Good afternoon. The first item of business this afternoon is a debate on motion S4M-12623, in the name of John Swinney, on the Local Government Finance (Scotland) Amendment Order 2015.
I call on John Swinney to speak to and move the motion. Deputy First Minister, you have a maximum of eight minutes, as we are short of time this afternoon.
On 5 February, Parliament approved the Local Government Finance (Scotland) Order 2015, which enabled Scotland’s local authorities to set their revenue budgets for the forthcoming financial year.
The Scottish Government has treated local government fairly in providing a degree of protection in very difficult economic circumstances, and with the approval of the amendment order before Parliament today total funding for this year will be confirmed at £10.8 billion. It will also be confirmed that, with extra money for new responsibilities, the total funding for next year will increase to over £10.85 billion.
It is worth comparing the 2015-16 position with the position this time last year. When we debated the Local Government Finance (Scotland) Amendment Order 2014, the total funding package for 2014-15 was confirmed at £10.6 billion. If we take into account the impact of the reprofiling of capital funding, the funding set out in this order represents, with the allocation of additional moneys for new responsibilities such as the expansion of early years childcare and free school meals provision, an increase of more than £250 million or 2.4 per cent.
I believe that in return for that protection it is only fair and reasonable to ask local government to give specific commitments. When their budgets for next year were set, local authorities were asked that in return for this increased level of funding they should freeze their council tax levels for an eighth consecutive year. They were also asked to maintain each individual council’s teacher numbers and teacher pupil ratios at 2014-15 levels and secure places for all probationer teachers who required one. I am delighted to say that all 32 councils have budgeted to fulfil in 2015-16 both the continuation of the council tax freeze and the educational commitments at 2014-15 levels.
On the council tax freeze, the Scottish Government has not only put in place the resources required to freeze the council tax as part of the overall cash settlement for local government but gone beyond that with extra money for new responsibilities. That is a fair settlement at a time of almost zero inflation and when local authorities are expected to achieve annual efficiency savings of 3 per cent that they are able to retain and reinvest. We have, of course, provided £70 million to recompense councils for freezing their council tax levels. Under the current financial constraints facing the Scottish budget, I believe that that represents a fair and reasonable settlement, and the continuation of the council tax freeze for an eighth year will be particularly welcome news for hard-pressed council tax-paying households across the country.
The Scottish Government also believed that it was necessary to take action to protect teacher numbers, because the teacher census, which was published in December 2014, showed that, despite the agreement between the Government and local authorities, those numbers had not been maintained. I accept that the Government’s approach was not universally welcomed by all local authorities, but we believe that it was the right thing to do to safeguard the number of teaching posts across Scotland in 2015-16.
We have also agreed to provide a further £10 million on top of the £41 million already included in the 2015-16 figures in this amendment order to give councils further support in delivering the commitments on teachers. That £10 million is not included today, but following confirmation that those commitments have been met I will add it to the 2015-16 funding allocations in the main order for 2016.
In view of the 2015-16 budget process having been concluded, this amendment order seeks approval for the payment of each local authority’s share of the £70 million set aside to compensate councils for the council tax income forgone as a result of the continued council tax freeze.
Today’s amendment order also seeks parliamentary approval for the distribution of more than £26 million, which represents the initial 80 per cent allocation of the discretionary housing payments funding for next year. This arrangement of distributing the majority of the funding until such time as more up-to-date information becomes available has been agreed with the Convention of Scottish Local Authorities. By holding back 20 per cent at this stage, this will ensure that the Government’s commitment to fully mitigate the impact of the bedroom tax can be achieved.
Following my announcement as part of the 2015-16 budget bill stage 3 debate that I intended to invest £11 million to match the poundage cap for business rates south of the border, I am required to increase the general revenue grant by £11 million and correspondingly reduce the distributable non-domestic rate income total by the same amount. Those changes are already included in today’s amendment order.
There is one other small change included in this amendment order: the transfer of £2.254 million for the business gateway marketing project. It was previously paid to Renfrewshire Council, which then forwarded it on to COSLA, but, following the decision of Renfrewshire Council to cease membership of COSLA, the responsibility for administering that sum has transferred to Dundee City Council.
