Local Government Finance (Scotland) Amendment Order 2012 [Draft]
The next item of business is a debate on motion S4M-02336, in the name of Derek Mackay, on the draft Local Government Finance (Scotland) Amendment Order 2012.
16:29
On 9 February, Parliament approved the Local Government Finance (Scotland) Order 2012, which enables Scotland’s local authorities to set their revenue budgets for 2012-13. At that time, local authorities were asked to provide formal assurance by 29 February that the approved budgets included provision to deliver certain specific commitments that were set out by the Scottish Government. Those commitments were to freeze council tax for a fifth consecutive year; to maintain the number of police officers to help to keep our communities safe; and to maintain teacher numbers in line with pupil numbers, while securing places for all probationer teachers who require one.
I note that one of the commitments was about police officer numbers. Does the minister accept that although that commitment might have been delivered, as we heard earlier today, we now have 1,000 fewer police support staff in Scotland’s communities, which could undermine community safety in our towns and cities?
The budget that the Scottish Government has delivered includes money for diversionary measures in our communities, enhanced community safety, a more efficient service that is moving towards the single police and fire service, and more than 1,000 more police officers on our streets. That compares very well with what is happening in England, for example, where there has been a reduction—not a growth—of 16,000 in the number of police officers on the streets. The Scottish National Party’s record on community safety and the police service is first class.
I am delighted to be able to inform members that all 32 local authority leaders have confirmed that their 2012-13 budgets contain the full provision to enable each of the commitments to be fulfilled. As a result of that confirmation, the order seeks approval for each local authority’s share of the £70 million that has been set aside to compensate councils for the council tax income that they have foregone as a result of their decision to freeze the council tax.
The decision to freeze the council tax and maintain police and teacher numbers will benefit every household in Scotland. There are many other examples of how local authority budget decisions will impact on various groups of people, including the allocation of money for tackling youth unemployment and poverty, as well as providing a living wage for local authority staff, and improving infrastructure in local areas. Councils are clearly focusing on contributing to economic recovery. Those steps are very welcome and will help to deliver better outcomes for people who are living and working in our communities across Scotland.
The Government’s commitment to continuing to support families in what is still a challenging financial environment is demonstrated by our on-going support for the council tax freeze. That support is vital, because it will ease the financial pressures that are being faced by households and communities, and it will stimulate our local economies, because household spending has the potential to provide a cost-effective stimulus as we work towards economic recovery. We have, of course, committed to working with local authorities to extend the council tax freeze over the lifetime of this parliamentary session. The agreement of all local authorities to extend the council tax freeze for 2012-13 means that our commitment will have saved households the length and breadth of Scotland more than £1 billion.
In England between 2008 and 2011, council tax increased by almost 9 per cent, whereas in Scotland it remained unchanged. In addition, an annual study by the Chartered Institute of Public Finance and Accountancy found that 43 per cent of homeowners in England will see a rise in their council tax bill next year. People in England appear to be having the worst of all worlds with deeper cuts in their council budgets and 45 per cent of all households facing higher council tax bills and other bills as a result of the United Kingdom Government’s policies. The average council tax bill for a band D property in England in 2011-12 was £1,439, which is more than £290 higher than it is in Scotland.
Since the main order was approved in February, there has been one further change in relation to the distribution of the £37.6 million for the teachers induction scheme. That funding has traditionally been held back until the number of probationary teachers who are allocated to each local authority is known, when it is distributed accordingly. Following a request from the Convention of Scottish Local Authorities, it has been agreed to distribute £10 million of that funding up front, and I confirm that that sum is included in the amendment order for approval. The remaining £27.6 million will be allocated later in the year.
I confirm that all 32 local authorities have now agreed to the 2013 targets of the business rates incentivisation scheme. That means that all local authorities will have the opportunity to directly benefit from maximising their existing business rate income and from growing their business tax base. Under the scheme, any council that exceeds its target will be able to retain half of the additional amount collected over and above the target figure. Equally, any council that does not reach its target will still be compensated by the Scottish Government up to the amount that is set out in the amendment order. The introduction of the business rates incentivisation scheme means, therefore, a winning, no-lose situation for councils and a potential gain for the Scottish Government and all the people of Scotland as a result of incentivising increased economic growth.
In summary, approval of the amendment order will authorise the distribution of a further £80 million to local government, to support the essential services that local authorities deliver to our communities. If all the councils had not accepted the offer, that would have undermined the constructive relationship that we have developed with our local authorities. However, they have accepted it and they have constructed their budgets in a way that contributes to the Government’s priorities, such as the preventative spend agenda.
To vote against the amendment order would be to go against the wishes of each and every local authority in Scotland and to deprive communities of £80 million of essential services, such as education, social work, police and fire services.
