Local Government Finance Settlement
Good morning. The first item of business is a statement by John Swinney on the local government finance settlement. The cabinet secretary will take questions at the end of his statement, so there should be no interruptions or interventions.
My statement to Parliament will cover three areas: I will set out the terms of the provisional local government finance settlement for 2010-11, I will confirm the business rate poundage levels for that year and I will announce the outcome of the review that I initiated last year of the distribution methodology for the local government settlement.
The local government finance settlement is an important element of our relationship with local government, which is set out in the concordat. We are now into the third year of the concordat. The key elements of that agreement, including the single outcome agreements that are now in place with every community planning partnership in Scotland, focus the work of national and local government on delivering for all our communities.
As part of the concordat, we are delivering on our commitment to increase year on year local government's share of the Scottish budget, despite the tightest financial settlement since devolution and the further cuts that have been imposed on the Scottish budget by the United Kingdom Government, and against the backdrop of the deepest economic downturn for a generation. I am pleased to be able to report to Parliament that the Convention of Scottish Local Authorities has been consulted on the terms of the settlement and that it agrees that it is a fair settlement for local government in the current extremely difficult circumstances.
The draft 2010-11 budget document that was published on 17 September confirmed our spending plans for the third and final year of the current spending review period, including the headline allocations for local government. Today, I can announce the provisional funding allocations to individual local authorities for 2010-11. Copies of summary tables that contain the key information in my statement are available at the back of the chamber.
The strength of our partnership with local government has allowed us to work closely with COSLA in moving towards the shared goal of doing all that we can to mitigate the impact of the global recession. The measures that we have jointly taken include capital acceleration, the provision of additional resources to allow councils to freeze their council tax levels, and the removal from many thousands of small businesses of the burden of paying business rates.
The total support for local government in 2010-11 will amount to £12 billion. In total, over the three years of the spending review, we will provide local government with £35 billion. Under the previous Administration, local government's share of the Scottish budget was declining; we have halted that decline. Local government's share of the budget will increase from 33.4 per cent in 2007-08 to more than 34 per cent in 2010-11. The total for next year would have been £174 million higher, had it not been for the cut in funding of around £500 million that has been imposed on the Scottish budget by the UK Government. Local government has worked with us in agreeing to accept its fair share of that reduction.
The total funding package of £12 billion includes revenue and capital funding. Within that total, our support for revenue will amount to £11.1 billion in 2010-11, which represents an increase in funding to local government of £308 million, or 2.9 per cent on 2009-10 levels. Among other things, that revenue funding makes available a further £70 million to enable councils to extend the council tax freeze for a third year, continues the removal of, or reduction in, business rates for the smallest businesses in Scotland and increases from £31 million in 2009-10 to £39.5 million in 2010-11 the provision to sustain the additional 1,000 police officers in our communities, which we promised in the concordat.
There are a few other changes to the local government budget that I can confirm since the draft budget was published. First, the addition to the settlement of about £5 million includes additional funding to support local authorities in improving waste recycling and landfill diversion performance, and to make further progress on the journey towards becoming a zero waste society.
Secondly, we have agreed with COSLA, police authorities and fire and rescue authorities new arrangements for a more transparent funding mechanism for pensions. Although the new arrangements change the way in which pensions are managed and accounted for, there is no change to the benefits that those schemes provide for police and fire officers. From 2010-11, the financial support for police and fire pensions will be paid directly by the Scottish Government to police and fire authorities. The pension funding will still be part of the overall support that we provide to the local government family, but the new arrangements will transfer the risk arising from the inherent variability of pension costs to the Scottish Government, where it can be better managed, which will provide greater certainty about pension costs, and give authorities a greater incentive to ensure good practice in managing ill health and injury.
The capital funding element for local government amounts to £0.9 billion for 2010-11. That takes account of the earlier acceleration of £100 million of capital expenditure by councils from 2010-11 into 2008-09 and 2009-10. The accelerated funds have enabled local authorities to maintain capital programmes that would otherwise have been at risk, which has helped to offset the downturn in the value of councils' capital receipts from the sale of assets, and has enabled councils to bring forward a wide range of projects, many of which are being delivered by local contractors.
