Official Report 925KB pdf
Pension Contributions (West of Scotland Local Authorities)
To ask the Scottish Government what discussions it has had with the Convention of Scottish Local Authorities, or Strathclyde Pension Fund directly, regarding the levels of pension contributions requested from west of Scotland local authorities for the financial year 2026-27. (S6O-05363)
The Scottish Government has not discussed employer contribution rates in the local government pension scheme with COSLA or Strathclyde Pension Fund. Rates are a matter for the administering authorities and are certified by their actuaries at each fund valuation.
Following the 2023 valuation, SPF informed its local authorities of a three-year package of rates that would be payable from 2024-25. The rate for 2024-25 and 2025-26 was a significantly reduced 6.5 per cent of pensionable payroll, with a rate of 17.5 per cent applying in 2026-27. Rates certified following the 2026 valuation will apply from April 2027.
The minister will be aware that Strathclyde Pension Fund has a working target to ensure that it is 100 per cent funded over the average future working lifetime of its active membership. The fund is estimated as being 174 per cent funded at March last year. Will the minister clarify whether there is a procedure to allow councillors to release excess funds while not affecting the pension fund’s ability to meet its targets, as that money in the local government system could be better used at this time to allow councillors to invest in local opportunities?
I understand that the pension scheme regulations allow for a revision of contribution rates after they have been set but that that would require a change to the administering authority’s funding strategy statement. It would be for the Strathclyde Pension Fund committee to decide whether that would be desirable and achievable.
The strong funding position of the local government pension scheme as a whole might provide a good opportunity to support the growth of Scotland’s economy. In our programme for government, we committed to engaging with the LGPS to explore investment possibilities, and that work remains on-going.
A720 Sheriffhall Roundabout (Grade Separation)
I will take a deep breath before I ask this question.
To ask the Scottish Government, as part of the cross-Government co-ordination of infrastructure, what discussions the finance secretary has had with ministerial colleagues on when a decision will be made on the design and construction of a new grade-separated junction on the A720 Edinburgh city bypass at Sheriffhall, including what cost revisions have been undertaken. (S6O-05364)
The Scottish Government continues to support the promotion of improvements to the Sheriffhall roundabout as part of its £300 million commitment to the Edinburgh and south-east Scotland city region deal. I regularly discuss the Scottish Government’s infrastructure and spending plans with ministerial colleagues to ensure that they are aligned. The latest discussions have focused on the spending review and development of the recently published infrastructure delivery pipeline, which includes Sheriffhall. As is the case for all other road infrastructure projects, the cost estimate for Sheriffhall will be updated once the statutory process has been completed and in advance of procurement.
The cabinet secretary states that the Government is committed to the project. However, I have been seeking updates from several ministers on what the cost revisions will look like and when motorists across Edinburgh, the Lothians and south-east Scotland will finally see this critical transport project start.
Funding was secured as part of the city region deal almost a decade ago. To date, Scottish ministers have spent almost £6 million, but only on consultation. Given that the Scottish budget that was announced yesterday contains £860 million of cuts to capital spending from plans that she outlined just six months ago, what assurance can the cabinet secretary give that resources will be made available to deliver the Sheriffhall project and that a decision will be taken before the elections in May?
First, the availability of capital funding is dictated, by and large, by the capital funding that we receive from the United Kingdom Government, and that funding is, unfortunately, due to decline.
However, let me say a couple of helpful things to Miles Briggs. I assure him that the Scottish Government remains absolutely committed to the city region deal, which includes up to £120 million for the grade separation at Sheriffhall roundabout. As I said, that project is also included in the infrastructure delivery pipeline. I assure him that the financial risk relating to costs over and above that figure lies entirely with the Scottish ministers and not with city region deal partners. I also assure him that the Scottish spending review includes funding to continue to make progress in delivering improvements to the Sheriffhall roundabout.