During questions on finance, employment and sustainable growth earlier today, James Kelly suggested that the cuts to local government were disproportionate, but they are not. I have researched the figure of 88 per cent cuts to local government. It is only possible to arrive at such a figure if £2.5 billion of Scottish Government contribution is excluded from local government spend. If James Kelly wants to ignore the £2.5 billion that is going towards local government, the figure of 88 per cent would be absolutely correct, but the £2.5 billion contribution exists in reality. It is part of a fair and decent settlement for local government. He need not take my word for it, because the president of COSLA has said that our financial deal for local government is the best possible deal under the circumstances.
On that note, I am happy to move,
That the Parliament agrees that the Local Government Finance (Scotland) Amendment Order 2012 [draft] be approved.
16:37
Let me make it clear from the outset that the Labour Party will support the amendment order at 5 o’clock. We have to accept that council leaders have been put in the position of having to take either the £70 million or a 5.2 per cent cut to the needs-based portion of their grant. The situation is akin to them having a gun held to their heads, so it is understandable why they have gone down their chosen route.
Will the member give way?
Not for the moment.
I did not think that he would.
I would be happy to take an intervention once I have developed my argument.
I want to explain a few home truths about the settlement and the SNP’s attitude to local government. Let us not forget that the £70 million comes with strings attached.
Will the member give way?
Not for the moment.
The £70 million has not increased in the five years since the SNP came to power, so inflation has not been taken into account. Moreover, as I have said, the offer comes with strings attached.
Will the member give way?
Let me finish this point. On the agreement on police officer numbers, the SNP is playing a numbers game in which, while the numbers are being maintained, the support staff have already been cut by 1,000, and there will be further cuts as a result of the settlement. I am sure that the potential undermining of safety on the streets of Dundee is of concern to Joe FitzPatrick.
I am very pleased that crime is at a 35-year low and that the streets of Dundee are the safest that they have been in decades.
Mr Kelly referred to strings being attached to pockets of money. My recollection is that for most of the previous parliamentary session, the Labour Party continually argued against the SNP’s proposals and determination to remove ring fencing—not just strings attached, but piles of bureaucracy and paperwork that prevented money from being used for the front-line services to which it was supposed to apply.
In relation to the impact on front-line services, 89 per cent of the cuts in the current budget have been passed to local government: £658 million of the total £739 million of cuts has been passed to local government. The SNP is hammering local government.
Will Mr Kelly give way?
Let me finish my point.
That point was reinforced only this morning in a report by the Accounts Commission, which drew attention to the fact that, based on the Government’s figures, there would be a 12.5 per cent real-terms cut to local government funding by 2014.
I give way to Mr Stewart.
Mr Kelly, I cannot give you additional time for taking interventions.
I thank Mr Kelly for giving away—rather, giving way and giving away nothing, come to think of it.
Why have Labour leaders of councils across the country accepted the package? Beyond that, why do they continue to welcome the progress that the Government has made in getting rid of ring fencing and allowing independence at local level?
Mr Stewart must look at the practical effects of the SNP budget on the ground. We saw in statistics that were published only yesterday that there have been 65 job losses in the public sector every day and that in the past year there have been 13,500 job losses in councils. We will see more of that over the coming year as a result of the local government settlement.
We need only look at the impact of the 20 per cent cut in the bus service operators grant. FirstBus in Glasgow is telling us about that. Mr FitzPatrick does not need to shake his head. The reality is that services are being cut.
Will the member give way?
I have already given way to Mr FitzPatrick.
The reality of the budget cuts is that bus services are being cut and pensioners are not able to get out and reach other parts of my constituency as a result of the cuts to the bus service operators grant.
Only last weekend, we saw the SNP roll up to its Glasgow conference and Mr Mackay, the minister for public spending cuts, talk at the people of Glasgow and tell them how they were poor, incapable and not in good health. What way is that to talk to the people of Glasgow? That is a disgrace and people will give their verdict on it on 3 May. [Interruption.]
Can we settle down, please?
They are getting a bit excited, Presiding Officer.
We are moving towards the local elections campaign and the single-issue campaigners on the SNP benches will go to the country on a platform of the worst, most swingeing cuts to public services since the days of Thatcher. Labour will go with a positive programme on housing, education and protecting pensioners.
You need to wind up, Mr Kelly.
We look forward to the elections and to building hope and defending jobs and services.
16:43
The Local Government Finance (Scotland) Amendment Order 2012 acts as an amending instrument to the Local Government Finance (Scotland) Order 2012, which was debated in the chamber last month. The minister will recall that when the order was debated the Scottish Conservatives disagreed with several aspects of it, including the regressive £95 million retail levy tax and the overly optimistic business rate incentivisation targets.
