Local Government Finance (Scotland) Order 2011
The next item of business is a debate on motion S3M-7840, in the name of John Swinney, on the Local Government Finance (Scotland) Order 2011.
15:56
The motion seeks agreement to the main allocation of revenue funding to local government for 2011-12 to enable local authorities to continue to deliver the vital services on which communities throughout Scotland depend.
In 2011-12, the Scottish Government will provide councils with a total funding package worth more than £11.5 billion. That includes total revenue funding of £10.9 billion and support for capital expenditure of £691.8 million.
Today’s order is for £9.482 billion of the £10.9 billion total. I will lay a second order before Parliament next month to pay out a further £426.3 million. That further amount includes £70 million to enable councils to freeze council tax again in 2011-12—for a fourth consecutive year.
Following agreement with the Convention of Scottish Local Authorities, the total in the further order will be subject to council leaders’ providing formal assurance by the end of this month that their budgets for 2011-12 include provision to deliver the full package of measures that is outlined in finance circular 14/2010, including the council tax freeze. I am pleased that all 32 council leaders signalled their provisional acceptance of the package in December.
The total revenue funding to be paid out to local authorities in 2011-12 also includes: £502.8 million of ring-fenced grants, mainly police grant; £267.3 million for police and fire pensions paid to police and fire boards; £38.5 million for additional police officers; £15 million for protection of teaching posts; £86.5 million paid to criminal justice authorities; £37.6 million for the teacher induction scheme; and £426.3 million to be distributed later, as I indicated.
That is not all. During the budget bill debate yesterday, I announced an additional one-off sum of £5 million in 2011-12 to help smooth the impact for councils—such as Argyll and Bute Council—whose allocations of the former ring-fenced supporting people provision have been most adversely affected by a recent uprating in indicators used within the distribution formula. The Convention of Scottish Local Authorities is currently consulting councils on local government’s response to our offer of an additional £5 million, including how that funding is to be distributed. I also announced an extra £400,000 for Edinburgh to increase its capital city supplement funding.
Those additional amounts will be added to the local government settlement totals when I lay an amendment order in March to allocate the holdback provision for councils that provide a formal assurance that their approved budgets include provision to deliver across all the specified commitments in the spending review agreement.
Although it is not part of today’s order, the overall package further includes support for capital funding of more than £691.8 million.
The order that is before Parliament today contains a number of provisions that relate to 2010-11. It seeks approval to distribute an additional £62.3 million to allow councils to carry through a number of agreed spending commitments that have arisen since the Local Government Finance (Scotland) Order 2010 was approved last year. They include: £37.5 million for the teacher induction scheme; £15.6 million for adult support and protection; £3 million for curriculum for excellence quality assurance and moderation assessment; and £1.9 million for flood risk management. Those resources are provided to help local authorities to meet the many challenges that they face now and that they will face in the future so that they can continue to deliver the vital services that our communities need and rely on.
The weather this winter has also had an effect on council finances. It has been particularly severe, has caused considerable damage to the local roads network and has presented real challenges to councils. I have already paid tribute to the efforts of local authorities throughout Scotland in responding to the challenges that were faced, and we have recognised the increased funding pressures on councils by separately providing an additional £15 million in 2010-11 to be shared equitably across all councils. That is three times the equivalent amount that was provided following the severe weather last winter.
In December, I announced that we would again match the poundage rate in England for business rates. I also announced that we would maintain the small business bonus scheme thresholds at 2010-11 levels. That scheme will continue to benefit tens of thousands of small and medium-sized companies in Scotland in 2011-12. It has been estimated that, over the past three years, the small business bonus scheme has already saved Scottish businesses around £289 million, and we estimate that it will save businesses a further £128 million next year. Along with renewable energy relief, which offers discounts of up to 100 per cent to renewable energy producers, and empty property relief—reliefs that are the most generous in the United Kingdom—that will 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 more than £11.5 billion. We face significant financial challenges and we have worked constructively with our local government partners and agreed an overall funding settlement and package of measures to help to sustain and develop the services on which people in Scotland depend. Under the previous Administration, local government’s share of the Scottish budget was in steady decline year on year between 2003-04 and 2007-08. In contrast, we have increased local government’s share of the Scottish budget in each of the past three years, and we will maintain its share at 34.5 per cent in 2011-12.
The Local Government Finance (Scotland) Order 2011 matters. It will provide our councils with the funding that they need to deliver the vital services on which people in our country depend.
I move,
That the Parliament agrees that the Local Government Finance (Scotland) Order 2011 be approved.
