The first item of business this afternoon is a debate on motion S4M-12242, in the name of John Swinney, on the draft Local Government Finance (Scotland) Order 2015. Members who wish to take part in the debate should press their request-to-speak buttons now.
Today’s local government finance order seeks agreement to allocation of revenue funding to local government for 2015-16 to enable local authorities to maintain and improve the vital services on which communities across Scotland depend. It also seeks agreement to the allocation of additional funding for the current financial year, since the 2014 orders were discussed and approved at this time last year.
The 2015-16 local government finance settlement is a single-year settlement. That is necessary because the Scottish Government can allocate funding only once we know what our budget settlement is from the United Kingdom Government; on this occasion, we are aware of our budget only for the forthcoming financial year.
In 2015-16, the Scottish Government will provide councils with a total funding package that is worth more than £10.85 billion. That includes revenue funding of almost £10 billion and support for capital expenditure of more than £856 million. Today we seek Parliament’s approval for distribution and payment of £9.8 billion out of the revenue total of almost £10 million. The remainder will be paid out as specific grant funding, for which separate legislation already exists, and other funding will be distributed later.
I will bring a second order before Parliament once councils have set their 2015-16 budgets, to pay the £70 million to compensate all councils that freeze their council tax again in 2015-16, for the eighth consecutive year. I will use the second order to distribute the funding for the discretionary housing payments, amounting to £35 million for next year, which will enable the Government to mitigate fully the effects of the United Kingdom Government’s bedroom tax, and any other changes that may be required.
Yesterday, in the budget debate, I advised Parliament about the approach that the Government is taking in relation to the number of teachers who are employed in our schools. The Government has been clear and consistent in our commitment to maintain teacher numbers in line with pupil numbers as a central part of our priority to raise attainment. Over the period 2011-12 to 2014-15, we will provide to local authorities additional funding of £134 million specifically to support them in maintaining teacher numbers. As I explained yesterday, despite specific and sufficient funding being available to maintain employment of teachers, the number of teachers declined slightly last year and the ratio of pupils to teachers rose slightly.
In discussion with the Convention of Scottish Local Authorities, I have offered to suspend the penalty for 2014-15 that I was entitled to apply as a result of the fall in teacher numbers, as well as to provide a further £10 million next year on top of the previously allocated £41 million to support employment of teachers. That £10 million is the amount that was put to me by COSLA as being necessary to deliver the commitment. At this stage, COSLA has been unable to agree to what I consider to be a fair and generous offer of Government support to deliver a good outcome for our education system. As a result, the Government feels that it has no alternative but to make that funding available on a council-by-council basis if—and only if—councils are prepared to sign up to a clear commitment to protect teacher numbers. Individual councils that share our ambition to maintain teacher numbers will have access to a share of the planned £41 million and of the further £10 million to help them to deliver on their commitment. However, failure to deliver will result in clawback of funding.
The most important change to the figures that I announced in December is the distribution of the £343 million in respect of the council tax reduction scheme. The only addition to the total figure is the £869,000 resulting from the Government’s decision to legislate to ensure that local authorities can take no further action to recover ancient community charge—or poll tax—debts.
The 2015 order also seeks approval for the changes to the net increase of £146.5 million in 2014-15 funding allocations that were either held back from the 2014 order or added to fund a number of agreed spending commitments that have arisen since the 2014 order was approved. They include £68.6 million representing the agreed 20 per cent hold back for the council tax reduction scheme; £27.5 million for the teachers induction scheme; £16.5 million for the free school meals in primaries 1 to 3 policy; £15 million for looked-after children; £12 million for discretionary housing payments; £5 million for the national teachers qualifications policy; and £3.5 million for workforce development resulting from the Children and Young People (Scotland) Act 2014.
I should also explain that the total revenue funding to be paid out to councils in 2015-16, but which is not included in the order, includes £86.5 million to be paid directly to criminal justice authorities; £70 million to fund the council tax freeze; £35 million for discretionary housing payments; and £27.6 million for the teachers induction scheme. The £70 million to fund the council tax freeze will be added to the individual local authority settlement totals when I introduce the local government amendment order for councils that have budgeted to freeze the council tax in 2015-16.
Members will be aware that my Budget (Scotland) (No 4) Bill statement yesterday included changes that will impact on the 2015-16 funding, both for the total local government financial settlement and for the distribution of the amounts that are included in the local government finance order that is under discussion today. As a result of our decision to match the UK Government’s cap on business rates poundage, the increase will be limited to 2 per cent, which reduces our business rates income by £11 million. However, as I explained yesterday, I have allocated a compensating amount from the associated Barnett consequentials to match that reduction in income. The practical effect of that is that I will reduce the distributable non-domestic rates amount by £11 million in the amendment order and will increase the general revenue grant total by the same amount. The redistribution of those sums will ensure that all 32 local authorities receive exactly the same total funding as is set out in the order before Parliament today.
