Local Government Finance Settlement 2012-13
The next item of business is a statement by John Swinney on the local government finance settlement 2012-13. The cabinet secretary will take questions at the end of the statement, therefore there should be no interventions or interruptions.
14:56
I welcome to office Derek Mackay as the Minister for Local Government and Planning and record my thanks to Aileen Campbell for her service in that capacity. I extend my good wishes to her in her new post as the Minister for Children and Young People.
My statement to Parliament will cover two areas. I will set out the terms of the provisional local government finance settlement for 2012-13, together with indicative figures for 2013-14 and 2014-15, and I will make a number of announcements on business rates.
The local government finance settlement is a vital element of our relationship with local government. The settlement is outlined in the context of the Scottish Government and local government working together on joint priorities to deliver better outcomes for the people and communities of Scotland. That relationship, which has underpinned the single outcome agreements that are in place for every community planning partnership in Scotland, focuses the work of national and local government on delivering for all our communities.
Over the period 2008 to 2011, we increased local government’s share of the Scottish budget and, for 2011-12, we maintained its share of the total Scottish budget at 2010-11 levels. In the 2012 to 2015 period, local government revenue funding will be a larger share of the funds that are controlled by the Scottish Government than the share under the position that we inherited in 2007-08, when we came to office. That has been achieved in the context of the most dramatic reduction in public spending that has ever been imposed on Scotland by the United Kingdom Government. In 2011-12, we have already been forced to reduce public spending by £1.3 billion compared with last year, with an £800 million cash reduction to our capital budget. Under the plans that the UK Government announced in its October 2010 spending review, between 2010-11 and 2014-15 we face real-terms resource budget reductions of 9.2 per cent. Our capital budget will be hit hardest of all, suffering a real-terms cut of 32 per cent.
As I explained to Parliament when I set out the rationale for the choices that we made in the 2011 spending review and draft budget for 2012-13, we have had to face some very difficult decisions. I do not underestimate the difficulty of the decisions that local government, in return, will have to make. However, I firmly believe that we have provided a fair settlement to local government that represents the best that can be achieved in the circumstances.
The 2011 spending review and draft budget 2012-13 document, which was published on 21 September, confirmed our draft budget for the first year of the spending review period and our spending plans for the subsequent two years, including the headline allocations for local government. Today, I announce the provisional funding allocations to individual local authorities for 2012-13 together with indicative figures for the following two years. Copies of summary tables containing the key information in my statement are available at the back of the chamber.
The Government has reached an agreement with the Convention of Scottish Local Authorities leadership on an approach to delivering joint priorities between national and local government. That was described in my letter to COSLA of 21 September, which set out the terms of the local government settlement for 2012 to 2015. I am pleased that COSLA has confirmed that local authority leaders support that settlement in principle.
As part of the settlement, local authorities will deliver certain specific commitments including: freezing the council tax, which is continuing to help families during tough economic times; passing on funding to police boards, as a contribution to allowing them to maintain the number of police officers on our streets; maintaining teacher numbers in line with pupil numbers and securing places for all probationers under the teacher induction scheme; and meeting the needs of our most vulnerable and elderly through the national health service and councils working together to improve adult social care.
Local government will also have a key role to play in the preventative spending approach, which is a major feature of the 2011 spending review. I know that local government strongly supports that approach and has committed to contributing resources to the change funds, which, together with contributions from national Government and community planning partners, are expected to deliver around £500 million to invest in early years, services to older people and reducing reoffending.
However, the package that is being offered to local authorities is conditional. Although it is agreed between the Government and COSLA’s leadership in principle, it is now up to individual authorities to decide whether they wish to accept it. If they accept, they will receive their needs-based share of the overall revenue increase. If they reject the offer, they will not receive all that allocation but will instead have access to a sum reduced by 5.2 per cent.