Taken together, those changes will add around £107 million to the amount of general revenue grant that we will be distributing to local authorities next year, over and above the sums included in the original 2015 order. As mentioned above, the distributable non-domestic rate income will reduce by £11 million—a net overall increase of £96 million. That confirms that the total revenue funding in 2015-16 will be almost £10 billion and the overall total funding, including capital, will be more than £10.85 billion.
I take this opportunity to make two further adjustments to the 2014-15 revenue funding allocations since the 2015 order was approved on 5 February. The first change is the addition of £6.5 million to support local government’s contribution to the early implementation of “Developing the Young Workforce—Scotland’s Youth Employment Strategy”, which arises out of the work of Sir Ian Wood on the Wood commission.
The second very small change will add £90,000 to the City of Edinburgh Council as part of the Scottish cities alliance initiative. Those changes add a further £6.6 million to the revenue figures for 2014-15, giving a total of £9.9 billion and an overall total, including capital, of almost £10.8 billion.
In summary, the approval of the amendment order will authorise the distribution of a further more than £96 million for 2015-16 and a further £6.6 million for this year to local government to support the essential services that our local authorities deliver for our communities.
The approval of the amendment order today is vital as the funding included in it has already been taken into account by local authorities in setting their 2015-16 budgets. The loss of more than £100 million in funding would have serious consequences for all local authorities, the communities they serve and the people of Scotland, who rely on these vital services.
The distribution of funding set out in this amendment order is essential to enable Scotland’s local authorities to implement their approved budgets.
I move,
That the Parliament recommends that the Local Government Finance (Scotland) Amendment Order 2015 [draft] be approved.
14:38
Scottish Labour will support the motion put forward by the Deputy First Minister.
I want to pick up a few points that the Deputy First Minister made. He talked about teacher numbers and the teacher pupil ratio. What came across clearly at the time when Mr Swinney broke off his negotiations with COSLA was that the majority of local authorities—certainly the ones that I spoke to—were not in favour of reducing the number of teachers that they have but that there are some real difficulties in their being able to provide teachers.
This morning, for example, I talked to Fife Council. When the previous teacher number survey was conducted, Fife was 83 teachers short. That was not because it did not want to fund 83 teachers; it was because it was not able to recruit 83 teachers. I raised that point with the Deputy First Minister previously.
Fife Council’s advertising for this August closed yesterday. Applicants were some 20 per cent down from last year. The council has a major recruitment problem. This morning, I was told by education officials in Fife that the problem is not just one that Fife is facing but one that all 32 local authorities are increasingly facing. I ask the Deputy First Minister to take up that point and look at the situation. It is fine for him to say that he will impose financial sanctions on authorities that do not meet the teacher numbers, but if they are not able to recruit the teachers we will have a problem.
Fife Council is talking to the General Teaching Council for Scotland. It is launching a major advertising campaign. For the first time ever, the council has had to go out again to recruit and to open up its recruitment. I am told that there is a major problem with recruiting teachers to primary school and to STEM subjects—science, including biology and chemistry, technology, engineering and mathematics—as well as English, maths and drama. There are major issues, so I would suggest that the Scottish Government cannot simply say, “You will provide or we will cut your funding” if the teachers are not coming through.
I understand that, this year, there is an increase in the number of probationary teachers coming through, but the Scottish Government cannot ignore what I am saying. I ask for an assurance that the Deputy First Minister will take that on board and look at the situation.
On this year’s settlement, we are again seeing a real-terms cash cut in funding to local government. John Swinney says that he is fully funding the council tax freeze. Local authorities would beg to differ: they would argue that the figure is short by £10 million and that up to £80 million should be going in this year.
John Swinney would probably say that the Scottish Government’s budget has been cut by 10 per cent and that that is being passed on. However, some authorities are taking substantial cuts. For example, Edinburgh faces a 20 per cent cut, while Renfrewshire faces a 17 per cent cut. It needs to be recognised that some authorities’ cuts are larger than others.
Under the present circumstances and given where the Government is at, the settlement may seem reasonable. I do not want to get into an argument about whether it is, but I will say that—this has been acknowledged previously—local authorities will find this year very difficult and they will find it more difficult as they go forward. The settlements fail to take on board the increasing level of demand for services, such as health and social care. As that demand grows and budgets fall, even though local authorities are working hard they are finding it difficult. This year, we will see front-line service cuts right across Scotland.
