Official Report 177KB pdf
Under agenda item 2, we will take evidence as part of our consideration of the budget process 2005-06. I welcome three representatives of the Convention of Scottish Local Authorities, who will give evidence today. They are Councillor John Pentland, Brenda Campbell and James Thomson. After Councillor Pentland has made some introductory remarks about the 2005-06 budget, the committee will follow up with questions.
Thank you for that introduction, convener, and for giving us the opportunity to present evidence to the committee. The committee has received our written submission and I hope that we will have the opportunity to expand on it later in the meeting. Rather than go through what we have stated in our written evidence, I will take this opportunity to highlight some of the key issues.
Thank you for your introductory remarks. I invite Bruce McFee to ask the committee's first questions.
I want to return to the thorny question of the base budget, which you have obviously identified as one of your key priorities. How does COSLA define the base budget and what should be in and what should be out? Do you take account of the different methods that local authorities use to deliver services?
When we were defining the baseline, we started with the aggregate external finance figure, as per the Executive's February 2004 finance circular. Various additional sums of money were then taken into account, as a result of Executive announcements about on-going commitments relating to such things as "Determined to Succeed: A Review of Enterprise in Education", free personal care and the supporting people programme.
So are you taking as your base the previous year's budget plus new services? We are not allowed to say "new burdens".
We have had discussions and there has been on-going work with the Executive. The AEF figure covers the core services. We then took account of commitments and announcements that have been made throughout the years for on-going work and for things that are now considered as core tasks of local government. The AEF figure has been built on so that we can plan and budget for on-going commitments and cover the three years of the spending review process.
So you are saying that you have taken the 2004 AEF and considered the additional areas in which you are required to make expenditure. Have you taken account of moneys in the years beyond 2004? How have you extracted what were supposed to be the Executive's commitments to new expenditure?
The AEF figure that we have gone for is the 2005-06 AEF figure, so it looks towards future years. We have returned to announcements such as that made by the Minister for Education and Young People, Peter Peacock, who has outlined on-going commitments for education of £14 million, I think, for the three years of the spending review process. Therefore, we have considered commitments that the Executive has given for local government work in a forward-looking way rather than retrospectively.
Perhaps I should add that we have taken all the Executive's figures and its AEF announcement and built on those. The Executive has provided all those figures to local government. We are not simply identifying amounts and adding them back in—there are on-going commitments. We have identified things in great detail. Things are there for the picking, if you like—they are open and transparent.
Part of the argument that local authorities made all along is that the AEF was inadequate. Therefore, if the AEF is taken as a starting point and first principles are not returned to, there will be the same inadequacies in what you now call your base budget. Will the question of the actual sum of money that is required to provide a particular level of service throughout the country be addressed?
To go back and carry out such an exercise would mean a completely radical review of the way in which local government is funded. In the timescales that we are talking about, it is clear that there will not be such an approach. In recent years, there has been a review of local government finance and we are looking forward to another independent review. However, it is not unreasonable for us to take the AEF, to consider the new initiatives as on-going commitments and to say what things cost or what resources we have to fund services. It is reasonable for us to do that and it represents a step forward from where we were previously.
Perhaps I expected something more fundamental. What is the substantial difference between your figure and the Scottish Executive's figure for what is required to run services at an acceptable level, or even to keep services at the current level, plus the new commitments?
Currently, we do not know what the difference is. We have provided a level of detail to the Executive and we are having discussions. It would be unfair of me to comment at this stage, because those discussions are on-going. Clearly there are differences. There is a substantial difference between the AEF figure that we have taken and the AEF figure in the annual evalution report, for which there will be good reasons. For example, there will be further circulars and adjustments to AEF during the year and redeterminations will have been included, but we have to have the discussion and clarify the issues. However, I do not have a number for the difference between us.
What else are you seeking to clarify? You say that some circulars or items may have been included by the Executive, of which you have no knowledge. Are there any other areas that you are seeking to clarify?
Yes. We are seeking clarification on a number of areas of the AER. AEF is one of them. There are references to sums of money—for example £55 million for McCrone and care home fees—that we want to be clarified, because they do not relate to the sums of money that we have identified. In addition, sums of money that have been included in the sections on ministers' portfolios relate to local government, which is misleading.
Thank you. I particularly appreciate your last point, because a number of members have the same questions for the Executive.
I know that Iain Smith wants to come back on the prudential regime, but Sylvia Jackson has a question on another issue.
