Local Government, Housing and Planning Committee

Meeting date: Tuesday, June 13, 2023

Official Report 655KB pdf

---

Local Government in Scotland: Overview 2023

Under agenda item 2, we will take evidence on the recent Accounts Commission report, “Local government in Scotland: Overview 2023”. We are joined by Andrew Burns, a member of the Accounts Commission, and Tim McKay, its interim deputy chair. We are also joined, from Audit Scotland, by Carol Calder, audit director; Antony Clark, executive director of performance audit and best value; and Lucy Jones, audit manager.

I invite Tim McKay to make a short opening statement before I open the meeting to questions from members.

Thank you, convener. On behalf of the Accounts Commission, I thank the committee for inviting us to discuss the overview report.

Councils have never faced such a challenging situation. Their finances are under severe strain, with cost pressures increasing and funding increasingly ring fenced. They have had to make significant savings to balance their budgets, and they still face difficult choices about spending priorities and service provision. The pandemic adversely affected performance across all service areas, and there are signs of growing backlogs and declining performance in some areas, including adult social care, housing and homelessness.

Councils have a clear focus on tackling inequalities, but the extent and impact of their citizens’ needs not being met are unclear. Some communities are facing crisis and experiencing persistently high levels of poverty and increasing financial hardship at a time when councils have less capacity to support them. Workforce pressures have deepened, with record levels of staff sickness absence and increasing recruitment challenges due to the competitive labour market.

The scale of the challenges, with funding forecast to reduce in real terms and demographic and workforce pressures growing, means that Scotland’s councils must radically change how they operate, particularly how they collaborate with their partners, if services to communities are to be maintained and national priorities tackled. During the pandemic, many councils showed strong collaborative leadership and demonstrated the benefits of a place-based approach and of working closely with partners and communities, focusing on the vulnerable, reducing bureaucracy and using the workforce in flexible ways. Those experiences must be consolidated and built on.

In our report, we are clear that leaders must take urgent action, but we recognise that that will not be easy. The level of uncertainty and immediate financial pressures make planning and delivering sustainable change much more difficult. In preparing our best value reports on individual councils, we have seen that the quality of leadership and the pace of, and appetite for, change vary. The current challenges might reinforce that gap, with the risk that some councils will be left behind. Shared services and shared administrative functions offer efficiencies and can help to manage recruitment pressures and skills shortages, but councils have made limited progress in providing them. Tensions with central Government and delays to agreeing the new deal create risks to councils’ ability to make fundamental changes at the pace needed.

Reform will have a huge impact on communities and the workforce. Councils must be open and clear with both groups about the need for change and what that means for future service delivery, and they must involve communities in making difficult decisions. The recommendations in our report are directed at councillors and senior officers, who must set the tone, make the difficult decisions and implement radical change. I will draw out just one key recommendation to enable that change, which is that the Convention of Scottish Local Authorities and the Scottish Government agree, as part of the new deal, a fiscal framework. That is long overdue, and such a framework should give councils long-term financial stability and flexibility to support them in making the difficult decisions and the fundamental changes that are urgently needed.

My colleagues and I are very happy to answer any questions.

Thanks very much for that. I was going to ask whether the overview showed any significant changes in local government finance and performance, but, in a way, you have laid that out already. I will ask a supplementary question about that, and, in response, you can pull out anything else that you want to highlight beyond the recommendation on the fiscal framework.

Given that the Scottish Government has allocated a total of £13.5 billion to local government in this financial year—that is up 3.5 per cent in real terms since 2013-14—can you set out why council budgets are now under such severe strain?

Yes. The settlement that you referenced is increasing slightly in real terms, but, if you look further forward, you will see that the funding settlement is, in essence, flat. With the cost of living crisis and the high inflation that we are experiencing, that will mean a real-terms decline in council funding.

Does anyone else want to come in on any highlights relating to the significant changes?

Tim McKay is quite right about the impact of inflation and the revenue and capital funding pressures that it creates for local authorities. We need to see that alongside the increasing demand for local government services. The Covid-19 pandemic is not entirely behind us, and local authorities are still having to deal with significant pressures on services associated with that. We know that we are living through a cost of living crisis, so the community demands on local government services and other services are increasing. All of that is piling pressure on local authority finances.

Thanks for highlighting that. There are so many bits to keep track of.

As you are aware, we held a great event with Scotland’s Futures Forum on local government and central Government relationships—some of you were there; in fact, all of you might have been there. A number of people told us that local government is often seen as the delivery arm of central Government rather than its true partner. I am interested in your thoughts on how a new deal could change that and support a relationship that is based on trust. What could a new deal mean for the communities that local government serves?

I am happy to answer that. I was at that event, and it was very worthwhile. I enjoyed the morning, and I look forward to future work by Scotland’s Futures Forum on the issue.

I draw everybody’s attention to page 30 of our overview report, where we have included some detailed information about the potential new deal and partnership agreement, which would include a fiscal framework. You will have heard the commission and Audit Scotland—individually and collectively—go on about that, at quite some length, on various visits to this committee and other committees, and it was mentioned during the session to which the convener just referred. The partnership framework has been discussed for several years, and it builds on further reviews of local governance frameworks and so on.

