Local Government Finance (Scotland) Amendment Order 2013 [Draft]
The next item of business is a debate on motion S4M-05924, in the name of John Swinney, on the approval of a Scottish statutory instrument—the draft Local Government Finance (Scotland) Amendment Order 2013.
16:26
On 7 February, Parliament approved the Local Government Finance (Scotland) Order 2013, which enabled Scotland’s local authorities to set their revenue budgets for 2013-14. In setting their budgets for next year, all local authorities were asked, in return for the full funding package that was available, to freeze council tax levels for a sixth consecutive year and to maintain teacher numbers in line with pupil numbers, while securing a place for all probationer teachers who required one. The Government indicated to local authorities that those were the conditional elements of the local government finance settlement that was available, and that if any local authority did not wish to meet those conditions, it should advise the Government that that was the case. I am pleased to confirm to Parliament that the deadline for receipt of such communications was 11 March and that I have received no indication that any local authority does not wish to take forward the provisions that I have outlined.
Therefore, I am also pleased to report to Parliament that the budgets of all 32 local authorities in 2013-14 should contain full provision to enable the commitments to freeze council tax levels for a sixth consecutive year, to maintain teacher numbers in line with pupil numbers, and to secure a place for all probationer teachers who require one, to be applied in local authority areas. The continuation of the council tax freeze will be particularly welcome news for hard-pressed council tax-paying households across Scotland, given the wider economic challenges that the country faces.
In view of the 2013-14 budget process having been concluded, the amendment order seeks approval for the payment of each local authority’s share of the £70 million that has been set aside to compensate councils for the council tax income that has been foregone as a result of the continued council tax freeze.
The amendment order also seeks parliamentary approval for payment of £37.9 million for the newly formed Scottish welfare fund, which has been set up following the transfer of the former social fund from the Department for Work and Pensions, as part of the UK Government’s welfare reform programme. The successor arrangements are intended to offer grants or support in kind for two purposes: the crisis grants will provide a safety net in an emergency when there is an immediate threat to health and safety, and the community care grants will enable independent living or continued independent living, thereby preventing the need for any form of institutional care.
That new service represents another example of the Scottish Government’s having to face up to the consequences of the UK Government’s welfare reform programme and the limitations of the transfer of resources that has been made to accommodate such issues. The money that was transferred from the Department for Work and Pensions represented a real-terms cut in funding, but I have been able to top up the grant funding in 2013-14 with £9.2 million to provide additional protection to some of the most vulnerable people in our society. That £9.2 million is included in the overall support figure of £37.9 million.
The third and final change to the 2013-14 funding allocations that Parliament approved in the Local Government Finance (Scotland) Order 2013 on 7 February is the distribution of an initial £10 million of the £37.6 million that has been set aside but not yet distributed in the 2013-14 local government finance settlement in respect of the teachers induction scheme. The initial allocation has been included with the prior agreement of the Convention of Scottish Local Authorities.
Taken together, those three changes will add almost £118 million to the amount of general revenue grant with which we will provide local authorities next year. That means that the total revenue funding in 2013-14 will be almost £9.8 billion and that the overall total funding, including capital, will be £10.3 billion.
I would like to take the opportunity to make further minor adjustments to the 2012-13 revenue funding allocations that have arisen since the 2013 order was approved on 7 February. I have set out the funding for 2013-14 for the newly formed Scottish welfare fund, but I also confirm that local authorities will receive more than £2 million for the new service’s set-up costs. Similarly, I am providing almost £4.2 million for the council tax reduction scheme set-up costs, and £400,000 for the associated software costs.
I am also making £1.1 million available to West Lothian Council as part of the recovery plan to deal with the closure of the Vion Food Scotland Ltd plant in Broxburn. The City of Edinburgh Council will receive a further £90,000 for the cities alliance project, which will be shared by the city councils, and Moray Council will receive £52,000 as its share of the money that is being provided to planning authorities to help them with the number of wind turbine applications with which they are dealing. Those final additions mean that local government will have received a further £7.8 million this year, on top of the £58.5 million that was included in the February order.
The approval of the amendment order will authorise the distribution of a further £117.9 million for 2013-14 and a further £7.8 million for this year to local government to support the essential services that our local authorities deliver for all our communities.