As part of our economic recovery plan, local government also agreed to release from its capital budget, in both 2008-09 and 2009-10, £20 million to support affordable housing. That £40 million is being returned to councils in the 2010-11 capital budget allocation.
As I announced earlier, we have been working with COSLA to prepare a scheme whereby local authorities will be able to apply for consents to borrow to help them to meet the costs of settling equal-pay related back-pay claims. It will allow them to apply for consents to borrow in 2009-10 and 2010-11 in order to enable them to spread the exceptional costs that will be incurred over a number of years. Borrowing is, of course, not a panacea. Councils will still need to meet the cost of such borrowing, but the scheme will help them to manage the impact of that substantial one-off cost. Following consultation with local government, the terms of the scheme have been formally issued, and applications from councils by 30 November have been requested. We will process the applications as quickly as possible.
Councils across Scotland are already wrestling with how they can best protect services in their areas. Some tough choices will have to be made, depending on councils' individual circumstances, but it is clear that the cut that has been imposed by the UK Government is being felt by councils right across Scotland. Had our budget not been cut, council budgets would have been £174 million higher; there is a lot that councils could have done with that extra £174 million. The cut will impact on different councils in different ways, but we will work with local government to deliver on our shared commitment to protect and improve services, and we will make progress on delivery of the national and local outcomes that are set out in the single outcome agreements.
Members will recall that I initiated a review of the existing needs-based grant distribution mechanism last year. That review, which was undertaken jointly with COSLA, was completed in September this year. Commentary on the issue has suggested that the distribution mechanism is unfair, that it is biased in favour of a few councils, and that there should be a cap on the level of funding that one council receives in comparison with another. Although I am alert to those competing views, I have focused my consideration on the facts and the evidence in the report from the joint officer review group, whose membership included COSLA and a cross-section of local authority directors of finance.
As part of the agreed remit of the joint review group, COSLA invited all 32 local authorities to identify and evidence potential anomalies across the range of indicators that are used in the needs-based distribution methodology. Following consideration of councils' responses, the review group's report concluded that there were no genuine anomalies that needed to be addressed in the medium term for the next settlement. It said that
"the existing indicators were considered to be reasonable and generally a fair indication of need and"
recommended that they should "be retained unchanged."
The report made a number of further recommendations to inform distribution of resources. It said that a more fundamental review of the distribution process will be needed once the way forward is clearer on future local and national taxation systems, single outcome agreements have bedded in and the future impact of the medium to long-term financial situation is clearer. It also said that there should be a business-rates incentivisation scheme and that further work should be carried out to develop options for the implementation of such a scheme from 2011-12.
COSLA set up an all-party distribution task group, which consisted of elected members, to consider the work and final report of the joint officer review group. All the final recommendations in the report were agreed by the distribution task group and were formally accepted at a COSLA leaders meeting on 25 September. Having carefully considered the group's report, and in the light of its findings and the views from COSLA, I confirm that I accept all the recommendations in it. Those recommendations will be implemented in time to inform the next local government finance settlement, which will cover the period 2011 to 2014. A copy of the full report is available at the back of the chamber and in the Scottish Parliament information centre.
Business rates are a key issue for our business community. As part of our economic strategy, we made a commitment that we would not allow the poundage for business rates to rise above what it is in England during this parliamentary session. I confirm that the rate for 2010-11 will remain in line with that in England—it will be 40.7p for 2010-11. The poundage supplement that is paid by larger businesses will be set at 0.7p, which is, again, in line with that in England. My announcement confirms the lowest national poundage ever set for Scotland. Of course, the fact that we have again matched the English poundage rate means that, following revaluation, we expect that the rates burden on businesses in Scotland will be significantly lower than it would otherwise have been. We have estimated that the benefit to Scottish businesses will be worth some £220 million in total in 2010-11.
The regular five-yearly revaluation of business rates will take place in 2010, and the Scottish assessors will shortly release detailed information about the new rateable values. I confirm that all existing relief schemes, including the small business bonus scheme, will continue in 2010-11. I am considering the impact that the 2010 revaluation will have on rates bills across sectors and relief schemes, and I want to ensure that it will have no unintended consequences for the operation of the reliefs that we provide, and on which many businesses rely. I am specifically considering the proposal for a transitional relief scheme, and am looking in detail at the impact of revaluation across all sectors. In doing so, I will need to take into account the UK Government's pre-budget report and whatever emerges from our own budget process over the coming weeks. I will confirm the outcome of my deliberations as soon as I can, including the thresholds for the various existing rates relief schemes, such as the small business bonus scheme.