16:02
We come to the debate as local authorities throughout the country meet to put together the biggest package of cuts in generations. We all wish that that was not the case, and we would all prefer that the banking crisis had not led to budget deficits and that there was no need to ask local government to reduce jobs and services. Labour Party MSPs would also have preferred the Scottish National Party Government to have decided to take the gun away from the heads of our local councillors, end its campaign of coercion and work constructively and imaginatively with our local authorities to find ways of protecting jobs and services rather than blackmailing them into complying with underfunded headline-grabbing commitments with drastically reduced budgets.
As I have done before, I make it absolutely clear, for the avoidance of doubt, that Labour has no problem with zero increases in the council tax. What we object to is the unnecessary, adverse impact that has been forced on councils by a policy that puts the interests of wealthy home owners before the services that are needed by our vulnerable elderly, young and disabled people. When a constituent of mine can work out that it is not a good deal for her that the 14p that she saves each week on her council tax is lost because she has to pay more than £2 each week to use her local community group, where she finds support and companionship, we have to ask why the towering economic geniuses of Alex Salmond and John Swinney think that their council tax freeze is such a wonderful policy.
Cuts to care and repair and supporting people funding threaten the security and care of the most vulnerable—the young, the old, the poor and the disabled—and housing associations and local authorities will not be able to deliver the services that our local communities deserve. With councils such as Argyll and Bute Council seeing a reduction of 4.9 per cent and Aberdeen City Council careering from one miserable catastrophe to another and having to get the First Minister’s spin doctor to put out messages to save it from itself, we see emerging a picture of decimation that can be traced back all the way to the decisions of the current Government. That Government is supported by Mr FitzPatrick, who wants to make an intervention.
Will the member tell us how much he would want the council tax to go up by? How much would it have to be raised in his local authority area to reverse the cuts that are coming from Westminster? We should remember that two thirds of those cuts were planned by the previous Labour Government.
I point out to Mr FitzPatrick that it was agreed in the budget process yesterday that there will be a council tax freeze for the coming year, and we accept that.
I also point out to him that in North Lanarkshire, to make up for the shortfall that his Government has just delivered to the area, the SNP group leader suggested that rents for people such as my constituents should go up by 3 per cent. I find that totally unacceptable, because that is a much larger increase than any council tax increase would be, and it will hurt ordinary people who rent their homes from the local authority. Mr Swinney has never addressed such issues. He has shifted the burden from council tax payers to people who pay charges for local authority services, and that burden is increasing because of the underfunding of the council tax freeze.
That is why, despite Mr Swinney’s token gestures yesterday, with which he tried to buy Labour’s support for his budget, we decided to join our Labour colleagues in local government and have nothing to do with the SNP’s financial package.
However, we must accept that Mr Swinney’s coercion strategy has worked again, that councils have been forced to accept a tawdry settlement and that vital local services will yet again have to be cut far more than is necessary. If we were not to accept the terms of the order, we would prevent the money that is available from getting to our local authorities. It may be gruel, and they may have had their pleas for some more rejected by Mr Swinney, but it is all that is on offer to them, so they require to have it.
When it comes to local government finance there is a better way and, between now and May, we will work to ensure that the return of a Labour Administration to this place will deliver it.
16:06
The Conservatives will support the Local Government Finance (Scotland) Order 2011 because it will, among other things, extend the council tax freeze.
Since 2007, the Scottish Conservatives have been the only Opposition party to support the freezing of the council tax, which has come as a welcome relief to households up and down the country that remember only too well the massive increases that were suffered under Labour and the Liberal Democrats.
Furthermore, on 9 January this year, we issued a warning to the next Holyrood Government that we would not support any budget that sought to raise council tax in 2012-13, thus extending the council tax freeze to five years. Of course, we know that some day the freeze will end, which is why we are suggesting that, in future, any proposed increase that is above the rate of inflation should be agreed by local people in a local referendum.
Labour and the Lib Dems are in favour of increasing the council tax across Scotland. Their record of hitting Scotland’s taxpayers is clear.
Will the member give way?
I am afraid that I have only four minutes.
Labour claims that the council tax freeze is unfunded. That is not true—the council tax freeze has been funded through the provision of an additional £70 million per year. That money is cumulative, so it is there.
With that in mind, I pay tribute to my good friend Councillor Donald Hay who, this very afternoon, is moving a Conservative amendment to the budget for Dundee City Council that would see bills for band D council tax payers falling by £7. I challenge John Swinney to congratulate Councillor Hay on his action and to give his backing to that groundbreaking initiative, and I encourage the SNP group on Dundee City Council to vote for it.