Finally, on the timeframe, the construction of the proposed scheme can commence only if it is approved under the relevant statutory authorisation process. Thereafter, a timetable for the scheme’s progress can be set. I am sure that the Minister for Public Finance will take an active interest in that matter with the Cabinet Secretary for Transport.
I, too, have a vested interest in the Sheriffhall roundabout, because the A7, from my constituency, ends up there. I hear what the Cabinet Secretary for Finance and Local Government has said, and I heard what the Cabinet Secretary for Transport said on 1 December last year. However, I am still waiting and, like Miles Briggs, I will be keeping my eye on the timetables.
Will the finance secretary convey to the transport secretary that, in the interim, a partial solution could be achieved? As cars approach the Sheriffhall roundabout from the A7, the road becomes two lanes only as they get to the roundabout, so cars bump up on to what we might call the hard shoulder or rough ground in order to make a second lane. Therefore, something could be done. Currently, only three cars can get through if they are travelling west or going straight on. Doing that at the moment would ease pressure. Has Transport Scotland ever considered that? If not, will it?
I am not aware of whether Transport Scotland has considered that specific option, but the Cabinet Secretary for Transport is in the chamber, and I am sure that she has heard what Christine Grahame has said and will follow up with her directly.
Budget 2026-27 (Prostitution Support and Exit Services)
To ask the Scottish Government whether it will consider allocating ring-fenced funding to local authorities in the 2026-27 budget to ensure consistent provision of prostitution support and exit services across Scotland, in line with the joint Scottish Government and Convention of Scottish Local Authorities equally safe commitment to tackling commercial sexual exploitation. (S6O-05365)
In addition to the funding that we have provided to improve support to those with experience of commercial sexual exploitation through the delivering equally safe and victim-centred approach funds, we announced in yesterday’s budget that we will provide a further £400,000 of funding, which will support the implementation of our strategic approach to challenging demand for prostitution and improving support for those with experience of it.
I look forward to seeing the details of that additional funding.
Current funding is very fragmented and it does not align with Scotland’s international human rights obligations, the Government’s stated aim to eradicate male violence against women or the Government’s and COSLA’s equally safe strategy, which recognises prostitution as a form of violence. The costs relating to violence against people in prostitution are continuing to escalate, and a tiny fraction of that money could be used instead as a proactive investment to deliver preventative, trauma-informed support and exit services.
Will the Scottish Government finally meet its obligations to reduce the sex trade market through criminalising sex buyers? Will it properly fund the support and exit recovery services that exploited women and children across Scotland need?
As Ash Regan knows, the Minister for Victims and Community Safety outlined the Scottish Government’s position on the Prostitution (Offences and Support) (Scotland) Bill to the Criminal Justice Committee in November. Although the Government strongly supports the principle of legislating to criminalise those who purchase sex, we retain a neutral stance on the bill. A number of stakeholders have voiced concerns about the safety of women, and it is of paramount importance that legislation that is laid before the Parliament be safe for women involved in and exiting prostitution.
The funding that I have announced will further support the implementation of the strategic approach, which will build on the work that we began with Police Scotland last year. That involves developing local networks between justice and wider mainstream and specialist services in order to ensure that women can be signposted to local support. That funding will help to pave the way for a wider pathway of support for women with experience of commercial sexual exploitation.
Employer National Insurance Contributions (Cost to Local Government)
To ask the Scottish Government how much the United Kingdom Government’s increase in employer national insurance contributions has cost local government in Scotland. (S6O-05366)
The Scottish Government has published an estimate, provided by the Convention of Scottish Local Authorities, of a £240 million increase for local authorities in Scotland in the 2025–26 financial year, following the UK Government’s hike in employer national insurance contributions.
That £240 million could have been invested in public services. For example, it could have given Scottish National Party-controlled Aberdeen City Council the ability to increase its anti-poverty fund or allowed Tory-controlled Aberdeenshire Council to reverse its daft decision to stop supplying grit bins. Is the Scottish Government still pursuing and pushing the Labour UK Government to fund those ENIC rises for public services in full?
