Official Report 452KB pdf
Item 4 is our scrutiny of the draft budget 2016-17. I welcome John Swinney, the Deputy First Minister and Cabinet Secretary for Finance, Constitution and Economy, and from the Scottish Government’s local government finance and local taxation unit, we have Graham Owenson, head, and Marianne Cook, policy manager. I invite the Deputy First Minister to make an opening statement.
I welcome the opportunity to meet the committee to discuss the 2016-17 draft budget, which I presented to Parliament in November. The United Kingdom Government’s continued austerity programme has reduced Scotland’s finances and put significant pressure on household finances. It is against that backdrop that the Scottish Government has taken its decisions for our budget in 2016-17.
Our funding package for local government is focused on delivery of our shared priorities to deliver sustainable economic growth, protect front-line services and support the most vulnerable in our society. The proposals deliver a strong but challenging financial settlement for local government. However, Scotland’s councils are able to address those challenges from a healthy financial base. Local government funding has been protected in Scotland in recent years, with additional resources provided for new responsibilities. That is in stark contrast to the position in England, where local authorities have faced a real-terms cut in funding of 27.4 per cent over the four years from 2011 to 2015.
As part of the settlement that the Scottish Government has put forward, education is a priority. We remain committed to maintaining teacher numbers. We do not believe that cutting the numbers will benefit pupils’ learning. Our commitment is that local authorities should collectively maintain the pupil teacher ratio at 13.7 and provide a place on the teacher induction scheme to every probationer who needs one. The Government will provide £88 million in the settlement to support the delivery of that commitment.
Successful health and social care integration will mean that fewer people need to go to hospital to receive care, that they spend less time in hospital and that they will return home quickly. We have therefore proposed that £250 million be provided from the health budget to integration authorities in 2016-17 for social care. Of that funding, £125 million is being provided to support additional spend on social care, in order to support the objectives of integration, which includes making progress on charging thresholds and expanding capacity as a consequence of demographic change. The other £125 million is provided to help to meet a range of cost pressures that local authorities face in the delivery of effective and high-quality health and social care in the context of reducing budgets. That includes delivery of the living wage for social care workers.
As a percentage of estimated total revenue expenditure, next year’s reduction in the local authority budgets in Scotland, when the £250 million that will be invested in health and social care is taken into account, is less than 1 per cent of total authority expenditure. Although I do not pretend that that is easy for any council, I note that some of the language that has been used to describe that change has been excessive.
The establishment of the commission on local tax reform followed the committee’s recommendation from 2014 on flexibility and autonomy in local government. The resulting report is a comprehensive piece of work, and we very much embrace its conclusions, which align with the Scottish Government’s overall approach to taxation. Before the end of the parliamentary session, we will produce a detailed plan for reform, which will embody the principles of the commission’s report. I urge other parties to do likewise, so that the electorate is offered informed choices.
The Scottish Government considers that, in the interim, it is important to continue to protect household incomes in what has been a challenging period for them. The final element of the package of measures therefore requires local authorities to work with us to deliver a council tax freeze in 2016-17. We are providing £70 million to enable local authorities to do so.
Tough choices have been needed to fund our commitments, such as building innovation to fuel future economic growth. In the face of the austerity environment, the lack of full fiscal and economic levers and the declining rate of receipts mean that it is no longer possible for us to sustain all our business rate measures. I have announced a number of proposed changes, including changes to the business rate supplement that large businesses pay and to some other reliefs. The small business bonus scheme, which is by far the most generous relief for small businesses anywhere in the United Kingdom, will continue in 2016-17. Legislation to make changes will be introduced in Parliament later this month. I have also announced a review of the business rates system, and more details on that review will be available shortly.
I fully understand the pressures on budgets. Our funding proposal protects shared priorities and delivers practical support to intensify the pace of reform. I look forward to creating a settlement that will deliver for communities across Scotland.
Thank you. The draft budget describes the local government settlement as “strong but challenging”. Local authority leaders have used much stronger language in describing the budget and the local government settlement. They have previously stated that the settlement here has fared well compared with local government settlements south of the border. After this draft budget, how does local government in Scotland sit compared with local government south of the border when it comes to central Government allocation?