The package of resources equates to £579 million across the whole of local government in each year of the three-year settlement. It is made up of each council’s needs-based share of the £70 million for the council tax freeze, the £24 million that was added to the 2012-13 settlement for teachers’ pay, the £15 million that was added as part of the negotiations on the Scottish negotiating committee for teachers agreement in the 2011-12 settlement and the £470 million that is local authorities’ 49 per cent share of the flat cash funding to be made available as a contribution to allow police boards to maintain the number of police officers on our streets. Council leaders have been asked to advise me by 20 December whether their council agrees to the full package on the terms that I have set out.
In 2012-13, the total support for local government will amount to £11.5 billion, which includes revenue and capital funding. In total, over the three-year period of the spending review, we are providing local government with £34.6 billion.
Within the total available, our support for revenue will amount to £10.9 billion in 2012-13; over the three years of the spending review, it will total £32.8 billion. That revenue allocation represents a flat cash settlement with small adjustments for police and fire pensions, increased resources to support teachers and funding to enable councils to extend the council tax freeze for the lifetime of the current parliamentary session. The revenue allocations that I am confirming today also include provision to deliver on our manifesto pledge that no council will receive less than 85 per cent of the Scottish average in revenue support. The funding for that provision is additional to the core local government settlement.
During the election campaign, we estimated that up to £26 million would be required to fund that scheme in each of the three years from 2012 to 2015. Had the mechanism for 2012-13 been in place in the current financial year, the cost would have been £20.4 million. We made it clear, however, that the exact cost could not be fixed until the annual local government finance settlements had been calculated and, in the spending review, I set aside a sum of £25 million for each of the three years from 2012 to 2015.
In honouring that commitment, I have taken a two-stage approach to distribution of that sum. Just as the introduction of the floor will ensure that the resources that are made available to each council should be no less than 85 per cent of the average, the calculation is made within a framework that assumes that no council will receive more than 115 per cent of the average. I stress that that will have no impact on the actual funding to those councils that have higher per capita levels; rather it is a notional adjustment for the purposes of having a mechanism for calculating a fair, representative and equitable Scottish average.
Under that mechanism, the cost of implementing the 85 per cent floor will be £18 million, £19 million and £18 million across the 2012 to 2015 settlement period. While that meets the 85 per cent floor commitment, the per capita allocations to Aberdeen and Edinburgh, which will receive additional support, still fall significantly below the next-lowest council’s per capita allocation. In recognition of that, I have included a second stage to distribute the remaining budget provision of £7 million, £6 million and £7 million that was set aside to implement the policy, on the basis of the relevant population shares of both Aberdeen and Edinburgh. Taken together with their respective increased settlement allocations, both councils will receive 85.5 per cent of the adjusted average in 2012-13, which means that Aberdeen City Council will receive, on a like-for-like basis, a total increase of £5.3 million and City of Edinburgh Council will receive an increase of £25.4 million next year.
I can confirm that there has been one further change to the local government budget since the draft budget was published, which is the additional provision of £0.8 million to Argyll and Bute Council for the purpose of operating Oban airport for each of the next three years.
Local government’s percentage share of the Scottish Government departmental expenditure limit plus non-domestic rates income in 2014-15 will be the same as it was in 2008-09, which is still higher than it was in 2007-08.
The total capital funding for local government in this spending review is £1.9 billion. That delivers on the Government’s commitment to maintain local government’s share of the total capital budget at 28 per cent. Capital expenditure is the engine of economic growth and, despite the cuts that have been imposed on our capital budget by the UK Government, I want to inject the biggest possible stimulus into the economy from investment in new infrastructure across Scotland. Local government has a part to play in that.
Unlike the Scottish Government, local government has the power to borrow. In order to maximise capital investment, I have agreed with COSLA that the capital funding for local government will be spread over four years rather than three. As a result, I have moved £120 million from 2012-13 to 2014-15, and £100 million from 2013-14 to 2015-16. Taking account of that reprofiling, the total capital funding for local government in the next financial year is £563 million. I have invited our partners in local government to consider the extent to which they can use borrowing to maximise capital expenditure. However, I make it clear that I have not placed any targets for borrowing on local authorities and they are under no compulsion to increase their level of borrowing. Borrowing is a matter for individual local authorities.
