Local Government Finance (Scotland) Order 2013 [Draft]
Good afternoon. The first item of business is a debate on motion S4M-05549, in the name of John Swinney, on approval of the draft Local Government Finance (Scotland) Order 2013.
Today’s order seeks agreement to the main allocation of revenue funding to local government for 2013-14, to enable local authorities to maintain and improve the vital services on which our communities across Scotland depend. It also seeks agreement to the allocation of additional money for 2012-13 for changes in funding that have taken place since the 2012 orders were discussed and approved by the Parliament.
Before I get into the detail of the order, I reiterate that the partnership that the Scottish Government established in 2007 with local government, which is based on the principle of mutual respect, has freed up councils from central government micromanagement and continues to deliver benefits for the people of Scotland in the design and delivery of public services in their localities.
Building on that partnership, we have agreed joint priorities regarding the delivery of better outcomes and a programme of public service reform that is informed by the Christie commission’s report. Following a joint review with the Convention of Scottish Local Authorities, we have agreed a package of measures to strengthen community planning and single outcome agreements as the best means of councils, the national health service, the police and other public sector bodies working together with the voluntary sector and communities to deliver better services and outcomes for all our local communities. That partnership working is vital and I will continue to listen to and challenge local government as we fulfil our respective obligations.
The importance that we attach to the community planning agenda is illustrated by the significance of the partnership theme that runs through the Government’s response to the Christie commission. It is reflected in a number of areas of joint working between different public services and in the principal area of significant innovation in adult health and social care, which are drawn together through the community planning activities that Derek Mackay and former councillor Pat Watters have taken forward and that have been agreed jointly by the Government, the local authority sector and our wider public sector partners. That will structure much of the joint working that is undertaken at local level.
I turn to the detail of today’s order for 2013-14, which is the second year of the current three-year settlement. Although local authorities were advised this time last year of the provisional allocation for 2013-14, a number of changes have taken place since then, on which I will provide more details later.
In 2013-14 the Scottish Government will provide councils with a total funding package that is worth almost £10.3 billion. That includes total revenue funding of £9.7 billion and support for capital expenditure of £552 million. Today’s order seeks the Parliament’s approval for the distribution and payment of £9.5 billion out of the revenue total of £9.7 billion. The remainder will be paid out as specific grant funding, for which separate legislation already exists, or will be distributed later.
Next month I will bring a second order before the Parliament to pay out £70 million to compensate all councils that budget to freeze their council tax again in 2013-14, which will be the sixth consecutive year that the Scottish Government has funded the council tax freeze. A range of local authorities have already decided to freeze their council tax and I expect a range of other councils to follow suit as they take decisions on their budgets in council chambers the length and breadth of Scotland.
The most significant changes that have happened in relation to the 2013-14 allocations were the transfers of responsibility and accompanying resources for the police and fire services from local government to the new Scottish Police Authority and the new Scottish fire and rescue service. Following agreement with COSLA, that has resulted in the removal from local government funding of a sum in excess of £1.2 billion.
The other significant change was the transfer from the Department for Work and Pensions to the Scottish Government and local authorities of responsibility for supporting vulnerable people in meeting their council tax liabilities, following the abolition of council tax benefit. That comes with a funding transfer of £328 million, which is 10 per cent less than the council tax benefit that is currently paid in Scotland—less money is being provided in England and Wales, too. The Scottish Government has provided an extra £23 million for our new council tax reduction scheme in 2013-14. Together with local authorities, which are contributing £17 million, we will fill the gap that the United Kingdom Government left, to ensure that people who currently get help with their council tax will have access to the same support in 2013-14.
The remaining changes, which amount to £8.2 million, are in respect of: £3 million for free personal and nursing care; £3 million for family support funding; £1.5 million for looked-after children; and £0.7 million following the transfer of responsibility for administering the blue badge scheme.
As well as seeking approval for the 2013-14 funding allocation, the order seeks approval to distribute an additional £58.5 million, which was either held back from the 2012 order or added to allow councils to carry through a number of agreed spending commitments, which have arisen since the 2012 order was approved.
In December 2011, the cabinet secretary made a commitment that no council in Scotland should receive less than 85 per cent of the average revenue allocation to councils. Given that he has reported on the transfer of resources in relation to the police and fire services, can he tell us what percentage of the revenue average will be allocated to Aberdeen City Council in 2013-14?
The point that Mr Macdonald is getting at is one that Mr Rennie has raised with me and which I have explained to the Parliament. We had a commitment that no authority would receive less than 85 per cent of the Scottish average. We calculate that at the outset of the spending review period, and that is applied for a fixed period, over the spending review, as is the other floor that is added to the local government settlement. As we applied that at the spending review in 2011, it was delivered for Aberdeen City Council and, on the basis of that calculation, it is consistent during the three years of the spending review. The issue will of course be revisited when the spending review period elapses.
The cabinet secretary gave a rather complicated explanation; the reality is that Aberdeen City Council is getting 79 per cent of the average, which is £20 million short of what it was promised. It was promised 85 per cent and it is getting only 79 per cent. Of course the budget has changed, but the reality is that Aberdeen has been short changed.
Mr Rennie has made the point a number of times and I have tried to be as helpful as possible in explaining the realities of the local government finance formula. We make calculations about the floor arrangements by agreement with local authorities in the spending review. In the spending review in 2011, the 85 per cent floor for Aberdeen was established, as it was for the City of Edinburgh Council, and that has been fulfilled for the duration of the spending review period. The commitment has been unreservedly delivered by the Scottish Government.
I return to the changes that the Government is making for 2012-13: £27.5 million will be allocated for the teachers induction scheme; £9 million for youth employment, opportunities for all; £5 million for additional work resulting from the 2012 local government elections; £3.5 million to help with the introduction of curriculum for excellence; £3 million for family support funding; £1.5 million for looked-after children; and £1.5 million for free personal and nursing care. Those additional sums have been provided to help local authorities to fund additional tasks that have been identified during the course of the current year.