There is a substantial difference in the profile of central Government support for local authority expenditure. In my opening remarks, I cited the fact that local authority grant support in England had fallen by 27.4 per cent in real terms over the past four years. The Scottish Government has taken an approach whereby, in each financial year since 2011-12, there has been an increase in the resources that are available to local government, with the exception of the year when we removed police and fire expenditure from local authority budgets.
There will be a reduction in local authority expenditure in the forthcoming financial year but, as I explained to the committee, I have put in place mitigation measures to support the delivery of local authority services, given the challenging financial climate. The performance of funding support for Scottish local authorities has been significantly stronger than that for local authorities south of the border, given the long-standing commitment that the Scottish Government has made to supporting local authority public expenditure effectively.
You have stated that the allocation to local authorities represents a 2 per cent reduction in councils’ overall income. However, councils such as Moray Council have suggested that they need to raise council tax by 18 per cent to deal with the allocation cut that they feel they have. Would you like to comment on that 2 per cent reduction in income and on the reaction that there has been from councils such as Moray Council?
10:15
I acknowledge that there is a £350 million reduction in local authority grant in aid as a consequence of the budget that I announced. As a proportion of the total expenditure of local authorities, which we estimate to be about £16 billion, that equates to a reduction of about 2 per cent. When we take into account the £250 million that will be spent through the integration joint boards to support expenditure on services in which local authorities are key participants, and given the guidance that I have issued to local authorities on what they can expect that fund to support, the result is a net reduction in the local authority budget of about £100 million out of £16 billion, or less than 1 per cent.
Some of the talk that we have heard about the impact of the settlement on local government has, frankly, been over the top. I do not underestimate the on-going challenges in delivering public services in a constrained financial environment, but I have to take into account a range of factors in setting the budget. I have to take into account the pressure that there will be on household incomes, the extent of Government grant and the constant necessity for us to reform the way in which we deliver public services. In the financial support that is being offered to integrate health and social care, I have provided a substantial investment to assist the reform process, so that services will be delivered differently in the years to come from the way in which they are currently delivered.
In all, the settlement that has been offered to local government is credible. It certainly does not merit the description that it has been given by certain voices in local authorities, and it most definitely does not merit an 18 per cent increase in council tax.
During this session of Parliament, the Government has talked of a decisive shift to prevention. Is the thinking behind creating that fund for health and social care integration that it should help with that decisive shift to prevention? There has been some commentary over the course of the weekend, from Aberdeen in particular, about supposed difficulties in dealing with some aspect of what you require for councils to access the £250 million. I understand that you have said that councils do not have to implement it on 1 April but that they have some leeway in that regard. Could you tell us your thinking about some of those things and perhaps comment on what has been said over the weekend?
The Government is pursuing, with our local authority partners and other public service providers, a long-term agenda to deliver that shift. Any analyst would recognise that a shift to prevention does not happen overnight and that it takes time for it to be managed and implemented. The Government is taking steps with our partners to advance that shift to prevention, and the investment of £250 million is designed to do that. As I explained, that investment is designed to better support individuals to remain in their own homes, where we know that individuals’ circumstances and their recovery, if properly supported, will be more effective and enduring than if they are in an inappropriate care setting, perhaps in a hospital that does not meet all their needs in the circumstances. We are investing to fuel the capacity and capability of social care to deliver that preventive agenda and to meet the needs and expectations of citizens.
One of the specific dimensions of the proposition that I have put to local government has been to put in place the measures and financial support that can ensure that social care workers are paid the living wage. My preference would have been for that to be implemented on 1 April, because we need to address the issue and the proposition has strong public, parliamentary and local authority support. I listened carefully to what local government had to say on the matter and I heard no lack of willingness on its part to pursue the issue. However, local government presented to me some important operational and practical issues, as well as those relating to negotiation, which would have to be taken forward to ensure that the living wage could be implemented reliably.
