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Welcome back. Agenda item 4 is consideration of the Scottish Government's draft budget. This year the committee's focus is mainly on equal pay in local government. At last week's meeting, we heard alarming evidence about the potential costs of achieving equal pay and the impact that the costs may have on the Scottish Government's budget. We look forward to hearing what the Scottish Government is doing to tackle this vital issue and whether the money that it is providing in the draft budget will be sufficient. The committee will also touch on the progress that the Scottish Government is making on its long-standing commitment to equality proofing the budget.
I thank the committee for inviting me to appear before it today to engage in dialogue and discussion on the formulation of the Government's 2009-10 budget and, specifically, the Government's commitment to addressing equality issues.
Thank you for that opening statement, cabinet secretary. Given your previous role as deputy convener of the Scottish Parliament Finance Committee, you will be well aware of the "Report on the Financial Implications of the Local Authority Single Status Agreement", which that committee published in 2006. Does the Government know the overall cost of implementing single status?
It is impossible for me to give the committee a figure, given that the cost is—of course—subject to final negotiation of all the arrangements that individual local authorities are putting in place.
So, you are saying that the figure cannot be quantified.
It can certainly be estimated, but it cannot be finally defined, given that all this is subject to negotiation and discussion. As we all know, in many cases the process of negotiation and discussion between local authority employers and employees and the relevant trade unions have been quite protracted. At this stage, it is impossible to identify with certainty the figure at which the costs will conclude.
Would you say that the Scottish Government is in the best position to quantify the figure?
No, I would not—we are not party to the negotiations on single status and equal pay at local authority level. The matter is, quite properly, one for authorities to engage in and take forward in that forum of discussion between employer, employee and relevant trade unions. The Government is not a player in those discussions. Obviously, we encourage resolution of the issues, which represent uncertainty not only for local authority finances but members of the public and local authority employees who are involved. Both at the institutional and personal levels, resolution is important for the Government.
Once every local authority has conducted its negotiations, will COSLA be in a position to collate all the information and to estimate the figure?
COSLA may well be in a position to do that, but it will have the same difficulty that any third party—indeed, that any authority that has not yet resolved the issue—will have, which is that it will be unable to quantify where the negotiations will end up as a consequence of the discussions.
Last week, we heard alarming evidence of bad financial planning by some local authorities. We heard that authorities are taking short-term solutions when a longer and perhaps more practical view should have been taken. The example that most concerned the committee is that of Glasgow City Council. Following a scoping exercise, the council was told that the cost of single status would be £50 million. The council decided that the figure was too high and went on to agree the short-term measure of making compensation payments of £42 million. In addition, it still has to make provision for the final cost of implementing single status. What is your comment on that bad financial management?
The issue is largely about the independent decision-making processes of individual local authorities. Local authorities are constituted as independent public bodies. They are entirely self-governing as regards their decision-making capabilities—subject, of course, to questions of resourcing, which are largely dominated by the contribution that the Scottish Government makes to local authority finances, and other legislative obligations that they must fulfil.
If a local authority were deliberately to stall the process of making such payments and to kick the issue into the long grass, with the result that the price continued to rise, surely that would be a value-for-money issue that would have a cost implication for the taxpayer. Is there any situation in which sanctions could be considered so that a more realistic and better outcome could eventually be achieved for taxpayers?
Local authorities are assessed on all such matters—which it is quite legitimate to raise—as part of the best-value process, which considers how local authorities operate within the best-value environment. I think that we are just about to complete the first round of best-value analyses of all local authorities in Scotland. If there was concern about how such an issue was being handled and about the implications of that for a local authority's financial planning, I would fully expect that to emerge as part of the best-value assessment of local authorities that is carried out by Audit Scotland. The implications for the wider financial health of an authority of not taking early decisions on equal pay and single status would arise as part of that assessment.
I have a question on that specific issue. I recall Donald Dewar taking action—in 1999, I think—against North Lanarkshire Council on financial matters. Do you have any powers to take sanctions against local authorities if you feel that finances are being mismanaged in some way?