Although it is not part of today’s order, the overall package for local authorities includes support for capital funding in 2015-16 of more than £856 million, which delivers on our commitment to maintain local government’s share of the overall capital budget.
I turn to business rates and to our continuing delivery of the most competitive business tax environment in the United Kingdom. For example, support under our small business bonus scheme is at a record high, with more than 96,000 business properties now benefiting. In December, I confirmed that we will continue to match the English poundage rates for 2015-16, which reaffirms the Government’s commitment to maintaining the competitive advantage that has been enjoyed by Scottish businesses since 2007.
Our extensive package of business rates reliefs also continues. It will be worth about £618 million in the forthcoming financial year and offers enduring support for Scottish businesses. The Community Empowerment (Scotland) Bill proposes the power for councils to offer further rates reliefs in their local authority areas if they choose to do so.
As confirmed previously, the public health supplement will conclude at the end of the current financial year. Looking ahead, we will continue to use the time before the 2017 revaluation to make further improvements to the business rates framework, based on our 20-point action plan and our current consultation on the appeals system, and responding to the important feedback that we receive from ratepayers.
In summary, the total funding from the Scottish Government to local authorities next year amounts to more than £10.85 billion. With that in mind, I move,
That the Parliament recommends that the Local Government Finance (Scotland) Order 2015 [draft] be approved.
14:38
Local government is key to delivering social justice and tackling inequality. If we care about preventative action—and I believe that, across the chamber, we do—the services that are provided by local government, such as education and social care, absolutely need investment, yet it is probably the only major spending portfolio to experience a real cash cut in its budget.
In 2010-11, local government received 38 per cent of the Scottish Government budget. Today, it receives 32 per cent. That is 6 percentage points less, and members will have heard me explain before that that equates to a £1.8 billion cut if it was applied today. The Joseph Rowntree Foundation has said that local government spending in Scotland will have fallen by 24 per cent in real terms this year.
I know that John Swinney is a master at spinning figures, but transparency suffers as a consequence. He tells us that local government’s share is increasing—he certainly did during the discussion on the budget—but he does not include the whole budget and he stills counts the resources for fire and police that were transferred out two years ago. The Scottish Parliament information centre confirms that—contrary to what the cabinet secretary claims—local government’s share has, indeed, fallen. The Joseph Rowntree Foundation tells us that there is a cut, local government tells us that there is a cut and Unison tells us that there is a cut. Only John Swinney pretends that there is not.
Make no mistake, the cuts that the Scottish National Party has presided over are not just austerity; this is austerity plus from the SNP Edinburgh Government. In October, the cabinet secretary wrote to every council to tell it that the Scottish Government had experienced cuts of 10 per cent from the United Kingdom Government. That was absolutely accurate, but if we apply his assumptions to local government, we see that he did not tell councils that the scale of the cuts that he would pass on to them would be even greater still. The cut in Renfrewshire is 17 per cent, in Edinburgh it is 20 per cent, and in West Dunbartonshire it is 22 per cent. Local authorities in every part of Scotland have received austerity plus even more cuts from the SNP.
There are 4,275 fewer teachers in Scotland because of the SNP. The SNP committed to maintaining teacher numbers, so that is a considerable failure on its part. John Swinney is only now attempting to put a sticking plaster on that failure, and concedes, as his starting point, a worsening of the pupil to teacher ratio and a reduction in teacher numbers. That strikes me as an incredible lack of ambition for Scotland’s parents and children. Labour is committed to maintaining teacher numbers, but Mr Swinney needs to give education enough money for that to happen.
John Swinney makes a fundamental mistake in playing politics with the issue of teacher numbers. I remind him about Renfrewshire Council when it was run by the SNP, under the control of none other than Derek Mackay, the former Minister for Local Government and Planning, whom I do not see in the chamber. When Derek Mackay took over that council in 2007, teacher numbers were 1,853. When Labour took control five years later, it inherited 1,598 teachers—the SNP and Derek Mackay had removed 255 teachers from local schools. Since then, Labour in Renfrewshire has not just maintained teacher numbers but increased them, albeit marginally. Actions speak louder than words, and it is clear that, in this case, the SNP in local government and the SNP in the Edinburgh Government are cutting teacher numbers.