I accepted that argument and offered a proposition to local government, which said that on the previously available funding arrangements—there was no change to the funding arrangement—it could be implemented with effect from 1 October 2016. Care workers would be able to look forward to the living wage proposition coming into effect by that time. That is a reasonable compromise, which recognises the practical issues that face local government. It also gives every opportunity to tackle some of the points that have been raised in the weekend news coverage, which I found a little strange, given that many local authorities were planning to do it anyway and the Government has given some more support to enable that to happen. I would have thought that that approach would be welcomed in local government.
Some of the perceived barriers will arise from Dirk Rüffert v Land Niedersachsen case, which has been discussed in the committee. Do you think that that timeframe would allow local government to deal with any issues in implementing the living wage for social care in respect of people who do not work directly for councils?
Yes, I think that that is adequate time.
Good morning, Deputy First Minister. You mentioned some of the language that has been used by local authorities, but the integration of health and social care is not a surprise—rather it is a plan that they have been working towards for a number of years. The whole idea is that we can get to a place where we consider the human element in the system, where social care and health are integrated in such a way that the individuals who experience it at the front line have the service that they need, rather than getting caught between two—in some cases, almost conflicting—institutions. Is it not the case that the local authorities knew it was going to happen, so it should be no big surprise?
We have been in very active partnership negotiation with local government around the implementation of health and social care integration. The debate has been going on as long as I have been a member of the Scottish Parliament, which is to say from its founding days. I am pleased that we have got to the point that we have legislated for health and social care integration at local level and the arrangements are in their shadow year, ready for implementation on 1 April.
I recognise that in bringing together those services, there will undoubtedly be opportunities for us to deliver services more effectively, addressing some of the questions of duplication and the significant management of case load that goes on as individuals make their journey through the care system.
Mr Adam was getting at the right point in his question. Members of the public and individuals’ families want to see those individuals getting the support that they require; they are not particularly interested in who provides support so long as the service is provided and is of the recognised quality. Integrated health and social care enables us to address the needs of individuals more adequately and to remove the barriers and duplication that can often exist in the provision of services.
The new partnerships will be managing about £8 billion of health and social care resources between them. We have put in an extra £250 million to drive that process of reform yet further. I am absolutely certain that, within an £8 billion budget, there is an opportunity for us to deliver care services much more effectively and efficiently and in a way that can create more capacity and, most important, meet the needs and interests of individuals. The collaboration that has gone on with local government in the formulation of the legislation on health and social care integration and its implementation has been welcomed by the Government and has been beneficial for citizens.
On shared services in local authorities in general, in my time as a councillor, I heard on numerous occasions that we were going to work more innovatively and that the council was going to share services to move things forward. As a member of the Education and Culture Committee, I have asked members of the Convention of Scottish Local Authorities and various councils who have given evidence to that committee whether they have considered ways of using back-office services and innovation, and how local authorities can work together on education and other matters. How does the budget help local government in that context? How have local authorities worked towards shared services to try to ensure that they can not just make efficiencies but, as with health and social care integration, actually deliver services in an efficient and helpful way?
I will make two points on that. The first is about innovation. In my wider responsibilities in Government, I am encouraging the formulation of what has been described as a culture of perpetual innovation in Scotland. Currently, innovation is often viewed as the preserve of sophisticated technologies and higher education institutions, but it has to be the preserve of us all. Particularly in the public services, we have to find new and different ways in which we can exercise our responsibilities and find solutions that meet individuals’ needs. I would therefore encourage local government to consider that. There are many good examples of local authorities taking effective measures in the field of prevention, which the convener questioned me about a moment ago.
My second point relates to the wider issue around shared services. I do not for a moment believe that we have exhausted all possible avenues for the delivery of shared services. Councils still habitually work independently without collaborating on particular issues and the provision of particular services. Therefore, there is an opportunity to achieve that. That is of course another device and technique that can be used to meet the budget challenges that local authorities face.
My question is on the £250 million transfer from the national health service to the integration joint boards. Is there a mechanism to ensure that that money continues to be additional and that councils cannot reduce their contribution as a result of the new money coming in?