My question follows on from previous questions on the core budget. You mentioned how you are trying to get a grip on McCrone and various initiatives, but what about the long-standing issue of local roads, which the committee has discussed? We are waiting for information from the Society of Chief Officers of Transportation in Scotland survey, but have you been able to examine that issue and include it—I think from what you are saying that you have not—in your core budget? When will you revise what you are doing, so that it is based not so much on what the Scottish Executive says, as on what you know to be the core services that need to be supported by the local authorities?
The important thing is to agree and secure the base budget. Our concern has always been that, as long as the base budget is not secured, some of it could be removed. That is our anxiety, so we need to secure the budget.
Do I understand from what you are saying that SCOTS has supplied you with the £1.5 billion backlog figure?
We have not taken that figure into account, but we have engaged the professional associations as part of our exercise. All professional associations have contributed to our submission.
I wonder whether you might be able to shed some light on the capital figures, which have bamboozled me. The figures in the AER do not seem to reflect the figures that were in the previous budget report. How do you understand the various AER figures for local government capital? For example, what is meant by "Supported Borrowing" and how does that compare with the "Single allocation" figure? Why do the figures for supported borrowing seem to be significantly lower than the single allocation figure? What is meant by "Local Authority Prudential Borrowing"? Table 11.02 in the AER mentions local government capital, but the figures do not seem to match up with any of the previous figures. Can you bring any clarity to the matter? We will ask the minister about it, but does COSLA have any idea about how much the figures in the AER suggest local government can spend on capital?
I am not sure that I will be able to clarify all that, but I can certainly say what I understand is meant. The single allocation was, in effect, the loan charges and the capital support that the Executive provided. My understanding is that, with the advent of the prudential regime, that money now comes under the heading "Supported Borrowing". To my mind, it should refer back to the note on how the Executive has taken some money out for capital grant. However, none of the figures refers back and I am in a similar position to you.
My understanding of the prudential regime is that local authorities, following the guidance that is provided, fund the borrowing from their own resources. What, therefore, is the line in the Executive's spending? Presumably the money does not come out of the Executive's pocket. I am a bit confused by that. I do not understand why the figure is counted as Executive spending if it is being funded from revenue resources.
I agree entirely—the figure is misleading. We have pointed that out to the Executive and an Executive official has agreed that it is misleading. There is confusion on the Executive's side about how to present the information. You are correct that the money would be entirely funded and supported by local authorities.
MSPs, you mean.
No, not at all.
What do the figures on local government capital in table 11.02 mean? The narrative suggests that the figures represent grants from Executive departments to local government. Do they fit in with other figures? If so, how?
You have described my understanding. Specific grants relate to subjects such as flood prevention. We were concerned that they might be phased out because of the prudential regime, but we have been provisionally reassured that that will not happen. I understand that the grants cover such matters. However, the table is misleading, because it shows figures that are not all contained in local government—some are in other portfolios.
To be fair, the Executive is trying to be helpful.
I acknowledge that.
Do you understand that one reason for the £56 million difference between the single allocation and supported borrowing is that some of that money has been transferred into grants?
That is my understanding.
Does Bruce McFee want to ask about the prudential regime?
Not at the moment. My question would be best answered by the Executive.
I will ask about inflationary pressures. COSLA has argued several times that a realistic view of pay and price pressures should be built into the spending review. What is realistic? I appreciate that defining that is not an exact science.
Part of being realistic involves examining current conditions. Just as the Executive is concerned about macroeconomic conditions, we must consider those conditions when we want to take a realistic view on pay and prices. It is not necessarily correct just to take the percentage that was used in previous years. Just a look at the media shows the continuing pay and price issues in the public sector, of which we are aware. We must consider the other conditions that have an effect before we make a percentage assumption, which must be realistic for negotiations that will take place.
You are talking about economic conditions. Is your main theme local economic conditions?
Yes. COSLA always acknowledges that if it negotiates a figure that is over the percentage that the Executive gives as the budget share for pay and prices, it will fully fund the difference. We are not saying that the higher the percentage is, the less we will fund. We just think that a realistic examination is needed of market conditions and of indicators such as the consumer prices index and the retail prices index, on which assumptions should be based.
Have representations been made to the Executive about that? If so, what was its response?
We will talk about that as part of our continuing dialogue. I re-emphasise that the Executive should not assume what pay increases or inflation rates will be without taking into account the conditions that James Thomson outlined.
