Local Government Finance Settlement
The next item of business is a statement by Tom McCabe, on the local government finance settlement 2007-08. The minister will take questions at the end of his statement, therefore there should be no interruptions.
Through this statement, I am pleased to provide details of the local government finance settlement for 2007-08, the domestic rate poundage for 2007-08 and the small business rates relief supplement for 2007-08.
In my statement to Parliament on the 2006-07 settlement just over a year ago, I said that we were determined to secure improvements in the quality of public services for the benefit of everyone living and working in Scotland. During the past year, we have engaged in dialogue and debate about how our reform agenda should develop, not just with individuals and organisations in public services but with others, including the users of those services. One thing has become abundantly clear from professionals, service users and the third sector—few people believe that the status quo is an option.
Constructive steady change has taken place and will continue. There is real willingness on all sides to embrace the changes that still need to happen and to explore how best to take them forward. We might not be overgoverned in Scotland, but there is increasing acknowledgement that we are overmanaged.
By all accounts, we are making real progress, but we fully acknowledge that there is a long way to go. One area in which change is contributing to progress is the much more positive relationship that we are developing with local government. I have made no secret of local government's key role in delivering many of our vital public services. I very much welcome the progress that councils are making in improving the quality of those services and in delivering better value for money from the resources at their disposal. Councils recognise the further action that they can take to live within their means while they strive to deliver the quality of services that people in Scotland expect and deserve. Part of the equation is the level of funding that we provide to local government. Last year, the funding that we provided, together with the careful management that councils exercised over those resources, allowed councils to set the lowest average council tax rise since devolution.
I fully acknowledge that, even with all the progress that councils have made, a range of pressures and challenges has developed since the original 2007-08 funding levels were set earlier in the spending review. I have made it clear on a number of occasions that I am prepared to discuss with local authorities the possibility of additional funding for 2007-08, but I have also made it clear that we will not simply hand over additional funding without any conditions. Taxpayers fund our public services and they have a right to know what they will get in return. That is why I have consistently said that we would link extra funding to further progress on efficiencies and to other specific outcomes.
Local government has responded positively to that approach. We have had a number of extremely constructive discussions with the Convention of Scottish Local Authorities and with individual councils over the course of this year. The Improvement Service has provided us with the evidence that was needed to show that local government is tackling the drive for greater efficiency with some endeavour. It is with regard to that excellent performance that I am announcing today's provisional figures, although I acknowledge that, working together, there is still much more that we can achieve.
Today's provisional figures will enable councils to get ahead with setting their budgets for 2007-08 and will afford them the opportunity to comment on any details that require clarification. The figures will be finalised during the parliamentary debate in early February next year. The debate will provide the statutory basis for the revenue support grant payments to be made during 2007-08.
Against that positive background, I can set out the revised level of Scottish Executive grant support for local government in 2007-08. Local government will benefit from an additional package of measures worth more than £250 million. That will include an extra £157 million in revenue support for core services and an extra £61 million in capital grant. The figure also includes £19 million that we are making available for a new firelink communications system for the fire and rescue services, and £7 million for e-planning. In addition, because of the actions that we are taking on business rates, local government will benefit from a repeating windfall of approximately £10 million a year.
The new core settlement figures, which build on the previously announced figures, mean that total revenue funding for local government in 2007-08 will rise to £8.7 billion. That is an increase on last year of £393 million or 4.7 per cent. The £61 million of extra funding for capital means that the total support that the Executive will provide to local authorities next year for capital will be more than £900 million. In total, therefore, in 2007-08 local government will receive core and non-core funding amounting to £10.2 billion.
In return for that additional funding, councils have given assurances in the following areas. They will continue to bear down on council tax levels, not just in 2007-08 but in the following three years, putting the taxpayers first and offering the costed stability that the taxpayer deserves. They will act to build on the steady improvement in council tax collection and push collection rates even higher. They will work to develop more effective asset management strategies for all councils, and they will produce a regular report on progress, including outcomes and targets. They will also increase the level of efficiency savings that they seek to deliver by the end of 2007-08 by a sum that is at least as great as the extra capital grant that we are providing today.