I have said that local authorities, in their participation in integration joint boards, can essentially offset increases in the cost of their provision of health and social care services. Every year, social care costs will increase, just to continue the existing service that is provided. I have indicated to the local authorities that they can assume that £125 million of the £250 million can be used to assist them in meeting the additional costs that arise out of providing the existing service and that, within that, there are resources to pay the living wage to social care workers. I have also said that £125 million must be allocated to provide additional support. Essentially, if a local authority requires to provide a new care package, it is in my view entirely legitimate for that to be paid for out of that £125 million of the new resources, because we all know that more care packages will be required from one year to the next.
There is provision for additionality and provision to meet the increased costs of providing the existing care service that local authorities provide, albeit that that will be in the environment of the integration joint boards.
Thank you.
10:30
Good morning, cabinet secretary. In your opening remarks, you put some figures on the table for us. Will you broadly outline for us what the funding settlement to Scotland has been over the spending review period and contrast that with local authority settlements during the same period? I want to get an idea of what is happening in local authority allocations in Scotland, England and Wales compared to the overall allocations that we get.
Over the period 2010 to 2020—the term of the previous Conservative-Liberal coalition, when the austerity programme started in 2010, through to the end of the current Conservative term in office—the discretionary budget available to the Scottish Government will have fallen by 12.5 per cent in real terms from the 2010-11 figure. That real-terms reduction is the equivalent of £1 in every £8 being lost from the Scottish Government’s budget.
I do not have to hand a directly comparable Scottish local authority funding position for the entirety of that period but, between 2008-09 and 2015-16, local government funding in Scotland has reduced by 4.4 per cent in real terms. I cannot offer Mr Coffey directly comparable years’ figures, but the figures show that the Scottish budget has been declining sharply and that we have worked to protect local authority expenditure during the period.
You mentioned a cut of something like 27.4 per cent in English local authority budgets between 2011 and 2015. I know that you do not have the figures to hand, but are you saying that the cut in Scotland is about 4 per cent compared to 27 per cent in England?
The figure is not directly comparable for those years, but the reduction in Scotland has been significantly lower than that in the rest of the United Kingdom.
You gave figures for England. As I understand it, the proposed cut to local government budgets in Wales is about 2 per cent, which the Welsh First Minister has said means that Welsh councils are relatively well protected. However, the narrative in Scotland has been hysterically the opposite of that, in that your cut of about 1 per cent has been described as a “disaster”. Will you comment on the contrasting narratives on what look like fairly similar levels of funding for local authorities in Scotland and Wales?
Let us look at the period since 2011-12. In 2012-13, the Government’s support to local government increased by 0.43 per cent. In 2013-14, we removed the costs of the police and fire services, so there was a fall in that year, as would be expected because of that removal. In 2014-15, the local government budget in Scotland went up by 3.62 per cent and in 2015-16 it went up by 2.15 per cent.
Two points are relevant about the local government budget in Scotland in comparison to the situation that Mr Coffey outlined. One is that local government starts from a relatively high base. If I look back at the local government settlements that I have delivered over the years, I see that the local government base has been getting stronger and stronger year by year. Secondly, the scale of the reduction in the local government budget is much smaller than some of the changes that have been applied to other public bodies in Scotland. When we take into account all the relevant factors, including the injection of £250 million to the integration joint boards, the reduction for local government—in terms of overall expenditure, because local authority services are supported by not just Government grant but by council tax and other charges—is less than 1 per cent.
We have to see the situation in its proper context. Some of the language that has been used to describe the settlement and to explain what has happened has been absolutely inappropriate. I appreciate that there are challenges in the local government settlement, but there are challenges in every part of the budget. The health service budget is going up, but there are challenges in the health service because of rising demand. The proper context has to be understood.
Of course, John Swinney can dish out only the cake that John Swinney gets. It is not a case of nasty Mr Swinney deciding to impose cuts across the country; you are dealing with the financial settlement that you have been given by the UK Treasury.
I am—but obviously there are choices to be made around that, which I suspect will be the substance of our debate in Parliament this afternoon at stage 1 of the budget process. I have powers to change the amount of income that we make, and I have taken difficult decisions, such as the decision to increase business rates, to ensure that we have more resources at our disposal to support non-domestic rates.