The Accounts Commission and Audit Scotland sense that it is imperative that the partnership agreement is delivered. If it is delivered in accordance with the anticipated three elements, shown on page 30 of our report, it could outline a complete change in tone. That might sound like a minor thing, but it could be quite significant if the language changes from “levels of government” to “spheres of government” and there is parity of esteem. We have all heard that statement and phrase endlessly over the years, but making it a reality has been a bit elusive. Frankly, the commission senses, from the evidence in its best value reports that Tim McKay, the interim deputy chair, mentioned, that there is often not parity of esteem on the ground. The partnership agreement—you will be as close to this as we are—could provide a change in tone and language. It could set the scene for “spheres of government” being the language that is used, as opposed to “levels of government”.

The partnership agreement has to be followed up, I suggest, very quickly by a fiscal framework that addresses the funding arrangements and settlements for local government. Again, I draw your attention to page 30. You will see that we anticipated that, as well as the partnership agreement and the fiscal framework, a working group would be set up to look at the funding arrangements for local government. I do not know about you, but I sigh internally when I hear talk of another working group, because so much work has been done on this over the years.

The Accounts Commission and Audit Scotland make a plea that, whatever comes out of the partnership agreement and, we hope, a fiscal framework thereafter, any funding arrangements be looked at extremely quickly and that we do not reinvent the wheel. Numerous studies show that there are fairly quick ways in which to increase the level of funding available to local government, and it can be significantly raised from the 15 to 18 per cent of revenue that local authorities are now responsible for raising through council tax.

Without repeating evidence that we have given previously, I will say that Scotland and the United Kingdom are outliers in that regard. On the continent, most local authority levels—or spheres of government, I should say—raise between 40 and 50 per cent of their own revenue. That is not just an aspiration but achievable, quite quickly, here in Scotland. Previous reports show how it can be done.

I hope that that helps.

That is super. I do not think that we should be concerned about repeating anything in this committee; we need to repeat things until they come through. I appreciate your response. You highlight the fact that we are an outlier. In the European Union, local authorities have the ability to raise 40 to 50 per cent of their revenue. I think that the message in relation to spheres is getting through—at a Conveners Group meeting, I asked a question of the First Minister, and he used the word “spheres” in his response. As you say, that sets the tone, but how do we put the action in under the tone? When I think about spheres, I think about getting real clarity. That came through at the new deal event. There is a need for real clarity about who is responsible for what areas and who has the power and the fiscal responsibility, and we will be looking for that clarity. Page 30 of your report will definitely be scrutinised heavily.

That is good to hear.

Good morning, everyone. I want to pick your brains and get your thoughts on the importance of financial planning information and how it supports decision making. That is often discussed with our colleagues from Audit Scotland at the Public Audit Committee. It plays an increasingly important part in the work that we do. I want to tease out what you mean by

“more detailed financial information … to support councils longer-term financial planning.”

Can you explain what you mean by that? I will start with Tim McKay and Andrew Burns, and then I will ask Audit Scotland colleagues to contribute.

There are two elements to the detail. One is to have a longer-term financial horizon so that councils, instead of getting a definite figure for just one year, can have, say, a three-year series of settlements so that they know exactly what they will get over three years. The other element is to have a transparent funding model so that councils know not only what they will get but the basis on which funding is calculated so that they are able to plan ahead. If, say, some element of funding is based on population growth, they can therefore have some idea of what they will get, based on their estimates of population growth, the number of children or whichever of the many factors are put into the funding model.

Before I hand over to Carol Calder, I want to emphasise the point that Tim McKay has just made about a longer-term horizon for planning. As a nation, we must collectively break out of the cycle of saying, “We cannot give you a three-year budget framework, because we do not get it from the next sphere, or level, of government.” All the evidence that we have seen over the years indicates that that type of blame game has to stop. Local authorities have to be given three-year settlements, whether the Scottish Government gets a three-year settlement or not. Doing that would allow for significant certainty—much more than there is now—around detailed financial planning, which is often not possible at the moment. Best value reports show that many local authorities produce a three-year or five-year budget plan, and one or two produce a 10-year budget plan. It is just a forward plan, but they do that having received a one-year settlement from the Scottish Government.

I stress that, if we can break the cycle of saying, “We cannot deliver a three-year budget horizon because we do not get that from the level of government above us or next to us”, let go a bit and commit to a three to five-year horizon for planning, it would make a huge difference. Carol Calder might want to add to that.

09:45  

Would those budgets be indicative or guaranteed? How would it be done? If something happened that meant that funding could not be delivered in the second or third year, what would happen?

At the moment, most local authorities that have three or five-year budgets—I think that one or two have 10-year budgets—set a hard-and-fast budget for the year ahead. The other budgets are potentially just indicative—that might be the wrong term—and they can flex in years 2, 3, 4 and 5. Obviously, for the odd one or two commendable local authorities that have 10-year frameworks, there would have to be flex in years 8, 9 and 10. As our interim deputy chair indicated, it really helps with forward planning if there is a framework, even if it is indicative.

Carol Calder, what more detail do we need?

Councils need to plan on three different horizons; they need to deal with the here and now, shorter-term priorities and longer-term priorities. You asked why that is important. If they do not have the information to allow them to plan for a longer-term horizon, they will never shift to a prevention and early intervention approach. That is why it is important. As others have said, it is about having certainty over a longer period, but it is also about not having funding coming in in-year. Councils receive an awful lot of fragmented funding, and it all comes with monitoring and reporting responsibilities. That takes up a lot of officer time and is not an efficient way of doing things. If funding was clearer and less fragmented, councils would be better able to forward plan in relation to prevention and early intervention, and we could start to see a shift from a reaction focus to a prevention focus.