It is important that councils will work with the Executive to establish once and for all the resources that they are spending on delivering free personal care and how effectively those resources are being used. They will do that so that people throughout Scotland receive the same high standard of service. They will put taxpayers first and offer the reassurance and stability that they deserve. In other words, by linking the extra finance to specific outcomes, we are sending a clear signal about the constructive and progressive relationship between central and local government in Scotland, as we work together to deliver the quality services to which the people of Scotland aspire.
Of course, we will be guided in our future actions by the success that we see in all those areas, but I can confirm that it is our intention that the £157 million of additional resources will be baselined in future years. So, providing that local authorities deliver on their part of the bargain—and I know that they will—the £157 million will be included in future local government budgets, not just for 2008-09 but for the years beyond.
Those amounts build upon the substantial sums that have been invested in local government in previous years. So, as the current spending review period comes to an end, the sums that I have announced today will mean that total funding for local government will have increased by almost £3.2 billion since 1999-2000—an increase of 57.9 per cent.
Later today, I will forward an information pack to all members, which will include some key facts on local government finance, a summary table showing what each council will receive in 2007-08, a copy of my statement and a copy of the letter that is being sent to COSLA to coincide with the statement, setting out the terms of our agreement and the conditions that we have attached to the additional funding.
I turn now to non-domestic rates. I can announce the non-domestic poundage rate and the small business rate relief supplement for 2007-08. One of the key factors that will help to determine our future prosperity is the success of our economy. Growing the economy is, rightly, our number 1 priority, and we are committed to ensuring that Scotland is populated by successful businesses that drive the kind of economic growth that will assist us in closing not only the all-important opportunity gap but that substantial fiscal gap that others try so hard to deny. We are helping business in a variety of ways—by creating business improvement districts, for example—and, within the resources available to us, we are continually seeking to target rate relief where it will achieve the maximum benefit.
I said in my statement last year that we would remove the existing gap between the Scottish and English poundage rates. In April, we halved the gap with England, and I confirm today that from 1 April 2007 we intend to remove the gap completely. The new poundage rate for 2007-08 will therefore be 44.1p. That new rate for Scotland represents a decrease of 0.8p from 2006-07. A technical note explaining how the figure was derived will be published shortly on the Scottish Executive website.
The 2005 non-domestic rating revaluation showed us that, on average, rateable values in Scotland had increased by 13.3 per cent, compared with 17.7 per cent in England. As a result of our policy of limiting rate increases, the rates burden on Scottish businesses relative to English businesses had already begun falling before we committed to equalising our poundage rate. That trend, in conjunction with the latest poundage rate, will mean that businesses here have significantly reduced operating costs. That will provide them with an all-important competitive edge. I now look to the business community to show that, in the interests of this country's economic competitiveness, it can take full advantage of the opportunity.
I am also pleased to announce that the small business rate relief scheme will continue in its present form and that, in line with our pledge to equalise the rate with England, the supplement on the poundage rate that is payable by larger businesses to cover the additional cost of the scheme will reduce from the rate in 2006-07 to 0.3p. The scheme benefits about 70 per cent of non-domestic subjects in Scotland. They will continue to receive relief up to the rate of 50 per cent. However, I want to assure Parliament and the business community in Scotland that we will continue our search to see what more we can do to support business, especially small business.
In conclusion, today's announcements see us build upon what are already record levels of investment and continue our record of providing above-inflation increases for local government in each year since devolution began. Those actions will contribute towards closing the opportunity gap by drawing more people into economic activity. That underlines our commitment to provide the best, costed, dependable and sustainable services for the Scottish people and to create the best opportunities for businesses, not only those already in Scotland but those that wish to invest here in the future. I commend the statement to Parliament.
The minister will now take questions on the issues raised in his statement, for which I will allow about 45 minutes.
I welcome the minister's statement and the advance copy of it that he provided for me.
I also welcome the fact that at long last, after much asking, the minister has begun to respond to the financial pressures on local government and on council tax payers and has offered more resources than he had planned. I also welcome the minister's admission that there are not the appropriate resources to implement free personal care, which this Parliament demanded but which, over time, the Executive has not delivered.
I will ask the minister about one detail that is missing from his statement, which is his prediction for the expected council tax increase in Scotland. Last year, he predicted that the increase would be 2.5 per cent, but it was 3.3 per cent. Will the minister say what his expectation is for the council tax increase? Does he recognise that, since Labour came to power in 1997, the council tax in Scotland has increased by 60 per cent, which represents an increase of four times the rate of inflation in that period?