I made a choice to protect household incomes—particularly households on low incomes, which have been under severe pressure since 2008-09. I do not think that the evidence that I have in front of me indicates anything other than that there remain significant challenges for household incomes. I therefore decided not to increase the Scottish rate of income tax because that would have placed a burden on low-income households.
Some members of the public think that a council tax freeze means that the council’s budget is frozen by the Government, but that is not the case. Some people think that there is a tightness that is being applied by the Government. You have outlined in your remarks that councils are funded to achieve the freeze year on year. Will you clarify that that has been the case?
The Government has built into each local authority settlement since 2008-09 £70 million to pay for the council tax freeze. That was set with an assumption of inflation at 3 per cent, and I have never changed the figure. The Scottish Parliament information centre produced an analysis some months ago which said that
“it could be said that the freeze, over the period 2008-09 to 2013-14 was ‘over-funded’. In total, over the six years, this has resulted in an estimated £164.9m extra going to local government as a result of the freeze.”
There were years in which inflation was lower than 3 per cent, but I maintained the £70 million that went into local government to pay for the council tax freeze. The SPICe report indicates that the freeze was adequately and effectively funded by the Government over that period.
Finally, you mentioned three key proposals to local councils, which are part of the settlement. Will you clarify what the arrangements are in relation to the proposals and say whether all councils have signed up to the Scottish Government’s offer?
I set out to local authorities, in a final offer letter on 27 January to the president of the Convention of Scottish Local Authorities, which was copied to the leaders of all local authorities in Scotland, a proposition that set out the funding that was available authority by authority. I also invited local authorities to participate in accessing £408 million of resources that would fund three things. The first is investment of £250 million in integration of health and social care activities at local level. The second is maintenance of the teaching population, through the mechanism of the pupil to teacher ratio, which is to be maintained at a value of 13.7 across all local authorities. I stress that local government made representations to me to the effect that it did not want an authority-by-authority arrangement such as we had in 2015-16. I have acceded to that and have moved to a national picture of maintaining the pupil-teacher ratio at 13.7. The final element is the council tax freeze, on which Mr Coffey has just questioned me.
I invited local authorities to indicate by 9 February whether they are prepared to participate in that £408 million package of funding. I have made it clear to local government that it is a requirement that they participate in all three elements and that it is not possible for authorities to pick one or two. I have said that if an authority does not perform effectively against each of those elements, I reserve my right to claw back some of the associated resources later in the year. For example, if a local authority signs up to protect teacher numbers but does not do so, I reserve my right to claw back a proportion of the £88 million in the settlement for teacher numbers.
I have subsequently had correspondence from the leader of Moray Council, asking me about the following scenario. If a local authority was to sign up to all three elements of the package but decided at budget-setting date—within the next few weeks—not to freeze the council tax, for example, would I penalise the authority just in relation to the council tax funding or would I withdraw its share of the £408 million—the total package of support that is available? I have taken the opportunity through that scenario to clarify to all local authorities that if an authority tells me on 9 February that it will sign up to all three elements but a couple of weeks later decides to increase the council tax, I would consider that to be an act of bad faith and would withdraw its whole share of the £408 million. I have communicated that to the leader of Moray Council and to all local authority leaders to avoid lack of clarity about my intention. I have now placed that on the parliamentary record, which will have some significance in the considerations of local authorities.
The point that you are making is that you are giving local councils funding to deliver on three elements, so it would be pretty strange if they were to accept it and then not carry out the policy.
That is the point that I made in my 27 January letter to Councillor O’Neill and in the subsequent letter that I sent to the leader of Moray Council, which was copied to leaders of all Scottish local authorities, on 29 January. If it would help, I am happy to make a copy of that letter available to the committee for the benefit of its records.
That would be extremely useful.
Thank you.
The draft budget shows that non-domestic rates income is forecast to fall by 2.8 per cent in real terms in 2016-17. Can you outline the reasons for that predicted fall and give us an indication of how much the large business supplement and changes to reliefs are expected to rise?