The total revenue funding paid out to local authorities but not included in the order in 2013-14 includes: £86.5 million paid directly to criminal justice authorities; £70.2 million for the council tax reduction scheme, which, as agreed with COSLA, will be distributed later, when more up-to-date information is available; £70 million to fund the council tax freeze; and £37.6 million for the teachers induction scheme.
Although it is not part of the order that we are considering, the overall package for local authorities includes support for capital funding in 2013-14 of more than £552 million, which includes local government’s full share of the capital consequentials that I announced to the Parliament on 19 December.
I turn to business rates, which are a key issue for Scotland’s business community and an integral part of local government finance. In November, I announced that we would again match the poundage rate in England. I also announced that a record number of small businesses across Scotland were benefiting from the small business bonus scheme. In 2006-07, just £24 million was awarded under the previous Administration’s relief scheme for small business. Under this Administration, it is estimated that the small business bonus scheme will save Scottish business around £151 million in 2013-14, which is almost seven times as much.
Along with the reforms to empty property relief, combined with our fresh start initiative, which aims to encourage landlords to let out empty properties, as well as create new discounts for entrepreneurs across Scotland who take on such properties, these reliefs, which are the most generous in the United Kingdom, provide a real boost to businesses in Scotland.
In summary, the total funding from the Scottish Government to local government next year will amount to almost £10.3 billion. In the present difficult economic times, we have worked constructively with our local government partners to agree an overall funding settlement and package of measures to help sustain and develop the services on which the people of Scotland depend, wherever they live.
I move,
That the Parliament agrees that the Local Government Finance (Scotland) Order 2013 [draft] be approved.
14:41
These are indeed tough times for local government. The order that we are considering shows that we cannot trust the Scottish National Party to protect local services. As ever, the cabinet secretary is pretending that the settlement represents a good deal for local government and that it will protect local services. We all know that that is a complete fiction. Today’s debate is our chance to hold the SNP Government to account and to put on record the impact of the SNP’s budget settlement on local services across the country.
That story needs to be told. This year, the Local Government and Regeneration Committee did not even take evidence from the cabinet secretary or the Minister for Local Government and Planning on the budget proposals, so we have had no chance to scrutinise the implications of the budget cuts that are made by the order under consideration.
Will the member give way?
No, we have only a short time. [Interruption.] I might take an intervention later, but I am only 50-odd seconds into my speech.
The challenges that local government in Scotland faces are stark as funding is squeezed. This time last year, the SNP Government passed on the brunt of its cuts—83 per cent of them, in total—to local government. That provides the backdrop to this year’s budget, which still represents a real-terms cut. It will put further pressure on hard-pressed local authorities, which will have to make increasingly difficult decisions.
Yesterday, the SNP pushed through cuts to housing, further education and the Edinburgh to Glasgow improvement programme. It was not a budget for jobs. There is a massive underspend on non-profit-distributing schemes and, today, a whopping £52 million has been chopped off capital spending for local government. Today’s financial settlement will mean that local government will again be forced into a financial straitjacket, and will be forced to reduce staff numbers and the services that they provide. Make no mistake—the consequences will be felt by families and local businesses across the country.
Yesterday, the Labour Party said that its input into the budget had been highly focused and that it had pressed us to change our position on college funding, housing and the EGIP. There was no mention of local government. Does that not make the member’s speech utterly worthless?
I can give some time back for taking interventions.
Thanks very much, Presiding Officer.
Mr Swinney will know, if he listened to what Ken Macintosh said yesterday, that the impact that housing is having on local government is central. We know that the social housing system is broken and needs to be fixed. That is why we suggested putting so much money into housing in the budget proposals that we made yesterday. That would impact materially on local government. It is not a case of putting up lots of one-bedroom flats tomorrow; it is about getting local companies going and encouraging the building of houses across the country. That would make a real difference to local government tax payers.
This year, we have seen a further 2.2 per cent real-terms decrease in local government funding, and that is after the money for police and fire services has been removed from the budget line. Let us not forget, either, that the Scottish Government is trying to sneak through redundancies from police and fire boards before the national services are set up in a few weeks’ time. This year, the trend continues, with local government core funding falling as a share of the Government budget. However, every time I raise the issue of SNP cuts in the chamber, local government ministers praise the “generous” settlement. I put it on record that I think that the business rates incentive scheme is a great idea, but what is its context? The toughest economic climate for decades, with shops disappearing daily. That issue was debated in the chamber earlier this afternoon.
Local government needs to be funded effectively. We know that the die was cast by yesterday’s budget, but I point out for the record that most of the key services that we and our constituents rely on daily are provided by local government’s budget choices, which are hamstrung by the SNP Government’s choices. That means tough choices across the country. We are beginning to see increased charging for care services, newly qualified teachers finding it hard to get permanent posts and youth unemployment rocketing. That is the context for the budget ambitions that were announced yesterday. We need to get people back into work and get the shovels in the ground for the projects that the SNP loves to talk about.
Alongside the loss of vital services, hard-working council staff are bearing the brunt of the cuts. Since 2008, 25,000 local government jobs have gone, which impacts on councils’ capacity to deliver services and on the economy, and it removes money from people’s pockets that is then not spent in local shops and businesses. We know from Treasury figures that the loss of 51,000 public sector jobs means the loss of 52,000 private sector jobs. That is the squeeze that is being put on our local economies.
Ministers tend to trumpet the council tax freeze, but although more and more money goes into the local government budget as the years go on, it is not enough to fill the gap. The true cost of the freeze is nearer £100 million a year—that is the squeeze that local authorities feel day and daily.
The cabinet secretary said that the Scottish Government has generously offered £23 million towards the £40 million gap created by the cut that the UK Government made to council tax benefit when it devolved it to the Scottish Government. In Wales, the Labour Welsh Assembly Government is providing for the whole of the 10 per cent gap this year. Meanwhile, our councils in Scotland are taking a hit of £17 million.