The minister allows certain areas of Government to retain their efficiency savings. Does he accept that the time has come to allow local authorities to retain efficiency savings, instead of undermining their baseline budgets—as he has done for the past few years—and to deliver, as the Scottish National Party has promised, a freeze on council tax for the hard-pressed council tax payers of Scotland? If not, will the minister preside over another punishing increase in the council tax for the council tax payers of Scotland?
Oh, no, no—Mr Swinney is too late. He should not bother welcoming what I have announced today, when a few weeks ago it was a bribe. Along with all other members, I remember the headlines on the front of the papers saying we were to bribe local authorities, but today Mr Swinney welcomes the increase in resources for local government. At the same time as he welcomes that increase, he and his colleagues call daily for increased expenditure and, in the same breath, tell us that they will freeze taxes. There is no consistency. Mr Swinney clearly did not listen to the statement and clearly he does not listen to the people of Scotland, who will respond appropriately to what his party says.
I, too, thank the minister for his statement and for the provision of an advance copy of it. I can only hope that I am more successful than Mr Swinney was in eliciting some answers from him.
The minister says that he has negotiated with local government on council tax rates, so I presume that he has some idea what "bear down" will mean. Perhaps he could tell us. He says that councils have experienced some pressures and challenges since the last spending review. Will he tell us what they are, how much they have cost councils and how many of them have been imposed by the Executive?
I welcome the restoration of the uniform business rate, but will he confirm how much extra Scottish businesses have paid in business rates as a result of his Executive's decision to increase business rates in the first place? Is the figure around £1 billion?
The member might get better answers if he asked better questions than Mr Swinney did, but he has not done very well, so he has failed that test.
It is remarkable that a Conservative representative will stand up in the Parliament to ask how much extra business has paid. I will tell Mr Brownlee when business paid extra—when it suffered under his party's Administration, when it had to pay for the 3 million people who were unemployed in this country, when there was a loss of opportunity and when there were lost generations. The difference in the life experience of people in Scotland over the past seven years has been remarkable, and they remember that well. In the light of today's statement, they will remember once again who best looks after their interests. That is another test that Mr Brownlee will fail.
The Liberal Democrats welcome the Executive's move to reduce business rates to the level south of the border, but we are disappointed that the minister has not felt able to reduce them even more. Does the minister agree with Liberal Democrat members that if he went further and reduced business rates to below the English level, as requested by the Federation of Small Businesses and the Scottish Chambers Of Commerce, that would give Scottish businesses a welcome competitive edge?
There are many ways in which we can give a competitive edge to Scottish business. The Executive has demonstrated time and again that we are determined to give Scottish businesses a competitive edge and that we follow through on that determination.
During my statement, I made it quite clear that we are determined to continue our search for ways in which we can enthuse business, grow the economy and bring more people into economic activity. That is the core of the Executive's being. Too many people have been excluded from economic activity for too long, so we will continue to examine what measures can be taken to ensure that they are brought into economic activity, so that they can make their own choices and we can grow the Scottish economy.
Judging from the long faces of members in certain parties, one would not believe that it was good news that was being announced.
I welcome the additional £250 million for local government and the fact that £157 million of revenue support will be baselined in future settlements. I also welcome the reduction in business rates. In previous parliamentary discussions about the business rate poundage, finance ministers have explained that the multiplier must be taken into account. Can the minister advise us whether the business rate multiplier in Scotland is still lower than the business rate multiplier south of the border and whether Scottish businesses have a competitive edge over those south of the border because of the reduction in the poundage?
I welcome the member's sincere acknowledgement of this afternoon's announcement.
I made it clear that, due to successive actions of the Executive, a competitive edge is now being given to Scottish business—indeed, that edge has been given for some time. We will not stop there. We will continue to search for ways in which to sharpen that competitive edge. As I said earlier, that is what will grow our economy.
The additional core funding for local authorities is welcome. However, does the minister recognise that the additional funding justifies what the Finance Committee and other committees have been saying for the past few years, which is that council services have been dramatically underfunded over that time? In order to find the funding that they need to deliver statutory services such as children's services, councils have had to raid other budgets, particularly community care.