I recognise the pain and distress that flooding can mean for those who are affected. That is why, despite the reductions in budgets that we face, I have agreed with COSLA that funding for flood projects will be maintained at the same level as in 2011-12 and will not be subject to any reprofiling. That funding will finance large flood prevention projects.
I now turn to business rates, which are a key issue for our business community. I am committed to ensuring that Scotland offers the most competitive business rates in the UK, for example through the small business bonus scheme, which gives a tax break to two out of five premises in Scotland. I can confirm that the limited and temporary measure to reduce rates for English small businesses that was announced by the Chancellor of the Exchequer last week does not compare well with the small business bonus scheme. Not one Scottish business would be better off under the equivalent small business relief scheme in England.
Furthermore, I appreciate the need to provide long-term stability for small businesses. The Government has therefore committed to maintain the small business bonus scheme for the lifetime of this Parliament—up to 2016. That compares favourably with the chancellor’s proposal, which has extended help to small businesses only until March 2013.
We made a commitment not to allow the poundage for business rates to rise above what it is in England during the lifetime of this Parliament. Today, I can confirm that the 2012-13 business rate poundage will be 45p. That is the same rate as will apply in England and includes a normal inflationary increase, which is tied to the September level of the retail prices index. However, in the current climate, businesses will appreciate an opportunity to reduce their overheads and I will be allowing any business the opportunity to spread the inflationary increase, which is 5.6 per cent, over three years.
We continue to consult on the proposals to apply a public health levy and to reform the approach to empty property relief. We will also take forward the commitment that was outlined in my spending review statement to embark on a review of business rates in advance of the next revaluation in 2015. Although it is important that we maintain the revenues that are secured through business rates, we also need to ensure that businesses in Scotland maintain a competitive advantage to support our focus on sustainable economic growth. More details of the review will be available shortly.
I would also like to take this opportunity to set out the buoyancy estimates for growth in the underlying tax base that we have used in the future projections of business rates income. Despite the UK Government’s more pessimistic expectations for economic growth, which it set out in the autumn statement, I remain satisfied about the robustness of the buoyancy estimates that were included in the draft budget and spending review for business rates income of 1.95 per cent in 2012-13, 2.15 per cent in 2013-14 and 2.35 per cent in 2014-15.
I remind members that those estimates are based on past buoyancy trends as well as an assessment of current and anticipated future economic conditions. Outturn figures show that, even at the height of the recession in 2008-09, there was still growth in the underlying tax base of 0.91 per cent, and that rose to 1.73 per cent in 2010-11—those are facts. That demonstrates that I have taken a prudent and cautious approach to future forecasts. Those forecasts will be subject to regular monitoring, as more up-to-date information becomes available, to check that our estimates remain on track.
I can confirm that the total level of funding for local government in Scotland that is set out in my statement is guaranteed, irrespective of business rates income. We are also committed to matching the English poundage so that, if there were any variations in the income estimates, the burden of that would not fall on businesses.
I can also announce that agreement has been reached with COSLA’s leadership on the introduction of a business rates incentivisation scheme. After careful consideration, I have decided that that new scheme should be introduced from 1 April 2012. The scheme has two aims: to incentivise local authorities to maximise their existing business rates income; and, more important, to encourage local authorities to attract new economic growth and, as a result, grow their potential business rates tax income. That will be vital in helping to grow the Scottish economy in these difficult times. Under the scheme, any local authority that exceeds its annual business rates target will share the additional income equally with the Scottish Government and retain the additional income until the time of the next business rates revaluation, which is usually every five years. The business rates incentivisation scheme targets will be issued to individual local authorities for consideration and agreement before Christmas.