We will hear this afternoon that there are no negative consequences for hard-pressed council tax payers. The SNP’s regularly suggested local income tax solution, however, is hidden away in a filing cabinet somewhere in Victoria Quay, not to be allowed out until after the referendum. That is no solution for hard-pressed council tax payers. The upshot is that for all the talk about partnership, local authorities do not have flexibility. They have to sign up to what the Government proposes, otherwise they will face huge financial consequences and, what is worse, so will their constituents.
In our election campaigns across the country last year, Labour highlighted supporting people through these tough economic times by investing in local jobs and training, in our schools and in support for carers. Our Labour council colleagues are now doing their utter best to protect and improve services, working with local businesses and investing in training through their own schemes, even though their hands are tied behind their backs by an increasingly centralising SNP Government.
Today, we got the welcome news that the Edinburgh trams will be included in the national concessionary scheme. We all thought that that was great news until we looked at the detail: there is no commitment to any cash and it is left up to the local authority to sort out the details. No surprise there, then; passing the buck as usual.
We want to tackle the social injustice and inequalities in our communities that have become more acute in these tough times. Whether it is families trapped by debt, children being denied the best start in life or people facing the future without decent care, local government has the potential to make a difference in addressing those serious social inequalities, but it needs the resources to make the difference to people’s lives that they want. Next year’s budgets will be even tougher as the impact of Tory welfare reform kicks in.
The Local Government Finance (Scotland) Order 2013 will only hamper economic recovery across Scotland and damage the lives of vulnerable people who rely on our local government services. Today’s settlement is therefore not good news, and SNP back benchers know it.
I call Margaret Mitchell, who has five minutes. There is a little bit of time on hand for interventions.
14:49
Thank you, Presiding Officer.
The Scottish Conservatives welcome today’s debate on the Local Government Finance (Scotland) Order 2013, which provides a vital opportunity to discuss the current and future funding of Scotland’s local authorities. I confirm at the outset that the Conservatives will vote to approve the order. Nonetheless, the debate gives us the opportunity to look at the background to the provision of the order.
For the financial year 2013-14, the total Scottish Government settlement to local authorities will be almost £10.3 billion, which is substantially lower than the settlement for that year that was originally set out in the 2012-13 draft budget and spending review. As the cabinet secretary confirmed, the reduction can be explained by the transfer of responsibility for policing and the fire service from local government to the new Scottish Police Authority and Scottish fire and rescue service.
Our consideration of the order follows yesterday’s stage 3 proceedings on the Budget (Scotland) (No 2) Bill. The order sets out the amount of revenue support grant that is payable to, and the non-domestic income for, local authorities in 2013-14. Excluding the police and fire moneys, to allow us to make a like-for-like comparison, local authorities in Scotland over the next financial year will have a 1.8 per cent decrease in funding in real terms.
The Scottish Conservatives have supported the council tax freeze, so the remainder of my opening and closing remarks will concentrate on the revenue support grant and non-domestic rates income.
The order reveals a projected 7 per cent increase in non-domestic rates income for 2013-14 yet, to date, no information has been forthcoming on the current collection rate for non-domestic rates. Last year, the Local Government and Regeneration Committee and the Finance Committee recommended that the figures should be published regularly and, this year, both those committees again stated that the figures should be published regularly. Given that the cabinet secretary receives collection rate figures quarterly, it is difficult to understand why, despite the recommendation of both those committees for two years, not to mention the best efforts of my colleague Gavin Brown to get the information released, the cabinet secretary has steadfastly refused to do so. As a result, it is just not possible to assess accurately whether that 7 per cent increase is even feasible.
Furthermore, the cabinet secretary will be aware that the Scottish Conservatives have argued consistently that the decision that local authorities will retain only 50 per cent of the income surplus that is collected under the business rate incentivisation scheme represents an opportunity lost. The similar scheme that the Scottish Conservatives suggested as far back as 2009, under which local authorities would have retained 100 per cent of the surplus, should have been introduced.
It should be stressed that businesses were desperately looking to the review of business rates that was to be undertaken in 2015 in the hope that it would result in the introduction of more realistic rates that reflect the dire economic circumstances in which they operate. Instead, the cabinet secretary has delivered a cruel blow to businesses by announcing that the revaluation of business rates will be delayed until 2017. That decision was taken without having put in place the sort of transitional relief scheme for businesses in Scotland that is available to businesses in England.
The coming period will clearly be a difficult time for local authorities. I look forward to hearing other members’ views during the debate.
As this is a short debate, we will have speeches of four minutes, although I have a bit of time in hand for interventions.
14:54
In the debate on the order, we must recognise the cabinet secretary’s contribution in obtaining significant financial outputs to accelerate key priorities for the Scottish people. It is worth reinforcing the point that the Scottish Government deserves credit for creating a degree of security and sustainability in local government budgets, and its strong commitment in that regard should enhance local government spending priorities. After all, from 2008 to 2012-13, local government’s budget has increased by nearly 9 per cent.
Since 2007-08, all councils have frozen council tax rates and I welcome the cabinet secretary’s commitment to continuing support for that move. We will have to wait and see whether local authorities, too, support the continuation of the freeze, which, I should point out, saved the average band D household more than £300 in the period from 2008 to 2012.
The more than £591 million revenue allocation for North Lanarkshire Council is not to be dismissed lightly. I note that, unlike the previous Labour-Liberal Executive, which clawed back local authority efficiency savings, the Scottish Government has since 2007 allowed authorities to retain them for spending on priorities in their areas and has given authorities the opportunity to invest in their strategic priorities and increase service provision as they deem necessary.