However, the Government seeks approval today for the amendment order, which sets out the distribution of incentive compensation that is to be paid to councils in return for their submitting to the full package of resource allocations and conditions that is laid out in the relevant finance circular.
In practical terms, the amendment order distributes the £70 million council-tax-freeze incentive among the local authorities that have given written declarations that they intend to freeze council tax rates, as required by the Scottish Government. As the minister set out, the order also independently allocates across local authorities the initial funding of £10 million for the teachers induction scheme.
As I stated when we debated the Local Government Finance (Scotland) Order 2012 in February, the Scottish Conservatives support the council tax freeze for the forthcoming financial year of 2012-13, and that has not changed. I will set out why we support the council tax freeze and the order. The Scottish Conservatives believe in lower taxes and we want to reduce the taxation burden on Scottish families. We supported the freeze throughout the previous session of Parliament, and a freeze for 2012-13 was a commitment in our manifesto last year. Incidentally, it is interesting that councils in England have begun to implement council tax freezes.
Ultimately, the freeze supports hard-working Scottish families and helps their money to go a little further. I welcome the additional funding for local authorities and I hope that it will be put to good use in providing high-quality services for local communities. The Scottish Conservatives support the council tax freeze for the forthcoming financial year and we are heartened that all councils will receive additional funding.
16:47
The settlement is good news for Scotland’s local authorities. It completes the funding for the delivery of vital services that the people of Scotland deserve and depend on. Before I talk about some of the good things in the settlement, I will talk briefly about buses. James Kelly’s comments were disingenuous, particularly given that anyone in Dundee will know that the Labour Party, as part of its budget proposals for this year, wanted to remove every single uncommitted penny in Dundee City Council’s fund to support the development of new bus routes in the city. It is very cynical on the one hand to say, “We’re not getting enough,” and on the other to want to remove every penny for future development and support of new bus routes in my city.
We need to look at the budget in the context of the cuts that have come to the Scottish Government from the Conservative-Lib Dem Government in Westminster. Alistair Darling confirmed that the cuts would be “deeper and tougher” than those of Margaret Thatcher, and Mr Kelly almost used those words. The cuts were planned and proposed by the Labour Party.
Does Mr FitzPatrick accept that his Government has doubled the cut from Westminster in the cut that it has passed on to local councils? I repeat that there are £658 million of cuts.
No, I do not accept that—Mr Kelly is wrong. Just about every member of the Parliament agrees that health spending should be protected, although there is debate on that. If health and the Barnett consequentials from health should be protected for health and so we remove health spending from the budget, we find that the share of the remaining budget that goes to local government has been more than protected. Even in overall terms, we have protected local government’s share. For the past three years, that share has gone up when, under the previous Labour-Liberal Executive, it went down year on year.
Does Mr FitzPatrick agree that even though we are living through these tough times of having cuts imposed on us by the coalition Government at Westminster—a situation that is down to the fact that the Labour Party caused economic chaos—the Government has increased the amount of money that goes to local government in Aberdeen and Edinburgh through the introduction of the 85 per cent rule?
You have one more minute, Mr FitzPatrick.
Kevin Stewart makes an important point. Ever since the Parliament started, there have been complaints about how the formula applied to Aberdeen. All parties were prepared to comment on that, but this Government has been the first to tackle the issue. John Swinney and Derek Mackay should be praised for tackling the problem that Aberdeen faced in such difficult times.
I turn to some of the good news in the settlement. Local government will receive £45 million to help it to deliver 30,000 affordable homes across Scotland. The protection of police numbers is crucial. I heard someone in the Labour Party suggest that we do not need to protect police numbers because crime is at an all-time low, but it is the other way round—it is because we have 1,000 extra police officers that crime is at an all-time low. Most important is the funding that local government is receiving for the council tax freeze, which will save the average householder in Dundee £192 this year. Across Scotland it will save—
You need to finish, Mr FitzPatrick. I call John Pentland.
16:51
I declare that I am still a councillor with North Lanarkshire Council.
This money has been trumpeted as a good news story, but it has just been used as a carrot and stick to ensure that local authorities apply the council tax freeze. They had little choice other than to do what they were told. I and many others—including, I suspect, those SNP members who are still sitting councillors—believe that the local government settlement is grossly unfair and unjust, putting most of the burden of Scottish Government cuts on local authorities.
Will the member take an intervention?
No.
However, as James Kelly said, we will not vote against what is on offer, because local authorities already face significant cuts and need all the money that they can get, even if it has strings attached.
Will the member give way? I am much kinder than Derek Mackay.
No.
Unlike what my party pledged to provide, this is definitely not a fully funded council tax freeze—rather, it is an underfunded council service squeeze. I recognise that the Scottish Government has less money to share out, thanks to the Con-Demolition of our finances, but the sharing of what is available is anything but fair.