In conclusion, the provisional allocations that I have announced maintain local government’s revenue funding and ensure that, throughout the spending review period, it will receive a larger share of the funds contributed by the Scottish Government, including business rates, than under the position that we inherited in 2007-08. The settlement also maintains local government’s share of the total capital budget at 28 per cent.
Today marks the start of the normal consultation period with local government on the provisional allocations. I will bring the final figures to Parliament as part of the local government finance order early in the new year.
The cabinet secretary will now take questions on the issues raised in his statement. I intend to allow around 30 minutes for questions, after which we will move to the next item of business.
I thank the cabinet secretary for early sight of his statement and join him in welcoming Derek Mackay to his new post, in which I wish him well.
I fully appreciate that the budgetary constraints under which the cabinet secretary is operating make his statement one that he would rather not have had to make. Having seen the contents of this year’s local government settlement and the poor choices that he has made in it, I am equally sure that local government staff and those who depend on council services would rather that he had not made the statement. What the cabinet secretary has outlined is that the settlement will increase the rate of job losses and will cut services when demographic and social pressures are increasing and will damage economic recovery. My main concern about the statement is that the funding squeeze will be unnecessarily tight. According to official statistics, that has already led to more than 14,000 job losses between 2007 and 2010.
Has the cabinet secretary assessed the scale of job losses that his settlement will cause? He has described the three-year plan as a flat cash freeze. Can he confirm that there is a real-terms cut of over £700 million—that is according to table 16.02 of the draft budget document—and of £350 million in this year alone? Can he confirm that the £70 million per annum funding for the council tax freeze is no longer ring fenced and that that will add to the cuts that councils will have to make? How much efficiency savings must each council make? Can the cabinet secretary confirm that the total savings that local government is being asked to make will be over £600 million this year and £1.6 billion over the spending review period?
I thank Mr McMahon for his remarks and his good wishes to Mr Mackay.
I say to Mr McMahon in all seriousness and sincerity that of course there are difficult decisions. There are not many easy decisions for a finance minister in the context of reducing public expenditure and growing demand for public services, but I do not think that it takes me to remind Mr McMahon that the Scottish Government has to operate within a fixed budget that is set by the United Kingdom Government.
They are your choices.
Your choices.
Mr McMahon and Ms Lamont mutter, “They are your choices,” and that is correct; they are my choices and I will defend them. The question that Mr McMahon and his colleagues must answer is: what are their choices?
If more resources are to be allocated to local government, resources must come from somewhere else. Labour must determine whether that would be from cuts to the health service. Just a few moments ago, Mr Gray was sitting exactly where Mr McMahon is sitting, implying that we are not giving enough money to the health service, eagerly egged on by Jackie Baillie. I pose the question: if Mr McMahon wants more resources to boost the local government settlement, where on earth will they come from?
I am happy to confirm that the £70 million for the council tax freeze is part of the local government settlement that I have announced today. As local authorities make clear to me, they have to live within their resources at all times, so they must make their own judgments about the levels of efficiencies that they must make.
I am certain that the constructive way in which we engage with local government—in focusing on joint priorities, in trying to make progress on improving outcomes for individuals through the change funds for elderly care and the early years interventions that we have brought forward together and in engaging strongly in the reform of adult social care—will enable us to ensure that we strengthen the outcomes for individuals in a very difficult financial climate. That is certainly what the Scottish Government is committed to, and I am confident that Scottish local government has the same objectives.
I, too, welcome the new Scottish Government minister to his post, and I thank the cabinet secretary for early sight of his statement. In response, I want to focus on the point that the Conservatives made after the spending review was presented in September.
The statement again confirms wildly optimistic estimates for non-domestic rates revenues, especially after the growth downgrades that were announced in the autumn statement. The estimates amount to an increase of 23 per cent over the spending review period and represent an increase of more than £100 million between 2011-12 and 2012-13 values alone, hence the projections of a steep hike in the business rates income. The Scottish Government claims that the increase is accounted for by inflation and the proposed £110 million tax raid on large retailers, but whether the numbers become reality is questionable at best.
