Local Government Committee, 03 Oct 2000

Meeting date: Tuesday, October 3, 2000

Official Report 167KB pdf

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Budget Process

We should go through the paper on the budget process and pick up anything on which members wish to comment or ask for clarification. Does anyone have any comments on the introduction and background, or on the issues for consideration?

I am meeting some local government people this evening—what do I tell them about what they will get? At the moment, we know only what it says in the paper about a 7 per cent increase and provision for general increases, but there is no detail. The detail may emerge after the discussions in November. It is difficult to assess whether our goals have been met by the global figures.

I am not sure how we should progress. If we ask the Minister for Finance, presumably he will respond that there is nothing more to say until he has talked to the Convention of Scottish Local Authorities. At some stage, we need detailed figures on which we can question the minister and have a debate.

One of the suggestions is that the Minister for Finance will give oral evidence. He is attending the committee in connection with a statutory instrument and, as far as I know, he will extend his visit to enable us to ask other questions on the budget figures.

It is very important. We have a bland statement of the 7 per cent increase in local authority revenue expenditure, which is apparently £1.2 billion, but, taking into consideration the McCrone recommendations, COSLA has said that the extra burdens will amount to £3.024 billion over the next three years. We may be lulling local government into a false sense of security when, in fact, there will be the same—if not more—cash pressures as there have been in recent years. As for the

"projected increases in capital expenditure",

they are increases only when compared with the present. Capital expenditure will still be less than it was a decade ago. The information needs to be broken down further so that it means something, especially for individual councils. Donald Gorrie is right about that. There is a long time between the announcement and knowing what it will mean for individual authorities.

The time scale for individual authorities knowing their budget is not really surprising; it is the usual time scale. Local authorities receive their budget indications towards the end of the year, in November or December. In the past, Government has generally tried to reach agreement with COSLA on the distribution formula and that is what it is trying to do again. That is why there are no figures for individual authorities.

Various people are pushing a number of points on how the distribution formula should be adjusted. I expect that there will probably be some significant adjustment. When the Minister for Finance is here, we might want to explore what progress has been made on that.

As I understand it, the minister's announcement is the start of a consultation process rather than the final budget for future years. That is why one cannot go much beyond the global figure for local government. If one published an amount for every local authority at this stage, every local authority would campaign for an increase in its share. It is sensible for Government to try to reach an accommodation with the whole of local government through its representative body, COSLA.

The only other thing I would note is that COSLA, in public statements so far, has welcomed the Executive's proposals for local government as a whole.

Given the political colour of COSLA, that is hardly a shock.

It is hardly a shock that you should criticise it.

The minister knows that there is £1.2 billion, not £1.1 billion or £1.3 billion, so he must have an idea, if not of how much will go to individual councils, of what categories he wants the money to be spent on. How much flexibility will local government have, or will the money be soaked up by new burdens and responsibilities on local authorities? It would have been helpful if we had been given some guidelines as to the minister's thinking at this stage.

The minister will appear before the committee on 31 October; we can ask him those questions then. I suggest that we also request written evidence from COSLA on the impact of the Executive's statement on local government funding requirements. Members would have that written evidence in advance and could link it with questions that they want to ask the minister. It might also be a good idea to take oral evidence on the same day from Executive officials about the impact on resource accounting and budgeting, as well as evidence from someone such as Professor Arthur Midwinter, who comes from a different angle and is often very interesting. He gave us evidence at stage 1 of the budget process.

I take Bristow Muldoon's point that this is the beginning of a process, not the end, and that we must get involved. We have a two-week recess and we are not meeting on 24 October. Our meeting of 31 October is the first time that we can get Jack McConnell here. I suggest that we invite him and seek evidence from the other people to whom I have referred. I am happy to take suggestions from members about other people from whom we could take oral or written evidence. We will not have met for three weeks, so a long meeting on 31 October should not bother us. We need to do this properly.

I am sure that members would not mind a long meeting about such an important issue.

It will be Hallowe'en. If members wish to invite other witnesses or to receive other written evidence, they should contact Eugene Windsor and discuss it with him.

Paragraph 18, in the annexe to the paper, states:

"The Committee notes the differences of understanding between COSLA and the Executive regarding Section 94 consent, and would seek a definitive clarification on this matter."

Who will give that definitive clarification? The Executive, COSLA and the Executive's officials all appear to be giving different interpretations.

Jack McConnell's letter, of which you will have a copy, has answered that.

I saw Jack's letter, in which he disputes how COSLA reached its view. Given the importance of the issue and the weight that COSLA has attached to it, we need a more detailed explanation of why COSLA disputes what the minister is saying.

You can ask the minister that question when he appears before the committee. We can also ask COSLA to provide an explanation in its written evidence. I take the point that COSLA and the minister are saying two completely different things and that the matter must be clarified one way or the other. Kenny Gibson is right to ask who can provide definitive clarification—it may be the last person that we speak to.

Will the committee agree to some changes to page 5 of the paper? Paragraph 7 states, in relation to local government finance, that the committee

"understands the reasons as explained by the Minister."

That is not my recollection of the committee's view. I have never understood why the Executive has taken the position that it has. I have not met a single person in local government who thinks that there is no need for a review of local government finance. I would like to delete

"and understands the reasons as explained by the Minister."

All we would have to do then would be to drop the word "also" in the next sentence, so that it would read, "The Committee accepts that some genuine efforts are being made". I think that some genuine efforts are being made—that has been explained to us—but I think that, although we would like to, we do not quite "understand".

Allow me to clarify. Page 5 is part of annexe A to today's paper. The annexe formed our submission to the Finance Committee at stage 1, which the committee has already agreed.

God help me then. I missed that. I am sorry.

If the issue comes up again, you will be able to ask about it, but that specific paper was agreed some time ago and has gone to the Finance Committee.

At least I have clarified my position on the record.

You have. It is well and truly on the record.

In response to Bristow Muldoon's points, which I accept, I want to clarify that I am not coming from the angle that we should be able to discuss soon how much Aberdeenshire or Perthshire should get. I want to be satisfied that money has been included properly for the McCrone recommendations. What exactly has been included for pay increases, and how will they be dealt with year after year? Will there be money for the less popular local government services? There is more money for services such as education, but in the past 10 years there have been consistent cuts in recreation, to take just one example. Are we assured that there will be no more cuts? I know that councils can make alterations, but I want to hear about the Executive's notional global division between services.

I know that Jack McConnell is keen to speak to all the committees and will set aside as much time as he possibly can to do that. Those are the sort of questions that not only this committee, but other committees that are interested in service delivery, will ask him. When he comes to the committee, members will be absolutely free to ask him whatever they like.

I want to support Donald Gorrie. We have heard COSLA's evidence about the amount of money that is needed to bring us back to the position that we were in a fair time ago. We need to find out how far we go along that route. In a way, it is quite a systematic line of questioning.

You are both coming from the same angle. Members will have plenty of time to ask those questions when the minister comes on 31 October.

I suggest that we take written evidence from COSLA on the impact of the Executive's statement. In particular, we will ask COSLA about section 94, so that we get separate written evidence on that. We will take oral evidence from Executive officials on resource accounting and budgeting. I suggest that we also take oral evidence from Professor Arthur Midwinter. He gave evidence at stage 1 and a continuum would be a good idea. We will also invite the Minister for Finance, so that members can put the questions that have been raised.

If that is agreed, I will take it forward for the meeting on 31 October. Be prepared for a long committee meeting. Are we agreed?

Members indicated agreement.

I ask for the public to be excluded from the meeting now, as we will take the next item in private.

Meeting continued in private until 15:20.