There are other aspects of the settlement that we are extremely happy with. The continued funding for the small business bonus scheme is an essential element of the support for small businesses across Scotland. The guarantee that police numbers will be maintained is also vital.
There are things that we are happy we managed to keep out of the budget. Abandoning the retailer tax was absolutely the right thing for the Scottish Government to do. The proposed raid on retail sent out entirely the wrong message to the business community and would have made life more difficult for many of our town centres. The proposed increase was not directed just at supermarkets, as the Government argued; it would also have hit some of Scotland’s most important shopping streets, including Princes Street, Sauchiehall Street and Union Street. The retail sector is a major employer in Scotland, and we believe that increasing taxes in Scotland would only make Scotland less competitive than the rest of the UK and would threaten Scottish jobs.
Finally, I turn to efficiency savings. We welcome the cabinet secretary’s commitment to make efficiency savings of 3 per cent, but we repeat our concerns about the reliability of the information on the efficiencies that are achieved.
Those concerns were raised by the Finance Committee, which reported the deputy Auditor General for Scotland’s concerns. She had said, in relation to the 2008-09 outturn:
“We were not able to find a clear pattern from bodies in any sector, particularly local government and health, that the amount of efficiencies that people had managed to release related to the amount that they spent or the types of goods that they purchased.”—[Official Report, Finance Committee, 20 April 2010; c 2076.]
Furthermore, we support the Local Government and Communities Committee’s recommendation that local authority efficiency savings be subject to independent audit from 2011-12. We look forward to hearing the cabinet secretary’s response to the recommendation.
The Conservatives welcome the opportunity to vote for the order, because it contains much that we wanted it to contain. I look forward to hearing the cabinet secretary’s response.
16:10
In last year’s debate on the local government finance order, my colleague Alison McInnes regretted that a one-and-a-half-hour debate was rather too short. Today, we have a very short time in which to debate an order that relates to £11.5 billion. I note that that is a decision of the Parliamentary Bureau, but it is worth putting on record that we are debating the use of £11.5 billion of taxpayers’ money to fund local services.
It is a decision of the Parliament.
Indeed, on the recommendation of the Parliamentary Bureau. That is absolutely true, but I thought that the matter was worth remarking on.
There is not much debate about the need for reductions in budgets, even though there is a political narrative from the Government in that regard. Most communities and users of services are aware of the global financial situation. The question is how the reductions are made.
In that context, the relationship between Government and local government is important. I re-read the Official Report of previous debates on local government finance orders—it took a bit longer to do that than it will take to read the report of this debate—and thought that there was a clear difference in tone. The word “concordat” was used quite a lot in the early years of the Administration. The concordat was supposed to represent a new relationship with councils.
There is no doubt that the Scottish National Party says that there is a new relationship and there is no doubt that some SNP members want to believe—and even do believe—that that is the case. However, the relationship depends on whether the council does what the Government wants it to do. We heard proof positive of that during the rather unedifying first 20 minutes of First Minister’s question time today. Local services seem now to depend on a telephone call from the leader of the Labour Party or the First Minister.
That is not the relationship that we need in Scotland. On council tax flexibility, social care, policing and so on, we do not need take-it-or-leave-it budget deals, on which not elected representatives but chief executives had to write to a Government minister by a deadline of 22 December to say what their council would do.
That is not the road that we should be going down. We must consider what local government is for. Is it simply an agency of central Government? Should not the trend be in the other direction, with much greater local electoral and financial accountability?
As we know, the cabinet secretary wrote to Opposition parties on Monday evening—he quoted from the letter to the Labour Party yesterday. In the letter of Monday evening, Liberal Democrats were told that because of the decision on the retail levy, which Alex Johnstone mentioned, there was a £30 million black hole in the budget. By Tuesday evening there was a £41 million surplus in the budget. Perhaps the kindest thing to say is that a pinch of salt will always need to be available when the Government comments on financing.
I was interested when I re-read what the cabinet secretary said during last year’s debate. As he knows, we were fearful that businesses were struggling because of the lack of a transitional relief scheme. In arguing against transitional relief, the cabinet secretary said:
“The retail sector alone would lose £25 million.”—[Official Report, 10 February 2010; c 23669.]
Well, I thought that the £30 million that the retail sector was going to lose through the retail levy was fully affordable, as the large retailers had the broadest shoulders. Perhaps the barons of lobbying in Scotland were at play then or now.