Let us not stop there, as there is another ticking time bomb around the corner. The cabinet secretary will be aware that the number of appeals by businesses on their rateable value has risen by 22 per cent compared with the previous revaluation period. To put that in perspective, it represents a staggering 71,210 businesses that are appealing their rates.
There has recently been a landmark ruling for the businesses in the form of the appeal won by the shop owners and landlord of the Mercat shopping centre in Kirkcaldy, which could see business rates cut by up to 45 per cent. As a consequence, a funding gap in local authority budgets could be created, which would amount to millions and which the Scottish Government would have to underwrite.
Has the Scottish Government considered that case in its calculations? Has there even been an impact assessment? More important, can the cabinet secretary tell the Parliament how he would tackle a further shortfall in his already overoptimistic projections?
I thank Margaret Mitchell for her remarks and welcome her to the front bench. It is the first time that I have had the privilege of debating with her.
In my statement, I set out the details of the assumptions that I made on business rates, which I have shared with the Parliament’s Economy, Energy and Tourism Committee. The key point in that assessment is that in 2008-09, when the economy was in recession and when almost all tax takes were reducing, there was underlying growth in the business rates tax base of 0.91 per cent. That rose to 1.73 per cent in 2010-11. My reason for marshalling that information for Parliament is to make the point that the estimates that I have made are securely founded, given the specific practical experience that we had in 2008-09 of an economy in real difficulty while there was still buoyancy in the business rates income.
Margaret Mitchell criticised me for applying the 5.6 per cent inflation increase as a consequence of the September RPI. I was roundly criticised by the Conservatives for doing that in the budget in September. If I remember rightly, the Secretary of State for Scotland—he is not a Conservative, but he might be soon—entered the fray to criticise me in that regard. I noticed this morning that the United Kingdom Government, which is populated by Conservatives and Liberal Democrats, has applied exactly the same inflation increase to business rates as I applied. In the words of a former First Minister, there is a word that begins with H and ends with Y, which I will not say in the Parliament.
There are four components of the increased business rates income that we are estimating: inflation; buoyancy; the public health levy; and empty property relief. I remain confident that the estimates that I have set out are strong and robust. I reiterate the point that I made in my statement: I guarantee those sums of money to local government in Scotland. That is exactly what the Government will do.
We have a large number of questions. If questions are brief and the cabinet secretary’s responses are equally brief, we might get through them all.
I welcome the cabinet secretary’s statement and in particular the announcement of the 85 per cent funding floor—another manifesto commitment met—giving more than £5 million in the first year and almost £9 million in year 3 to Aberdeen City Council. I have spoken to the council leader, Callum McCaig, who assured me that the money will be spent wisely on providing services for the citizens of Aberdeen. How far does the cabinet secretary estimate that the money will go in addressing years of underfunding at Aberdeen City Council?
We have delivered on the commitment that we gave during the election. I look to Aberdeen City Council to steward the resources wisely and invest in the city’s future. The council has had a difficult journey during the past few years but was ably stewarded by my parliamentary colleague Kevin Stewart. I look forward to working with Councillor McCaig in taking forward the city’s priorities and creating economic strength and quality public services in the north-east of Scotland.
I read the cabinet secretary’s statement with interest and I thank him for the advance sight of it. I also read the appendices that are attached to it. Why is Glasgow City Council one of only a handful of councils whose revenue funding will decrease year on year, according to his figures?
A needs-based formula drives the allocation of resources to local government. The formula is agreed with local government, in discussions in which Glasgow City Council is a full participant. The formula is driven by a number of indicators, principally the population—updated with the mid-year population estimates in 2010—and it applies in that fashion to provide the answers that are set out in the funding settlement.
I welcome the statement and the announcement of the funding floor, which I am sure will be as gratefully received by the City of Edinburgh Council as it will be by Aberdeen City Council. Does the cabinet secretary agree that that is another election promise fulfilled for the people of Edinburgh? Does he also agree that the improved funding allocation recognises Edinburgh’s unique status as the capital city and underscores the SNP as the national party, which supports our national capital?