Your evidence makes no reference to efficiency or productivity improvement. Is COSLA's position that the best-value regime will liberate no resources? Should we consider productivity and efficiency improvements as a way of saving resources, perhaps for reallocation?
You are absolutely right. Most authorities have been through the best-value regime and we are now as lean as we can be. That is why it is important for us to identify a base budget from which we can allow individual councils to offer the efficiency that would give them the opportunity to reinvest in their councils. If we take that stance as we go forward, both the Executive and local government will be in a win-win situation. We have been through the best-value regime and, until we can identify the base budget, we should not assume that there are further efficiencies to be made.
Why did you not include that in your evidence?
Throughout our submission, we make it clear that the base budget is of paramount importance. If we can agree to such a budget, individual councils will have the opportunity to identify efficiencies.
We can put that point to the Executive—if it can identify the base budget, you can build efficiencies into your three-year review.
Yes. Again, that would be a win-win situation for the Executive and local authorities.
We want to agree and secure the base budget rather than apply a national assumption such as a percentage of the base budget. We do not want an efficiency level to be applied nationally. The responsibility should lie with individual councils, which should be able to engage a level of efficiency at department level. Perhaps they will go out to departments once a year as part of the budget process and say, "We are looking for 1 or 2 per cent efficiencies." They should then have the opportunity to reinvest locally in existing services or new initiatives. That is the point at which we want to start discussions on efficiencies with the Executive. We agree that there are efficiencies to be made in councils, but we believe that those efficiency savings should be reinvested locally.
To pursue that point, in the Executive's budget, expenditure on local authorities accounts for about a third of the public purse. Is it a little unrealistic to presume that any savings that are made in local government should be spent on local priorities instead of, after discussion with the Executive, being invested in other public services, such as enterprise, higher education or the national health service?
It is reasonable to say that, but we need to go through a period of operating to an agreed base budget to see where we are at. In recent years, we have not known what the base budget is—we have operated without that information. Efficiencies might have been made nationally that we are unaware of; the system has not been transparent enough. We need to go through a process in which we work to an agreed base budget and allow local investment. We can then open up the discussion with joint working across the health service, local government and the public sector in general. Local government would like to go down that road, but we need a period of stability first.
It seems to me that, in establishing the base budget, we must identify what proportion of the budget is for statutory responsibilities. For example, a council's education budget is driven largely by the number of children in its area who are of school or nursery age. Other areas of expenditure are largely discretionary and the level of provision in those areas varies considerably between authorities. Do you want to be able to identify clearly which services are driven by statutory obligation and which services the budget has reached its current position on because of local priorities?
We have not approached the matter in that way and I am not sure what we would gain from doing so, although I am not saying that we are completely opposed to the idea. It would be a big job to go back and do that work, because there are so many discretionary items within statutory obligations. For example, school transport is a statutory duty, but it has a discretionary element and the 32 councils differ in their provision. I think that what you suggest is a big exercise to go through and I am not sure what we or the Executive would gain from it. That might be a discussion that we need to have.
It strikes me that, if there is a case to be made that local government services are underfunded, there might need to be a debate on whether discretionary expenditure is being spent in the right areas. For example, Sylvia Jackson mentioned that we have noticed from our work on roads expenditure that there are quite wide variations between local authorities, even between authorities in geographically similar locations. That applies both to grant-aided expenditure and to expenditure per kilometre of road. It is sometimes difficult for the committee to pin down the justification behind the different levels of expenditure in some areas.
The difficulty for us is that, in recent years, we have tried to move away from GAE. That creates a difficulty when returning to the measurable part of that input. We must hold up our hands and admit that we might need to go back to work on that.
I accept your point about GAE, but when we compared neighbouring local authorities, which I presume had similar terrains and weather conditions, we found that the expenditure per kilometre of road often varied dramatically. That disparity was drawn out not only by GAE-based comparisons.
I have to say that we have not approached the subject in that way. I can take the issue away and we can perhaps consider it. I take your point.
John Pentland might remember from previous discussions that we set great store by an outcome-based approach because it allows councils more flexibility in the methods that they use to achieve outcomes. How have you been developing your work on that in relation to the spending review proposals, and how have you been making progress on talking to the Executive when reaching strategic outcome agreements?