On the surplus, the point is that there has been a lack of transparency in many of the figures that have been used in the Government’s statements. When it comes to local communities depending on local services, the first thing that they need is a degree of straightforward honesty in the presentation of local financial figures.
16:15
This is not the order that we would all want to pass today. It represents a £450 million reduction; however, the budget that was passed yesterday included a £1.3 billion reduction due to the worst settlement from Westminster in the history of devolution. The cabinet secretary has proved that the Scottish Government is doing its best within the limited powers of the Parliament. Despite the cut to the Scottish block grant and the strains that it has placed on spending, local government’s share of the Scottish budget is being maintained. I hope that the whole chamber will welcome that.
Will Mr FitzPatrick ever recognise that the fact that the UK Government had to step in and rescue the Royal Bank of Scotland and the Bank of Scotland has impacted on the Scottish Government’s budget as well?
We continue to hear the Labour Party trying to talk down the Scottish banks. When the banks were doing well, the Labour Party was quick to tell us that their revenue could not be assigned to an independent Scotland because they were cross-border organisations. As soon as they are doing badly, they are entirely Scottish organisations. It is bizarre for the Labour Party to constantly talk down Scottish institutions.
We have seen how the cuts have impacted south of the border. Massive cuts averaging 7 per cent have been foisted on councils. Scottish councils face difficult decisions, and I do not relish the work that finance conveners up and down the country are having to do to make their books balance just as John Swinney had to make the books balance in the Parliament. However, Scottish councils are now getting a higher share of the Scottish block grant than they did when the Government came to power.
Today is the day on which councils up and down the country are setting their budgets. Mr Johnstone mentioned the situation in Dundee City Council, which is setting its budget. He may also be aware that the council tax in Dundee has only ever been reduced once, through an SNP budget. What councils throughout the country need today is certainty. They need the order to be passed so that they have the certainty to plan. The last thing that council workers up and down the country want is the order to fall and there to be a lack of certainty in how councils will be funded.
Michael McMahon and, I think, Mr Purvis talked about the order not giving local government full flexibility. That point was pushed particularly by Michael McMahon. In Parliament, we constantly hear the Labour Party arguing for the Government to take direct action and intervene in areas such as education and other devolved matters. In local government, however, Labour councils are crying out for more devolution to themselves and an end to ring fencing. So, on one hand, Labour in the Parliament is asking for more ring fencing while, on the other hand, Labour in local government is asking for less ring fencing. That is another example of the sheer hypocrisy of the Labour Party.
Michael McMahon went on to talk about the council tax freeze. I often ask him to tell me by just how much the Labour Party would increase the council tax if it could.
Michael McMahon rose—
The member is just finishing.
When Labour was in power in Dundee, it wanted to increase the council tax by up to 15 per cent in one year. Pensioners up and down the country cannot afford to have their council tax increased by 15 per cent. It is people who are on the edge—pensioners in particular—who would be affected most by the great hikes in council tax that the Labour Party has imposed in the past and would impose again.
16:19
Yesterday, we learned what a nice guy the Cabinet Secretary for Finance and Sustainable Growth, John Swinney, can be when he has a spare few million pounds in his back pocket to give to his friends, the Tories and the Liberal Democrats. Scotland’s 32 local authorities might hold a different view, however. They will have £11.5 billion to spend in the year ahead but on 9 December last year, when delivering a ministerial statement on the local government finance settlement 2011-12, Mr Swinney said that he would limit council funding cuts to 2.6 per cent, but only if councils deliver key SNP policies such as freezing the council tax and maintaining police numbers. However, Mr Nice Guy can also be Mr Nasty, as councils were warned that those that did not toe the line would face cuts of 6.4 per cent. As was said at the time, that was negotiation “The Sopranos” style.
I also remember the First Minister, Alex Salmond, insisting that Scotland’s councils had been offered an exceptional deal to help shield them from spending cuts—no doubt part of the concordat that we hear so little about these days. He is not alone in being delusional about the impact that this has had on Scotland’s councils. On Google, there are 24.2 million hits for the words Scotland, council and cuts. That is hardly surprising when, every day, we turn on the news or open a newspaper and hear about councils cutting this or that. Western Isles Council has to find savings of £24 million. How will it do that? Through redundancies and school closures. Scottish Borders Council—Mr Purvis is familiar with it—has to find savings of £20 million. Guess who suffers most? The education and lifelong learning department, which loses £1.5 million from its annual budget.