What about the resource spending review? Does that help or hinder?

It did not have a lot of detail in it. The medium-term financial strategy that came out last month indicated that the figures in the resource spending review would be refreshed. We do not know what changes there will be across the different budget groups as a result of that. It did not provide sufficient information for councils to know how much they were getting and what they could do with it. It is a step forward, but a bit more detail is needed to allow councils to, as I described, look forward and invest to save. At the moment, they are frustrated or limited in their ability to do that.

I want to build briefly on what has been said about the medium-term financial strategy. It operates at a level that is above that which would be required to give councils confidence about different policy commitment areas and levels of funding for local authorities. The consequence of the short-term budget-setting process—the annual funding—is that councils find it difficult, as you will know from previous evidence to the committee, to fund others. Local authorities might be trying to support the third sector, which is an important partner for local government, but one-year funding for that sector makes it difficult to employ staff and invest in new services. The committee will know that local government and its partners are committed to long-term outcomes and the prevention agenda, which Carol Calder mentioned. By definition, long-term outcomes require long-term investment and planning. Therefore, the failure to have a system that gives people a higher degree of certainty about the future makes it much more difficult to deliver new services, transformation and planning for long-term outcomes.

Thank you for that. A favourite question of mine when we have Audit Scotland colleagues in the room is this: if, next year or the year after, we look back at your recommendations, how will we know whether they were implemented and were successful? For you to be able to say, “Oh yes—they took that on board and carried it through,” what would you expect to see?

Number 1 would be a fiscal framework.

With longer-term—

—with longer-term figures and more certainty to allow long-term planning and all the things that my colleagues have talked about.

You would also like there to be more detail in the spending review, to provide a bit more clarity. Should we expect to see that as evidence that your recommendations have been carried forward?

I hope that, next year, there will be a new deal that we can refer to. We need to think about other things as well. We do an annual overview, but some of the problems that local government faces are societal problems that will not shift markedly over 12 months, so we sometimes have to look at the impact over the longer term as well. However, we hope that the mechanics of managing and planning and looking at different ways of delivering services will be visible over the shorter term.

My last question is an important one, which is about what is called service rationing. Are you seeing any evidence of that? By that, I mean things such as unmet demand increasing or eligibility criteria to get certain services being changed because of the budget situation. Are you seeing any evidence of that or of budgets being shifted to push them towards other priorities?

We are. Antony might have some more detail on that.

Yes, we are seeing that. It is not a new issue. The tightening up of eligibility criteria for some important local government services has been happening for quite some time, given the financial pressure facing local authorities. Several years ago, the commission wrote a report on social work services in Scotland and, as part of that report, we looked at the eligibility criteria across all 32 local authorities. At that time, to access social care services, people had to present with the highest level of need. We asked questions about the extent to which the eligibility criteria in place for many social care services were supportive of the prevention agenda, because if people present largely in crisis situations, that clearly runs counter to the prevention agenda. That is one example of where fiscal and financial pressures have tightened the eligibility for an important service.

In addition, in some other important services, levels of access in respect of opening hours and patterns of provision have been changing. In the overview report, we talk about there being uncertainty about what that means across all local government services. That is an issue that the Accounts Commission and Audit Scotland are looking at quite closely, because we want to make sure that, when councils make those important decisions about prioritisation and choices, there is a sense of understanding of what the impact will be on communities. It is a really important question, Mr Coffey.

Paragraph 23 references a Society of Local Authority Chief Executives and Senior Managers survey, which identifies some of the services that are most under pressure.

We are always banging the drum, and we will bang it again, on the need for data. We have anecdotal evidence from councils, services and chief executives that they have unmet need in their service areas, but it is difficult to quantify that and to be transparent about that. One of the recommendations in the report is that councils should develop better information so that they can be clearer and open with their communities about what the unmet need is and where backlogs lie.

Is there any timescale for a full impact assessment on that unmet need? Could we look forward to reading such an assessment next year?

We will certainly look at that again. It is one of the recommendations, so we will follow up on that.

Thank you very much for answering those questions.

Good morning, and thank you for joining us. I want to ask a couple of questions about the spending figures in the report. What stood out for me was the significant reductions in council spending on planning, culture and leisure services and environmental services over the past decade. What impact have those reductions in spending had on local communities and businesses? Have some of the changes that we have seen—for example, the use of arm’s-length external organisations—helped, or have they simply been a way of transferring the money off council budgets?

You are referencing exhibit 1, which identifies the individual areas that you mentioned. Carol, do you want to give some evidence on what that means for specific services?

The trends are really quite stark. They are long-term rather than overnight trends. Some of those services have had reductions of more than 30 per cent in funding and staff. For communities, that means that planning applications might take a bit longer, because the planning department has been cut to the bone.

Internally, councils’ workforce planning has been affected. Their ability to manage their workforce into the future has been inhibited by the fact that they have cut their core central services and they do not have the capacity in human resources and organisational development to do the necessary forward planning around what skills they will need in the future. That inhibits councils’ ability to deliver services in those areas because there are fewer people to deliver them. In planning, the income that councils get from planning applications does not come anywhere near the costs of providing the service. There has been an impact on performance in those service areas.