It goes without saying that the passage of the order is significant to the local authorities of Scotland; the funding that the order includes has already been taken into account by authorities in setting their 2013-14 budgets. The loss of almost £126 million in funding would have serious consequences for all local authorities, the communities that they serve and the people of Scotland, who rely on the vital services. It would also undermine the constructive relationship that has been developed between the Scottish Government and local government in taking forward a range of shared priorities. Given that context, the amendment order is essential to enable Scotland’s local authorities to implement their approved budgets. I therefore commend the order to Parliament and invite Parliament to agree to the motion.
I move,
That the Parliament agrees that the Local Government Finance (Scotland) Amendment Order 2013 [draft] be approved.
16:34
In my speech in the debate on the draft order last month, I said that that was our chance to comment on the Scottish Government’s priorities and to highlight our unhappiness about its centralisation agenda and its budget allocations. On the day, Scottish National Party spin doctors had to work really hard; they had to work overtime to finesse the damage that the impact of the settlement caused in Aberdeen.
We do not see today’s order as being a cause for celebration, but we understand that the money needs to go to local government today. We understand that every council leader would rather accept the proposed deal than no deal, and we know that local authorities have no real option but to sign up to it. There will be negative consequences in every part of Scotland. One academic has noted that it is a tighter squeeze with even less flexibility than the Tories ever managed. We live in tough times, and local authority finances face an unprecedented squeeze.
Today, we have an Accounts Commission report that identifies a significant rise in the level of debt that is being sustained by local authorities. Their challenge is that their capacity to service that debt and the repayments has not increased, but their need to build new infrastructure to support services still has to be met year in, year out.
Will the member give way?
I will give way briefly on the point about debt.
Does Sarah Boyack regret that, in trying to get more money for local authorities, she led her party to vote against the order, which would have resulted in the local authorities receiving no money whatever?
If Mark McDonald had read his agenda on the day, he would have noted that that was the draft local government finance order. Today, we are discussing the actual finance order. There is a distinction, and it is important to log that point. As I said in my speech, we had a chance to make our points. Today, we are resolutely focused on what needs to be done now to improve the quality of life in our communities and to protect people who are suffering the impact of economic uncertainty.
The council tax freeze of which John Swinney is so proud is underfunded, and the strings that come with today’s package mean that the Scottish Government does not just set the money for every authority; it also requires a commitment on how revenue is actually spent. It sets the parameters.
In his report to the Parliament’s Finance Committee, Professor Bell highlighted the uncertainty around local government funding, and his recommendations focused more on local government funding than anything else.
Will the member give way?
No, I will not. I will get on.
It is a great pity that the Local Government and Regeneration Committee did not invite ministers to talk about the local government element of the budget.
Pressure on local government services will continue to grow over the next year. Only last week, members debated the growing challenge of demographic change and the need to improve health and social care services. We all know that the Christie commission identified the need to focus on tackling social inequalities and to build capacity in our communities, but the combination of the UK Government’s austerity and welfare polices has meant that times are hard for people on low incomes. Child poverty is rising, families are being hit by dramatic rises in fuel costs and 25 per cent of our young people are unable to get a college place or a job.
That is the context of what we think is a constructive amendment. We want to work to ensure that every opportunity is taken to help people through these tough times and to provide the resources to provide practical support.
Will the member give way?
I will give way on the point about a constructive approach.
I am interested in Sarah Boyack’s amendment. Can she explain to members why, in all the discussions that I had with the Labour Party prior to the budget, no mention was made of funding of local government services?
That is because we were focusing on housing, which is crucial to local government. I will come on to that, Mr Swinney, because your underfunding of housing is creating the problem that we are attempting to address. If you speak to local government officers, they will tell you that the funding system for social housing is broken—end of story. We need to tackle that.
Speak through the chair, please.
Across Scotland, advice services and councils are, as we speak, redeploying staff to gear up for the impact of the bedroom tax, but more needs to be done. That is why, in our amendment, we ask the Scottish Government to do more to
“mitigate the impact of the ... bedroom tax”.
Will the member give way?
No. I have already taken interventions.
There is another squeeze that is being caused by the transfer of council tax moneys minus 10 per cent. The Welsh Assembly Government met that shortfall in full. In Scotland, local authorities had to find £17 million this year, and there is no promise of funding going forward. Last month, Scottish council leaders called on the Scottish Government to make up that shortfall. I am told that their decision to do so was unanimous, which is significant. Council leaders are looking at their budgets, and they know that there will be shortfalls as a direct result of the UK Government’s decision to pay housing benefit directly to tenants. Yesterday, the BBC reported that the pilots show that there will be a massive 30 per cent increase in arrears. That should concern all of us. It is bad news for councils and tenants, and it is a huge financial problem.