If Mr Whitton is arguing that we should be giving local government more money—which I think would be great if we could do it—could he tell us what he would cut to provide that extra funding?
As Mr FitzPatrick knows, the Government has already agreed its budget. We are debating the local government finance order for this year.
East Renfrewshire Council is facing a budget gap for 2011-14 of approximately £32 million. It has said that there will be a requirement to reduce its workforce by 10 per cent, which is equivalent to approximately 400 jobs. It said:
“The council can only achieve the budget savings required if we employ less people; use fewer buildings; maintain a smaller fleet and purchase fewer services and supplies.
Regrettably some of our non-statutory services—the services we are not legally bound to deliver, may cease or be reduced.”
I need not go through the nightmare that is SNP-led Aberdeen City Council.
East Dunbartonshire Council is voting through cuts of £6 million this year and anticipates having to make savings in the region of £10 million or more over each of the next two years. How will it do that? Staffing levels will be cut by 250 posts during 2010-11 and employee numbers will continue to reduce by around 200 a year for the next three years. Many charges for services have been reviewed and revised, taking account of the reasonableness of the charge and of people’s ability to pay.
My constituency contains no trunk roads and so it gets no extra help for repairs, a matter that I raised with the previous minister with responsibility for transport. The recent bad weather, which John Swinney mentioned, has meant that the condition of many roads and pavements is worrying. At the moment, the council does not know what the extent of the damage will be, apart from the additional cost that arises from the gritting. I welcome the extra £15 million that the cabinet secretary has allocated to the issue and no doubt I will have to send a letter to Mr Swinney fairly soon to ask him for some more support.
Drastic changes in staffing levels in council areas impact on the local economy. Year-on-year cuts will drastically reduce the level of services that councils can provide. Efficiency savings, which Alex Johnstone mentioned, are supposed to mean doing things better for less, not making a service worse, as is so often the case these days.
Limiting local authority reductions to an average 2.6 per cent only if they are prepared to implement what the SNP regards as key policies could be viewed as institutional bullying. The deal that is being offered by the Government amounts to it saying, “We’ll cut your budget massively if you don’t agree to what we want.” The cost of the unfunded council tax freeze does untold damage to local authority services, just so the SNP can claim to have helped the average band D council tax payer to save a few pence a week.
Scotland’s councils have voted for the proposal because they have to, not because they want to, and we will do the same.
16:24
I want to correct one point that Jeremy Purvis made. He indicated that chief executives of local authorities had been required to write to me to confirm that the authority would sign up to the agreement that we reached with COSLA. That is not the case; council leaders were asked to confirm that. I have read every one of the letters that were sent in by council leaders. Some of them were quite short, indicating their willingness to agree to the deal, and others were longer and contained some pretty fruity terminology. I will leave it to Parliament to work out who issued which letters to me, but they were a very interesting read.
I think that Mr Whitton has something against me, although I do not know what the origin of it is. His speeches are always about whether I have shown generosity and whether I am Mr Nice Guy or Mr Nasty and all the rest of it. In the course of a speech in which Mr Whitton accused me of being Mr Nice Guy and Mr Nasty, because I had money for this but not for that, he managed to tell Parliament that I was short-changing local government while giving it extra money for winter maintenance, which is what I have done. I thought that the money was welcome; it is three times what was available for the last severe winter. On my next visit to my in-laws in East Dunbartonshire, I will check the roads to see whether the conditions are as Mr Whitton alleges and see where that leaves us.
Mr McMahon made a comment about the wider financial picture and the issue also percolated through Mr Whitton’s speech. The Labour Party will have to face up to the inconsistency of its line of argument. On the one hand it says that there has been an international financial crisis, that the banks had to be bailed out and all the rest of it, conveniently missing out the R-word—the recession that the Labour Government presided over. On the other hand, although it says that everyone accepts that there have to be reductions in spending, it complains about every single reduction in spending. Mr McMahon is shaking his head, but that is what it says. We have gone round the houses on this before and I dare say that we will have to go round the houses a few more times. However, there is a complete inconsistency in the line of argument that says that, somehow, there cannot be spending reductions in the particular areas that the Labour Party complains about.
Michael McMahon rose—
I am afraid that the cabinet secretary is too near the end of his speech.
The most encouraging comment that I have heard today was from Mr Johnstone. His enthusiasm for a referendum has been noted and is warmly appreciated by the Scottish National Party. We look forward to Mr Johnstone leading a charge within the Conservative party to consult the people on some significant questions that affect the constitutional future of our country and we would be delighted to take them forward with his support.