From the start, we have set out to ensure that our evidence has been based on an outcome-based approach. When we have gone to the professional organisations to ask them about what should be included and what the priorities should be, we have done so on an outcomes basis. When we have thought about costings, we have sought to cost the outcomes: we have tried very much to base our approach on outcomes. It has been one of our key aims to approach the spending review from that perspective.
I have one more question. For simple souls like me, can you give an example of an outcome proposal that allows councils the flexibility to tackle matters in different ways? How are the outcomes written so that they give councils the freedom to achieve outcomes in different ways?
The outcomes are worked out at a national level. They are not specific in any way—they are generic. The issue is more about the bigger outcome of delivery on the ground. James Thomson will be able to provide an example. It is a question of looking at the outcomes in the bigger picture.
I was hoping that Brenda Campbell would answer your first question so that I could provide some examples.
You have chosen an example that I know something about. At Aberfoyle, satellite technology is used because it is a more appropriate system. I can appreciate what you are saying now. How do you cost the outcomes nationally?
There is no standard answer to that question, because the experience of all the initiatives has been different. For example, we have used information from professional associations that cost initiatives at individual council level based on particular inputs, and then gross that up to national level. There are many ways of costing such matters.
In your response on outcomes, you mentioned providing broadband in schools. How much of that provision is more of an input than an outcome? Delivering broadband to every child and school is not necessarily an outcome in itself; surely the outcome is that every child in a school is able to use the facility properly. Are we in danger of confusing one set of inputs with another when, in fact, we need to develop a method of measuring positive outcomes at the end of the process? As I have said, the outcome is not to supply broadband technology but to ensure that people know how to use it.
I might have made a mistake in that respect. We want to ensure that all children in Scotland have access to broadband technology rather than have the situation in which a school has four computers that are locked up in the staff room and cannot be accessed by any children. Obviously, we are not seeking such an outcome; we are committed to giving all children access to this technology.
I am more reassured by that response. However, even if each child can access broadband technology, how would we measure the ability to use it? After all, that would be the outcome.
We are probably at the stage at which we have tied the outcomes that we are talking about to the Executive's targets. You are probably right to say that we have completed the first stage, but the second stage has not been cleared yet. That is where we are in discussions with the Executive on outcome agreements. We have certainly focused on tying in our outcomes with the Executive's targets—that link exists.
On the prudential borrowing regime, I know that the local authority in the area that I represent certainly produced some assumptions about prudential borrowing in terms of its capital over the next three years. You have obviously noted that no figure is identified in the Executive's plans as being presumed against local authority prudential borrowing. Do you have a figure for the borrowing capacity that local authorities intend to utilise in the course of the current year?
The figure that the Executive has given us is £306.6 million.
Is that consistent with what local authorities are assuming in their budget planning?
Yes—it is based on the returns that the local authorities provided.
I will ask a final question. Once we have discussed the base budget and identified priorities, outcome agreements and so on, how do we ensure that councils actually spend the money on those areas? Ring fencing is a sticky issue.
You will know that the COSLA line is that we have always advocated that there should be no ring fencing and no initiative funding. We are not saying that we expect councils to spend on a line-by-line basis, as we identified at national level. We have always advocated councils' having flexibility; we have argued that for all sorts of reasons and we still argue that case.
It does—it was a very clever answer. I just wanted to put the point in a slightly different way, to take us back to what Bruce McFee was saying about the importance of outcomes. Are you saying that if a council can show that it has achieved a certain outcome, but that another outcome has not been achieved—for whatever reason—the money could go to unachieved outcomes?
Yes. Councils should have the flexibility to make such decisions. It is almost a question of managing by results. If a council is delivering the outcomes, the inputs do not become irrelevant—they are clearly relevant—but the focus is not on inputs. The focus shifts.
Do you agree with Bruce McFee that how the outcomes are framed is important?
Absolutely.
Those are all the questions that my colleagues have, so I thank John Pentland, Brenda Campbell and James Thomson for their useful evidence.
It is a pleasure to be here once again to consider the budget and to talk about stage 1 of the budget process—the "Annual Evaluation Report 2005-06", which is a development of the way in which we seek to present financial information to Parliament.
Thank you for those remarks. I invite Bruce McFee to open up the questioning.
An additional £55 million has been included in the AEF to cover things such as the McCrone settlement, care home fees and support for young people who are leaving care. How much of the additional money is going to each of those headings? What is the purpose of that additional money?