However, I reassure members that the revaluation is not about raising tax revenue, but about achieving a fair distribution of the tax burden. The overall result will be that we will not raise a penny more in income in 2010-11; indeed, we will raise less. As I have already said, businesses in Scotland will see a saving that will be worth almost £220 million in total as a result of our policy to match the poundage rate in England.
In conclusion, the provisional allocations that I have announced to Parliament continue our commitment to further increase the share of the Government's overall budget that goes to local government. We will work together to continue our focus on sustainable economic growth through targeting our investment to support households and business communities throughout the whole of Scotland.
The budget allocations include a further £70 million to enable local authorities again to freeze council tax. I hope that all local authorities will take up that offer and deliver a much-needed boost for hard-pressed families in these tough times.
I recognise that councils face a number of competing pressures on their budgets for 2010-11, which is why, through our partnership, we will work with local authority leaders to deliver on our shared commitments. The dialogue with our partners will continue as we look ahead to the challenges for 2011-12 and beyond.
In line with our economic strategy, I am delighted to have confirmed that, for 2010-11, the Scottish Government has again delivered on our commitment to businesses that we would not allow the business rate poundage to rise above that in England during this parliamentary session. Today marks the start of the normal consultation period with local government on the provisional allocations. I will bring the final figures to Parliament as part of the local government finance order early in the new year.
The cabinet secretary will now take questions on the issues that were raised in his statement. We have until exactly 10 o'clock for questions. We must then move on to the next item of business.
I thank the cabinet secretary for providing an advance copy of his statement and I welcome his decision to pay the financial support for police and fire officer pensions directly from the Scottish Government. We look forward to seeing more details about that.
I had hoped that the cabinet secretary would have surprised us and shown that he had been listening to individual local authorities, voluntary sector bodies and service users, but he has, regrettably, confirmed what we all know: that he proposes to deliver a bad deal to local government. His failure to take us any further forward on transitional relief and tax incremental finance will also perplex the business community.
Mr Swinney's statement clearly reinforces the fact that he intends to be responsible for an assault on local government finances at a time when his own budget is growing by £600 million. No amount of bluster and assertion can disguise that. The statement underlines the reality that, during a time of recession, when local authorities should be getting their fair share of increased Scottish Government resources in order to protect local services, Mr Swinney has decided to pick their pockets.
In the face of increasing reports about the scale of local council cutbacks and public anxiety about the extent of impending service cuts, does the cabinet secretary genuinely believe that local authorities have been provided with the resources that they need to meet the Scottish Government's manifesto commitments? Does he seriously continue to expect that all local authorities will be able to deliver his commitment on a council tax freeze next year when they are faced with having to cut services because they have been underfunded by the Scottish Government? Faced with COSLA's "fury"—I am quoting COSLA—at his proposals for funding teacher retirements, and the widely held view among local councillors that the real problem for local government is the Scottish Government, does he believe that the concordat has been exposed for the con that it is and that his statement marks the beginning of the end of the concordat as it currently exists?
First, I welcome Michael McMahon to his new post, in which he will speak on behalf of the Labour Party on local government issues. I look forward to having as fruitful a relationship with him as I always had with his predecessor, and to my encounters with him. I also welcome his comments on police pensions. The move to remove uncertainty for local authorities is sensible.
I was, however, a bit surprised by the sudden deterioration in the tone of Michael McMahon's remarks on what the statement represents as a deal for local government. The Scottish Government is delivering an increase in the share of the Scottish budget that goes to local government. I had thought that the Labour Party would welcome that—although perhaps I should not have thought that because, of course, the Labour Party presided over a falling share of the Scottish budget going to local government. We all know that that is the case. That share went down from 2003-04 until the Scottish National Party Government came to office. In the first settlement that I presided over, the share of the budget that went to local government started to go back up again. Therefore, Mr McMahon does not have a leg to stand on in making the accusation that he has made.