As has been mentioned, there has been much discussion about the resource allocations. It is worth pointing out that, as Sarah Boyack indicated, local government expenditure is being squeezed in cash terms by 0.2 per cent in the 2013-14 budget; however, that should be seen in the light of a real-terms cut to the Scottish Government’s budget. It could be argued that existing budgets should be prioritised and take account of the best practice that many local authorities throughout Scotland have already established.
The arguments that have been made by local authorities about the financial settlement are rather ironic, given the difficulty of comparing this year’s figures with those of previous years as a result of the removal of fire and police service budgets from the settlement. That money will now be paid directly to the agencies concerned, and local authorities will have to take account of the fact that those budgets have been withdrawn from their settlements. We look forward to seeing how that will work out in future years.
Other issues are worth further examination, but I have to say that the issue of executive pay in local government is a real concern for me. Scrutiny of the parameters for those pay levels looks increasingly self-serving, and the area needs to be addressed. For a start, the right tone needs to be set in this financial environment and at a time when many local authorities are still trying to deal with equal pay and single status claims that have been outstanding since 1999.
To provide some context to the debate, I point out that the Government is taking account of reality outside the chamber and, as the cabinet secretary has mentioned, is addressing the issue of the social wage by encouraging—I was going to say “insisting”, but I meant “encouraging”—local authorities to introduce it for all local authority employees. That must be welcomed. Many people, including low-paid workers in local authorities, are benefiting from the cabinet secretary’s decisions, particularly with regard to continuing the freeze.
I support the motion on the order that has been placed before Parliament, look forward to discussing the issues further and hope that the Opposition will face up to the reality with regard to budgets and make a positive contribution to the debate.
14:59
Once again we are debating an underfunded settlement with a Scottish Government intent on pushing councils off the economic cliff. Over the next two weeks, councils will meet to agree deep cuts in their budgets. John Swinney, who yesterday was quick to accuse others of hypocrisy, says that he is proud of his budgets, but will he be proud of the cuts and the damage done when councils are forced to consider increasing charges for their services, closing schools, cutting play parks and leisure facilities, reducing staff, cutting voluntary sector funding and closing or reducing opening hours for libraries, local offices and other facilities? Possibly the only thing that they will not be cutting is the grass. Councils simply cannot reduce spending without reducing employment, and the minister should know that that hits the local economy, further depressing council income.
Local authorities face further decline in their share of Scottish Government expenditure. Despite local government’s share of the budget now being less than 30 per cent, it is getting 50 per cent of this year’s cuts on top of the heavy cuts last year. The council tax, which is the main alternative source of income, is frozen. The Scottish Government talks of partnership with COSLA, but it withholds £70 million until councils surrender to its diktat. Is that a partnership? I do not think so. Good partners do not use a big stick to get their own way.
Will the member take an intervention?
No. I will not take any interventions from people who applaud college cuts.
We hear a lot from the Government about prevention, but preventative services are being eroded by Mr Mackay’s and Mr Swinney’s cuts. A stitch in time saves nine, but that is a bit difficult when the Scottish Government has cut the thread. The deeper the cuts, the harder the decisions become. Local authorities are beyond trimming excess. They are now cutting to the bone, and that means jobs. What price the Scottish Government’s policy of no compulsory redundancies if it forces others down that road?
Doubtless Mr Swinney will claim that it is not his fault. It is your fault, Mr Swinney. The public know that it is your fault, for you have compounded the UK austerity with council cuts that are two and a half times the cuts to the Scottish budget.
Ministers say that they would make different choices after separation, but why not make them now? Why make local government pay the price while ministers fail to stimulate growth with their grossly underperforming non-profit-distributing model? Why hit local authorities with an additional £17 million funding gap on council tax benefit? Why are you not protecting local authorities from the impact of the Tory welfare reforms? Why spend so much time and use so many resources on the dogma of separation?
No doubt councils will be blamed—particularly those that are run by other parties—for any problems that arise from the Scottish Government cuts, but let us be honest. This is not a settlement but an imposition. You, cabinet secretary, and the Minister for Local Government and Planning, Mr Mackay, in being so weak and not standing up for local authorities, are responsible for the damage that the Scottish Government is doing.
As for the Scottish Government’s tame back benchers, who are chained to their leadership by a goal of independence, are they really happy with the cuts to local government? How far does the prospect of independence need to recede before we find out? Or will their seal-like applause just get louder to hide their growing unease?
I remind members to speak through the chair, please.
15:03
Once again, the local government finance settlement is, considering all the circumstances, a generous one. It maintains local government’s share of the Scottish Government’s budget, which is higher now than it was in 2007-08. Once again, council tax will be frozen, ensuring that hard-pressed households are protected, supported by £70 million allocated on a needs basis. That is economically important because our ailing economy lacks demand, and cutting household budgets would only further depress demand. It is the right thing to do both economically and morally.
Teacher numbers will be maintained, supported by £39 million, and a range of measures are being introduced to ameliorate the worst effects of the UK Government’s welfare reform, including £40 million to plug the gap that is left by reductions in council tax benefit. That is another measure to protect hard-pressed households. It is morally wrong that the cuts should fall hardest on those who are least able to bear them but it is a mistake to think that the Scottish Government, with limited resources, can fully protect Scotland from those Westminster-imposed cuts.
Councils, too, are receiving their share of extra capital—a further £46 million to fund shovel-ready projects. All that will provide much-needed local economic stimulus, supporting jobs and demand.
Of course, we have—incredibly—heard the Tories continuing to deny their austerity policies and arguing that the UK Government is not making cuts. They do that at the same time as they lobby on behalf of big business. I do not think that the Scottish public are likely to be fooled by that.
Labour—just as absurdly—continues to call for more spending on virtually everything. It seems to be equally in denial of the Tory austerity policies. Today, Labour members will fail, as they have failed since the draft budget was first introduced several months ago, to provide any meaningful alternatives in terms of showing where they would get the extra money from to fund their long and expensive wish list. The only thing that we have heard from them in that regard this afternoon is that they want to increase council tax, adding hundreds of pounds to the bills of hard-pressed households.