I have such powers.
Could you explain what they are?
I have powers that allow me to intervene in certain circumstances in which local authority finances are not being operated effectively. I am sure that, in the context of what I have said about the independent status of local authorities, all colleagues will understand that such powers would be exercised only in the most extreme circumstances.
I was just trying to establish that the Government has those powers, convener.
The cabinet secretary has indicated that it does.
You mentioned the best-value review. Under its gender equality duty, Scotland has a specific duty relating to equal pay. From 2007, public bodies have been required to publish an equal pay statement. Will that work hand in hand with the best-value review, and will that also be evidenced? What powers could you and the Scottish Government use if the reviews and progress reports that are published every three years were to show that local authorities were not fulfilling their duty on equal pay? Would retrospective action be taken?
Each local authority must fulfil its statutory duty in any respect, whatever the duty happens to be—there will be many statutory duties that local authorities wrestle with. Each local authority has an obligation to fulfil its statutory duty on equal pay and to report as required.
You have spoken eloquently of the Government's commitment to equalities. Can you clarify whether, over the next four years, the budget of the equality unit in the Government will be reduced, stand still or be increased?
The equality unit's budget is rising with inflation, if recollection serves me right.
The Scottish Government's gender equality scheme lists the expected outcome associated with the priority objective of equal pay as
The Government's purpose is, essentially, to focus Government and public services on creating the opportunities that will allow all Scotland to flourish within the context of delivering increasing sustainable economic growth.
What is your understanding of the term "implemented", as COSLA has used it?
It is not for me to explain the definitions, but, as far as I understand it, "implemented" in this context means that a particular single status scheme has been applied—it might not have been agreed to by the relevant employees, but it has been applied by the relevant local authority.
So it could mean that negotiations have just been opened, rather than that an offer is going to be accepted.
My understanding is that a proposal has been put in place—I would define that as "implemented".
The evidence that we received last week suggests that there is huge concern that the current job evaluation schemes are not delivering non-discriminatory pay structures and that what is being agreed to will, in the long term, make things worse. The concern is that the mainly women who are in low pay will continue to be in low pay and will still be able to go for litigation and that the pay-offs that were given are temporary pay-offs, which will also run out. It looks like there is a time bomb. Last week, we felt that that was a matter of urgency and that the Scottish Government should take responsibility for it and hold urgent talks.
It would be completely inappropriate for the Scottish Government to "take responsibility for" this issue, to use Marlyn Glen's phrase, because it is within the exclusive competence of individual local authorities as self-governing organisations. The Scottish Government has no role to perform in negotiating individual single status agreements at local level. We certainly have a general duty to advance the issues of equalities and the agenda of equal pay within our general action and we have a responsibility and a duty, as a Government, to ensure that we are taking forward those issues for our employees. The Government takes that forward very effectively and we will continue to take forward the general issue within the wider debate in Scotland. In my view, the specific negotiations of individual local authorities are entirely a matter for them.
We take that on board, cabinet secretary, but the real question is this: if the situation spirals out of control, at what point will the Government have to intervene?
Individual local authorities have duties to operate within the resources that are available to them, to meet their liabilities and to fulfil their commitments; they fulfil those duties every day of the week. The commitments that they must honour on equal pay and single status are part of their routine obligations, so they must ensure that they implement them effectively on behalf of their employees.
Might Audit Scotland or some other body have an appropriate role in determining whether job evaluations are fair?
That is an interesting question, because it cuts across an individual local authority's right and responsibility to carry out that assessment. There is no doubt that councils have an obligation to undertake that process as employers. For me, the question is whether they are acting on that responsibility. The information that I cited a moment ago suggests to me that, since the Finance Committee considered the question in 2006, councils have increased the tempo of their work on equal pay and single status.
On councils taking responsibility, the Virginia model of presentation—I have forgotten the correct name but I am sure that you know what I mean.
I am deeply attached to it.
Does progress on equal pay appear on that model? If it does, what kind of measurements appear?