Graham Owenson can give a precise breakdown of the figures—I will have him do so in a moment. There will be a logical split. I am sure that Mr McFee appreciates that discussions continue between COSLA and the Scottish Executive on new initiatives and on ensuring that those initiatives are fully funded.
The £55 million figure is a net figure. It is made up of a number of changes in and out of the budget. Mr McFee mentioned care home fees. The figure for department help for those fees is £38.6 million. The other main figure is the figure for the McCrone settlement, which is £26 million. Those are two of the bigger items that have been picked out.
I am sorry; I am not sure that I caught the figures. Did you say that the figure for care home fees was £38.6 million and that the figure for McCrone was £26 million?
Yes.
I presume that there are some other outs.
There is a range of minor ins and outs on top of that.
That seems to be £64 million out of the £55 million immediately. It might be useful if that information could be provided in writing.
That would be helpful.
We can certainly provide that information. Many of those things get picked up, as Mr McFee will no doubt find with great relish, by subsequent revision orders when a lot of clarity comes through in relation to changes that we have to make. Mr Monteith knows all about the changes that we have to make during the course of the year.
I would be obliged if that information could be provided.
Are you referring to portfolios across the whole of the Executive?
Yes.
I am not sure that we can answer that question off the top of our heads without getting a precise breakdown of the figures for each of the portfolios. I am not on top of the figures for each portfolio in relation to that split. Unless Andrew Rushworth has precise figures, we can provide the information later.
I imagine that Mr McFee is looking at table 11.02, on the contributions from other budgets to local government spend.
Yes. A higher rate of increase is implied.
The figures for 2005-06 are not yet the budget figures; that is a matter for the next stage of the budget process. The figures in the table are rolled forward from last year's budget statement and they in turn stem from the previous spending review, in 2002, in which the provision for pay in local government was 2.5 per cent, while for prices it was 1.25 per cent. Those figures are subject to review in the current spending review and the outcome of that process will be reflected in the final budget proposals for 2005-06.
So it is another case in which we will need to wait and see, pending the outcome of the review.
We are conducting the spending review now, so we could not possibly anticipate the outcome. As I understand it, we produce the general evaluation report at this stage and we will produce our specific budget proposals at stage 2 of the process in September. I guess that the answer is yes—you will have to wait until then.
Sure. Do you have a notional figure within the figures that you have presented today? For example, you estimate that following on from last year the provision for pay will be 2.5 per cent and for prices it will be 1.25 per cent. Can you break down what that would mean in terms of the overall 5.6 per cent increase, or would that require more of a paper exercise? I appreciate that it may be difficult to provide such information off the cuff.
If Mr McFee is referring to 2005-06, 2006-07 and 2007-08, it would be unhelpful—as I said in my opening remarks—and would not achieve anything if we were to make public our assumptions, in relation to public pay policy in particular. Negotiations will go on through the period and will involve detailed consideration at spending review time. That detailed consideration will be open to scrutiny as the budget process continues through the year.
I was talking about the difference between 2004-05 and 2005-06.
Again, that will become eminently clear as the budget process continues during the year.
You may have heard my questions to COSLA, with which I was trying to clarify the local government capital lines within the budget. I am afraid that it is all rather confusing for us poor MSPs.
Mr Smith asks some important questions. It is important to recognise—as I am sure Iain Smith does—that under the prudential regime we are giving local authorities the flexibility to structure, manage, monitor and evaluate their own capital spending in a way that I would argue did not exist before. That system is new, so some refinements have been made to it in terms of the information that we receive and, therefore, the information that we can present to Parliament. Perhaps Andrew Rushworth can deal with the detail of Iain Smith's questions.
The single allocation is the single allocation of capital consent, which authorities used, largely, to borrow money and which fed through into the loan charges support calculations within the revenue support grant. As the committee is aware, that system came to an end on 31 March this year and was replaced by the supported borrowing line, which again will feed through into the loan charges support section of the revenue support grant. Part of that transition involved a transfer from section 94 consent to capital grant, so in some of the other portfolios' capital grant lines you will see an increase that explains the reduction between the single allocation last year and the supported borrowing figure for this year and provisionally for 2005-06.
The move from single allocation to supported borrowing would seem to imply a reduction of £56 million in that line, which, I accept, was balanced up partly by an increase in the local government capital allocations by department. However, the increase across all departments appears to be of the order of £26 million. Does that imply less support from central Government to local government capital?