We gave commitment to the 85 per cent funding floor because the disparity that was being created at the bottom of the table in per capita allocations was growing to such an extent for individual authorities that it required to be addressed. We gave a commitment to undertake that, which has now been delivered as part of the local government settlement.
I am slightly concerned that the cabinet secretary seemed to suggest that Glasgow does not need the money.
My question is about the impact of welfare reform changes. What contingency has the cabinet secretary set aside to deal with the projected reduction in income as a result of the changes to council tax benefit and housing benefit, which do not seem to be covered in the statement?
First, I was interested in a newspaper that I saw called The Edinburgh Voice, which is the paper of what is called Labour’s team for Edinburgh. It states:
“Glasgow receives 40% more funding from the SNP Government, that’s not our claim, but the proud boast of an SNP member of the Scottish Parliament!”
My colleague Mr Mason made that proud boast, but it seems to have—
Is this germane to the answer?
It is.
I am answering Mr Smith’s—[Interruption.] I think that the process works on the basis that the Labour Party chooses the question and I deliver the answers. My answer is about the fact that Mr Smith suggested that I do not think that Glasgow needs the money. I am pointing out that the Labour Party in Edinburgh is attacking the funding settlement that I have delivered for the city of Glasgow, which is rather injudicious of the Labour Party.
Mr Smith’s other point was about welfare reform and housing benefit. There are serious issues about the way in which the United Kingdom Government takes forward its policy changes and the consequences that that has for funding arrangements in Scotland. I cannot in all honesty say to the chamber that I am comfortable with, or confident about, the arrangements that the UK Government is making for the future of council tax benefit, which is one of my areas of close interest and the subject of discussions with the UK Government. Once the decisions on housing benefit and council tax benefit are clearer, the Government will be able to share and to discuss—indeed, we have already had discussions with local government—the implications of those issues for the delivery of public services in Scotland.
I, too, welcome the statement. In particular, I welcome the commitment to continue to fund the council tax freeze, which has been very important to my constituents and to citizens throughout Scotland. Reports are coming from some councils in England that they are planning to reject the UK Government’s attempt to copy the Scottish Government’s hugely successful policy of a council tax freeze. Is the cabinet secretary confident that Scottish local authorities will continue to work with the Scottish Government and implement the freeze for a fifth year in a row?
At one stage I was told that a council tax freeze would be illegal, which was an interesting piece of news journalism in Scotland. Since 2008-09, we have delivered the freeze in partnership with our local authority colleagues. I am confident that we have put in place the arrangements and the funding support that will make that possible in the years to come.
In probably more appropriate surroundings, I welcome Derek Mackay to his new position. I thank the cabinet secretary for advance sight of his statement.
The cabinet secretary is aware of the concerns in my constituency about the differences in the relative funding allocations between the island groups; that issue will be discussed at the meeting that he has agreed to have with me and Orkney Islands Council later this month.
I turn to the suggestion in the cabinet secretary’s statement that if councils accept the package, they
“will receive their needs-based share of the overall revenue increase.”
If they choose not to accept it,
“they will not receive all that allocation but will instead have access to a sum reduced by 5.2 per cent.”
Does he consider that to be tantamount to holding a gun to their heads? With a commitment to a council tax freeze over five years, does he accept that there are concerns that that will become increasingly unsustainable and will remove much-needed flexibility for councils to respond to local needs?
On Mr McArthur’s first point, I look forward to discussions that we will have shortly before Christmas with the leadership of Orkney Islands Council. Secondly, in relation to the mechanism that is inherent in the statement, we agreed and deployed that approach with local government last year. Conditionality about access to resources has been part of the settlement throughout. The approach that we have taken in the settlement represents a fair and orderly way of going about that, and we look forward to discussing it with local authorities in the period ahead.