We must look at how community planning partnerships are delivering. The demographics tell us that people are living longer, so the demand on health and social care services is increasing. We are also seeing that the number of children being taken into care is on the increase. That is adding massive pressure on to local authorities’ budgets. Therefore, we must have a strategy that looks at the underlying causes of poverty, so that we can start to address the issues. That takes us back to the Christie commission report. It was hailed as the way forward for public services, but I am not sure to what extent we are delivering on it.
In the brief time that I have left, I will raise one other issue. Local authorities fund care home services by buying the places in care homes. I want us to focus on delivering the living wage to staff. What is a care worker worth? In the private sector, the majority of workers are paid only the minimum wage. We must address that situation.
14:44
It is welcome that the draft amendment order on the money that is to be distributed to local government is before Parliament. As I have said before, it is important that local government finance orders are kept transparent and open to scrutiny, especially when local authorities across Scotland face significant financial difficulties.
Only this week, the Accounts Commission published a report that details local authorities’ financial positions at present and going forward. In summary, the report makes it very clear that councils are facing unprecedented pressure on their budgets. In that context, the stand-off that we have seen over teacher numbers in the lead-up to this debate has set a worrying precedent on central Government’s intervention.
The Accounts Commission report “An overview of local government in Scotland 2015” highlighted the serious financial difficulties that councils across Scotland face. It rightly cited a number of reasons for the strain on councils’ finances, including demographic trends and the challenge of establishing effective health and social care partnerships. In addition, it was suggested that councils reform so that they provide a more responsive and efficient service that suits local needs and is financially sustainable.
The Scottish Government says in the draft amendment order that it has
“consulted with such associations of local authorities as appear to them to be appropriate.”
What does that mean? What does the Government call “appropriate”? I am sure that the Deputy First Minister will answer that question.
A key pressure point that is highlighted in the report that I mentioned is the burden that is put on councils to deliver national policies. The clear message to be taken from that is that every penny matters to councils and that they must be allowed the freedom and flexibility to deliver local services in a sustainable manner.
It is clear that that message has not been reflected in the Scottish Government’s behaviour in the lead-up to the amendment order. It is all very well to say that the full amount of moneys available to councils will be paid out with the amendment order, but that masks how the so-called agreement was reached. The Scottish Government stated in no uncertain terms that it would take money away from any council that did not agree to implement its targets on teacher numbers, so councils had the choice—it was like Hobson’s choice—of losing out on millions of pounds of valuable funding or surrendering their autonomy. Given their financial difficulties, it is not surprising that all councils felt compelled to agree to the Government’s demands.
The point is not about the relative merits of higher or lower teacher numbers—I am sure that we alI wish education standards to improve across the board; rather, the point is about flexibility and autonomy in local government, which I recall debating in the chamber only recently. As the Accounts Commission’s report highlighted, councils should respond to increasing pressure on their services by adopting flexible and responsive approaches that engage extensively with communities to determine how the best outcomes can be achieved consistently. In other words, central Government should not force rigid targets on them. Rather than being faced with unaffordable demands, councils and their communities need to be empowered.
That takes me to the Community Empowerment (Scotland) Bill. Members will be aware that that bill is at stage 2 and I have been seeking to ensure that it realistically empowers communities. I remain concerned that, as it stands, the bill will empower communities only in name and not really in practice. In the interests of time, I will not go over the changes that I have sought, but true flexibility at a local level, free from central orders, is crucial.
Accordingly, I reiterate my conviction that, especially in times of financial difficulty, councils need to have the flexibility to deliver more responsive and efficient local government that is best for communities and the sustainability of their finances. Unfortunately, the Government is intervening where it sees fit and not allowing that to happen.
We move to the short open debate. I have two requests to speak. Speeches should be of four minutes; less than that would be better.
14:48
In the forthcoming financial year, the Scottish Government will provide councils with a total funding package that is worth more than £10.85 billion. That means that local government’s revenue funding and capital share will be maintained on a like-for-like basis, with additional moneys for new responsibilities, including childcare commitments.