I assure Kevin Stewart that we continue to pursue the UK Government on its approach to the cost of ENICs. As I have said many times in the chamber, there is a £400 million-a-year gap between the funding that has been provided and what is needed to meet the cost of the increase in employer national insurance contributions. I have regularly raised the issue with the Chief Secretary to the Treasury and will continue to do so.
Last year’s national insurance hike showed Labour’s utter disregard for jobs and economic growth. The cabinet secretary was right to say that it has negatively impacted the public sector as well as the private sector.
However, as councils grapple with those costs, yesterday’s Scottish budget and spending review dealt them another blow. Today, the Institute for Fiscal Studies has said that the finance and local government portfolio uplift is only 0.3 per cent, which is far less than the 2 per cent that was claimed by Shona Robison yesterday. In future years, the local government portfolio will suffer annual real-terms cuts of 2.1 per cent. How are councils meant to meet those increased costs and deliver front-line services when this Government is intent on slashing their budgets?
Local government’s budget would be slashed if £1 billion was taken out of public services, which is what the Tories have advocated. They cannot come here to ask for more money for local government if they would take £1 billion out of public services. That is a ridiculous position to take.
On the local government funding position, the budget provides a further real-terms increase in the local government settlement by delivering record funding of £15.7 billion, which includes a quarter of a billion pounds of unrestricted general revenue grant. The overall settlement is to increase by £650.9 million, which is a cash increase of 4.3 per cent, or 2 per cent in real terms, compared with the 2025-26 budget. That is the amount by which the local government settlement is estimated to increase by the 2026–27 spring budget revision. Craig Hoy should go away and read the document properly.
Non-domestic Rates Revaluation (Business Support)
To ask the Scottish Government what action it is taking to assist businesses that have seen a significant proposed increase in rateable value as a result of the current revaluation for non-domestic rates. (S6O-05367)
Valuations are carried out by independent assessors. The average increase as a consequence of those valuations across businesses was 12.2 per cent over a three-year period. We recognise that, although some ratepayers will see their rateable values fall, a number will see significant increases, and we have met assessors and businesses to address those concerns.
That is why the draft budget set out our plans to lower the basic, intermediate and higher property rates for 2026-27 and to provide transitional relief schemes that are worth more than £320 million to deliver support to businesses that need it.
The reaction from business to that aspect of yesterday’s budget has been absolutely furious. The Campaign for Real Ale, the Night Time Industries Association and UKHospitality have all said that the reliefs that were announced yesterday will go nowhere close to meeting the extra costs that businesses will face as a result of the revaluation. What more will the Government do, or will it just sit there complacently and watch while businesses fail?
I have indicated what we are doing. We have £320 million in transitional reliefs and a total of £860 million in reliefs for businesses across the piece. I recognise that some parts of some sectors have specific challenges, and we continue to engage with those businesses and meet assessors to address those challenges where necessary.
However, to take a step back and consider the numbers, the estimated revenues from NDRs next year will be 6 per cent lower in real terms than pre-Covid. That is a consequence of the steps that we have taken over that period to reduce the overall rates bill for businesses. As I said, the average increase across the three-year period was only just over 12 per cent.
Having lobbied the Minister for Public Finance over many months to maintain the 100 per cent rates relief for island-based hospitality and retail businesses, I welcome the confirmation yesterday of an extension to that provision in the budget. However, as my colleague Jamie Greene highlighted yesterday, further targeted support is still needed.
The Association of Scotland’s Self-Caterers has voiced serious concerns about the 2026 valuation model. In my constituency, a local operator has reported a 270 per cent increase in its rateable value. The minister will understand that the situation is unsustainable and that, without further intervention, many small businesses will face a cliff edge. Will he commit to engaging with the sector to put final protections in place?