The second point that Mr McMahon raised was about whether the deal is good or bad for local government. I was interested in a press statement that he released—it could have been his inaugural press statement—around 1 November. In that statement, which appeared in The Sunday Times, he said that
"The SNP Government is ripping off"—
where have we heard that before?—
"local councils by £270 million."
Mr McMahon's acid test will be whether he lodges an amendment to the budget bill that would give £270 million more to local government in Scotland. If we see such an amendment from Mr McMahon, we will consider it. Of course, he will also have to say which health board and what other services he would take the money from.
The Government has changed the relationship between local government and national Government. We co-operate with local government on shared objectives, and will continue that work. As I said in my statement, we have put in place the resources to fully fund a council tax freeze. I encourage local authorities to decide to do exactly that.
I, too, thank the cabinet secretary for advance sight of his statement. The Conservatives certainly welcome the council tax freeze, even if nobody else in Parliament seems to.
In his statement, the cabinet secretary referred to
"a more fundamental review of the distribution"
funding formula
"once the way forward is clearer on future local and national taxation systems, single outcome agreements have bedded in and future impact of the medium-term to long-term financial situation is clearer."
Will that be in this century or the next? Is it surprising that the review identified no major anomalies in the distribution funding formula, when it did not specifically examine deprivation, rurality and three other major indicators? Is the cabinet secretary surprised that COSLA has concluded that no change is appropriate?
I welcome what the cabinet secretary said on business rates incentives, and I hope that he closely examines the proposals that the Conservative party made earlier this year. On the vexed issue of transitional relief for business rates, will he ensure that whatever his decision, he will minimise the distortion in the business community? Will he ensure that Scotland's business rates system is competitive with that in England?
The most important issue is the timescale. It is understandable that the cabinet secretary is waiting to see what horrors come out of the pre-budget report. However, to wait until the end of the Scottish Government's budget process, as he suggested we do, would mean that we may not have any clarity on the issue until the end of January, or even early February. It is important, whatever decision is taken, that businesses have clarity sooner rather than later. I ask the cabinet secretary to confirm the precise timescale, and to specify whether or not we will have to wait until February next year for an answer.
I am surprised by Mr Brownlee's comments on the funding distribution review. The key elements of the joint review were to
"review the validity of the existing"
needs-based "indicators and" distribution
"methodology to ensure that the whole process"
is as "equitable" as possible. I do not see how one could read those words and not believe that there had been a comprehensive assessment of the appropriateness of the distribution methodology.
I understand Mr Brownlee's point about business rates. As I said in my statement, the Government estimates that the benefit to Scottish businesses from the decisions that we have taken on the business rate poundage is of the order of £220 million in 2010-11. I think that that will be warmly welcomed by the business community, and it confirms our manifesto commitment that we would not set a business rate poundage that is higher than that in England. That was not, of course, the record of our predecessors.
We will ensure that decisions are taken as swiftly as possible in relation to the application of revaluation and any questions of transitional relief. I said in my statement that I want to consider all the complexities of those questions in the context of the pre-budget report and the arrangements around our budget in Parliament. I will reach a conclusion as soon as I possibly can.
The decisions do not necessarily have to wait until February: I want to be in a position to take decisions earlier, but I must retain flexibility to consider all the different factors that relate to transitional relief.
I thank the cabinet secretary for the advance copy of his statement.
Why has the Government not published a floor for those councils that are receiving a low percentage increase from the previous year? In his 2007-08 statement, the cabinet secretary indicated that floors would exist for 2010-11, including a 2.5 per cent minimum uplift. Does that exist for this year? There was no mention of it in either his statement or the documentation that he provided.
Last year, the cabinet secretary's statement said that he was taking into consideration all aspects of accelerated capital, and he gave a percentage difference of capital uplift. Why is there no mention of capital uplift in his statement today? The figures that he has provided show a 10 per cent cut in year-on-year terms, which is the biggest cut since before devolution.
The Government estimates that its decisions on business rates will mean a £220 million benefit for businesses. Is that lost revenue for authorities? On what basis did the cabinet secretary come to the figure of £220 million? No other information has been published today. If he has calculated the benefit, he must have all the data from the assessors at his disposal. Why, then, has he not published a transition scheme or even proposals for one today? The UK Government announced proposals in July for a transition scheme. Why on earth is the Scottish Government only now considering a scheme that businesses need to know about in order to plan ahead for the next financial year?
