifesto commitments to local government without providing the appropriate funding. When the previous Scottish Executive made commitments on bus travel and class sizes, we provided the money to support them.
- John Swinney:
I notice that Mr Kerr does not refer to the policy of free personal care, on which the previous Government undoubtedly short changed local authorities in Scotland.
The Government has allowed local authorities to reinvest their efficiency savings at the local level, whereas the previous Administration top-sliced them. That is the approach that will be taken by the United Kingdom Government if it goes ahead with its decision to top-slice our budget in 2010-11.
There has been a lot of talk in the debate about local government's share of public expenditure, which is a subject that is dear to Mr Kerr's heart. He and I spar on the issue frequently.
- David Whitton:
Stick to the facts.
- John Swinney:
The fact is that the share of the Scottish budget that was allocated to local authorities fell each year from 2003-04 under the previous Labour-Liberal Administration. It fell in 2004-05, 2005-06, 2006-07 and 2007-08. At that point, the SNP Government came into office and reversed the trend, and local authorities' share of the budget is now going back up again.
- Andy Kerr:
During that time, we invested our resources in the national health service, whereas the SNP Government has chosen to reduce the national health service budget. If the cabinet secretary picks any three years of a Labour Administration and compares the figures with his projections for the next three years, he will find that the average spend under Labour was more than it will be under the SNP.
- John Swinney:
The minute that we answer one charge from Mr Kerr, he flips on to the other side of the charge. The fact is that the share of the budget that went to local government under the Labour-Liberal Administration declined before the SNP Government came into office and increased afterwards. He should willingly accept that point.
There has also been a great deal of talk about my previous contribution to a local government finance debate, on local income tax. I would have thought that my announcement that day would bring some cheer to Labour and Conservative members—I accept that the Conservatives have been slightly less grudging than the Labour Party. To Mr Purvis I say that, no matter our view on the issue, we have to face the reality that there was not the parliamentary support to implement the policy. That is one of the factors that we had to take into account.
- Jeremy Purvis:
Will the cabinet secretary similarly respect the way that Parliament has voted on the issue of the referendum?
- John Swinney:
Having listened to the remarks of Mr Purvis's leader at his party's annual conference in the fair city of Perth, I am not altogether sure where the Liberal Democrats now stand on the issue. They are flip-flopping all over the place.
- David Whitton:
Will the cabinet secretary give way?
- John Swinney:
No doubt we are about to hear some flip-flopping from the Labour benches. Maybe Mr Whitton wrote the "bring it on" speech as well as the "hungry caterpillar" speech.
- David Whitton:
I am afraid that Mr Swinney gives me credit for things that I deserve no credit for.
As Mr Swinney is on the subject of the local income tax, will he take this opportunity to tell us whether he will publish the detailed workings that the Government got in a fankle about and let us see how ministers arrived at the decision to ditch the local income tax?
- John Swinney:
The Government has published plenty of information on the local income tax and has answered plenty of parliamentary questions on it as well—I seem to remember many late-night parliamentary questions scrutiny sessions.
I will end on some constructive points. Mr Kerr made some points about the difficulties arising out of section 75 agreements, and Mr Brownlee made much the same point in relation to the decline in local authority income from fees and charges and the difficulties with capital assets sales and how that fits into the whole development climate. The Government has a positive view of tax increment finance, and we are already exploring with local authorities how we can take that forward. There are a number of other opportunities for us to try to bring together some of the different components of investment that will still exist in the private sector and the local authority sector. The Government's capital programme can contribute to that, and we will also be delighted to contribute through the Scottish Futures Trust, which I am sure we will debate next Wednesday.
Various elements are coming together, and I think that we can have a constructive debate that recognises the fact that, at a local level, development issues are a particular challenge, given the economic climate. The Government is very much engaged in addressing that problem as part of our work to support investment in the Scottish economy. That will also be supported by the passage tonight of the order, which will mean that, for the second year in a row, resources will be provided to local authorities to enable the council tax to be frozen.