As I indicated, the average increase across the three-year period was just over 12 per cent. However, I recognise that there are specific examples of businesses that have, for various reasons, experienced significant increases. We continue to engage with assessors and the business sectors that are most affected to find solutions. As I said, we have put more than £320 million into the reliefs package to support businesses that are impacted by the increases.
Business Rate Discount (Retail, Hospitality and Leisure Premises)
To ask the Scottish Government whether it will provide an update on the request from the Scottish Retail Consortium, Go Forth Stirling BID, and other business improvement districts for Scotland to follow England and introduce a permanent business rate discount for all retail, hospitality and leisure premises. (S6O-05368)
As I indicated earlier, the draft budget ensures that the revenues that will be raised from non-domestic rates in 2026-27 will be 6 per cent lower in real terms than pre-Covid. That is an indication of the steps that we have taken to reduce the impact of the rates bill on businesses. About half of the properties in the retail, hospitality and leisure sector continue to be eligible for the 100 per cent small business bonus relief. A further 37,000 properties in the retail, hospitality and leisure sector that have a rateable value up to and including £100,000 could benefit from the new 15 per cent relief and the relief for islands. The budget guarantees that support for the full three years of the revaluation.
Prior to the budget yesterday, five of Scotland’s largest business improvement districts, including the Stirling BID in my region, warned that England’s new permanent 10 per cent business rates discount will make Scotland
“a materially more expensive place”
to do business, putting at risk sectors that employ 457,000 Scots. The minister may well laud the meagre measures that are in the budget to support business, but, as the Campaign for Real Ale stated,
“Transitional reliefs may sound good but if this Budget still means higher business rates bills than pubs are paying now then this will be the straw that breaks the camel’s back for many hard-pressed licensees.”
On this Government’s watch, the current system is becoming an existential threat to our town centres, from all avenues. Where is the creative thinking? Will the Government agree to freeze non-domestic rates so that we can consider guidelines for the review and bring forward a joined-up approach to fair business taxation?
Just to be clear on the facts, Roz McCall mentioned 10 per cent relief, but we have 15 per cent relief for retail, hospitality and leisure businesses. As I have already said, we are putting £320 million into transitional reliefs for the three-year period and we are putting £860 million in total into reliefs. We can listen to the commentary from businesses and business organisations. Scottish Chambers of Commerce has said that
“businesses can take heart from today’s Holyrood Budget, which offered firms immediate relief from rising cost pressures.”
It also welcomed
“measures such as NDR relief”.
Those are words from business organisations that answer Roz McCall’s point and Murdo Fraser’s earlier commentary.
We are very much focusing on working with businesses and business sectors to put in place steps to address some of the increases. Taking into account the reliefs package that we have put in place, that work is absolutely recognised across the piece as being a significant step by the Scottish Government.
Humza Yousaf joins us remotely for question 7.
Budget 2026-27 (International Development)
To ask the Scottish Government how much it has allocated in the proposed Scottish budget to support its international development efforts. (S6O-05369)
Twenty years on from the start of our international development programme, the Scottish Government remains committed to that work.
In the draft Scottish budget for 2026-27, which we published yesterday, we set out that
“At a time when others are stepping back from commitments to the world’s poorest and most vulnerable, support for Scotland’s International Development Fund and the Humanitarian Emergency Fund will grow to £16 million in 2026-27.”
We have also restated our on-going commitment to climate justice, with more than £12 million allocated in next year’s budget to support vulnerable communities in the global south, particularly women and young people.
I was pleased to see in yesterday’s budget the significant increase in the Scottish Government’s international development fund, which the cabinet secretary mentioned. I was, however, disappointed—although not altogether surprised—to hear voices of opposition, particularly from the Tory front bench, to helping the world’s most vulnerable, such as those in Malawi.
Does the cabinet secretary agree that, in a world that is riddled with conflict, poverty and climate-related disaster, investment in the world’s poorest speaks to a nation’s character, values and even morality? If so, will she reassure me that she and other ministers will use their offices to urge the United Kingdom Government to reverse its disastrous decision—to cut overseas aid worth billions of pounds—which is directly harming the poorest in the global south?