In the spending review, we set a floor for the local authority settlement, which has remained unchanged during the current spending review period. The floor was agreed with COSLA as part of the arrangements around the settlement. It is clear that capital acceleration has an impact on the capital budgets; we cannot accelerate capital expenditure and then have to claw it back without seeing a difference in the numbers—that is rather elementary arithmetic.
Mr Purvis asked about the basis for the calculation of the figure of £220 million that I gave in my statement. If the Government had set business rates on the same basis as England, the poundage would have been approximately 44.3p. However, we did not do that, so we are delivering a major boost to businesses to the tune of £220 million.
Mr Purvis asked finally about transitional relief and made a comparison with the situation in England. There is, of course, a fundamental difference, in that there is a statutory obligation in England to have a transitional relief scheme, whereas that is not the case in Scotland. I want to ensure that we examine all the issues around the revaluation to ensure that, in the context of the current economic climate, we take decisions that properly apply changes in relation to the revaluation of business rates in a fair and effective manner that is not detrimental to the development of the Scottish economy.
We move to open questions. A considerable number of members wish to ask questions and, if we are to fit them all in, questions and answers must be as brief as possible.
I welcome the cabinet secretary's statement. Has he held any discussions with COSLA on the efficiency savings targets? Will the Government continue the established principle of allowing local authorities to retain the money that is identified from efficiency savings, rather than return to the previous Labour-Liberal Democrat Administration's practice of top-slicing that money from local authorities' budgets?
The Government took a decision in the spending review to enable local authorities, for the first time, to retain their efficiency savings, and I am glad that we did so. Local authorities have delivered on—and even exceeded—the expectations in efficiency savings, and I welcome their commitment to that. We certainly have no plans to change the arrangements whereby local authorities retain the efficiency savings that they realise.
Glasgow City Council's capital budget has been halved, from £206 million to £103 million. That is a greater reduction than there has been in any other local authority's budget. Will the cabinet secretary explain why there is such an acute reduction in Glasgow's finances? The Government already stands accused of ripping off Glasgow; is this budget further evidence of that? Why is the city with the highest levels of deprivation taking the largest hit with regard to the reduction in its capital budget?
The level of funding for citizens in Glasgow puts the council, along with Argyll and Bute Council as the other mainland authority, at the very top of the list of local authorities that get the largest support per capita for local authority services in Scotland. It is clear that there is an impact on the capital budgets because of changes in relation to the acceleration of capital expenditure; I made that point in my answer to Mr Purvis. If we accelerate capital expenditure, we have to claw it back.
The other factor is that local authority capital budgets have had to take some proportion of the reductions in budgets that have been applied by the United Kingdom Government that Pauline McNeill supports. It demonstrates the hard impact of the UK Government's budget decisions on the budgets of individual organisations throughout Scotland.
What principle lies behind the revaluation of business rates? How many businesses are expected to benefit from that? Can the cabinet secretary tell us more about the contribution that it might make to Scotland's wider economy?
The detailed information on the number of businesses that are affected is still being worked on to ensure that I have the most accurate picture of the impact of the business rates revaluation. The principle of the revaluation is to take account of the value of individual business premises and the change in circumstances that can take place over a five-year period, such as enhancements and developments that might surround such premises. That is at the core of the independent valuation that our valuation personnel undertake. The Government will consider that carefully as we look at the application of any review of relief schemes that are in place, the thresholds that apply or any wider transitional relief scheme.
The cabinet secretary has committed to a proportionate share of reductions across all portfolios. However, as the £128 million end-year flexibility has been allocated to the national health service capital budget, local government takes almost half of all reductions. Will the cabinet secretary rectify that situation and prevent local government from carrying the can for other Government spending decisions? Will he dispense with the illusion that he is on the side of local government, when he gives with one hand and takes back with the other?