The position of Labour members is wonderfully complacent. They seem to calmly accept the Tory cuts and somehow seem to believe that the Scottish Government can fully protect the Scottish people against the ravages of their better-together friends in the UK Government.
With the limited powers at its disposal, the Scottish Government can never fully protect the Scottish people in these circumstances. It cannot do so without the full range of powers that will come with independence. Given all the circumstances, and most notably the Westminster cuts, the local government settlement is both fair and prudent.
15:07
It is worth taking a moment to consider today’s order, which is quite significant. It is probably the most significant local government finance order for many years because, following the SNP’s decision to centralise the police—which we opposed—local government has seen £1.2 billion stripped from its control. The Government claims that it is in favour of local government and has a respect and trust agenda with local government, but I think that stripping £1.2 billion from its control shows a certain degree of disrespect.
It is worth reflecting on the fact that this is probably one of the most significant orders for some time, which probably represents one of the biggest-ever transfers of fiscal power from local government to central Government since around the time of the poll tax.
Would Mr Rennie care to remind members how much the removal of ring fencing contributed to local government’s control? It went from some 20 per cent of expenditure down to some 4 per cent.
Stewart Stevenson is right—removing the ring fencing was a good move and gave a certain degree of control to local government. However, the order that we are discussing has undermined all those efforts. The stripping of that finance from local government control has significantly reduced its powers.
It is also worth reflecting on the fact that the promise of the 85 per cent funding floor has been broken. Mr Swinney promised that the funding floor would be 85 per cent. He gives a long explanation of his thinking, which, I am sure, convinces some people. However, I wonder what the current view is of the SNP MSP who said, at the time, that the funding floor represented a great victory and that, with regard to Aberdeen,
“the new funding floor will give the city a fairer deal for years to come.”
They said “years”, plural. Not one year, but years. We need an SNP Government that follows through on that commitment.
On a Scotland-wide average, spending per person is about £1,795, based on the Scottish Government’s allocation of more than £9 billion to local councils. In Aberdeen, with a budget of about £311 million and a population of around 220,000, the figure is £1,412. That accounts for £20 million—that is how much Aberdeen has been short changed. I hope that all the Aberdeen members in the chamber are able to explain to their constituents why that funding has not been followed through and why the funding floor has not been kept. That will have a significant impact over the years to come. When John Swinney winds up the debate, I hope that he will at least reflect on the fact that the commitment has not been maintained, and I hope that it will be maintained in future settlements. Such commitments are important.
In the few seconds that I have left, I will reflect on what I think should be the direction of travel in Scottish politics in years to come. Many parties in the Parliament are in favour of more powers for this Parliament, some more than others. I do not think that it should necessarily stop at Holyrood. We also need to consider the transfer of powers to local government. That is why, in our proposals for home rule in a federal UK, we have set out that council tax and business rate powers should be much more in the hands of local government, so that it, too, can have control over the purse strings. Holding the purse strings brings fiscal responsibility in the same way that holding the purse strings in this place, in partnership with the UK, is what we should be trying to achieve. I hope that that is what members of the Parliament will agree to in the years to come.
15:11
There have been some interesting speeches. I turn, first, to some of the comments that Ms Boyack made. She said that local authorities cannot trust the SNP. She said:
“local authorities do not have flexibility.”
I can tell Ms Boyack something, as a former councillor. Certainly, councils did not trust the former Labour-Liberal Executive, which held most of the purse strings through ring fencing, so that councils were forced to spend money on things that were not priorities in the areas concerned. That was economic and financial madness as far as I am concerned, and I am glad that that has disappeared off the agenda. There is more flexibility under this Government, given the signing of the concordat and the respect agenda with local authorities.
Many things have been said in today’s debate. However, I quote the COSLA finance spokesperson, one Councillor Kevin Keenan—a Labour councillor. On 13 December 2012 he said, after the announcement that day:
“There are no surprises in what the Minister told Parliament this afternoon ... but it has to be accepted that there are challenges in there, challenges that will need to be faced by all 32 Councils in Scotland.”
Will Mr Stewart take an intervention?
Not at the moment, thanks.
In that man’s sensible comment is recognition of the fact that the Government faces challenges because of the Westminster cuts that we have had to bear. That was not the typical moans and groans that we often hear.
Yesterday, we heard from Labour members that the priorities were housing, colleges and the Glasgow to Edinburgh rail link. Today, it seems to be local government. That is one of the things that really annoys me. Since the draft budget order was made, Labour has made announcements with spending commitments of £2.74 billion. Let us consider the realities of local government finance, and let us—
Will Mr Stewart take an intervention on that?
No. Ms Boyack would not take an intervention from me. I might let her in later.
Between 2007-08 and 2012-13 the Scottish Government’s budget increased by 6.4 per cent. Over the same period, local government’s budget increased by 8.9 per cent. That is showing respect to local government—an increased share of the Scottish Government budget over the piece.
What is the member’s response to Mr Swinney’s decision that Aberdeen City Council should no longer receive 85 per cent of the Scottish average revenue funding per head?
As an Aberdeen MSP, I was going to come to that. First, I point out that the 85 per cent floor applies over the spending period, as Mr Swinney has explained. Ours is the first Government to have put in place such a floor, and I am very proud of that.
At the same time, I still firmly believe that there should be a change to the funding formula. Given our respect agenda, Mr Swinney cannot impose that on local government, so the issue needs to be dealt with by the Convention of Scottish Local Authorities. I fought for such a change within COSLA, and I will continue to call for a change to the funding formula. Mr Rennie may well sit and smirk, but the key thing is that we need a fair funding formula. If Mr Swinney were to impose a change on local government, there would be absolute uproar in this place. Mr Swinney has done what he promised to do in the SNP manifesto, and I am glad that he did so. Do I think that Aberdeen should get more? Yes, and that could be achieved through a change to the funding formula.