The reason for that significant reduction is in the communities line of capital grant, in which there is a reduction between 2003-04 and 2004-05 in the aggregate level of support. The decisions on that, which were taken in the previous spending review, are now working their way through and will be revisited in this spending review for the forward period.
Is the reduction related to the Glasgow housing stock transfer or anything of that nature?
I do not believe that it is. That is dealt with separately.
On the more positive side, it would appear that there is a substantial jump in the overall level of local government capital expenditure as a result of the prudential borrowing regime. Did the Executive expect the sort of increase that is implied by the figures as a result of the prudential borrowing regime? What assumptions did you make about the contribution that the regime would make?
The figures that we have entered for prudential borrowing—£319 million for 2005-06 and £306 million for the current financial year—are based on local authorities' forecasting projections, which we were provided with at the turn of the year.
Did the Executive have any indication of what the level would be? I accept that you did not have a figure down on paper, because it was not the right part of the budget process, but I presume there was some expectation of what level of borrowing would take place.
I cannot really say. It is clear that there was an expectation that prudential borrowing would be used, but the extent to which it would be used was not clear until the local authorities first gave us provisional forecasts last autumn. Those forecasts were broadly confirmed in the update that we received at the turn of the year.
It is important to reflect that local authorities will have a considerable financial responsibility on themselves in relation to their capital programmes and that there are checks and balances in the system. I suspect that those checks and balances will be reflected not only in the Executive and the committee's observations on authorities' spending plans but—dare I say it—in local taxpayers' observations on those plans.
I appreciate that the Executive is trying to be helpful by providing additional information, but it is slightly confusing that table 11.01 in the AER contains a line for local authority prudential borrowing; in effect, that is not Executive spending because it is, by definition, supported by local authorities. Compare that with the revenue figures in the table, which contain a line for the revenue support grant but no line for the amount of revenue that local authorities actually spend, which would obviously include council tax-funded spending. Could the figures be presented differently, to make clearer the areas in which the Executive provides direct support in terms of capital expenditure? An indicative figure for the expected additional capital from the local government prudential scheme could be given somewhere in the budget line.
I have no problem with that suggestion, which makes eminent sense. The AER is a new mechanism—the prudential scheme is also new—for informing the Parliament and discussing with it the expenditure of large amounts of public money. I will be happy to look closely at how we might better identify and badge the components of local government capital spending.
We asked COSLA how the outcome agreements were framed and we were told that the agreements were closely linked with the Executive's targets. To what extent have outcome agreements been incorporated into the spending review? If they have not been incorporated, does that undermine the budget strategy of linking finance to the delivery of outcomes?
Sylvia Jackson asks an important question about how we ensure that the expenditure for which we are responsible to the Parliament is aligned with our priorities and with the delivery of outcomes. Pilots are in place, but there is an awful lot more to do in the area. I think that ministers across all portfolios would like that work to develop—work with COSLA is on-going, but perhaps more slowly than we would have liked. I assure Sylvia Jackson that the issue will be addressed vigorously, to ensure that in 2006-07 and 2007-08, which are of course the financial years that we are discussing in the context of the spending review, those outcomes can be clear, demonstrable and transparent for the Parliament. We have quite a lot of work to do to ensure that we achieve what we and, I suspect, the committee want.
How outcomes are framed is important. When Peter Peacock was Deputy Minister for Finance and Public Services, I think that there was an expectation that he would allow councils the flexibility to achieve outcomes in different ways or, if they had achieved certain outcomes, to consider other outcomes that they might not have addressed as much as they could have done. What are your views on the importance of that rationale?
Agreed outcomes—it is important to stress the word "agreed"—between local government and central Government can provide for scrutiny by local people, who see how local services are provided. They can also provide for what I might loosely describe as the audit trail back through local government and central Government to Parliament, which scrutinises the use of considerable amounts of public money. We can do more on that.
I am a little worried by how you phrased that. I suppose that my hope was that in producing a base budget, we would have agreement with COSLA about priorities in all local authority areas and that the outcome mechanism would ensure that those priorities were adopted. However, the system should not be prescriptive about how councils achieve outcomes and it should recognise that some outcomes might already have been achieved. For some authorities, education is a big priority, whereas others have other priorities—that just happens. Can we reach a position in which all authorities are at least at a baseline level, but do so without being too prescriptive about how they get there?