All I can say to Mr McCabe is to quote from Councillor Graeme Morrice, COSLA's finance spokesperson, who I am sure Mr McCabe would agree speaks on behalf of local government. On the budget settlement that I announced on 17 September, Councillor Morrice said:
"We see from today's announcement that our partnership with the Scottish Government has secured that position and a fair settlement for local government under difficult circumstances has been achieved."
Those are not my words; they are the words of COSLA's finance spokesperson. They stand as testament to the fact that the Government has delivered on its commitment to put in place a rising share of the budget for local government in Scotland. That is what we said we would do and that is what we have delivered. We have countered the declining share that was presided over by my predecessors from the Labour Party.
The cabinet secretary has previously refused to be drawn on whether there should be a local government pay freeze, saying that that is a matter for councils to negotiate with the unions. However, does he believe in the concept of a payroll freeze, so that any increases that are negotiated have to be accommodated within a fixed budget for pay? Given that pay is far and away the biggest component of local authority spending, has his settlement been predicated on that, or on any other, pay assumption?
Pay will clearly be a significant issue for all areas of the public sector in the forthcoming years. I have made it clear that pay settlements must be affordable in the difficult climate in the period ahead, and we will ensure that that will be the case in the pay remits for which ministers are responsible. For local government, negotiations take place between local authorities and the trade unions, and it is entirely up to those parties to have those discussions. The Government has no role in the negotiations, other than when it is part of the pay negotiation machinery—for example, on teachers' pay.
On public sector employment, I have made it clear to members, including in committee to Mr McLetchie, that I expect employment in the public sector to fall in the coming years. That is an inevitable consequence of the tightening financial climate in which we operate. However, in taking forward that reality, the Government will work to protect the delivery of front-line services, which is an essential part of what our local authorities do throughout Scotland.
Several councils will feel let down by the cabinet secretary's refusal to modernise an outdated allocation system. To compound that by refusing to countenance the distribution of previously ring-fenced money via the supposedly fair distribution formula is a further insult. Does the cabinet secretary accept my view that it is absurd on the one hand to agree that the preferred option for distributing any new funding should be the agreed distribution formula, while on the other hand to say that the preferred system should not be used in the future to allocate existing ring-fenced moneys more fairly? As Aberdeen City Council—
I must hurry you, Ms McInnes.
As Aberdeen City Council and Aberdeenshire Council have been allocated the lowest-ever share of local government resources, which part of the concordat will they be exempted from delivering on?
In the distribution review, a process has been gone through to examine the details of the distribution arrangements. I cited for Mr Brownlee the details of the remit, which is available for members to see. The process has involved all local authorities, and they have had the opportunity to submit information. That has been considered by the joint review, and the arrangements have been agreed across the board in local government. I have accepted the recommendation.
I simply point out to Alison McInnes that, as part of the settlement that I have announced today, Aberdeen City Council and Aberdeenshire Council will receive increases in their budgets of 3.41 per cent and 3.44 per cent respectively.
It is clear that cuts are on their way to local government in future years—UK cuts with a Labour axeman. We have heard that local authorities are considering a move to shared services and other reforms to deal with those cuts. Does the cabinet secretary agree that local authorities must consider any changes carefully and that the local authority in the city that I represent, Glasgow, and other local authorities should commit to having no compulsory redundancies?
Mr Doris raises an important point about the progress that can be made on sharing services as part of managing the financial strain that we will face in the years to come. The local authorities in the Clyde valley area and in the south-east of Scotland—in Edinburgh, the Borders, the Lothians and Fife—have been co-operating on a number of shared services projects. We welcome that co-operation, which is exactly the right course of action. It is not for Government to dictate the details of those shared services, but we encourage an intensification of the pace of activity to ensure that local authorities play their part in addressing the difficult and challenging circumstances that we will face in the public finances while delivering effective services to people in our communities.
Despite the £600 million more in the Scottish budget, local government is facing a year of cuts because of the financial settlement. What does the cabinet secretary say to local authorities that are forced to freeze their council tax to ensure that they receive a share of the £70 million that has been allocated for that but which find that they still have to make cuts and outsource essential services?
I would refer the local authorities to the comment that I mentioned from Councillor Morrice, with whom Mary Mulligan will be acquainted. He said that local government has achieved
"a fair settlement … under difficult circumstances".