As a Parliament, we need to focus on what we can do together now. I ask the SNP Government to work with us across the chamber. There is much that we can agree on: we need to support people through these tough times and enable our local authorities to get the financial support to do what they need to do.
I move amendment S4M-05924.1, to insert at end:
“but, in so doing, considers that the Scottish Government should mitigate the impact of the so-called bedroom tax and respond positively to COSLA’s call for the Scottish Government to fully fund the replacement scheme for council tax benefit as the National Assembly for Wales has done.”
I remind members to speak through the chair.
16:39
The order will amend the level of central revenue grant that is payable to each local authority by distributing the full £70 million of council tax holdback funds to councils that will freeze council tax for 2013-14, as well as assorted other funds. Although today’s debate on the order gives us another opportunity to discuss the financial settlements for Scotland’s local authorities for the coming year, it has to be said that the other opportunities have, to date, failed to provide any answers to the questions that have been posed to the cabinet secretary and the minister on non-domestic rates income.
Therefore, I will cut straight to the chase and ask once more: How much has been collected under the business rates incentivisation scheme so far? [Interruption.] If the cabinet secretary would do me the courtesy of stopping his conversation and listening, he might be able to answer that. It should not be difficult for him to do so, given that we are less than three weeks away from the financial year’s end.
In addition, I would like to know what the Scottish Government’s prediction is for the year’s total. Again, that should not be difficult to answer because the cabinet secretary receives quarterly updates on collection rates. If he wants to intervene and give me the figures at any time, I will be glad to take an intervention.
We hear a deafening silence. Okay. Taking into account the above two requests, I would like to know how many of Scotland’s 32 local authorities are likely to receive money back. To conclude on that subject, I put on record again that today’s order is another opportunity lost to extend the business rates incentivisation scheme to allow councils to retain 100 per cent of the income surplus above the centrally set targets, rather than 50 per cent, as is the case under the Scottish Government’s scheme. The obvious advantages of that are that it would provide a greater incentive to councils to support business growth while maintaining the certainty, predictability and administrative simplicity of a national poundage rate for businesses.
This is the sixth year in a row in which all of Scotland’s councils have agreed to freeze council tax. The Scottish Conservatives welcome the fact that Scottish households will have certainty that at least one bill will not rise in the coming year.
On Labour’s amendment, the spare-room subsidy simply seeks to address the serious problem of underoccupancy in the social housing stock in an effort to free up accommodation for those who desperately require it. If there are mitigating reasons why someone should live in a property that at first seems to be too large for their needs, those will be taken into account and they will be exempted from the tax.
Would Margaret Mitchell consider the fact that it is the person’s home to be a mitigating factor?
Linda Fabiani states the obvious, but that does not get over the problem that, if the property is too big for the person, they are in effect taking up property that could be used for another person who desperately needs it. [Interruption.] No amount of barracking will get away from that fact.
In effect, the Labour amendment expects the public to pay for people to live in homes that are too large for their needs. I therefore confirm that the Scottish Conservatives will support the order but vote against Labour’s amendment.
16:44
I welcome the order. It is worth repeating what I said when we discussed the Local Government Finance (Scotland) Order 2013. Between 2007-08 and 2012-13, the resources in the Scottish Government’s control increased by 6.4 per cent while, over the same period, local government’s budget increased by 8.9 per cent, which demonstrates the strong financial settlements that have been agreed with local government during these challenging times. We should not forget that.
I welcome the sixth year of the council tax freeze, which will help hard-pressed families throughout the country. I also welcome the maintenance of teacher numbers in line with pupil numbers and the fact that probationers will get jobs as part of the teacher induction scheme.
I am an Aberdonian, so I welcome the funding floor that this Government implemented, which benefits Aberdeen and Edinburgh. I still wish that there could be a review of the funding formula. I hope that COSLA will initiate a review, and I hope that it has listened to what ministers said recently about the door being open.
I say to Ms Boyack that Aberdeen City Council is getting more money than it previously got and faces no significant cuts. That will not last, because the careful financial management of its SNP administration is no longer in place. It is unfortunate that what we have now looks like a hotch-potch of what we had previously, which almost led Aberdeen to financial disaster.
I find Ms Boyack’s amendment somewhat bizarre. Social security is still a reserved matter and it seems that the Labour Party is quite happy for that to continue; I have to say that I am not.