I welcome the fact that the cabinet secretary has kept his promise on the 85 per cent floor funding. I was very interested in his response to Marco Biagi. The cabinet secretary will be aware that, in an earlier answer by Aileen Campbell to a question that I lodged, the Government pledged to deliver the 85 per cent in addition to the capital city supplement. I see no mention of the capital city supplement in today’s statement. Has he scrapped it?
No, it is part of the overall budget settlement. It is allocated as part of the former ring-fenced grants that are part of the settlement. The City of Edinburgh Council holds its capital city supplement and has access to the resources that are delivered as part of the 85 per cent floor arrangements.
I, too, welcome the statement, which clearly shows that, despite the Westminster-imposed financial squeeze, Glasgow City Council will still receive the highest level of funding per head of mainland local authorities throughout the spending review period. Given that Scottish Parliament information centre figures show that between 1999 and 2007 the percentage increase in funding that Glasgow received was lower than that of any other local authority in Scotland, and given that the cabinet secretary confirms that all parties in COSLA support the settlement in principle, does he agree that any of the usual fake outrage from council leader Gordon Matheson or Labour Party colleagues opposite is just politically motivated bluster to cover their own failings in running Glasgow City Council before next May’s local authority elections?
I simply say that the city of Glasgow will continue to have the second highest per capita allocation of all mainland authorities in Scotland. The highest is Argyll and Bute, which benefits from special islands needs allowance, and the city of Glasgow gets £333 more per head than the Scottish average. The fact that my colleague Mr Mason seems to have offended the Labour Party with his comment in The Edinburgh Voice newspaper demonstrates that there is a strong funding settlement for the city of Glasgow.
In evidence to the Finance Committee, the Centre for Public Policy for Regions said of budgets to local government:
“future funds are less certain as they rely on NDR, whose final level is dependent on sustained economic activity.”
Does the cabinet secretary accept that there is very real concern among experts about the credibility of his figures? If there is a shortfall in resourced budgets, how will he plug the gap?
We always have to listen to all sorts of commentary from experts. Some expert opinion is worth listening to, and some expert opinion is more helpfully put into some degree of context. Margaret McCulloch’s point is very similar to the point that was made by Margaret Mitchell. As I made clear in my answer to Margaret Mitchell, the figures that are contained in the non-domestic rates income estimates are, in my opinion, robust and sound, based on our existing practice. As I also said in that answer, the Government will guarantee that income to local government in any case, so there is no reason for anxiety on that front.
I welcome the cabinet secretary’s statement and I welcome Derek Mackay to his new post.
As the cabinet secretary knows, the previous UK Labour Government gave the Northern Ireland Assembly borrowing consent of £2.5 billion, four times the annual capital allocation to Scottish local authorities, which can themselves borrow. Although Scotland has almost three times Northern Ireland’s population, no such consent was given to the Scottish Parliament. If we had the same per capita share, what would that mean for local government capital projects and employment in Scotland?
Clearly, there are opportunities for local government in Scotland to borrow resources. They are perfectly able to do that within the prudential framework that is available to local authorities. As I said in my statement, I do not put any obligation on local authorities to do that, but it would help if those of us who are able to borrow sustainably were to deploy that power in order to assist economic recovery.
The Scottish Government is transferring resources from revenue to capital, bringing forward our NPD investment programme, spending our capital allocations and encouraging our local authority partners to maximise their capital investment in the most sustainable way that they can.
Last year, my local authority in West Lothian boasted about having the best budget settlement in Scotland but still had to cut its budget by £16 million. If we are to have a council tax freeze, will the cabinet secretary at least break with past practice and fully fund it?
I have fully funded the council tax freeze from the moment at which I applied that provision as part of the budget and the local authority settlement. Despite people telling me that it could never happen, there has been a council tax freeze across the country since 2008-09 and the householders of Scotland have benefited. It is pretty clear, despite all Labour’s flip-flopping during the election campaign, that it is opposed to the council tax freeze. I am sure that that contributed to the difficulties that it had in May of this year.