Although I disagree with what the Labour president of the Convention of Scottish Local Authorities, David O’Neill, said about universalism this morning, I agree with what he said when he made clear the stark contrast with local government in England. He said:
“Since 2010, in real terms, English local government has experienced 14% cuts in its budgets, whereas in Scotland we have experienced only 3%. Where we have maintained our share of total public sector spend or even increased it, in England this has gone down by 3%.”
Sir Merrick Cockell, the chairman of the Local Government Association in England, has said:
“Every year I meet my opposite numbers in Scotland, Wales and Northern Ireland and they listen to us in wide-eyed disbelief at the budget cuts we are enduring and they are not.”
In its recent report on local government funding, the Joseph Rowntree Foundation confirmed that Scotland has been protected from the drastic cuts that have been experienced in England. It also found that the current constitutional set-up limits the extent to which Scotland can follow a completely different path.
In previous debates on the issue, the Opposition parties have called for more money for local government. They have done so again today, albeit in more measured tones. They always fail to identify where those moneys should come from. Do they want to cut the health budget? Do they want to slash support for small businesses at a time when we are trying to grow the economy? Do they want to hit hard-pressed families by raising the council tax, which the Scottish Government has frozen?
In what I said today, I certainly was not banging a drum for more money. Does Mr Stewart recognise that there is a serious issue with the recruitment of teachers in Scotland, which local authorities across the country are having to deal with?
Mr Rowley is to be congratulated on his measured tones. There is some logic in what he has said. There are recruitment problems in certain areas, and councils need to take measures to deal with them. The additional money will help them to recruit more teachers.
In 2014-15, Aberdeen City Council received £327.969 million in revenue funding, which will grow to £337.989 million in 2015-16. That increase of £10.02 million is very welcome, but it will come as no surprise to members that I am about to make the same appeal as I have made whenever we have discussed local government finance: I urge COSLA to review the local government funding formula, as I believe that Aberdeen City Council fares badly from a system that was designed more than 40 years ago. If COSLA agreed to undertake that task, it might be able to persuade Aberdeen City Council to return to the fold.
I put on record my gratitude to the Government for agreeing to establish the commission on local tax reform, in line with the Local Government and Regeneration Committee’s recommendation, and I wish all the commission’s members all the best in their endeavours.
14:52
I am grateful to have the opportunity to speak. There is no doubt that councils are experiencing tough times. They are on the front line of local service delivery, and they have a huge role to play in delivering social justice and ensuring that preventative activity, which we all value so highly, is taken forward at the community level.
I am afraid that Kevin Stewart is wrong—this is not a like-for-like budget. It represents a real-terms cut to local government, as the Scottish Parliament information centre has confirmed. I remember John Swinney talking about how much local government received from the Scottish Government and its ever-increasing share. It would be fair to say that he made a positive virtue of it. In 2010-11, local government received 38 per cent of the Scottish Government budget, but today the figure is 32 per cent. That is 6 per cent less, and it equates to a £1.8 billion cut. John Swinney no longer crows about how much local government receives.
In a recent report, the Joseph Rowntree Foundation told us that local government spending in Scotland had fallen by 24 per cent in real terms. Unison points to the significant reduction in the number of public sector employees, of which there are some 40,000 fewer, as evidence of the Scottish National Party’s cuts. Contrary to what the cabinet secretary has claimed previously, SPICe confirms that local government’s share of the budget is down.
Everyone says that there have been huge cuts, but the cabinet secretary remains in denial. He wrote to council leaders back in 2014—in October or November, I think—to tell them how challenging things were, how the UK Government had cut his budget by 10 per cent and how he had to pass that on. Never for a minute did they imagine that the SNP would take the Tory austerity cut from George Osborne and double it before passing it on to councils. Austerity max is exactly what the SNP has delivered to local government.
I will focus on the consequence of those cuts. Just yesterday, the Joseph Rowntree Foundation published another report, which considered the cost of the cuts for council services and deprived communities. The report looked at four local authorities across the UK—Renfrewshire Council was the only Scottish authority. Aside from identifying that Renfrewshire had suffered the fourth-highest reduction in spending from the SNP Edinburgh Government between 2010 and 2014, the report suggested that there is evidence of an east-west bias, with councils in the west suffering a 7.4 per cent spending reduction compared with a 4.5 per cent cut for those in the east.