It appears in so far as we have a national outcome that says:
You mentioned national outcome 7:
The national outcomes are shared with local authorities and public bodies in Scotland, so we are all working together to achieve them. That is the mechanism that we deploy to implement that part of the Government's agenda. We have direct duties on equal pay as employers and, indirectly, are involved in discussions with local authorities on the issue as part of our work to tackle
If that was the deal that was agreed with local government under the concordat, does not the Government have a direct interest in ensuring that local authority pay structures are non-discriminatory? Otherwise, local authorities will not fulfil the agreement.
Part of the answer is that we understand and respect the self-governing nature of individual local authorities. If we had a system whereby ministers directed local authorities what to do—which is the logical extension of Elaine Smith's point—the character and role of elected local authorities in our country would be fundamentally altered.
I am not—
I will let Malcolm Chisholm ask a brief question, as we need to move on. Cabinet secretary, can you confirm whether you need to leave at 12 o'clock?
I am timetabled to be here until 12, but if the committee wishes to detain me for longer I am happy to continue beyond then.
That is helpful.
Convener, I just want to say that I am not saying that the cabinet secretary should direct local government. I appreciate that local authorities are elected in their own right but, given the agreements on local government finance and the outcome agreements, the Government must have some say in how those outcomes are achieved.
Elaine Smith has now put that point on record.
I suppose that I want to ask the same question in a different way. The cabinet secretary trusts local authorities to make progress, but what would the position be if inequality in a particular local authority got worse?
A number of different areas, some of which I have touched on already, could be the subject of that process. Along with the Cabinet Secretary for Education and Lifelong Learning, I have regular bimonthly discussions with COSLA leaders on local government's progress on delivering and developing the concordat. We have single outcome agreements with individual local authorities. We also have the best-value process, whereby local authorities are assessed on how they steward their resources. In addition, the Government has established a direct channel of communication with individual local authorities—which, I must say, is proving to be very beneficial—whereby a director from the Scottish Government has a role in entering into dialogue with the authority to consider what progress has been made, what issues are emerging and what factors it finds troubling in the Scottish Government's conduct or intervention. The current framework provides ample opportunities for the Government to have that dialogue and to exert influence.
We do not disagree that we have shared aspirations—shared outcomes are a wonderful idea. However, local authorities have an impossible task, as they have a limited budget—that is the bottom line. The issue may be more crucial now than it was two years ago. I am sure that you are aware that the committee has heard evidence that employers are still building highly expensive and discriminatory pay systems into both the public sector and the private sector. That is storing up financially risky situations.
I remember that I got into some trouble when I last requested an Audit Scotland investigation, so I will not accept Marlyn Glen's kind invitation to get into that space. It is for Audit Scotland to decide whether it wishes to conduct an investigation into equal pay and single status; that is not a matter for me. Audit Scotland will come to its own conclusions on that question.
I am sorry to interrupt, but last week we understood that Audit Scotland had never taken the issue of equal pay into account in best-value audits.
Let me complete the equation. I am trying to get across the point that, in exercising its responsibility in relation to the best-value process, Audit Scotland must look at councils in their entirety and determine whether they are functioning and delivering value for money. It cannot exercise that responsibility without giving some consideration to how local authorities are handling the question of equal pay.
The question was about not just best value, but risk assessment.
My second point relates to that issue. Best-value audits of local authorities look at value-for-money considerations. The professional accountants who assess the statutory reported accounts of each local authority must perform an assessment of the risk to which the authority is exposed in a variety of areas, of which equal pay and single status may be one. That is where the issue is properly handled.
I suppose that we are considering both ends of the spectrum—what it could cost in one-off payments and what it could cost when it is eventually resolved. The latter figure is causing the committee concern. We had hoped that Audit Scotland would have a comment on that.
We must consider that we are in a different place from where we were when the Finance Committee undertook its inquiry in 2006. I hear what Marlyn Glen says about the wider implications, but progress has been made. A judgment has to be made about whether that action has mitigated individual local authorities' exposure to risk. Some authorities sorted out the issue once and for all a long time ago. For them, it is done and dusted, and they now operate with their new pay and grading structures. My view on the financial risk is that, if one local authority has been able to sort out the issue, it must be possible for other local authorities to do likewise, and many of them have done so.