If we are agreed that we want to maintain teacher numbers—we are agreed on that—we need to ensure that there are sufficient resources for that to happen. Local authorities face an average of a 20 per cent reduction in their budgets, and the scale of the Scottish Government’s response needs to reflect that challenge.
I am conscious that discretionary housing payments have been reduced by the UK Government this year. There will be less available for local authorities to help some of the most disadvantaged people in our community. I always listen carefully to what the cabinet secretary has to say. He said that the Scottish Government’s position is to provide sufficient funds for full mitigation of the bedroom tax. Although I do not believe that we should constantly be making up for the proposition that has been put to us by the Conservative and Liberal Democrat Government, John Swinney did say that there would be full mitigation, so there is a shortfall in funding to some of our most hard-pressed local authorities to help the most disadvantaged in our communities. I would be interested to hear whether he intends to provide additional resource to help those local authorities and the people across Scotland who need that assistance.
We are in agreement that there is a structural problem with the financing of local government, so I very much welcome the cross-party commission on local government funding. However, there is an urgent need to help now. Although we will vote in favour of the order this evening, we will do so recognising that the amount that is available to local authorities is in substantial decline and that that position needs to be reversed.
14:44
As the Scottish Government’s budget was approved yesterday, it is of course welcome that the order on the money to be distributed to local government is before Parliament. It is important that all members and the public are kept well informed of local government finance orders, because every detail matters to the communities that Scotland’s councils serve. I imagine that all members present are aware of the financial difficulty facing many local authorities at the moment, which heightens the importance of Parliament debating local government policy at length.
On that point, the debate gives us the chance to consider some of the on-going issues relating to local authorities’ finances and how their relationship with the Scottish Government is influencing them. It is very important that we give some context to the debate about the local government finance order. Ultimately, what matters is what the public get from their local authority.
With that in mind, the financial situation at the City of Edinburgh Council is an example worth considering. The council currently needs to find £138 million of savings in its budget for 2017. It has consulted the city’s residents to gauge which services are considered to be essential and which might have funding withdrawn. I therefore wonder why the City of Edinburgh Council’s funding has been reduced on a like-for-like basis from £746 million to £739 million and would welcome clarification of that. It seems to be the only council that has had its funding reduced.
I will not go into the detail of the council’s decisions, which are a matter for it, but its situation is not unique in Scotland, so Parliament would do well to consider such a context in our consideration of the funding that is being provided by the Scottish Government. In my opinion, the Scottish Government and local authorities have a duty to be as transparent as possible regarding financial choices and they need to ensure that decisions on spending are clear for all to see. Councils as well as central Government must be accountable to the taxpayer.
That said, responsibility applies both ways. In particular, those who owe tax to councils should have to pay it. Councils depend on those taxes to fund the services that local residents need. However, the Government is planning to remove the debt that local authorities are owed and to offer as compensation only a tiny settlement, which completely ignores potential knock-on effects for future tax payments to local authorities. When councils are facing substantial budget difficulties, the Government is choosing to support people who have avoided paying their tax. Hard-working taxpayers should not be forced to subsidise other people’s tax avoidance and local authorities should not be left to suffer the financial consequences when people avoid paying tax, if they expect their debt to be cancelled by a future Government. We cannot ignore that context while considering the order that is before us.
Finally, I would like to use this opportunity to draw attention again to a crucial aspect of local government policy, which is how exactly local authorities are funded. In previous debates, we have discussed how there is broad agreement that the current model of council funding through council tax, Scottish Government grants, fees, business rates and other income needs to change. As yet, a crucial decision on how to reform that has not been reached. I emphasise my hope that a sensible and fair solution can be reached.
Accordingly, I express my hope that, when it comes to local government, Parliament continues to focus on the real issues that affect councils every day. With that in mind, it is in the context of pressing financial difficulties, exacerbated by the Government’s policy on community charge debt, that we should consider the order before us, as well as any future review of how local government is financed. We will, however, support the motion this evening.
Thank you, Mr Buchanan. We move to a very short open debate. Speeches should be of four minutes.
14:48
I am glad to debate the local government finance order this afternoon. I am extremely pleased that we will have the council tax freeze for the eighth consecutive year, which will give the average household a saving over the period 2008 to 2015 of £900 in their pocket. That will be welcomed in households across Scotland.
Beyond that, we are seeing once again delivery of the most competitive business environment in the UK. Some 96,000 businesses throughout the country will benefit from the small business bonus.
I have to say that, compared with its counterparts in England and Wales, Scottish local government is doing quite well. The difference lies in the drastic cuts that we see south of the border, while in Scotland, although the Scottish budget has risen by 6.4 per cent since 2007-08, the Scottish Government has increased local government’s share of that budget by 8.9 per cent.