Arthur Midwinter highlighted a gap between the £416 million that is spent on children's services and the £255 million that the Executive gives local authorities for those services. Surely that gives the lie to what the First Minister said to my colleague Robin Harper at First Minister's question time in October, that there was enough money in core funding to meet children's services needs. When will the minister ensure that core services such as children's services are properly funded and meet the entire gap that Arthur Midwinter highlighted? When will he acknowledge that the underfunding has been going on for years?
First and foremost, since Mr Midwinter expressed his view, we have demonstrated that a wide range of funding is making its way towards children's services. That funding will not merely bridge the gap—it will more than bridge it. We have demonstrated clearly that significant investment is going towards children's services in Scotland.
I am glad that Mr Ballard has acknowledged the increases that I announced today. However, I would be happier if he had acknowledged that they came about as a result of a constructive dialogue between central and local government. They came about because both are determined to work together in the interests of Scotland. Local government recognises that a substantial move is being made in the right direction. It will put the resources to good effect. People throughout Scotland will feel the benefit of that. It is time that politicians in Scotland recognised that.
Given that the Executive's efficient government initiative is in total disarray, with the minister being unable to tell the chamber anything other than the gross savings—he cannot tell us what the savings are or set out the baseline outcomes before or after the efficiencies—what steps will he take to measure the effect of the initiative on council tax payers, business rate payers and the wider economy?
In addition, given what the minister said about bringing more people into the economy, how does he reconcile that with the fact that, in February 2003, 240,000 of economically inactive people wanted to work, but only 185,000 of them now want to work? What will he do differently? How will that change?
I know what is in disarray. The SNP's campaign director, Angus "Taxman" Robertson, says that taxes will rise under the SNP. Mr Salmond hears about it only at the last minute, falls out of a bistro in Fulham and says, "No, no, no. We're going to hold taxes steady." That is what is in disarray.
Fiona Hyslop is calling for more funding for services, Angus Council is doing likewise and John Swinney is calling for more money for everything. At the same time, the SNP is saying that it will freeze taxes. It is just not possible to square that. People in Scotland are beginning to see that the real disarray is in the SNP. That is having an impact on people's views, which is why the SNP will make no progress whatever come May.
The minister mentioned welcome incentives for businesses in Scotland, especially small businesses. However, if businesses were burdened with administering the local income tax proposals, what impact would that tax have on them and the Scottish economy?
There would be an impact on businesses, and they have expressed concern about yet again being used as unpaid tax collectors, which would have a significant impact on the competitiveness of our economy.
However, the impact of local income tax would be felt long before we got to businesses. The SNP has said, "6.5 per cent is too much; people would never stick to that, so we would limit it to 3 per cent," but they forgot to mention that that would create a £1 billion black hole in the funding of local services. In its panic, the SNP compounded that felony by announcing that it would freeze council tax—there goes another £100 million. What could we buy with £1.1 billion? [Interruption.]
Order.
I will tell members what the SNP could not buy. It could not buy a new Victoria hospital or Stobhill hospital in Glasgow and it could not build the infrastructure that we have planned for Scotland. That would be the impact, which not only businesses but the economy would feel. That is the chaos into which this country would be plunged if people decided to tinker—even for one second—with the nonsense that comes from the SNP. Businesses have a lot to worry about and so does everyone else.
Tom McCabe likes to portray himself as Father Christmas, but for some councils he is still regarded as Mr Scrooge. What will the minister do about levels of deprivation in the Aberdeen City Council and Aberdeenshire Council areas, which have some of the worst figures in Scotland? Why, after all these years, can he still not tell us what is spent on free personal care, and why there is not yet a uniform national service? Finally, I give him another chance to answer this question: how much extra have Scottish businesses paid since Jack McConnell increased business rates?
The Conservatives cannot make up their minds. Either they want local democracy or they want central control. Which is it?
As I said in my statement, since 1999-2000 we have increased the resources available to local government by 57.9 per cent. We have distributed the money under a system that is agreed with COSLA, so the appropriate amounts went to the areas that Mr Davidson mentioned. I know for a fact that since devolution the experiences of the people in those areas have been considerably different from their experiences prior to devolution. Their experiences prior to devolution were the Conservatives' fault, as the people in those areas know.