By now, you have probably spotted that there is some concern about Audit Scotland. Let us say that it undertakes a best-value audit and ignores factor X, which turns out to be important. How would you ensure that, in future years, Audit Scotland paid attention to factor X?
As Dr Wilson is aware—I have made the point already—Audit Scotland does not operate at ministers' behest, but draws up and undertakes its own work programme. If a local authority chief executive were sitting where I am sitting, he or she would tell you that the best-value process is a pretty exacting one to be put through by Audit Scotland. They certainly tell me that often enough. The committee should have confidence in the best-value assessment that Audit Scotland carries out.
Audit Scotland has already indicated that, and we will take up its offer.
Good morning, cabinet secretary. In your opening statement, you said that the Government expects to deliver equality and tackle inequalities in Scottish society. The issue of equal pay—obviously, it is mostly women who are lower paid—is linked to Scotland's economic growth. You mentioned the report that the Finance Committee published in 2006, and although there might not be equal pay, there have been some outcomes in local government.
We must look at the issue from a different perspective. One of the challenges for the Scottish economy is the fact that we operate within a lower-wage economy than the rest of the United Kingdom. Let us take economic activity, for example. Scotland has the highest level of economic activity of any part of the United Kingdom yet we do not have the highest gross domestic product per head. In essence, the answer to your question lies in the mismatch between those two factors. More of our people are economically active than in other parts of the United Kingdom, but we have a lower GDP per head. What does that mean? It means that people in Scotland are generally, although not always, in lower-wage jobs. The big challenge for the Government—I freely concede that it is a big challenge at the heart of our economic agenda—is to create higher-value employment in Scotland.
I understand what you say about the objective of raising people's pay not necessarily being ring fenced in the draft budget but appearing in other areas of economic growth and other aspects of the Government's policies. However, although we obviously want both men and women to have higher wages, that does not address the current inequality between men's and women's pay.
There is a commitment, which lies at the heart of how the Government takes forward its economic agenda in all our interventions. Through the Scottish funding council, we are supporting entry into relevant vocational or higher education opportunities in the colleges and universities. We are working through Scottish Enterprise on business development. We are working through Skills Development Scotland to achieve the aspirations that I talked about, such as ensuring that we have higher-value employment and that we sustain high levels of participation in a difficult economic climate. Those interventions support the development of new and better opportunities for individuals in the workforce, which will have particular relevance for women, who are more likely to be in lower-paid occupations.
The committee would absolutely applaud efforts to bring higher-value employment to Scotland. Will those efforts be targeted on women and, if so, how?
The essence of all this is a challenge that has been with us since the equal pay legislation was applied in 1970. We have a gender pay gap that has to be closed. I will not say that the Scottish Government will be able to complete that job in the next 12 months, because that will palpably not be the case. However, we can work to ensure that we have a range of economic opportunities that are attractive to women in Scotland and which allow them to participate in the labour market at a higher level than before. The Government will focus on that challenge in its work to encourage more women to enter the labour market and to take part in further and higher education to develop their skills and equip themselves for different roles in the labour market. As I explained to Sandra White, a number of interventions through universities, colleges, training institutions and Skills Development Scotland support the Government's efforts in that respect.
Notwithstanding what the cabinet secretary said about page 4 of the budget document, the general thrust that the committee has been pursuing is mainstreaming equalities issues. It would have been helpful if the commitment on mainstreaming equalities had been reflected tangibly throughout the document, rather than appearing only in a statement on page 4. To some extent, this is about self-interest, but that would have made it easier for us to do our job of tracking what is going on across budgets.
In essence, that is the point that I made to either Sandra White or Marlyn Glen—please forgive me for not recalling who. We could have constructed the budget document in such a way as to demonstrate throughout it what we are spending on equalities issues, but we would then have faced demands for a similar presentation on, for example, a deprivation perspective, a young people perspective or an old people perspective. We tried to construct an open and transparent document that sets out where our commitments lie and how they are being taken forward. Obviously, I have the opportunity to explain some of the detail to the committee.