John Mason (Glasgow Shettleston) (SNP) rose—
Within the shrinking Scottish Government pot, local government funding is shrinking faster than other funding, and the amendment order does little to address that. The amounts of money have been disputed, but the reality is that more than 80 per cent of the cuts will still be shouldered by local government.
Kevin Stewart rose—
Over the next three years, local government’s share of the Scottish budget will drop from 34.5 to 33.3 per cent. More than £1.5 billion is being taken away from councils, with nearly £900 million being taken away as a result of the cuts being above average.
While the Scottish Government’s real-terms funding has dropped by 2.2 per cent, local government is losing 5.5 per cent of its real-terms funding. The rest of the Scottish budget is down by just 0.5 per cent. The Scottish Government expects local government—which we all depend on to deliver high-quality services—to shoulder 10 times the level of cuts that will apply elsewhere. So much for the Scottish Government and the new local government minister valuing the importance of local government.
What could local authorities have done with the money that they would have had, had the cuts been shared more equally? They could have increased support to the voluntary sector. They could have created more employment and job security. From the Highlands to the Borders, many more houses could have been built and many services, and the jobs of those who provide them, could have been protected.
John Mason rose—
The member has made it clear that he is not taking interventions. Please let him continue.
From the Western Isles to Fife, instead of standards being lowered and services reduced, services such as street cleaning and education could have been protected.
The Scottish Government might not like to admit it, but it has failed local authorities and their employees. It has failed those who are dependent on the quality services that are delivered by local authorities. It has failed to recognise that, rather than job losses—particularly among women—jobs could have been protected. It has failed to recognise that there could have been a pay award rather than a pay freeze. Most disappointingly, it has failed to recognise that it did not have to be this way. To borrow a line from the Scottish Trades Union Congress, there is a better way.
I call Derek Mackay to wind up the debate.
16:55
I think that I have wound up the debate on what I was told should be a fairly consensual amendment order. I have done my best, because the Scottish National Party Government has a very good story to tell.
It appears that the Labour Party has buried a few things today. First, there is James Kelly’s assertion that we have reduced local government spending disproportionately, by 88 per cent. Yes, but only by ignoring £2.5 billion of funding to local government is that figure in any way accurate.
Then there is the question of proportionate reductions in health spending and abandoning our commitment to health protection. Councillor Pentland refused to take an intervention. Do not take my word for the settlement being good. I return to the comments of COSLA’s president Pat Watters, who said that the financial packages are the best in the circumstances and represent a far better deal than England has experienced.
Will the minister take an intervention?
No, thank you.
The Government will continue to spend more proportionately than the Labour Administration did when it was in office. We are protecting and growing police numbers as opposed to what is happening in England and Wales, where they are reducing by 16,000, and we are freezing the council tax.
Bruce Crawford rose—
I say to Mr Crawford that I know that so generous is the Scottish Government’s settlement to local government and so fully funded is the council tax freeze that the tax can be reduced in places such as Stirling. With the funding floor, issues have been recognised and things have been sorted for Aberdeen and Edinburgh.
Members have referred to the strings that are attached. Strings are attached to the council tax freeze in England, too, but many English local authorities are turning them down, and they have the worst of all worlds. In England, there are deeper cuts in council budgets and council tax rises, contrary to what is happening in Scotland.
For all that the Labour Party has said about disagreeing with our approach to local government finance, it will vote for the amendment order. If members ever hear the Labour Party say again that we favour the east or the west, they should remember that it is endorsing the mechanism that determines how local government funding is distributed. That exposes the Labour Party’s hypocrisy.
The party conference, which I was happy to chair, was mentioned.
Will the minister take an intervention?
I am coming to Mr Kelly.
Mr Kelly said that we rolled up to the party conference with good announcements for local government, and we did. Of course we did; we are entering the local government elections. When he said that we rolled up to the party conference, he was right; people were queuing up at it. Our conference was a sell-out, whereas the Labour Party has sold out on all its policies.
There are United Kingdom cuts, of course, and we can play only the cards that we have been dealt. We now know that if the Labour Party had won the Westminster election, the cuts to the UK budget would have been deeper and tougher than even the Conservatives’ budget cuts, the consequences of which we are dealing with.
We will put in place a budget that secures economic recovery, supports youth employment, freezes the council tax, invests in local infrastructure, rolls out broadband, supports the living wage and delivers much in many areas. That is why Labour, around the country, will shamelessly criticise it, although, when push comes to shove, it will vote for it today.
As Pat Watters said, the deal is the best that local government could possibly secure in the circumstances. Perhaps that explains why 32 out of 32 council leaders are signing up to the Government’s deal on local government finance.
This is a good budget. It is good for every community in Scotland, and it will be welcomed in every part of Scotland. [Applause.]
I think that there has been something in the water this afternoon.