You also asked about ALEOs. Of course, ALEOs have been greatly affected by the pandemic, and we still do not know what the extent of the recovery will be. We did a piece of work on how councils work around ALEOs, which talks about the governance of ALEOs and the importance of monitoring them and making sure that we are getting value for money through them. The impact on culture and leisure services, for instance, has been immense over the pandemic. There are a lot of unknowns in that area.

Would you say that those areas in which councils have been able to make cuts have been the low-hanging fruit? We have just completed some work on the national planning framework 4, and a big part of that was about the fact that planning departments are not functioning properly and do not have the workforce in place. That might be changing now but, for a decade, people have been lost to a very important part of our local government planning system. Has that been an area that councils have been forced to target because key statutory services need to be funded instead?

I will kick off, and Antony Clark and Carol Calder might come in with some more detail.

You raise an important point, which I think is linked to ring fencing and the directive nature of the core budgets for local authorities. Colleagues will tell me what the exact figure is, but about two thirds—a huge part—of most local authorities’ budgets is soaked up by education and social care. All the services that you have just asked about are outside that and form a much smaller part of the overall budgets of each of the 32 local authorities.

Because there has been more and more direction on those two central services of education and social care, that has undoubtedly led indirectly to significant pressure being put on the remaining 30-odd per cent of services—all the ones that you have just listed. I am not sure that I would say that they have been the low-hanging fruit. That has been a result of the increasing amount of direction and ring fencing. The last time we were here, we debated the actual percentage of ring fencing that we have. I do not want to go down that rabbit hole, but I hope that we can all agree that ring fencing is increasing. The specific figure should not overly trouble us, but there is more and more of it happening. If the amount of ring fencing decreased, that would free up local authorities’ ability to be much more flexible on the services that you referenced, which, as you rightly said, are under significant pressure.

Andrew Burns has made the point that I was going to make. I do not want to repeat it, if that is okay.

That is fine.

On the flipside of that, if we look at what the report says about adult social care being in crisis, we see that spend by councils on adult social care has risen, in real terms, by 25 per cent since 2012. Given some of the reforms that we have seen, such as the integration of health and social care, and the record amounts of money that are going into the sector, why is performance going in the wrong direction? As every member of this committee knows, I always raise the Edinburgh situation, but 25 per cent of all delayed discharge happens here in the capital. Something is clearly not working, beyond workforce issues. Do you have more detail on why a 25 per cent increase in spending is not delivering better outcomes?

You are absolutely right to say that spending has increased but, at the same time, demand has increased, and not just demand in terms of numbers. There is an ageing population—the percentage of those who are over 65 has increased—as well as greater complexity of cases. Adult social care is delivering more hours of home care than ever before.

With regard to the performance indicators, we are talking about a system that is probably at capacity and has been for quite a while. It is increasing as much as it can. It is a workforce that really struggles because of recruitment and retention problems and that probably feels undervalued. Wages have increased, but there are still issues around the workforce feeling undervalued. Satisfaction has declined. Therefore, although a huge amount of effort and work have been put into delivering and—during the pandemic—maintaining those services, overall, we see a system that is under huge pressure and probably at crisis point.

10:00  

The Feeley report analyses and critiques what has and has not worked well in health and social care integration. It clearly indicates that, despite all the efforts that have been made with integration joint boards, councils and the health service, we have not yet been able to make that system shift towards community-based preventative services. There is more activity going on, but we do not have the full range of preventative services. The local authority funding position probably does not give an overall picture of how funding operates or needs to shift across the health and social care system. There is still an awful lot of work to do to get the shift in some of the national health service services that is needed to support community-based provision. The issue is broader than just local authorities.

You do not go into this in the report, but would it be helpful to have a specific ring-fenced preventative budget? I do not see many current opportunities for spend to go directly to preventative projects, because we are managing crisis, whether in social services, homelessness services or mental health services. What would you recommend doing to achieve that shift towards prevention? If the resource is not there, the projects do not happen.

You are right—we do not reference that directly in the report. My instinct, based on the evidence that we have seen over the past few years in the work of the commission and Audit Scotland, is that, rather than having a specific pot for preventative work, the freeing up and letting go of the overall funding envelope for local authorities would give them the ability to choose whether they wanted to spend on prevention.

At the moment, there is so much directive control over spend—that is the case not just in education and social care but across the wider piece. That direction is focused primarily on education and social care, but it is elsewhere, too. A freeing up or letting go would give local authorities the ability to choose whether they wanted to spend significant sums on prevention. If they choose not to, they choose not to. That is the difficult conundrum and position that we are potentially about to come to with the partnership agreement and a new fiscal framework. From the evidence that we have seen over recent years, that is what local authorities want, and I get a sense that the Scottish Government is slowly moving in that direction, too. We might see a change in that regard quite soon.

There is little doubt that greater flexibility would give local authorities more scope to invest in preventative services.

The other point that I will make is that, sometimes, it is not as clear cut as prevention or failure. Services meet lots of different needs. We need to be conscious of that complexity in the terminology that we use.

I cannot resist a follow-up question on that last point. It is hugely important. We are talking about social care spend and preventative spend in the context of local government, but, of course, it is the health service that feels the pain from that. The IJB model has not delivered on that, so do you want to comment on how that could work? Clearly, all of that, right back to ambulance queues, is a result of social care not delivering.