My final observation is that the perspectives to which the cabinet secretary just referred—young people, old people and deprivation—are, in fact, all equal opportunities issues.
The role of equality impact assessments remains unclear—a single mention is made of them on page 5 of the budget document, but there is no detail or information on how they have been applied. Why are the practices and outcomes associated with the application of equality impact assessments not evident in the budget document?
To an extent, that relates to the point that I just covered, which is that an approach runs through the document that is designed to tackle a range of outcomes that the Government considers important, one of which is the reduction of significant inequalities in Scottish society. Specific policy interventions will be the subject of equality impact assessments, and the Government provides to the relevant parts of the organisation the supporting policy guidance and relevant information that allows the undertaking of equality impact assessments on specific policy questions.
Our view would be that the document should contain that evidence, because it is a high-level document. However, passing over that, can you give examples of equality impact assessments that have informed the document but which are not included in it?
A range of equality impact assessments has been undertaken, which have examined questions about access to support in relation to welfare provision, and in relation to vulnerable families and vulnerable women. Those assessments will have affected budget decisions that were taken on supporting the work that is implicit in the Government's programme about violence against women. That is one example in which our thinking has been developing and in which, as a consequence of the equality impact assessment, we have increased the available resources for the work to tackle violence against women that will be taken forward as part of the budget process.
Can you give an example of resources being spent differently in a particular area as a result of an equality impact assessment?
The example that I gave would be one in which we changed our budget priorities. We increased the resources that are spent in that direction as a consequence of recognising the challenges posed by the equality impact assessment.
Will the cabinet secretary give us an insight into his personal experience of engagement with EPBPAG and the extent to which its role has informed the budget process?
I will call it the budget policy advisory group—if I do one thing as part of the process, it will be to change the name of that group so that it is at least to some extent pronounceable.
You will have my support on that.
Let us just agree to call it the budget advisory group for short.
To summarise your response for the sake of clarity, you receive information from the group via a third party and have not engaged with the group itself. Is that correct?
I am advised by Yvonne Strachan and the equality unit in the Government. I receive a multiplicity of information and advice from all corners of the Scottish Government on how to take forward the budget process and my wider ministerial responsibilities. I do not have to meet every single group to do that; in fact, that would be physically impossible for me.
Have the single outcome agreements been subject to equality impact assessments? More critically perhaps, when they have been subject to such assessments, how are we monitoring the link with funding?
Local authorities have a duty to take equality considerations into account in developing policy. The guidance issued by Scottish Government to councils on developing single outcome agreements sets out the duties of councils and community planning partners in relation to questions of equality. Those are material considerations for councils in the formulation of their single outcome agreements. In both the dialogue on the implementation of the agreements and the channel of communication between the Scottish Government directors and individual local authorities, to which I referred earlier, we will consider the development and delivery of the single outcome agreements in the context of the variety of factors that we have to take into account, one of which is the need to ensure that equality issues are properly considered.
Has the Government considered how it will report under the gender equality duty in 2010? Can the cabinet secretary identify the stated priority areas and comment on where the process of budget setting and reporting is situated in the context of those stated priorities?
The issue is still being considered by ministers. We are clearly aware of the 2010 duty, which we welcome as a positive addition to the Government's reporting structure. We will of course consider carefully how we can fulfil our obligations timeously for 2010. I stress that the Government positively welcomes the duty.
As Malcolm Chisholm said, the draft budget is a high-level document, so issues arise over the level of detail that can be meaningfully presented. As you said, you could go off at many tangents if you were not careful.
The issue comes down to the level of detail that can be shown in a budget document. On too many occasions over the years, I sat on the other side of the fence during the discussion of budget documents. We have to find a reasonable balance. As ever, I remain open to discussion on how much detail we can properly show in a budget document.
Thank you for your offer of further information; we may well take you up on it.