The Scottish Government has committed £23 million, with local government providing a further £17 million, to support nearly 560,000 people, through the council tax reduction scheme. When Ms Boyack sums up, will she say why, when the Council Tax Reduction (Scotland) Regulations 2012 were laid before the Parliament last year, the Conservative and Labour members of the Subordinate Legislation Committee voted together to report that the regulations were potentially outwith devolved competence? Was the Labour Party trying to put the kibosh on the scheme?
Mrs Mitchell came under attack on the bedroom tax and I have no reason to believe that my colleagues were wrong to attack her on that. However, her view is shared by Helen Goodman, who serves in the shadow Cabinet, no less. Helen Goodman said on “Daily Politics” on 11 March:
“We’ve said that the bedroom tax should only apply if people have been offered a smaller place to live and turned it down, because obviously it is better to use the housing stock more efficiently.”
What is the true Labour position on the bedroom tax? Is it Scottish Labour’s position, or is it the position of the Westminster Labour Party, which—let us face facts—will continue to control social security if Labour has its way?
16:48
I spent part of my career in local government, so I have seen at first hand its power to drive change, improve communities and provide opportunities for residents. Local authorities are at the forefront of tackling poverty and regenerating many of our neighbourhoods, and they deserve our support, but increasingly we are asking them to do more with less. I welcome any additional funding that the cabinet secretary announced today, but Sarah Boyack was right to remind members that last year the Scottish Government passed on 83 per cent of all cuts to local government. Of course, the proportion this year before the adjustment is 50 per cent.
At the same time, there are new burdens on the shoulders of local government, particularly as a result of welfare reform. What the UK Government is doing does not deserve to be called reform. It is making savage cuts, which impact on some of the most vulnerable people in our society. It is doing so at a time when it is rewarding its millionaire friends with tax cuts. The majority of members in this Parliament think that that is simply obscene.
Much of the responsibility for picking up the pieces falls to local government and the voluntary sector. As the cabinet secretary said, local government will be responsible for community care grants and crisis loans, at a time when claims are likely to increase. Local government is contributing to the council tax reduction scheme alongside the Scottish Government, but no agreement is in place on how the funding will be provided in future years.
The overwhelming burden of the bedroom tax—some £50 million—will fall to councils along with housing associations. They have expressed serious concerns about the impact on housing revenue budgets and repairs, and some housing associations fear that they might even go to the wall.
The amendment before us says that we should
“mitigate the impact of the so-called bedroom tax.”
To echo the point that Kevin Stewart made, does Ms Baillie seriously argue that the Labour position, as expressed by Helen Goodman, which essentially accepts the premise of the bedroom tax, is about mitigation?
I say to Jamie Hepburn that the SNP missed an opportunity. We should be uniting to get the Tories to bin the bedroom tax, but instead the SNP sees everything through the prism of the constitution. Everything is about the contrast with Westminster—frankly, that is depressing. The Scottish Government has the power to mitigate the impact of the bedroom tax, but the louder the SNP members shout, the greater they intend the diversion to be. The people whom they ignore are the most vulnerable in our society. Shame on them for that.
It is the impact on people that should concern us all. In many cases, people will not be able to contribute additional funding for their rent. They will inevitably struggle to manage and will fall into arrears. Simply to suggest that somehow they can just move house demonstrates a complete and utter misunderstanding of the housing market in Scotland. I say to the Tories that there is a shortage of social rented housing—one-bedroom properties are just not around. Already our surgeries are full of people who are concerned.
Simply saying that it is all Westminster’s fault and “We share your pain” is just not good enough. It is exactly for times such as these that devolution was created. We can and should do something. The Scottish Government has the power to help local authorities mitigate the impact of the bedroom tax and we will support it if it is brave enough to do so.
A number of creative solutions have been suggested. The Scottish Government should look at them and consider how it can help people. My local authority, West Dunbartonshire Council, is not going to evict tenants provided that they engage with the council’s debt counselling and repayment services. It has also added the maximum allowed to the discretionary housing payment pot, but it simply is not enough to cope with demand.
Local authorities need help. Communities across Scotland need help. It is truly the worst kind of politics to have the power to protect people now but to suggest that they simply wait until 2016 before anything is done. This is about people’s lives. The SNP needs to raise its game.