Presiding Officer, this is not your fault, but trying to get an answer from the minister is becoming a bit of a farce. I hope that if I ask specific questions he will give specific answers.
Can the minister tell us the average increase in funding across the 32 local authorities? Can he confirm that for the seventh year running the funding increase for Glasgow will be less than the average increase for the whole of Scotland?
Does the minister think that the settlement will provide enough resources to address the scourge and tragedy of rising homelessness? Since 2001, homelessness has increased by some 44 per cent in South Lanarkshire—the minister's area; by 219 per cent in North Lanarkshire; and by 38 per cent across Scotland as a whole. Will the funding settlement tackle that scourge or will we again hear empty rhetoric from the Executive on homelessness?
Not only has the Parliament not heard empty rhetoric on homelessness, it has produced the most progressive legislation on homelessness of just about any Parliament in Europe. There has been increased investment in social housing and an expansion of the social rented sector, which we will continue. We are determined to continue to work with housing providers and to alleviate the tragedy of homelessness. The additional money for local government that I announced today will of course make a contribution towards that.
I suggest that the city of Glasgow is in a better state now than it has been in for a generation—it is booming and is acknowledged to be driving the economic progress that the country is making. The city will receive a funding increase of 4.1 per cent. I am sure that people there will recognise the totality of funding that comes from the Executive and the way in which that helps the city to meet its ambitions and do more for its citizens than has been done for a very long time indeed. People such as Mr Sheridan should acknowledge that willingly. They should not come to the Parliament and try deliberately to dispirit the people of Glasgow; instead, they should tell them once again, as we do regularly, backed up by our actions, that we are determined to see that city flourish as a result of the resources that we give it together with the outstanding political leadership that it now has.
I agree with the minister on the key role of local authorities. I welcome the increase in funding, especially as it is to be baselined, as Dr Murray said. To be parochial, I welcome the convergence of funding levels between that for Aberdeenshire and the Scottish average in the settlement. Will the full amount that is being announced today be allocated through the grant-aided expenditure distribution formula, or will any of it be top sliced to address some of the glaring mismatches that are thrown up by that complex formula or meet any shortfall that may be identified by local authorities that are delivering free personal care properly and fully?
On that last point, an important part of the discussions that we have with local government is an examination of the totality of the spend on care services in Scotland. That issue does not relate only to the money that has been made available for free personal care, which is in addition to the considerable sums of money that were in the past available for people who received care services for free, who were the majority of those who received such services. We will continue earnestly to examine expenditure patterns and methods of service delivery and try our best to ensure uniformity of service throughout Scotland; to ensure that any uncertainty about the policy is removed; and to ensure that not only the users of services but their families have greater reassurance on the long-term commitment to the services.
I confirm that the money that is to be baselined will be distributed through the methodology that is agreed with COSLA. I also confirm that I have made it clear to COSLA that I want to continue discussions on a review of the distribution formula to see how we can reflect better some of the emerging circumstances in different parts of Scotland.
On behalf of my constituents, I warmly welcome the content of the minister's statement. The Scottish National Party has stated that it would cap local income tax at 3 per cent, but the nationalists do not even know the earning levels of council constituents; nor do they know what such a scheme would cost to administer. With regard to the capping level, which, incidentally, would leave a black hole of £1.1 billion in public finances, will the minister explain to me, the Parliament and, more important, my constituents—who enjoy the benefit of ever-improving public services—the consequences of that fallacy and policy and how it would impact on other citizens in Scotland?
Mr McCabe, you will answer for your statement, not for another party's policies.
Quite so, Presiding Officer. However, although we have announced today a positive funding package for local government that is costed and deliverable, it is important to stress that that is set against the prospect for the people of Scotland—who I think will warmly welcome today's announcement—of an uncosted policy and a situation in which a range of services would no longer be deliverable. It is important that it is clear to the people of Scotland that the people who promise to freeze tax levels are the same people who, when they manage to run a council, deliver the highest tax levels of any area in Scotland.
As we properly consider—[Interruption.]
Order.
As we properly consider the stability of funding for services at local level, it is worth our reminding people that the two councils in Scotland with the highest council tax increases last year—5.1 and 5.3 per cent—were both controlled by the SNP: high taxers who are pretending to people that they would be no-taxers.
