Local Government Committee,

Meeting date: Tuesday, May 29, 2001

Official Report 209KB pdf

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Subordinate Legislation

Comrades, I would like to run over how we shall deal with the affirmative instrument, the draft Local Government Finance (Scotland) (No 2) Order 2001. I shall allow the minister time to give evidence on the instrument and for members to ask questions only of clarification, information or explanation. During that time, the questions may be answered either by the minister or by one of his officials. I shall then announce that the time for questions is over and we shall start the debate. The minister will then read his statement and move the motion. At that stage, members can speak either for or against the motion. When I have decided that everyone who wishes to speak has done so, I shall put the question.

I welcome Peter Peacock, the Deputy Minister for Finance and Local Government; Nikki Brown, who is the head of the grants distribution and non-domestic rates branch; and Fergus Millan, who is head of the teachers' pay and conditions branch.

The Subordinate Legislation Committee's report on the instrument is attached to members' papers. The Subordinate Legislation Committee considered that Parliament's attention did not need to be drawn to the instrument.

I have little to say by way of introduction. The Local Government Finance (Scotland) (No 2) Order 2001 gives effect to the allocation of the additional resources for the McCrone settlement that was announced by Jack McConnell on 14 February. It does that by revoking the Local Government Finance (Scotland) Order 2001, which Parliament debated on 7 February, and replacing it with an order that incorporates the increased allocations of revenue support grant.

I am happy to answer any questions.

I remind members that any questions that are put to the minister or his officials—if the minister chooses to ask his officials to speak—at this point are for clarification and explanation only. Are there any questions? Keith Harding has a question—there is a surprise.

Will you confirm that the McCrone settlement has been fully funded, as was assured in Parliament?

Yes. We made a commitment that we would meet the full costs of McCrone and the order gives effect to that commitment. It does so within the context that local authorities would always have had to make some provision for normal pay increases of about 3 per cent, which is equivalent to the upper end of £40 million. That is taken into account in the settlement, but apart from that, the Executive has provided all the additional resources that were required to meet the McCrone settlement.

I accept that the aggregate costs of McCrone are being met. However, is it the case that, because of the way in which the distribution system works, some authorities may not receive the full amount of the costs that they face for the implementation of McCrone, whereas others will get a bit more than they require?

The way in which one looks at such things depends on where one sits in local government. In the not too distant past, some councils have raised discussion points about the distribution mechanism. We have taken the view that we must consider the distribution of all the education costs, not just of what is a small but significant element of the total. We would have to have very good justification to revisit the way in which all education expenditure is allocated.

The way in which that expenditure is allocated at the moment is built around certain needs factors—principally, the number of pupils. That eliminates policy choices that local authorities may have to make if they have more schools and more teachers than other local authorities or construct their classes in a different way that requires more teachers. The system of grant distribution does not reward local policy choice; it tries to allocate funding equally. If we were to re-examine the distribution mechanism and consider doing things differently—neither the Convention of Scottish Local Authorities nor any local authority has made any case for our doing so—that would open up questions about the additional allocations that we already make for small rural schools and, for example, the special islands needs allowance, which recognises additional costs in the islands. Once we begin to ask those questions, it is not certain that local authorities that currently think that they would be better off with a different distribution system would be better off—they might be worse off. That is why we have stuck to the existing mechanism, which is fair, has been agreed by COSLA and makes a reasonable allocation to authorities over time and over the whole of education resources.

As there are no further questions, I call the minister to speak to the Local Government Finance (Scotland) (No 2) Order 2001 and to move motion S1M-1950.

As the committee is aware, there has been a widespread welcome for the McCrone agreement, which is a package of pay and conditions for teachers that will bring the much-needed stability to Scottish education that has been sought for many generations. As Keith Harding said, ministers promised to commit the resources necessary to implement the final agreement, and the order delivers on that promise. Along with the £105.4 million that we have distributed to local authorities for McCrone, we are now distributing a further £67.4 million in addition to a settlement that gives every council a grant increase of at least twice the predicted rate of inflation and increases local authorities' revenue grant by 6.2 per cent.

I am pleased to seek Parliament's approval for grant allocations to local authorities that will deliver an additional £1.2 billion to local authorities over the next three years. The full agreement of COSLA to those allocations has been sought and obtained. Local authorities are waiting anxiously for the money to be distributed, and the sooner that we can distribute it, the better. The Executive is anxious to proceed, and I hope that the committee will support the order.

I move,

That the Local Government Committee recommends that the Local Government Finance (Scotland) (No. 2) Order 2001 be approved.

Motion agreed to.

I welcome the order. It is good news that the McCrone money has been found by the Scottish Executive. The McCrone deal is a very good deal for teachers.

Thank you, minister.

Thank you, convener. I trust that all business will be done so expeditiously in future.

We now move into private session, so the official reporters may leave.

Meeting continued in private until 16:32.