I will leave the presentational issues to one side. Has the pilot project on sport influenced spending in the sport portfolio? Can you answer the question now, or would you prefer to answer in correspondence?
If the committee will forgive me, I would prefer to give a detailed answer in writing.
I want to follow up Malcolm Chisholm's point. The pilot project was designed to show how equalities could be influenced by the budget—so that we could see where the money came from and whether it was achieving the stated aspirations. I remember, in a similar budget discussion, expressing my disappointment with the previous Administration that the pilot project was so small. The expectation was that, although we were only at the beginning and had taken only a small step, we would be moving forward. I think that the committee should follow up with more questions. The pilot was small and was not high level, but it was terribly significant.
Are you asking about the pilot's significance in the development of the equality impact assessment process?
Yes.
I can tell the committee that the sport pilot, and the smoking pilot, had a significant impact on the design of the equality impact assessment process and on Government's general approach, and I will be happy to answer specific additional questions, to give the committee a flavour of how that came about.
We would like to follow that up. We are looking for evidence on the matter, but we do not have any.
We will take up the cabinet secretary's kind offer.
As the convener said, at last week's meeting we were concerned to hear about the ever-increasing costs of compensation schemes. If the costs get out of hand—some people think that that has already happened—where will the local government funding for that come from? I am not talking about your power to take sanctions against local authorities, which we discussed. Perhaps we could first clarify what percentage of local government funding is raised through council tax and what percentage comes from the local government settlement.
About 80 per cent—probably a little more than that—of local authority funding comes from channels that are provided by the Scottish Government and about 18 to 20 per cent comes from council tax revenue.
In the past, if local authorities wanted to spend more money they could increase the council tax, subject to certain rules and regulations. However, that is not currently an option for local government, because you have agreed a council tax freeze. Is that correct?
That is correct. However, I am funding the council tax freeze, so there is no loss of income to the relevant local authorities.
Yes, but local authorities have no opportunity to seek additional income.
I judge that people would not welcome a council tax increase in the current financial climate.
My question is about the 80 per cent of funding that the Scottish Government provides through the local government settlement. If compensation payments get out of hand to the extent that local services start to suffer, given the limited amount of money that councils have, can the Government step in and help councils by giving them more money? Would doing that affect the budget that you have set out? If you did not do that, would local services suffer?
Your question raises three issues. First, we should remember that some local authorities have concluded the matter entirely—
Are you confident that there will be no further litigation and compensation claims?
In some cases that will be the case; in others there may still be exposure to risk. I am confident that in some cases the issue is done and dusted and has been sorted out. If it has been possible for some local authorities to sort out the issue in the existing financial framework, I assume that it must be possible for others to do likewise.
But, at the end of the day, you could step in with further funding, if you felt that that was necessary, albeit it that doing so would have an effect on other budgets. You have the ability to do that.
I have the ability to change the assumptions that are made, although my exercising that ability is subject to the consent of Parliament. That is an implicit part of the process. However, I do not propose to do that as part of the present budget process.
It is important that we sort out the issue of equal pay because the situation is coming to a crunch, particularly in Glasgow.
I think that I can manage to drag myself, kicking and screaming, to agree with Sandra White that the Westminster Government should be giving the Scottish Government more money. I generally take that view on most issues.
I wonder whether the cabinet secretary agrees with Sandra White's assertion that the whole issue of equal pay is a mess.
I do not. The issue has been going on for a long time, but in some parts of the country it is done and dusted.
At this point, I ask our budget adviser, Ailsa McKay, to sum up.
I am conscious of the fact that time is running out and that people have places to go to, but there are a few points that are worth reinforcing in relation to the committee's focus on budget scrutiny.
Thank you very much for that. The points that you raise are of concern to the committee.
I thank the committee for its consideration of the budget. The question of COSLA's attendance is a matter that is entirely for COSLA and not one on which I should comment.
On your first point on imposition, the committee is very conscious that imposition flowed from litigation that was conducted on a no-win, no-fee basis. The situation is not ideal.
Meeting suspended.
On resuming—
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