Yesterday, the Labour Party voted against £330 million of further investment in schools for the future, against extending childcare for all three and four-year-olds and vulnerable two-year-olds, against the council tax freeze, and against the most competitive business tax regime in the United Kingdom. Since the budget vote yesterday, a number of Labour politicians have taken to social media and the newspapers to say that they will have a war over teacher numbers. The money to hold those teacher numbers is being provided; all that councils need to do is spend that money to ensure that teacher numbers are maintained. If they choose not to do that and there is a war, that war will be on teachers, pupils and parents. That is what bothers my constituents, including the parents at Broomhill school, who have been on at me about teacher numbers this week.
Will the member give way?
I am sorry, Ms Grant, but there is no time.
Parents across the country are concerned.
Instead of talking about a war over teacher numbers, councils throughout the country should take the money from Mr Swinney and ensure that it is spent on maintaining teacher numbers across the nation.
I am pleased to see once again that Aberdeen will benefit from the settlement, with an extra £10 million in the next financial year. I am always a little bit parochial in that regard.
In such debates, I always make an appeal—not to the cabinet secretary but to COSLA—to have a look at the local government funding formula, because a change to it would benefit Aberdeen and the north-east of Scotland even more.
I will support the order.
14:52
The comments of the convener of the Local Government and Regeneration Committee are so far removed from reality that I do not want to waste any of my four minutes speaking about them, to be honest.
Yesterday, I was really disappointed when the Deputy First Minister, John Swinney, decided to turn this into a political argument with local government. I have spoken to local council leaders today and I think that they are equally disappointed in terms of moving forward.
There is an important concern that I hope that the Deputy First Minister will address. I found out today that 12 out of the 28 council leaders at the COSLA meeting last week were Labour leaders. Therefore, it was not simply about Labour in local government; there were genuine concerns across all parties in local government. I understand that one of the genuine concerns that they wanted to discuss with Mr Swinney was their ability to meet the teacher recruitment numbers.
Last week, Angus Council in the north-east was one of the councils that talked about having to send pupils home because of the recruitment problem. I spoke to my colleagues in Fife this morning. There is a major problem in Levenmouth in Fife, and the director of education in Fife is advising Fife Council that there are major problems with recruiting teachers in a number of areas.
When I ask council leaders what the issue is, they tell me that the Scottish Government got its preparation wrong and they talk about the national planning process that is in place. The Scottish Government’s failure to plan properly could—to use Mr Swinney’s words—result in councils being penalised, with moneys that need to go into education being taken off them. Mr Swinney needs to address that issue; he needs to talk to councils.
I hope that council leaders and education spokespersons across Scotland will contact and meet Mr Swinney. I am certainly asking them to publish all the figures that they have on teachers and education budgets because major cuts are being made education budgets right across Scotland.
The issue that I have with John Swinney’s budget is that it fails to look at joined-up working. One of the strategies that Mr Swinney has been pushing for some time is one that came out of the Christie commission, which talked about the need to change the way in which we deliver public services and to look at investing in prevention. John Swinney’s budget fails to do that.
Local government is on the front line when it comes to tackling inequality and poverty. As Audit Scotland and Unison point out, the cuts that are being made mean that there is more pressure and less opportunity. They say that four out of five of the 50,000 jobs that have been cut in the public sector are local government jobs, and many more are in the pipeline. Services have been salami-sliced, which has increased pressure on the remaining staff to deliver services with fewer resources.
Will the member take an intervention?
The member is in his final minute.
Audit Scotland and Unison point out that if we are to tackle inequality and poverty, we need to be at the heart of communities, putting in place training and skills programmes that give people the opportunity to get a job.
This morning, the deputy leader of Fife Council told me that Fife Council has a science, technology, engineering and mathematics strategy in place because it recognises the need to do more to give young people job opportunities.
You must finish.
She continued by asking what the point is of having a STEM strategy if the council cannot recruit the teachers in mathematics and so on to teach the STEM subjects. That is the real problem, and I hope that Mr Swinney will address it, go back to local authorities—
The point is made.
—and apologise for politicising the issue.
I call Mr Swinney to wind up the debate—I beg your pardon. I call Alison McInnes, who has up to four minutes.
14:56
I will be brief. On Tuesday, I asked Fergus Ewing why Aberdeen City Council’s funding allocation was below the funding floor. He just recited the script that the finance minister has used for the past three years—that the Government made an adjustment three years ago and nothing more needs to happen. I have had to listen to John Swinney say for the past three years that it is important to him not to look again at the settlement.