The issues that have affected the non-domestic rates pool have been twofold. First, we make long-term predictions about the level of non-domestic rates; when we were making our predictions, we made assumptions about the level of inflation. We generally use Office for Budget Responsibility inflation estimates. As we all know, inflation has been significantly lower than the OBR estimates, which has affected expectations about what we could achieve in the increase in non-domestic rates receipts.
The second issue is that the level of buoyancy that has been delivered has not been as high as was anticipated in the budget assessments. For example, in 2014-15 we assumed a buoyancy level of 1.55 per cent, but the actual buoyancy for 2014-15 was 0.82 per cent. Of course, some of those factors have had a cumulative impact on the receipts for non-domestic rates. I have had to take steps to strengthen the non-domestic rates pool, so I have made decisions on the different elements that we are discussing; for example, it is estimated that the large business supplement will raise £60 million as a consequence of the decisions that I have taken.
10:45For the committee’s benefit, I will put that change into context. I have decided to increase the large business supplement from 1.3p to 2.6p, which is added to the 48.4p as the core poundage for which all businesses are liable. The combination of the two factors increases business rates for companies that pay the large business supplement by 3.4 per cent for 2016-17. Looking back at recent years, in 2011-12 the comparable increase for companies that paid the large business supplement was 4.6 per cent, and in 2012-13 it was 5.8 per cent. Although the increase is slightly higher than it would be for ordinary companies that are not paying the large business supplement, it is clear that, in the context of the past three years, an increase of 3.4 per cent is not as high as the increases in 2011-12 and 2012-13.
I will move on to small business. As I have gone out and about in my constituency recently, I have found that the small business bonus scheme has been welcomed by almost every small business owner I have met. Many folks have said that it has allowed them to keep their head above water in tough times or to invest. However, in certain quarters there seems to be a call for the small business bonus scheme to be abandoned. What is the Government’s position on that?
The Government’s position is that the small business bonus scheme has been of enormous benefit in a very challenging financial climate for small businesses the length and breadth of the country. Indeed, we see from the latest statistics that just short of 100,000 properties have had their business rates either reduced or completely removed by the scheme. For the sake of accuracy, at the last statistical release the number was 99,559, which is an increase of 3,000 since last year.
In comparison with equivalent businesses south of the border, the scheme can save companies up to £3,200, so there is a real competitive advantage for small companies in Scotland. The Government has made clear our belief that the scheme is a fundamental element of the architecture of financial support for the business community in Scotland. If we are fortunate enough to be re-elected in May, we will maintain the scheme in the years to come.
Since its introduction, approximately £1 billion has been invested in small businesses through the scheme, so it has made a significant contribution. Given the challenges around the sustainability of town centres and the wider challenges for the business community—I am sure that all members are aware of such challenges in their constituencies—the scheme has provided very strong support, which members of the public and the business community have welcomed.
So the Government believes that that is £1 billion well invested.
It does.
On local authorities that plan to use the localised relief under the Community Empowerment (Scotland) Act 2015, are you aware of any authorities making moves on that front?
It is quite early for such plans to materialise. The act received royal assent just within the past six months. The powers came into effect on 1 October, so it is quite early for us to see what steps authorities might be taking.
I have tried to do three things on non-domestic rates for local authorities. The first is to give local authorities absolute certainty about the financial support that they can rely on from non-domestic rates. Secondly, the non-domestic rates that are raised in every local authority area go directly to that local authority. For example, all the business rates that are raised in your city of Aberdeen, convener, flow directly to Aberdeen City Council, which is as it should be. Thirdly, I have given local authorities the opportunity, where they see fit, to use their resources to reduce business rates if they believe that that would be beneficial to the local economy. I would of course encourage local authorities to consider the use of those powers.
The powers came into effect in Scotland significantly earlier than they will come into effect south of the border. We do not expect them to come into effect in the rest of the United Kingdom until 2020, whereas they came into effect in Scotland in October 2015. In fact, it may have been on 31 October, not 1 October, in which case I will correct the record.
The powers came into effect not that long ago, so we may see some changes in forthcoming local authority budgets.
The option should be available to local authorities to use the powers if they so wish.
We will watch with interest.