Given that the Minister for Finance and Public Service Reform has suddenly rediscovered numbers and percentages, can he tell us what he expects the average rise in council tax levels across the board in Scotland to be next year? Given his close relationship and discussions about the funding formula with COSLA, can he tell us how the changes that he has announced today will address COSLA's concerns about the funding formula for GAE for social work, especially in light of the additional costs of providing free personal care?
I assure Parliament that the statement that I have made today will be warmly welcomed by the Convention of Scottish Local Authorities. The scaremongering that is taking place on the SNP benches today is as irrelevant as it always is. I confirm to Parliament that, as I said in my statement, the Convention of Scottish Local Authorities is committed to exerting downward pressure on council tax levels, not only in the year for which the announcement has been made but in the three ensuing years. That offers a degree of stability and reassurance that is better than the situation that we have experienced for some time. When the average tax rate increase is announced by people in local government, who are the proper people to make that announcement, some SNP members will do their best to forget the questions that they have asked this afternoon.
I thank the minister for the announcement that he has made today. Will he detail his vision of public service reform and the role of local government in 2007 and beyond? Will he also address the question of those local authorities that do not complete the required returns for free personal care, which has led to differing levels of provision across Scotland?
We work closely with local government to ensure that the information that it provides is accurate and timeous. We are already engaged in in-depth discussions about lifting the burden of regulation and inspection, and about the accuracy and quality of the information that local government provides to us. Local government has made an absolute commitment to work with us to improve that, in order that we and councils may have a better fix on the overall position both financially and in terms of the quality of service that is being delivered to people in Scotland.
Quality and sustainability of service drives our vision for public service reform. That vision is based on a frank exchange with local government; on seeing not just local government but the entire public service as partners; and on being determined to work together to create a new structure that serves people in Scotland better. Importantly, it is also based on honesty with delivery agents, be they in local government or in any other part of the public service. It is dishonest to suggest—I make it clear that we do not suggest it—that at the same time as cutting taxes we can raise the level of services. It is dishonest to suggest that a hole of £1 billion in the funding of local services would not cause chaos in our local communities—it would. That is the danger posed by political parties that make false promises in desperation, because they see not only their opponents but the public in Scotland coming after them at some pace.
This is quite a straightforward question, so I hope that I will get an answer to it—I am optimistic about that.
I turn to the acknowledged council tax collection problems. Does the minister agree with the Burt review that the inclusion of water and sewerage charges in council tax bills has an adverse effect on collection rates, which are only 93.3 per cent in this country in comparison with 96.5 per cent in England? Accordingly, does he agree that if, as we have suggested, Scottish Water were saved by mutualisation, that would increase council tax collection rates and save the public purse millions of pounds?
I can confirm that we are prepared to consider a variety of recommendations in the Burt review. Before the report was published, I had discussions with local government about the collection of water charges. There is no universal view from local government. Some local authorities are keen to continue with the existing arrangements, and some feel that they are a constraint on their ability to maximise the amount of council tax that they can collect from the people whom they represent. Our mind is open on that. There is different evidence, and different views, on the matter throughout Scotland. I think that that is healthy and reflects democratic expression in the different circumstances that exist in different parts of Scotland. We would certainly not rule out the recommendation, which is just one part of the report that we are considering, on which we will pronounce in due course.
I correct any misinterpretation—intended or otherwise—about the overall level of collection of the council tax in Scotland. Collection rates have been increasing and continue to increase. Local government has worked hard to improve the figures. We know that more can be done. Local authorities have acknowledged that they can do more and have told us that they will put specific actions in place to improve the level of collection. I welcome that and I think that the honest, hard-working people who make an effort year on year to pay the tax will welcome the fact that, more and more, authorities will pursue the people who can afford to pay and that we will do as much as we can to assist those people who are challenged in their ability to pay.
When Sir William Rae, the chief constable of Strathclyde police, came to talk to the budget at a joint meeting of the Justice 1 Committee and the Justice 2 Committee, he told us that the numbers of police are at a temporarily high level and that they will fall after the retirements that will take place over the next couple of years. In the draft budget—for the avoidance of doubt, I refer to page 156, line 13, word 5—the minister says that the Executive will
"maintain record levels of police officers".