15:16
Yesterday’s budget was bad news for my constituents. It was bad news because the Scottish Government has turned its back on students in pressing ahead with a £24 million cut to college budgets—a decision cheered and applauded by SNP back benchers—and it was bad news because the Government’s cut to the housing budget has come at a time when a shortage of affordable housing is one of the most urgent issues facing my constituents.
Today, there is more bad news. We know that the SNP Government is passing the buck by passing on the vast majority of cuts to local authorities. As Sarah Boyack said, last year 83 per cent of the cuts were handed down to local government. The most painful decisions are being passed on, but the effect in our communities will be the same.
Will the member take an intervention?
No thanks.
Nowhere will the impact on local services be felt more than in my area, which is Renfrewshire—an area that the Minister for Local Government and Planning knows well. When Renfrewshire Council sets its budget next week, I know that the new Labour administration will make the best use of the limited resources available. Renfrewshire Council has already shown a determination to do all that it can to assist the most vulnerable people in our communities. The council recently announced a number of measures to support local residents in dealing with the impact of welfare reform cuts. The council is also investing heavily in tackling youth unemployment in Renfrewshire.
That work is being completely undermined by a Scottish Government that is cutting not only the local government settlement but other financial support. Renfrewshire Council needs to plug not only a £16 million shortfall over the next two years but the £800,000 of youth employment money that was allocated by the Scottish Government last year but is not being continued. With around 13 people chasing every job vacancy in Renfrewshire, funding to tackle youth unemployment should be an absolute priority. We need to do all that we can to help people back into work. The Scottish Government’s answer appears to be not to give additional money but to pass on disproportionate cuts, which could result in Renfrewshire Council losing 250 staff in the coming year.
Ministers have described the settlement as a good deal, but the people in Renfrewshire will regard it as a bad deal. As the cabinet secretary and the minister know, Renfrewshire Council is the only mainland council in Scotland to have been allocated the minimum possible grant floor funding by the Scottish Government year on year since 2009. During that time, deprivation has increased significantly. According to the Scottish index of multiple deprivation, last year 48 zones in the 15 per cent most deprived areas of Scotland were found in Renfrewshire, compared with 43 in 2009 and 36 in 2006. Renfrewshire has also experienced an increase in the number of zones in the 5 per cent most deprived areas. Ferguslie in Paisley was judged to be the most deprived area in the whole of Scotland last year. It is no coincidence that the level of deprivation in communities in Renfrewshire is increasing at the same time as the Scottish Government’s financial support is decreasing.
In difficult times, support should be provided to those most in need. Why should an area such as Renfrewshire, which has above average social and economic need, receive below average funding? John Swinney and Derek Mackay can change funding settlements when they want to. They have made extra finances available for other areas, so why not give Renfrewshire a fair deal?
In the past two days, we have seen the Scottish Government make damaging decisions that will have a serious impact in many communities across Scotland. Yesterday’s cuts are unwelcome, but I fear that, with the Government passing on the buck to local authorities once again, even worse may be yet to come. It is time that this Government stood up for local communities. It is time that the Minister for Local Government and Planning stood up for Renfrewshire and gave Renfrewshire a fair deal.
15:20
I congratulate the Cabinet Secretary for Finance, Employment and Sustainable Growth and local councils on what has, over the years, been an effective collaboration, despite the variety of political views and objectives held by all the councils and members in the chamber.
Scotland has the lowest number of elected politicians per 100,000 of population in any European country: it has 33.5, while south of the border has about 42 and Greece has about 660. I am certainly not advocating any change one way or the other, but that illustrates that we expect a great deal of our councils and councillors. Most councillors serve without thought of self-interest and work hours that would be hardly contemplatable if one were to look at the minimum wage. We are fortunate—in all political parties—in the broad sweep of the councillors that we have.
Willie Rennie—who is no longer in the chamber—talked about Aberdeen. I noted that he did not choose to talk about Aberdeenshire. Aberdeenshire Council, which is Tory led in partnership with the Lib Dems and an assorted group of independents—the word “group” is hardly appropriate; the phrase “ferrets in a sack” comes closer to it—has had a massive underspend of tens of millions of pounds in consecutive years. That fatally undermines any arguments for increases in resources. More fundamentally, because of that underspend the Liberals and Tories in administration are unnecessarily cutting services in relation to the funding that they have. The removal of wardens from many of our sheltered housing schemes is particularly resented by my constituents.
There are individual councillors who do not rise to the challenge, and I am going to take the opportunity of naming one in my constituency because of his long-running failure to earn his keep. Councillor Alan Buchan is a vice-convener in the council administration. He cannot even find it in his heart to stay with the pack when he is leading a delegation to meet people in the energetica corridor—the most important of our economic environments. It is time that that councillor in particular looked at his own performance and that the council leadership looked at it, too.
Interesting things have happened. We have seen councils agree to maintain teacher numbers in line with pupil numbers, which is entirely welcome.
As in the past, Lewis Macdonald has made reference to funding for different councils. I am slightly surprised that we have not had a reminder about that, so let me provide one. Labour, in essence, controls COSLA. It can change the formula, and I encourage Labour to look at doing so.
I want to look at the numbers in the letter that the cabinet secretary has produced that relate to private finance initiative and loan charges. In Glasgow City Council, which has long been run by the Labour Party, such charges account for nearly 10 per cent of the updated service provision, which is quite out of line with any other mainland council. The island councils are in a different position because they have different circumstances. The Labour Party, in particular, needs to look a little closer to home in relation to effective administration.
In September 2012, I joined the Local Government and Regeneration Committee, which has responsibility for local authorities. I very much enjoy being there, and I expect that we will see more support for councils. That committee will work on behalf of councils—and with the Government—as we always do.