As part of our budget scrutiny this year, the committee has focused on city deals and the use of local government pension funds to invest in infrastructure projects. Aberdeen City Council has now received its city deal information. Do you have anything to update us on in relation to city deal allocations or the use of local government pension funds to invest in infrastructure projects?
I welcome the fact that we have managed to reach agreement on the city deal with Aberdeen City Council and with the United Kingdom Government. The agreement was announced last week by the Prime Minister and was signed jointly by the Secretary of State for Scotland, Keith Brown and the leaders of Aberdeen City Council and Aberdeenshire Council, supported by Sir Ian Wood, who has made a huge contribution to the discussion—I am meeting him later today. The Aberdeen deal is therefore in place and we look forward to implementing it. It is of course supported by a wide range of Scottish Government expenditure in the north-east of Scotland, particularly in relation to the Aberdeen western peripheral route and the other examples of investment that the Scottish Government has set out: the improvement of journey times and capacity on key rail links between Aberdeen and the central belt; the improvement of the Laurencekirk junction; our planned expansion of digital connectivity services; and the expansion of housing services. It is a strong and emphatic deal for the north-east of Scotland.
Further discussions are being taken forward in relation to the city deal in Inverness, which I think is the next most advanced proposition, and other propositions. The Government will of course keep the committee and the Parliament updated on those matters.
We are seeing increased interest and energy being put into the whole concept of pension fund investment in infrastructure, and we are actively involved in discussions to enable different local authorities to take that forward.
Thank you very much.
You cannot appear in front of this committee without my asking you about the formula for the allocation of funds to local authorities. Have there been any recent moves by COSLA to change the funding formula?
There has been nothing, other than the routine updating of indicators that will be undertaken jointly by the Government and COSLA through the settlement and distribution group, which looks at updated and changed factors. There will be no fundamental reform of the distribution formula arrangements.
You have gone on record before as saying that you would be more than willing to review the funding formula if COSLA approached you and asked you to do so. Is that still the case?
That remains my position.
Thank you. Has the Scottish Local Government Partnership approached you about changing the funding formula?
I saw a letter last night from the Scottish Local Government Partnership, but I have not had the opportunity to consider all its details. With the caveat that I am not familiar with all of that letter’s contents—although it has just been put in front of me—
Well done, Mr Owenson.
I do not think that the details of the letter relate to reviewing the funding formula, and I am unaware of having received representations that we should do so. I had better check all correspondence in that respect and reply to the committee in writing, but I am not aware of any call for a review of the distribution mechanism.
I would be grateful to receive that in writing.
As I understand it, cabinet secretary, one of the main ingredients in the mysterious funding formula is population size in authorities. If we look at the data on the revenue allocations to authorities on a per head basis, we get a completely different picture. For example, on a per head basis, Glasgow City Council’s allocation is actually 113 per cent of the Scottish average. The allocation for my own authority, East Ayrshire Council, is slightly increased, too.
While authorities wait with bated breath for their allocations, if we look at the allocations on a per head basis, there is a different story to tell. Is COSLA thinking of paying, at some point in the future, closer regard to local authorities’ population size when determining the settlements that they finally get?
The funding formula combines population factors, which certainly bear very heavily on it, and a range of other indicators that do not relate to population and which take into account some of the differences between local authority areas in relation to their nature and character and the special circumstances that we have to address.
Mr Coffey is absolutely right that there is a significant range in the per capita funding that local authorities receive. The Scottish average is £1,776, but the figure for Glasgow City Council, for example, is £2,222 and in Mr Coffey’s area of East Ayrshire it is £1,872. The range reflects the intensity of population and the nature of and challenges in individual localities, which are affected by a range of different issues.
At the moment, is there any imperative within COSLA to change the formula?
No. One thing that I have heard clearly from local government is that there has not been much of an appetite to revise the funding formula. Indeed, at times I have been expressly asked not to revise it.
I have a final point on the funding formula. I take it that the Government’s position is to keep the funding floor in place.
Yes, it is.
Deputy First Minister, thank you for your evidence to the committee today. I understand that you are now off to the Finance Committee.
10:59 Meeting suspended.Previous
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