Is Sir William Rae wrong, or was that a false promise by the minister?
It was far from a false promise. Communities the length and breadth of Scotland are experiencing the benefit of record numbers of police officers. Anyone can look at the figures for the police and retirements that might or might not take place. I know Willie Rae quite well. He did not retire at the earliest opportunity and has worked past the normal retirement age. That facility is available to every single police officer in Scotland, so it is not possible for anyone to say what individual decisions will be taken by individual police officers as they approach the earliest point at which they can retire.
Does the minister accept that the increased investment will be welcomed in the Borders and that there should be no excuse for the Conservative-led Scottish Borders Council to carry on with its cuts in teaching staff and social care? Given that the overall investment in local government equates to about 20 per cent of all local government expenditure, and given the fact that local authorities will be elected in a different way in the future, does he also accept that this is not the time to talk about fiscal devolution or autonomy in this Parliament in isolation and that we should enter into the debate more radically by devolving more fiscal responsibility to our local authorities too?
There is no excuse for a Conservative council in the Borders, never mind an excuse for the things that it does. By its actions, the council proves that on a daily basis. However, I think that it will be appropriately judged next May.
Some people talk about fiscal autonomy because they are scared to mention the word "independence". It is a cover for their reason for existence and so, under the cloak of just having a nice, cosy debate, they talk about fiscal autonomy.
Independence, independence, independence.
Mr Stevenson will not get Alex Salmond to mention it as much as that at the right time.
The direction of travel that this Executive wants to go in involves a different approach being taken to the relationship between central and local government—one that collapses funding streams, moves to more of an outcome-based settlement between central and local government and acknowledges that, once we have agreed a financial envelope with local government, we should be more prepared to allow local authorities to find ways to deliver the outcomes. That is the kind of mature relationship that we are trying to develop. There are many people in local government who are excited by that. After the May election, when sensible people are returned to the Executive benches, that relationship will flourish and there will be a far more adult relationship between central and local government.
The minister has said a few things already about the black hole that would follow the introduction of local income tax. Can he expand on how it might be possible to fill such a hole? Would it simply be a matter of raising more taxes?
We must have questions on the statement that the minister made. Minister, you may make a quick response.
In short, if there is a £1 billion deficit in the funding of public services, there will be considerable pain. Common sense tells us that. I could spend the rest of the afternoon explaining the ways in which people would feel that pain. [Interruption.]
Order.
I do not want to scare people in Scotland unnecessarily, because there is no prospect of the people who promote that £1 billion black hole being able to implement it.
Is the minister aware that the external auditor has said that Fife Council is in a precarious financial position? Can he tell us whether that is because of continual underfunding over the past eight years by the Labour-Liberal Executive or because of mismanagement by Fife's Labour councillors? Further, does that explain why nearly two thirds of Fife's Labour councillors are jumping ship before the next election, or is the reason for that the fact that they have read the writing on the wall and understand that there will be an SNP administration in Fife as well as an SNP Administration in the Scottish Parliament?
I do not know whether that question was directly related to the statement either, Presiding Officer.
No, it was not.
In any case, it was nonsense.
Does the minister expect, as a result of the settlement that he has announced today, that the average council tax increase in Scotland next year will be higher or lower than 3 per cent?
It is inappropriate for me to stand here and try to set council tax levels before councils have even had a chance to consider the totality of their budgets this year. I can, however, tell Mr McLetchie that council tax levels in Scotland will be considerably more reassuring and attractive than they ever were under a Conservative Government.
I thank the Presiding Officer for the opportunity to question the minister on his statement. I hope that the Presiding Officer will allow Labour back benchers to make political points, as Opposition members have done.
Careful.
I welcome the minister's announcement on increased funding for local government. I certainly welcome the 5 per cent increase for North Lanarkshire Council. I can measure the effects of the increased investment from the Scottish Executive on services in my local community, including schools and services for the elderly.
I seek clarification on the additional funding for free personal care. That is welcome, but will the minister expand on how he expects local authorities to spend the additional money? Does he expect to give them stronger guidance on how it should be spent?