One of the messages in the overview report is about the importance of local authorities working with partners—public sector partners, the third sector and communities—to deliver change. We saw during our evidence-gathering work for the overview report that many local authority chief executives and their partners in health, enterprise agencies and elsewhere think that the only way forward in delivering sustainable public services is to work together. More seamless approaches to the use of funding are required, and there needs to be a more place-based focus on models of service information and transformation. That whole-system approach seems to be the way forward, Mr McKee, and it is not easy. The levels of trust, shared understanding and shared priorities vary enormously across different parts of the country.

Taking an optimistic view of the world, we saw, during the Covid-19 pandemic, that local authorities and their partners could do fantastic things when they had a shared vision and were working towards a common enterprise. Obviously, we do not want to go back to the difficult days of the Covid-19 pandemic, but, if we can maintain some of that energy and focus, one could have hope that some of the transformational change that is needed will happen.

It will not be easy or straightforward. They have to keep the show on the road—empty the bins, educate kids and provide social care services—while making change happen, but we are seeing some quite interesting thinking from the better, more progressive local authorities, along with their partners. In the overview report, we reference the work that was done by the Improvement Service and SOLACE on a new operating model for local government. There are some radical ideas there.

It is fair to say that almost all of the things in that report are being done to some degree in different bits of Scotland but that no part of Scotland is doing all of it at the level that is required. There is a need to see this as not just a local government challenge but a public sector, community and third sector challenge.

That brings us nicely on to what I was going to ask about, which was exactly that: embracing radical change. What does that look like? You might want to give some examples. How does that embracing of radical change play out with councils working more closely together and with other public sector partners? Is it through shared services and back office functions and sharing premises? When I was in government, getting the Scottish Government to talk to local authorities about sharing space was, at times, an interesting challenge in both directions. Following on from that, what are the implications of that for the workforce?

Maybe you could start by talking about the radical ideas, about what is out there, what needs to happen, what can happen and how we move that forward.

Sure. That is interesting, because we recently had a joint event with the Improvement Service at which we asked some relatively newly elected councillors what the barrier to that sort of radical change is. Mostly, the answer was political; sometimes with a small “p”. If there was no political alignment across local authorities, or if there were political—with a small “p”—clashes with those in another authority area, it did not seem to happen.

There are occasional examples of co-operation. Two of the councils in Ayrshire co-operate on roads, and there has been economic development and co-operation between Scottish Borders Council and Dumfries and Galloway Council, but there has not been that more radical wholesale kind of change that would provide efficiencies.

Joining up a couple of areas that we have talked about, it is interesting that a lot of the staff shortages are in highly professional areas. It quite often happens that somebody is poached from one authority by another. If there were a more joined-together approach with some of those shared professional services, there might be an opportunity to take that poaching pressure off and allow all authorities to have access to those specialist resources. At the moment, the smaller authorities sometimes struggle to attract those highly skilled professionals.

Does anyone else want to answer?

Are you asking for examples of where we see innovation?

Yes.

We would probably have to look a bit beyond the shores of Scotland to see that. If we look at other parts of the UK and beyond—perhaps into Europe—we see examples of shared leadership, shared governance and combined authorities that provide greater flexibility for the planning and deployment of resources. We have not yet seen that in Scotland.

I know that you will take evidence from Reform Scotland in a later session, and I am sure that the witness will have a lot to say about this and about different models of configuring, planning and delivering public services. Those things are not straightforward. They require political and managerial leadership. They also require a burning platform for change. It seems to us that, now, that burning platform is there, so we may see more of that happening in the future.

I might be naive, but I would have thought that the fact that local governments are short of money—we know that they are short of money because they never miss an opportunity to tell us that they are short of money—would be the burning platform that would persuade people to talk to their neighbour about how they can do things better. You are saying, however, that you see very little evidence of that on the ground.

We see an increasingly lively conversation about the need for change, but plans to make that change happen and plans for what that might look like in practice are less well developed. We see lots of examples of very good innovation and transformation at a local level, but, to use the oft-repeated cliché, they are not necessarily at scale. The scaling up of those things is, perhaps, the challenge at the moment.

Is there a role for the Scottish Government not to mandate but to guide, direct and help to share the best examples of that in order to indicate the art of the possible?

There is a role for local government’s Improvement Service and a role for local government itself in being better at sharing, challenging and driving the change that it requires.

Okay.

For sure, Ivan, there is a role for the Scottish Government to be an advocate for that type of change. I do not wish to contradict the discussion that we have just had about releasing some direction on funding. It is not contradictory to make that case, from seeing the evidence that we have gathered over the years, and, in the same breath, to say, “Yes, why should the Government not be an advocate for the type of change that you have discussed with Antony Clark and colleagues?” There needs to be caution shown about directing it financially, because to do so would contradict the tenor of what we have been debating, but advocating that type of change, along with partners such as the Improvement Service and many of the lobby groups, would certainly be helpful.

We could certainly see that with shared IT systems, shared services and shared estates.

Some of the evidence that we took from the famous Jackie Weaver about the role of community councils down south was interesting. One of the points that she made was that more-empowered community councils and parish councils in England were taking on services at a very local level and could deliver them much more effectively and cost effectively than local authorities could. I see that in my constituency with community groups taking on community halls and making them work, whereas the council could not. Do you see scope in that area as well?