We all understand that the public finances are in a very different situation from previously. Local government would have been in a worse situation if the Government had not reversed the trend that the previous Administration imposed on it of reducing its share of the Scottish budget. Thank goodness that the Government came into office, changed the trend and gave a better deal to local government in Scotland.
I reiterate that, if Mary Mulligan is concerned about the volume of the local government settlement, she, like Mr McMahon, has an opportunity to change the budget and to allocate—
It is your budget.
Order.
Mr McNeil shouts from a sedentary position that it is my budget. I am absolutely crystal clear that it is my budget—
You are responsible.
I know that I am responsible. We could continue the running commentary, but we would be here until midnight at this pace, because I can keep talking for a long, long time.
If Mary Mulligan and Mr McMahon—I do not know whether Mr McNeil is in the same boat—want to increase the resources that are available to local government, they know what the rules are. They know that they have to lodge an amendment that would take money away from other public services, such as hospitals, to give them to local government. That is the choice. We have made a choice and given local government a larger share of the budget than it received under the previous Administration. That is the settlement that is delivering for local government in Scotland.
Does the cabinet secretary agree that a 45 per cent difference between the lowest and highest rate support grants for mainland authorities is distinctly anomalous? Does he agree that the more fundamental review of the distribution process that he announced this morning should be open, transparent and independent of COSLA?
I understand Mr Adam's point, which he has made to me on many occasions. However, we have to go through a process of examining the evidence, which is what the distribution review has done. It has come to its conclusions, which I have considered. I appreciate that the outcome may not be the one that everyone wanted, but it is an outcome that delivers the appropriate stability for local authority finance in a difficult climate, and that is the basis of the decision that the Government has come to.
Talking of taking money away from local government, why has the cabinet secretary taken £34 million from the capital budgets of local government as its share of the £129 million reduction in the NHS capital budget—a share that is fully covered by end-year flexibility money? On 25 June, the cabinet secretary said that
"the Government will have sufficient resources on deposit at the Treasury to make good that shortfall".—[Official Report, 25 June 2009; c 18948.]
If he could make good that shortfall in June, why is he now ripping local government off by £34 million?
I return to the quote from Councillor Morrice, that
"a fair settlement for local government under difficult circumstances has been achieved."
Answer the question.
I will come to Mr Whitton's point; I am simply giving him a bit of background to allow him to think carefully about the questions that he asks.
Mr Whitton asked why local government is taking a share of the capital reduction that we can meet from end-year flexibility. Mr Whitton will be aware that local authorities do not contribute to EYF; they may retain in reserve any resources that they do not utilise. It is therefore equitable that the EYF should be available to the areas of the budget that the Government supports. It is the Government's resources—and not the resources that are allocated to individual local authorities—that go into EYF.
I share Derek Brownlee's concerns about the time that it might take to have a final review of the distribution of funding formulae. Taking up the point from the previous question, is there room in the 2010-11 spending plan or in the current end-year flexibility for a little pump priming for exceptional projects of benefit to the whole country, which of course have to be located in one local authority area?
Glasgow? Excellent.
I am thinking of another.
The point that I make to Margo MacDonald is one that I have made to Parliament on a number of occasions. The public finances will be under acute pressure in the years to come. It will be a real challenge to take on further projects when the Government is having to take difficult decisions about supporting existing projects. Those are difficult challenges to wrestle with. We will consider all of those issues as part of the budget process—they are issues of significance that the Government must address in all that it does.
Why is the cabinet secretary ripping off Edinburgh with a cash reduction of £36 million? Since he will mention capital in his answer, why is the revenue increase for Edinburgh approximately 1.7 per cent, when he said that the revenue increase for Scotland as a whole is 2.9 per cent?
In Edinburgh's case, the figures that have been made available do not take into account Edinburgh's share of the transfer of the management of development funding, which is a housing grant—it also applies to the city of Glasgow, which is relevant to Pauline McNeill's question. For example, last year Glasgow received £83 million of TMDF money. Those allocations, which are yet to be made, are material to the distribution of resources.
What happens in relation to revenue funding is that the various streams of funding are considered, the floor level of funding is applied, and specific grants are added on top. That is how we arrive at the calculations that are in the settlement, which have all been agreed with local government in Scotland.