Through discussions in which COSLA will willingly engage, and through examination not only of spending patterns but of methods of service delivery, we will find much more information about personal care and the best practice that can be applied. We will do our best to ensure that best practice is disseminated throughout Scotland to introduce the reassurance and stability that many people want.
Like Tommy Sheridan, I hoped to ask a question about the impact of the announcement on specific local authorities, so I regret that the minister decided to release the table after we have questioned him rather than before. If he had released it earlier, that would have allowed me to ask my question. Instead, I will ask a different question.
Many people will welcome the extra money for local authorities and many council tax payers will welcome the smaller council tax increases if they come about, although we have still not heard a prediction on that. However, in the longer term, is there a danger in a continually decreasing proportion of council spending being raised by councils? What proportion does the minister expect that to decrease to in the coming years? Is there a level below which it should not fall?
That is impossible to predict. We are looking at the funding of local services and the methods of raising and collecting local taxes. Until that work is finished, no one can confidently predict what the percentages will be. However, some considerable research has been done—most recently by the Burt review—that shows that people in Scotland are less concerned about the split between local and central funding and more concerned about how the totality of funding is applied and what they get back from it
I am glad that there is acknowledgement that the increases that I announced today will benefit people throughout Scotland, who will see a real difference. That is exactly what we intend and I know that our colleagues in local government are every bit as determined as we are that people feel the best effects of the increases not only this year but in the years to come.
I would not normally call members who come in significantly after a ministerial statement, but today we have time. I call Carolyn Leckie.
Thank you, Presiding Officer. I apologise for being late. I read the minister's statement, which was provided in advance.
Will the minister take the opportunity to help me blast the myth that Scotland's businesses are overtaxed? He has allowed for a handout to business of at least £280 million between 2006 and 2008. Fifteen years ago, the top 10 businesses in Scotland made £3 billion in profits. They now make £13 billion in profits, which represents an increase of 330 per cent, while in the same period the state pension rose by only 60 per cent.
Can the minister confirm that women will achieve equal pay through the settlement, or will they continue to be expected to subsidise public services, to subsidise inequality and to subsidise handouts to big business? Will it be women who pay for the handouts to big business, or will they achieve equal pay? My question is specific and simple—will they or will they not?
Given that local authorities have today been awarded considerable additional resources, it is self-evident that those resources will assist them as they seek to meet their equal-pay obligations and the obligations that they brought upon themselves when they signed the single-status agreement.
Women throughout the country—not only women in local authorities—will benefit from what I have announced. The measures will improve services, including care services, and people—male and female—who receive those services will feel benefits in many ways not only this year but in years to come. The benefits will be not only financial, as people will benefit from the determination that local government has shown time and again to improve the breadth and quality of the services that it delivers.
Miss Leckie commented on business in Scotland. We are 100 per cent committed to expanding business and helping business to grow the economy. More people will be brought into economic activities as a result of that growth and the number of people who are excluded from society will be reduced—certain groups have been excluded from our society for generations. That is what we are about, and a successful business community will help us to achieve such things. We are determined to stay on that path until as many people as possible are in beneficial economic activities. That is in their interests and in society's interests.
I apologise for my late arrival, which was due to a school visit to which I was committed.
Will the minister recognise people's ability to pay and the situation in which the poorest pensioners, who have been means tested, find themselves? He has already done so in reducing water rates by 25 per cent, but will he go the whole hog and, by removing the water rates element from council tax bills, not plunge pensioners who have been means tested and are on the poverty borderline back into poverty? Their council tax is already paid. Why should people who live on the breadline then be asked to pay an average of £354?
I know that Mr Swinburne is being sincere and that he would be the first to recognise the considerable efforts that have been made, through initiatives that have been taken by the Chancellor of the Exchequer and initiatives such as the warm deal and free central heating programmes in Scotland, to alleviate the burdens on pensioners who qualify for benefits under means-testing arrangements. A lot of progress has been made—indeed, I have seen such progress in my constituency.
I give an assurance that when we examine methods of levying local taxation, the progress that can be made in lifting burdens from pensioners who face genuine challenges in meeting their obligations will be at the forefront of our minds. We have never forgotten and we never will forget that tackling such matters is one of the reasons why we are in politics. Many pensioners in Scotland recognise the action that has already been taken, and they can look forward to more being taken.