It is already happening. We see countless examples of asset transfer taking place under the community empowerment legislation. It is generally accepted that the notion of making decisions closer to the people you service is a good thing. The community empowerment legislation provides for some of that, and we are seeing it happen in practice.

It is an extension of the principle for which we are arguing, which is for local authorities’ decision making and money to be put down—sorry, not “down” but whatever the correct, non-pejorative word is.

Up.

Up to the local community council level.

Concentrically, perhaps.

Yes, concentrically.

My last point is on the workforce, the intent in the RSR to get the size of the public sector workforce back to pre-Covid levels and the implications of that for local government. How is that playing out? I also want to understand specifically the extent to which that is looked at through the lens of comparing how efficient different councils are at using the headcount that they have, how they deliver certain services with a given headcount or a given corps, and the balance between what you might call front-line roles and what you might call back-office, management or supervisory roles. Is any work happening to assess which councils are most effective in that regard?

Over the long term, the best-value reports are where you get that information from. We look at performance and value for money, although that phrase is not used. Rather, we call it “best value”. Basically, we look at how well they are doing, given the resources that they employ.

Carol Calder may want to comment.

Yes, I was going to come in on that. The public sector reform agenda was to reduce the public sector wage bill and headcount. That has been moderated slightly and is now about slower growth in the workforce. We are interested in how councils are using their existing workforce to best effect. They do not have the money to recruit. The competitive market means that it is difficult to recruit, because the pay differential between the senior officers in councils and those in the private sector is such that the public sector is not an attractive option. If you therefore cannot recruit your way out of the problem, what can you do? You can make sure that you use your workforce to best effect and that you innovate around that.

The Accounts Commission has asked Audit Scotland to do some work over the next year to collect information from all councils on how they are innovating to use their workforce; how they are increasing productivity, increasing wellbeing and reducing sickness; how they are engaging with communities about what services need to be provided; and how they are increasing training and development in generic roles.

10:15  

We saw how fleet of foot the councils were at the beginning of the pandemic, with the workforce being deployed in very different ways. How is that being built on now, and what does that look like? We will speak to all 32 councils to get some information on that, and we will produce a national report, but that will not be until the end of 2024. There are so many things on the work programme that it is difficult to work out when they will come to fruition, but we are certainly very interested in that, because the recruitment challenge is a kind of macro challenge. There are market pressures and labour pressures; there are funding pressures on individual councils; the cost of the workforce has gone up; and inflation has led to an increase in the workforce bill. It is about what we do with what we have rather than about getting more.

Yes, and the labour market will not get any less tight. Average public sector wages are still higher than average private sector wages. It will absolutely continue to be a challenge. Thank you very much.

Good morning. The Accounts Commission’s local government overview 10 years ago talked about how

“Councillor involvement in performance, improvement and governance is crucial”.

Is the experience of leadership in councils by councillors driving councils to improve performance and become more efficient and effective? When I talk to councillors—particularly longer-serving councillors—they speak with real regret about how their councils are more officer led than councillor led. What are your reflections on leadership among elected members in councils?

That is a pertinent question, as that is an issue that we have been focusing on more and more. When we do our best value reports, that is one of the areas that we look at. In fact, we are starting a new cycle of best value reports and, as part of the new process, we are producing a thematic report. Carol Calder talked about a workforce thematic report that we are doing, but, before we do that, we are doing one on leadership. The next cycle of best value reporting will specifically include a look at leadership. By that, we mean elected member leadership as much as officer leadership.

My own feeling is that scrutiny has improved over the past 10 years, but I will defer to colleagues, who might want to give more detail.

Mr McKay is absolutely right that, across the suite of best value reporting over the past 10 or 15 years, we have seen improvements in scrutiny. However, it is also true, as Tim McKay said in his introduction, that we see variability in leadership among elected members of local authorities. Given that variability, we think that there are risks around whether or not local authorities will have the drive to transform and deliver sustainable public services. We will look at that very closely in the next cycle of best value assurance reports. There is a degree of variability. I think that we mentioned that in the introduction, Mr Griffin.

Do you have any indication of why that variability exists? Is that because of structural issues, or is it purely about personnel issues?

I do not think that there is any evidence that that is a structural issue. The evidence suggests that it is more to do with the individuals concerned; the level of support and training that they have; the culture that develops within individual local authorities; and the ability of the local authority to regulate itself and improve itself.

Antony Clark referred to the situation over the past 10 years. I have been on the Accounts Commission for five and a half years, so I have seen in detail only five and a half years of best value reports for individual local authorities. Over the past five and a half years, and further back, there have been huge discrepancies in the quality of elected member training that is on offer across local authorities, as well as differences in the volume of take-up of that offer. Often, the offer can be good, but there is very little take-up, and sometimes the offer is not so good, but there is good take-up. It is very variable.

Based on my understanding and knowledge from the past five and a half years of reports across the 32 authorities, there could be a big improvement in the consistency of the offer on elected member training, which I sense would be of help in improving leadership qualities across local authorities.

I am interested in the lack of take-up that you mentioned where the training could be good. Is that down to the pressure that councillors are under? They often manage second jobs, and they have fairly high committee burdens and casework. Do councillors have time to take up the offer of training where that training offer might be very good?