16:52
No one has really argued effectively against our amendment, with the honourable exception of Margaret Mitchell. Today, the issue is that we have a very tight set of constraints on local government. Today’s Accounts Commission report is a real wake-up call. That is the context for our discussion. The Accounts Commission reports a 39 per cent increase in local authority debt levels in the past five years. That is on the cabinet secretary’s watch. Does he have concerns about that? How does it square with this year’s whopping £52 million capital spend cut for local authorities? That will simply make a bad situation worse.
How sustainable is local government finance? Given the financial straitjacket that the Scottish Government has put local authorities in, what does it intend to do to tackle that problem?
The Accounts Commission recommends more financial and project management skills, and particularly business planning skills, in local government. When we debated the draft order last month, I highlighted the loss of staff across local authorities. Local authorities have taken the biggest hit in staff numbers—disproportionately so—in the public sector. What impact has that loss of expertise had on the quality and terms of service delivery? The need for effective service delivery becomes even more acute when there is less money around. The predictions are that there will be less money next year, too.
Does the SNP have concerns about the ability of local authorities to employ sufficient staff to provide the crucial financial expertise and project and risk management skills that we urgently need? What of the impact of last year’s loss of 14,000 staff from local authorities, given that the same is predicted again this year? Quite apart from the human impact of that on families, there is also an impact on hard-pressed communities. It means less money in our local economy, less money being spent on local goods and less money for our local businesses.
Since the SNP came to power seven years ago, it has made great play of its partnership with local authorities, yet this has been a centralising Government, as is demonstrated by the order before us today.
The concordat has failed our local communities. It is a way for the Scottish Government to control local authorities’ purse strings and to pass all the blame to them when things go wrong.
The proposal in our amendment would be a small but significant step towards allowing local authorities to manage their cash more effectively, and it would have a huge impact on our constituents and the people who will suffer from the iniquitous bedroom tax and the welfare reforms that the Tories are pushing on us. We must do what we can do. It is a dented shield, but it is still a shield. Let us use that shield properly.
16:55
My opening remark concerns construction. I thought that the Labour Party’s philosophy was to invest in capital projects to stimulate the economy, but the spokesperson has this afternoon disowned that strategy.
The order is about extra resources: some £70 million to make the council tax freeze real across Scotland, which will be warmly welcomed by hard-pressed families; and the £37.8 million for the Scottish welfare fund, which will protect many of the most vulnerable people in this country in the face of UK actions.
On local government finance, the Labour Party has said that we should do what is being done in Wales. I inform members that the share of local government expenditure as a proportion of Government expenditure in Wales is 30.4 per cent. In Scotland, thanks to the actions of this Government, it is 37.6 per cent.
On the issue of centralising Governments, it is this Government that has reduced ring-fenced funding from £2.7 billion to £0.2 billion in 2013-14.
On the council tax freeze, which is fully funded, there is £70 million compensation out of a £10.3 billion budget. That overbearing centralisation amounts to 0.7 per cent of local government finance.
As Kevin Stewart said, over the same time that the Scottish budget has grown by 6.4 per cent, the local government budget has grown by 8.9 per cent under this Government’s watch.
I know that the Labour Party was not very good when it was the Administration, but it is not very good as an Opposition, either. It was revealed today that Sarah Boyack did not realise that, only a few weeks ago, the Labour Party voted against a £10 billion settlement for local government. Imagine the impact that that would have had on front-line services across the country. Labour thought that that was a draft order, but it was the order that released resources, just as the order that we are discussing today releases resources.
I do not recall Kenneth Macintosh saying during the budget debate that local government should get one more penny. No such amendment was forthcoming from the Labour Party. It named three priorities, but local government was not one of them. There was no alternative budget, but there is empty rhetoric. Warm words from the Labour Party on the bedroom tax and other welfare issues are no substitute for the action that this Government is taking to mitigate the impact of decisions taken by people whom the people of Scotland did not elect.
Will the member give way?
No, I will not; I have one minute to go.
This Government has acted to protect more than 560,000 council tax benefit recipients, through our reduction scheme. SNP members are right: if it were left to the Labour Party—or the Conservatives, for that matter—the scheme would not be in place and those people would not be protected from the consequence of the actions of the Conservatives.
Mitigation is the best that we can do with the powers and the resources that we have at our disposal. However, the best way in which to mitigate the impact of the pernicious and cruel policies of a Government that this country did not elect is—[Interruption.] I see that Labour members know what is coming. They know that the answer is a single word: independence. That is the best way in which to protect the people of this nation.
The order reflects partnership working with local government, which we will continue to engage in to defend our front-line services and the people of this country.