I absolutely agree with Humza Yousaf. The Scottish Government’s continued support for international development and climate justice is an important way that Scotland demonstrates good global citizenship.
It is about our core values. At a time when so much is happening in the world, the support for international organisations’ work on the ground to help communities to help themselves is really important. There was a time in this Parliament when that was a unanimous position; it saddens me that some people have stepped back from our global requirements and obligations.
The First Minister wrote to the UK Foreign Secretary on 14 December, raising his profound concerns about UK Government aid cuts from 0.5 per cent to 0.3 per cent of gross national income by 2027-28. He asked the Foreign Secretary to reconsider the reported proposed cuts to Malawi, which has been one of the Scottish Government’s partner countries since 2005. We continue to advocate on the issue to the UK Government.
The extra millions for external development, which were announced in the budget, have been allocated at the detriment of many local projects across my region. I ask the cabinet secretary to justify cutting funding streams for those vital projects, which are lifelines to many of my communities, in favour of grandstanding on overseas projects.
As I said earlier, that speaks volumes, does it not? Alexander Stewart does not seem particularly bothered about the impact on local services and projects of the £1 billion of unfunded tax cuts that the Tories have provided—[Interruption.]
Members!
Imagine the impact on local projects from £1 billion of unfunded and unaffordable tax cuts—
Always speak through the chair, cabinet secretary—
You should reflect on that before coming to the chamber—[Interruption.]
Members!
—and criticising this Government’s decisions.
All the shouting means that nobody can hear a word that anybody is saying, so, apart from anything else, it is not a very productive way to proceed.
PFI and PPP Payment Obligations (Local Authorities)
To ask the Scottish Government what support it provides to local authorities, including North Lanarkshire Council, that face significant annual private finance initiative and public private partnership payment obligations, which are estimated to amount to approximately £26.6 million per year. (S6O-05370)
The Scottish Government, by way of the annual local government settlement, provides funding in support to local authorities for payments relating to their PFI or PPP contracts .
We were, of course, able to replace the United Kingdom’s costly PFI with a more cost-effective alternative, which has enabled us to build hundreds of new schools and substantively upgrade hundreds of others.
The PFI legacy contracts that were agreed under previous Labour and Conservative Governments still cost Scotland more than £1 billion per year. One project in my area, which had an estimated value of £150 million, is now expected to cost £764 million.
Will the cabinet secretary give assurances that the Scottish Government will resist a return to PFI-style models, particularly in the light of reports that the UK Labour Government, under Rachel Reeves, may be considering similar schemes again?
As I said, we are committed to ensuring that PFI contractual obligations are delivered and that contracts are as affordable as they can be. That is why we asked the Scottish Futures Trust to support public bodies in optimising value for money from those contracts, including the provision of expert advice to contract managers where appropriate, and that has been quite successful.
As Clare Adamson said, PFI legacies have placed a huge burden on councils. That is why, in the 2026-27 budget, we provided local government with a further real-terms increase and record funding. It is also why we have delivered a more cost-effective, alternative model; going forward, we will look at using that model, rather than the expensive PFI contracts of the past.
The Scottish Fiscal Commission has modelled that local government will receive a real-terms budget cut of almost £500 million between 2025-26 and 2028-29. What analysis has been done on the impact of that cut on the budget of North Lanarkshire Council and of councils across the rest of Scotland?
I will, again, be clear that we estimate that, by the conclusion of the 2026-27 spring budget revision, the local government settlement will have increased by at least £650 million in comparison with the 2025-26 budget, because of the in-year transfers. That is what members should look at. The spending ability of local government has seen a real-terms increase for the second year running. Those are the facts, as set out to the Convention of Scottish Local Authorities over the course of yesterday and today.
That concludes portfolio questions on finance and local government.