That is a really valid point, and that is a really difficult conundrum. There are a couple of ex-elected members sitting in front of you just now, and we understand those pressures. Many elected members have other jobs. Without wishing to go into the details of the argument, it is an incredibly difficult Political—with a capital “P”—argument to have. However, there is an argument and a debate to be had about whether local elected members are remunerated highly enough. That is a really difficult avenue to go down, but when we compare and contrast their salary with—dare I say?—your salary or the convener’s salary, we see that there is a huge difference, and that has an impact on what people can do when they are elected members at a local level.

Yes, I would echo that. I understand that Angela Leitch is doing some work on a review of councillors’ conditions, but I echo Andrew Burns’s point. Being a councillor is a really difficult job, and if they are also expected to be a leader and their remuneration is perhaps only half of what they need to live on, it is incredibly difficult to attract people to the job.

When we had the event a couple of months ago that I talked about, I was amazed by the talent of the people whom we talked to, and I thought, “Thank goodness you’ve put yourself up for that.” However, if we really want to continue to attract that kind of leadership, the Government needs to think about the remuneration that those people get.

Carol Calder touched on absence and talked about planned work. Is there any indication already that the sickness absence level in 2021-22, which I think was the highest on record, was purely pandemic driven or was driven by the burden that we put on council staff in asking them to do more with diminishing resources? Before you start that detailed work, is there any early indication of why sickness absence is at that level and whether you expect that to come down as we ease out of the pandemic?

We are easing out of the pandemic, but we are also dealing with a cost of living crisis and, as you said, issues around vacancy rates and recruitment of staff, so staff are under more and more pressure. We have been told through the Improvement Service that staff are burnt out and exhausted, and there has not been a pause since the pandemic. That is part of the issue. The other issue is the pressure on staff when resources into smaller services are cut, so fewer people are doing more work.

One of the other things that the Improvement Service raised was that the sickness absence level is sometimes affected by the waiting times for treatment in the NHS. Some people are off longer term, or for longer than they used to be, because of that. However, what we have seen over the pandemic and since is that more people are retiring earlier, so there is more economic inactivity in the population. That means that people who work in councils are under more pressure. There are recruitment challenges, undertaking the work is falling on fewer shoulders—and they are exhausted shoulders following the pandemic—and there was no break before going into a cost of living crisis and the difficulties of that.

In addition, some of the workforce will have been pushed into poverty through the cost of living crisis. The pandemic did not affect the population and not the workforce; the workforce is absolutely as affected by the cost of living crisis and the pandemic as everyone else. Multiple factors have built up to that.

We hope to see that coming down in time. Councils have a very clear focus on wellbeing initiatives to support people back into work and to support people not to go off sick in the first place, and more flexible working options around hybrid working and so on to enable people to have a better work-life balance. There is a lot of activity going on in that area, but I go back to the point that I made earlier. The HR and OD functions in councils have been cut, because the back-office services are the first to be cut, but those people will be training the workforce of the future, planning what that workforce looks like, and supporting people to be well in the workforce and in the workplace.

Is it even going to be possible to deliver some of the changes that we are talking about with sickness absence levels as they are right now?

That is difficult, and we recognise that. We said in the report that radical change is not easy, and particularly not with an exhausted workforce. We are asking that workforce to think and do things differently. It is going to be really difficult.

My colleague Lucy Jones wants to come in on some more of the detail.

Carol Calder has touched on the reasons why sickness absence levels are high at the moment, but that is a continuation of a long-term trend, which has been creeping up slowly for close to a decade. There was a dip during the pandemic, which was probably a reflection of the different ways in which sickness absence was recorded, but the level is higher now than it was before the pandemic.

Okay. Thank you.

I have a number of mop-up questions. On the subject of wellbeing, is there any consideration of the four-day work week? Has that been looked at?

Some councils are looking at that, other ways to upskill and retrain, generic roles—all sorts of things. That is why we and the commission are particularly interested in doing some work to understand what councils are doing and what innovative approaches they are taking to try to improve the workforce. Watch this space: we will be producing some more on that.

Brilliant. When you were responding to Ivan McKee’s questions, you mentioned the opportunities from the Community Empowerment (Scotland) Act 2015 and how that has brought about communities doing asset transfers. I wonder whether our upcoming community wealth building bill could bring more opportunities for the collaboration that you have talked about, around the procurement of goods and services across local authorities. What are your thoughts on that? Antony Clark is nodding.

Yes, I am nodding in agreement. There are certainly potential opportunities for that to be quite a force for good if it is planned and implemented effectively. The community wealth building bill also ties into the broader agenda that many local authorities are focusing on around things such as 30-minute neighbourhoods and more sustainable approaches not just to procurement but to planning and service delivery. All those things are interconnected.

This might be a radical idea for reform, but I was in conversation with somebody about forestry. We spoke at length and, several times during that conversation, we came back to local government reform. One of the points was that local authorities might own more land, perhaps for forestry or agriculture. Again, that ties into the community wealth building agenda. That may be a radical idea, because we do not do that. We tend to look at that more at the national level. We have talked about the need for a more local and nuanced approach. In that conversation, we kept coming back to the point that that is an opportunity. Local authority-owned forestry could be an income generator, and it could provide timber for housing. Has there been any thinking around that kind of approach? I know that we have the common good land, but that has evolved in a slightly different way. Certainly, locally to me, a lot of that land is a golf course rather than for other things.