We now move to closing speeches. I remind members who have taken part in the debate that they should be in the chamber for the start of the closing speeches.
15:25
A number of valid points have been made from all parts of the chamber during the debate. It is not in doubt that the order confirms budget reductions to local authorities for the next financial year and that, consequently, Scotland’s councils will have to make some tough decisions.
In my opening speech, I concentrated on the non-domestic rates income provisions in the order. I would be grateful if the cabinet secretary or the minister would answer the following questions in their closing comments. How much has been collected so far under the business rate incentivisation scheme? What is the Scottish Government’s prediction for the year’s total? How many of Scotland’s 32 local authorities will receive money back and how much will they receive?
I turn now to the revenue support grant. Although it is welcome that ring-fenced grants have more than halved since 2006-07, concern has been voiced in the Parliament and elsewhere about the ability of local government to act independently and respond to local needs when councils are becoming more heavily dependent on central funding sources.
That concern was neatly summed up by the respected economist and adviser to the Finance Committee, Professor David Bell, when he stated that local government is
“increasingly dependent on funding from the Scottish Government and therefore potentially less able to take an independent stance on policy.”
I would be interested to hear the cabinet secretary’s comments on that.
I am wondering how far back I have to remember to the days when large and, it seemed, significant parts of the council budget were ring fenced and separately accounted for at great expense.
I covered that. Of course it is welcome that that is no longer the case but, as Professor Bell highlighted, local government is increasingly dependent on central funding and not able to make the choices that it would ideally want to make.
The Scottish Conservatives have consistently argued for the town centre regeneration fund. We made its creation a condition of supporting the minority SNP Government’s budget in 2009. We welcome the announcement of the £2 million for town centre regeneration but, as it is spread over 32 local authorities, it is unlikely to make any significant impact on our town centres, which are reeling from the prospect of the empty property tax and the reality of the retail levy.
Local authorities knew that the financial settlement for 2013-14 would be challenging, and the debate has confirmed that view. However, it is to be hoped that Scotland’s councils can turn the challenges into opportunities to consider better ways of delivering services in the wider debate about public sector reform.
15:28
I welcome the opportunity to take part in the debate and to scrutinise the SNP Scottish Government’s record on local government.
Throughout the debate, we heard from the slavishly loyal SNP back benchers about how outstanding the settlement is for local councils. We need to follow the money.
Let us look at the figures that the Scottish Parliament information centre has provided on the settlement. Those figures tell us that, when we strip away all the transfers and police and fire money, local councils have £216 million less in real terms than they did last year.
Despite the fact that local government accounts for around a third of the Scottish Government budget, the share of cuts being apportioned to councils is over the 50 per cent mark. This SNP Government is penalising councils, so let us not hear any more about what an outstanding settlement it is and what a great relationship the SNP Government has with councils.
I am grateful to Mr Kelly for giving way. Can he help us by telling us by how much money the local government settlement should be increased?
The point that I am making is that, in the budget that Mr Swinney is laying out, more than half the cuts are being made to local government—passed on from the UK Government. The local government budget represents only a third of the Scottish Government’s budget, so it is a matter of record that the local government section of the budget is being more penalised than the other areas.
Will the member give way?
No. I am sorry, but I want to make some progress.
Stewart Stevenson quite rightly paid tribute to the work of local councillors, but let us look at the practical effect that this settlement has had and the difficult decisions that councillors will have to make. They face the prospect of having to close or curtail the activities of sports facilities in the run-in to the Commonwealth games, when we are trying to encourage participation in sport.
Will the member give way?
Just let me make these points. At a time when the elderly population is rising, we see compromises being made in care packages, which puts real pressure on pensioners and councils. It is a matter of fact that some schools cannot afford to print out the homework for pupils so pupils have to get it printed at home. Some families in the very poor areas that Neil Bibby talked about cannot afford computer printers.
Will the member give way?
I will give way to Stewart Stevenson.
Now that the Labour members on Aberdeenshire Council have recently joined the administration, will the policy of significant underspend be sustained? Mr Kelly should bear in mind that he will be held to account for his answer at a later date.
I am proud of that council’s record in delivering a living wage—but even that policy will be compromised in different councils across the country by today’s settlement from the SNP Government.
The SNP Government has made a political choice. It has passed the buck and is trying to pass the blame to local government.
Will the member give way?
I am sorry, but I need to make some progress.
As Sarah Boyack rightly pointed out, 25,000 local government jobs have been lost since 2008, which will have an impact on local economies.
Neil Bibby was right to mention the report issued before Christmas that highlighted areas of deprivation, such as Ferguslie Park in Paisley, Whitlawburn in South Lanarkshire, and Brucehill in Dumbarton. How is this settlement responding to the challenges of deprivation in those areas? What do we see from the Government? We see 32 workstreams set up to look at independence. The Government should take the people from those workstreams and set them to work on how we can challenge deprivation in our communities and help the very people that Neil Bibby talked about.
The fact is that, as Mike MacKenzie’s speech suggested, this Government is locked in the independence bubble. It has announced independence day when it cannot even give us a date for the referendum, and its members are cheering on the council cuts. It is time that the likes of Mr Mackay got out of their ministerial offices, listened to people on the ground and produced a fair settlement that gives councils a chance to face up to the challenges that they find in their communities.
15:35
When the Labour Party was directly asked how much additional revenue or capital funding it would give local government, the silence was deafening on absolute figures and an alternative budget. I listened closely to Ken Macintosh’s speech in the budget debate yesterday; he said that he had only three simple requests. They were for extra resources for colleges, for housing and for rail. Not a penny was requested for local government capital or revenue spend.
Who does the minister think would construct the houses? It is perfectly obvious that local authorities and housing associations would do it.
In addition to the Barnett consequentials, of which a 28 per cent share will go to local government, there will be the housing resource from the Scottish Government, to which Mr Swinney committed the Government and Parliament. The views that the Labour Party says it holds would take away resources from local government, schools, roads and other priorities. Labour Party priorities depend on which debate it is attending, so members should expect no consistency from it on such matters.