That complacency and neglect completely ignores the situation with the North Sea oil and gas industry, which has changed in the past three years. It does not help us to react to decisive shifts in the economy. All the emergency meetings and renewed strategies and the summit meeting are supposed to show how serious we all are about oil and gas in North East Scotland. They are supposed to mean action, but the Scottish Government has let the region down by failing to fulfil its promise on city council funding.
The north-east’s local economy is of national importance. Aberdeen City Council has important work to do to help the industry that drives that economy. The settlement does not recognise the work that our partners in Aberdeen city need to do. In December, we showed that the city was short-changed. We look at the figures today and see that it has been short-changed by £16 million under the Government’s plans.
The Scottish Government should admit today that that is the case. The promise of a funding floor has not been met. Aberdeen was promised at least 85 per cent of the national average and we have not got it. SNP ministers and their MSP supporters boasted about that funding floor; Maureen Watt even put it on her website. Now she is a minister and she is voting for less than 85 per cent.
For Aberdeen, the funding has not followed the flannel. The funding floor simply does not exist and, in this year of all years, Aberdeen City Council needs a decisive commitment from the Government, but we will not get it today.
14:58
I will address the last point that Alison McInnes raised, because it has been raised frequently. In responding to her point, I will also answer Mr Buchanan’s point about the City of Edinburgh Council, because the two are linked. When this Government became the first Government ever in Scotland to do anything to tackle the underfunding of Aberdeen City Council, we introduced an 85 per cent floor.
I have Mr Swinney’s figures, but the research from SPICe has shown time and again that Aberdeen was above the floor year on year during the years when we were in government. We did not need an 85 per cent floor, because the settlement was always above the floor.
The problem for Alison McInnes is that the difference in funding for Aberdeen City Council versus the Scottish average has been a persistent problem that, I am afraid to say, her Government did absolutely nothing to resolve. We were the first Government to resolve it.
For the forthcoming financial year, if I had done nothing about the issue, Aberdeen City Council would not be getting an extra £11.3 million. The council is getting that extra money because the amount of money that is going to Edinburgh will reduce as a result of changes in the distribution formula. For example, Edinburgh got £22.9 million out of the 85 per cent floor money last year but will now get £13.7 million, which answers Mr Buchanan’s point.
All that I would say to Alison McInnes is that it would be nice if she welcomed the fact that the Scottish Government acted to address the funding situation in Aberdeen, which was such a campaigning priority of my late colleague Brian Adam.
Jackie Baillie raised the issue of the share of local government funding and its pattern, and Alex Rowley also spoke about that. I would take their contribution more seriously if they had come with budget proposals yesterday and offered more money for local government, but they did not. Jackie Baillie and all her colleagues came here and told me that they would be so good this year, that they would not have a big shopping list of all the things that they normally come with and that they would be incredibly disciplined.
We did not have such a list.
They managed that approach until the last stages of the debate, when the list, which was to be only about health, actually became about health, local government and colleges.
If I give Labour members the benefit of the doubt and say that the only thing that they demanded in the budget process was more money for health, they shoot their argument in the foot by saying that there should be more money for local government. On Thursday afternoon—just a day later than and not even 24 hours after we voted on the budget—they are arguing for more money for local government, which is a request that they did not bring to Parliament yesterday.
Will the cabinet secretary give way?
Of course I will give way to Mr Rowley.
We are arguing today for local government to have more teachers. Does Mr Swinney accept that there are not enough teachers, that he has got the planning wrong and that local authorities in many areas across Scotland are struggling to find teachers?
Yesterday, I announced that an extra £10 million would be available to fund teacher posts. Where did that figure of £10 million come from? I did not dream it up; it was put to me by the Convention of Scottish Local Authorities. Being a reasonable man, I thought that if I offered to pay that £10 million, I might get an agreement from COSLA. However, I was unable to get that.
Yesterday, I went through carefully with Parliament my regret that I could not get a deal with local government. We have worked hard over the years to get agreements, and local government has been very fairly treated by the Scottish Government’s financial arrangements.
The Labour Party supports what we have done on health expenditure. In fact, it would like us to go further, and that was its position yesterday.
You should draw to a close, please.
I will do so, Presiding Officer.
If we take health funding out of the equation, the local government share of the total budget available to the Scottish Government is going up under this Administration.
What about the teachers?
Mr Rowley shouts, “What about the teachers?” I am putting £10 million into the settlement to support the funding of teachers. I encourage him, rather than shouting at me from a sedentary position, which is most unlike him—it is normally reserved to Jackie Baillie to do that sort of thing—to do something constructive and encourage his local authority colleagues to accept the deal that I have offered.