We are not aware of any specific discussions or activity taking place around forestry, land purchase or land use by local authorities. However, we detect from our discussions with chief executives and others a strong interest in the wellbeing economy and a desire to understand the needs of individual communities and to understand and connect with local businesses in more sustainable ways. I guess that land use might form part of that, but I am not aware of any specific activity in that space at the moment.

Thanks for that. Does anybody else want to come in on that?

You have just raised an interesting idea. On the potential for forestry, I am not aware of any rural authorities that are significant landowners, but I know that several urban authorities are significant landowners and have, mainly through their economic development functions, gone through quite protracted programmes of developing land, but not with regard to forestry. If that can happen in urban authorities—and it does occasionally—why not in rural authorities? That is an interesting idea.

10:30  

From being on the Rural Affairs and Islands Committee, I am aware that there are regional land use partnerships. In my region, Highland Council is involved in the regional land use partnership. It feels like that is another step in the direction of looking at land use.

Given the English experience—the examples of some councils basically investing in businesses, but then getting their fingers burned—there is still some caution out there.

It is very good that you have highlighted that. Speaking of English councils, I am aware that there are inshore fisheries and conservation authorities there. In England, there is overview of the inshore waters, managed at the council level. That is a really interesting model. In Scotland, we are probably struggling with having local stakeholder input into our inshore marine space. It is not just about fishing; many other people are involved in the inshore waters. The approach that is being taken in England and the fact that it is tied to a local authority is interesting. It is not necessarily appropriate to take models from England and use them as a sticking plaster to be placed over what is going on in Scotland, because we have a different structure to begin with, but it is interesting to look at that.

I want to make a point that I intended to make when I was responding to Mr McKee earlier. One of the things that we are all very aware of around the transformation and reform agenda is that a model that will work in one part of Scotland will not necessarily work in another part of Scotland. Therefore, the notion of trying to apply a unified or identikit model across Scotland is probably not the way forward. I think that that is well accepted. The downside of that is that it can lead to variability and concerns about postcode lotteries, for want of a better phrase, in different models. It seems that that is one of the inherent tensions in the reform agenda.

You talked about the roles and responsibilities of local authorities. Part of the conversation about the new deal might be about what is appropriate for one local authority area or one region might be different from what is appropriate for another.

I totally take on board the idea that we need a nuanced approach. Some of it is to do with the fact that we have many islands, a lot of coastline, a lot of big rural areas, and a high concentration pattern in the central belt. A nuanced approach is definitely needed. I get a sense that the situation is different from that in other parts of the UK, where there are not so many islands, for a start. We have a very different set of issues right off the bat.

I have one more question, which is about housing. The report expresses significant concern about the record number of children who are trapped in temporary accommodation, failing homelessness services, and a chronic shortage of social housing across the country. How can local authorities respond to those immense challenges?

We will be doing some work around homelessness for the commission in the next couple of years, so we might be able to answer that question more fully at that point.

On the capital programme and the impact of the pandemic on the building of new affordable housing, there is a new affordable housing target. We did a piece of work on the last affordable housing target. We did a performance audit—that was done jointly by the commission and the Auditor General. That looked at the meeting of that target, which was met in time. The pandemic took things off track a wee bit towards the end.

The main thrust of that report was that it is not just a numbers game; it is about what is needed and where, and about how housing is being built in a way that reflects other policy objectives around poverty, disability and access, heating homes, and energy and fuel poverty. The interconnectedness of those policies was largely absent in the last strategy to build more affordable housing.

The new strategy pulls some of those things together. The councils have a role, along with other registered social landlords, in ensuring that they know what the housing need in their area is and that they can build in a way that meets that need. That means considering the type, the size and the location, and looking forward to net zero by not having gas boilers and maybe having charging points for cars and all those things, rather than developers being able to produce identikit houses very quickly on an estate.

There are lots of barriers to councils doing that: land availability, the infrastructure and services that are required for housing, and the availability of developers who want to work in those areas. The capital projects have all been impacted by the pandemic, but there is a lot going on and, in our monitoring, we will keep a close eye on whether the target will be met.

As I said, the commission is interested in looking at homelessness, because we know that the homelessness figures have increased since the pandemic. The Auditor General and the Accounts Commission recently published a blog post on the impact of homelessness and the number of people, including children, in temporary accommodation. There is a lot of information out there.

We monitor everything that happens and then see where we can fit in to help to shine a light on where the spend goes in all of this. A lot of money is tied up in keeping people in temporary accommodation, not because that is what councils want to do but because of the lack of available suitable accommodation. That is certainly on our agenda.

Thanks for that. That is really helpful. We will keep an eye out for that work.

It is clear that it is about more than housing; it is about the full support package to help people. One thing has been flagged up to me in my region in conversations about housing. When I talk to people about “affordable housing”, they say, “We need housing that people can afford.” It would be good to have a look at what we mean by that. In the committee, we discuss affordable housing—housing that people can afford—at the local level, as salaries and incomes may be very different across the board.

Another thing that we have been looking at is whether the housing need and demand assessment is fit for purpose. You have pointed to the importance of councils understanding the need in their area to bring forward the right type of housing.

Thank you very much. It has been a super morning. The evidence has been really helpful for us, and we appreciate it.

I now suspend the meeting to allow for a changeover of witnesses.

10:37 Meeting suspended.  

10:41 On resuming—