I hope that that concerns the cabinet secretary, because it has been demonstrated that deprived authorities and deprived communities are suffering disproportionately from the cuts. Measures to tackle prevention have not come from the Scottish Government but, rather, have occurred—where possible—at the councils’ own initiative.
That is a damning indictment of the SNP and it exposes the SNP’s empty rhetoric about tackling social justice. What we see is all warm words; there is no meaningful action and the SNP is being found out. It is little wonder that Renfrewshire Council and other local authorities are crying out for resources that will help them to address need in their communities.
Finally, I come back to an issue that I asked Mr Swinney about when we debated the then draft Local Government Finance (Scotland) Order 2015 and which he spoke about today—the mitigation of the effect of the bedroom tax. I heard what he said about holding some money back to make sure that it goes to the right areas. I think that that is in effect an underspend, but I would be grateful for his confirmation of that.
On top of that, the UK Government is reducing discretionary housing payments, so less money will be available for local authorities to mitigate the effect of the bedroom tax. Mr Swinney said that he would fully mitigate the effect, but the budget line has not increased at all. I ask him again whether he will help our most hard-pressed local authorities in some of our most disadvantaged communities to fully mitigate the effect of the bedroom tax and whether he will make up the shortfall.
14:56
On the question of being found out, Jackie Baillie has been found out on two counts. The first is that she has come to the chamber and bemoaned the funding settlement for local government, but she went through a budget process just a few weeks ago during which she asked me to spend all the consequentials that the Government had available to it on the health service. She was dissatisfied that I did not do that. I took certain decisions to invest in education—which, the last time I looked, was a local authority service—and support attainment issues in some of the most impoverished areas in our country. What did Jackie Baillie do about that? She voted against it. That is the first count on which she has been found out. [Interruption.] She shakes her head and says that she did not vote in that way. I am afraid that I have to tell her that she voted against the budget, which included money to tackle attainment in some of the most deprived areas in the country.
The second count on which Jackie Baillie has been found out is on some of her supposed like-for-like comparisons. I will go away and look at her like-for-like comparisons, but I think that those comparisons include looking at the budget when police and fire services funding is in the budget and when that money is out of the budget. That is not like for like; it is apples and pears. That is one of the many weaknesses of her approach.
Let those in glass houses be the first to throw stones, cabinet secretary. The figures are from SPICe and do not make the assumptions that the cabinet secretary claims; indeed, he is the one who continues to count police and fire services funding in the allocations when such allocations no longer exist.
We will look at the SPICe analysis and we will give a response on what is involved in that.
Alex Rowley asked about teacher numbers and teacher training. The education secretary is heavily involved in tripartite discussions about workforce planning between the local authorities, the trade unions and the Government. The Government has always followed whatever recommendations have come out of those tripartite discussions. I appreciate the issues that Mr Rowley fairly raises on behalf of local authorities, and the education secretary will of course be engaged on all those points.
Mr Rowley also asked whether community planning partnerships are delivering within the themes of the Christie report. He poses a fair question. That issue is why the Government is intensifying its work on public service reform to ensure that, at local authority level and at CPP level, services are reconfigured to include a greater emphasis on preventative interventions.
In my view, the strategy is absolutely correct, and I am pretty sure that Mr Rowley agrees with the strategy and with the Christie report. There is a fair question about whether it is being delivered with intensity. To address Jackie Baillie’s point, the Government cannot impose that—it has to be agreed and taken forward at local level in community planning partnerships.
Cameron Buchanan raised a number of points about the Accounts Commission’s overview report. I thought that it was pretty complimentary about the way in which local authorities have managed the financial challenges that they face. The commission concluded that local authorities had managed the difficult financial situation effectively and it encouraged them to continue to do so. I echo those sentiments.
The Accounts Commission report also talked about flexibility. One of the greatest elements of flexibility that the Scottish Government has given local authorities is the removal of ring fencing from £2 billion of local authority expenditure, which was in place when we came to office. That gives local authorities more flexibility to meet their priorities in local areas.
I apologise, Deputy First Minister, but you must draw to a close.
I hope that that addresses the issues that Mr Buchanan raised.
I encourage Parliament to support the draft Local Government Finance (Scotland) Amendment Order 2015.
Previous
Libraries