Margaret Mitchell asked appropriate questions about the business rate figures. We must look at the business rates incentivisation scheme in the end-year process, when we will have the outturn figures. I cannot say how much will be realigned through that and how much will be returned to local government through the 50 per cent mechanism, because targets are set for the end of the year. However, we will of course return to that.
Is not the cabinet secretary regularly updated on the figures throughout the year?
Margaret Mitchell asked how many councils would benefit from the business rates incentivisation scheme. My answer is that we will not know until the end-year process takes place, when we will have the outturn figures on business rates and the targets that have been reached. However, local government has certainty, in that the Scottish Government guarantees the resource to local government.
Labour conveniently left the non-domestic rates income out of the local government settlement figures, which is how it arrived at amounts of 50 per cent, 85 per cent and 83 per cent. Labour members have accused SNP back benchers of being loyal, but at least SNP members can stick to the same line in a debate, instead of giving four different figures in accusing the Government of reducing local government’s share of the resource.
Incidentally, local government’s share has increased under this SNP Government, although it was decreasing under the Labour-Liberal Executive. An interesting statistic for folk who would like to indulge in doom-mongering is that, in the period when the Scottish Government budget increased by only 6.4 per cent, the local government budget increased by 8.9 per cent—by more than the increase in the Scottish Government budget. We recognise that times are tough.
I turn to Willie Rennie’s speech. The cabinet secretary again clarified how the figures were produced and how, as a consequence of the 85 per cent floor, Aberdeen City Council and the City of Edinburgh Council received contributions that were less than would be the case under the funding formula. The 85 per cent commitment was delivered. Mr Rennie misunderstands that mechanism and also misunderstands the transfer to local government for police and fire services. The transfer from the Scottish Government to local authorities for police and fire purposes was largely ring fenced and was to be passed on to the police and fire authorities. By transferring the money—incidentally, the approach was agreed in partnership with local government in the spirit of the concordat and our partnership approach—local authorities have largely agreed with the transfer figures to the new single authorities. However, like Mr Kelly, Mr Rennie is obsessed with the constitution rather than with the bread-and-butter issues that we face daily.
Mr Pentland pleaded with us to mitigate the impact of Westminster decisions, although we have done that in respect of council tax benefits and in other areas. Would not it be better to cut out of the equation the Tory-led Administration in Westminster so that we can make decisions for ourselves in Parliament with Scotland’s own resources?
Will the minister take an intervention?
I would like to make some more progress.
The figures that the Labour Party has given are inaccurate, of course, because they ignore the non-domestic rates income. It will be for councils to make choices.
I return to Mr Pentland’s colleague Mr Bibby. We are no longer sparring in the council chamber—we are in Scotland’s national Parliament—but I am left wondering why he does not support the floor mechanism, which provides the safety net and the recognition of deprivation that we would expect in order that we can care for the most vulnerable people in our communities. The floor is not a disadvantage; it compensates less-well-off areas and gives additional resources to local authorities that are in positions such as that of Renfrewshire Council.
Will the minister give way?
I would like to make more progress.
I want to probe the budget choice for Renfrewshire Council, which did not invest in some of the priorities that Mr Bibby suggested, but managed to find resources for new councillors’ accommodation, for big new flat-screen televisions in the council chambers, and for more senior Labour councillors. How are they the priorities of the people of Renfrewshire?
A number of speeches have been made on what the order will achieve in respect of new resources for local government, in areas in which we have reached agreement, on commitments on free personal care, family support, teacher induction and the council tax freeze.
The minister has made a very interesting point. Does he not have a TV in his office?
I believe that there is one that dates back some time. There we are. The Scottish Government has been exposed; my office has a television that was purchased some time ago by the parliamentary authorities. I thank Mr Malik very much for his intervention.
I am not quite sure why the Labour Party would rather leave it to Westminster to determine our resources, when the settlement for local government achieves £9.7 billion revenue support and £552 million capital for local government. On capital to help to stimulate the economy, the deal that will be agreed with local government will encourage the transfer to capital and the new resources from the Barnett consequentials to be invested in new capital projects, which will be achieved timeously. Those decisions feel like the right kind of decisions to stimulate economic recovery at this time.
The share to local government has increased under the SNP, and it will still be higher than that which we inherited from the previous Labour-Liberal Executive when it was in power. We are guaranteeing the non-domestic rates income for local government, and we have in Scotland the most generous package of rates relief in the United Kingdom. Rates relief amounts to more than £0.5 billion in Scotland. There is the small business bonus as well as the new town centre fund, which the Conservatives voted against yesterday in the budget process. The approach gives certainty, no surprises, investment in Scotland’s priorities, and the continuation of the council tax freeze. If I remember correctly, that was also a Labour Party manifesto commitment in the Scottish Parliament elections. That commitment has, of course, been abandoned since then by the Labour leader.
Sarah Boyack asked what we are doing for the “hard-pressed” council tax payers of Scotland. In partnership with local government, we are freezing the council tax for the “hard-pressed” council tax payers of Scotland. That is a shared manifesto commitment. We are able to abide by that commitment, whereas the Labour Party is disowning it.
A number of SNP members quite rightly identified the de-ring fencing of large sums of money from the Scottish Government to local government. That is absolutely the right approach. Willie Rennie asked us—
You might wish to draw to a close.
Just as we require to do, we want to seek to transfer powers from London to Scotland, but there is also the potential to transfer more powers to the local level.
I will finish with a challenge—to the Labour Party, in particular. If it wants to revisit the distribution mechanism and how local government finances are distributed across Scotland, the cabinet secretary and I will be more than happy to work in partnership with COSLA to do that, because it will show the hypocrisy of the Labour Party and others on how local government finances are actually distributed.