That is an important public policy issue. The Finance Committee is also concerned about the issue and asked me about it last September when we discussed the autumn revision order. In stark terms, the matter hinges on an agreement with COSLA about baseline figures and the way in which we and local government seek to deliver priorities, which we were elected to do. As I say, there will always be a balance. I cannot envisage circumstances in which local government and central Government do not achieve a balance and agree the need to deliver outcomes, because it is demonstrably in the interests of both tiers of government to have a transparent agreement for which they are entirely accountable.
Target 5 for your portfolio refers to the need for public organisations to improve their coterminosity and joint working. What is the latest position on that? How is the review proceeding?
The Executive is determined, in the context of the spending review, to encourage joint working between local authorities to consider ways in which moneys can be saved and reinvested in priorities. We believe that much work can be done on the issue.
What you are saying sounds good and the glossy document looks good, but are we not failing to deliver in practice? I appreciate that the community planning process is a serious and complex piece of work, but where are we with it? We are setting out an agenda in the nice document, but where are we delivering on the target?
There are two strands to that, although they are interrelated. The first is the consideration of, and potential for, savings in back-office functions and therefore reinvestment in front-line priorities within groups of local authorities. The second issue, which is related, is community planning per se, how effective it is and whether it provides a structure in which local authorities and other public sector agencies can work together towards agreed outcomes, looking clearly at priorities in local areas.
Target 6 contains a commitment to conduct an independent review of local government finance after consultation with COSLA. That target has been there for two years, and the committee has taken significant evidence on the issue, so why do you continue with the target? Is it not time to move forward with the agenda?
I could not agree more, and I am doing my best to get rid of that target by meeting it. I have made a commitment to the Parliament that, by the summer recess, we will have announced the independent review. I hold to that.
In your introduction, you indicated a wish for progress towards a core or base budget to be agreed with COSLA. How would you define such a budget? You might have heard, in some of my questions to the COSLA witnesses, that I feel that it would help us to understand that core or base budget if there were some recognition of the statutory functions that local authorities provide, the budget that is required for those functions and the element of the local authority budget that is discretionary. That would help not only the committee but members of the public to understand the flexibility within which local authorities operate. How do you feel about that?
You have put the matter in context by expressing it in terms of such splits. My recollection of the normal quarterly ministerial meeting with COSLA in February—Andrew Rushworth has been involved in the official discussion on the matter and can also comment on it—is that the figures that COSLA presented were the existing expenditure figures across the range of local government expenditure. I am not sure that they were based on the split between normal statutory functions and discretionary spend that you have just described. We may wish to reflect further on that issue. Andrew Rushworth will correct me if I am wrong, but I do not recollect that COSLA and the Scottish Executive's current disagreement over some of those figures reflects that kind of split. Nevertheless, the point about the transparency of figures is important.
That is right. We have made a lot of progress with COSLA since we started the discussions at the turn of the year, and we have reached a large measure of agreement. The base budget, as we see it, comprises the core budget of AEF—revenue support grant, rates income and on-going specific grants—and those additional grants, whether capital or revenue, that are awarded and paid outwith the AEF envelope. Some of those grants are temporary and have short life duration and some of them are pump-priming grants. We have reached a large measure of agreement on rolling forward the existing allocations for the previous financial year and for the current financial year into 2005-06.
There are areas in which local authority departments have indicated there is underspend in terms of actual need; roads, which you mentioned in your introduction, are an example of that. If you are trying to get to a true base budget, I presume that you are trying to get to a budget that is satisfactory to meet those needs and not one that is insufficient to meet those needs.
That raises some interesting questions about GAE as a principle of share-out of local government finance, because it is up to each local authority whether it spends below, up to, or more than its GAE. I am sure the local authority in your area does that; I know that mine does. If we were to be prescriptive about GAE, that would be a significant change—a huge change—to the manner in which local government finance is structured and allocated. That is an interesting and very wide question.
I am not necessarily suggesting that you nationalise local government. I was driving more at the fact that, if you are trying to agree a base budget and you manage to do so, you cannot then say, "But we haven't got enough money in this base budget for X, Y and Z."
I take your point.
There are no further questions, so I think that you have got off remarkably lightly.
It did not feel like that from this end.
Thank you for your contribution. I also thank the Scottish Executive officials, Graham Owenson and Andrew Rushworth.
Meeting continued in private until 16:17.
Previous
Items in Private