Chamber and committees

What do you mean by that?

Yes, we will take that away and make sure that that happens.

I will bring in officials to give you a little bit more detail, but, as I said earlier, the thing that has changed is ensuring that, at decision-making points, ministers have information on the impacts and the tagging in front of them so that they can influence the decisions that are being made before they are made. It is a fair point, though, and I guess that we have to ensure that we can record where ministers might have made one decision, and then make another on the basis of evidence that is now part of their decision-making process but which was not there before. After all, the decision is not going to be changed after the event—it will be changed during the decision-making process.

Simon, are we capturing that sort of thing? Are there examples of ministers making decisions based on what is in front of them?

We will certainly take that away. Kaukab, did you want to comment?

Of course, work is the best way out of poverty, and the supports that are provided through Social Security Scotland are there to support people. Of course, many people in work get the supports, too, because they are all about lifting children out of poverty. Had we not put in place the Scottish child payment and the other family supports that children receive, we would not be the only part of the United Kingdom to see falling child poverty rates.

That has not happened by accident; it has happened because we have put funding into measures such as the Scottish child payment and the other family benefits that are actively supporting families and helping to put food on the family table. If we took those benefits away, we would not be heading towards meeting our child poverty statutory targets, which we need to do by 2030—something, of course, that the whole Parliament signed up to. The Scottish child payment is an absolutely key part of that.

We also provide funding to employability services for the very reason that we want to get parents back into work. The draft budget, which will pass only if people vote for it, protects the Government’s investment in employability services at £90 million for 2026-27. That will enable local employability partnerships to continue to support people who are experiencing barriers to employment and it will support up to 7,500 people, including parents, into work, as well as supporting many more to achieve positive outcomes. According to our analysis, the £270 million of employability funding available over the course of the spending review period is expected to help more than 22,000 people into work and to support many more to progress towards employment.

In addition, we have a new £8 million fund that colleges in Scotland bid for to support parents who need such support to get back into the labour market. After all, colleges are good places that do not have certain barriers associated with them, and they provide a non-threatening and supportive environment in which parents can access skills and training in order to get back into work.

We also have the no one left behind plan, which provides a range of employability support to 8,532 parents, including single parents, who are predominantly women. We therefore have a good track record of supporting people into employment, and members will be able to support those resources at the budget process.

11:15

I have just outlined the programmes and the funding that we have put in place to support 22,000 people into work. There is good evidence that the employability programmes are working to support people. Of course, wraparound childcare, extending the school day and all the other elements in the budget that members can vote for are there to make sure that parents are supported to be able to take on employment or, indeed, additional hours because of the supports around the school day.

The examples that are being quoted are from a report that contains the anecdotal examples that Pam Gosal has just repeated. I will write to the committee to confirm my understanding that that report did not find evidence that social security supports are systematic barriers to people going into work. Although the report contained some anecdotal examples, its overall conclusions did not support the contention that Pam Gosal is making, that there is a systematic problem in that, because people are getting the Scottish child payment, they are not going into work. Many people who get the Scottish child payment are already in work, and we should remember that.

We do not eradicate child poverty and lift children out of poverty by making it more difficult for them to access supports and by putting in place a two-child cap, which I know Pam Gosal supports. The evidence shows that that would turn around our success in reducing child poverty—we are the only part of the UK to do so—and that we would see increasing levels of child poverty. That is the complete opposite of what our Government wants to see. At the end of the day, we are talking about supporting kids, and that is the most important thing.

The whole family wellbeing funding, some of which will be announced as part of the tackling child poverty delivery plan, has been brought together in recognition of exactly that point: what are the barriers to someone getting into work? The barriers sometimes relate to skills, training or confidence, but they sometimes relate to bus fares or childcare not being flexible enough. We are attempting to wrap services around the person, the family or the parent in order to address the barriers. If the barrier relates to the bus fare, could a bus pass be provided for the first year, for example? That work involves practical considerations about such barriers.

Let me reassure you that we reflect on all the work, including the work with CARM, not just our own research. If improvements can be made in the light of these evidence sessions, we want to reflect on that.

For example, I am already reflecting on our use of the word “exceptional”, because that might sound as though we are marking our own homework and think that all the services are exceptional when, in fact, the budget line is being described as having an exceptional impact. We might need to be a bit clearer about that, because I can see why people might say, “Well, that’s not my experience.” We will take away that point about language, because we want to be clear that we are talking about budget lines rather than outcomes for everyone. Everyone will have a different experience, with some having better outcomes than others, so I give the assurance that we will reflect on our language.

Thanks, convener, and thanks for the opportunity to make some brief opening remarks.

This year’s budget invests in the wellbeing of our society and seeks to ease the pressure on families and family budgets by continuing, and expanding, the best cost of living support package available anywhere in the UK.

With regard to local government, we have made significant joint investment in the engagement process throughout the financial year, and the local government settlement delivers what I would describe as a fair outcome for councils. The budget provides a real-terms increase in the settlement, including £253 million of unrestricted general revenue grant. I could have considered targeting all or some of that increase at social care, but instead I chose to provide it as flexibly as possible to councils and to give them full discretion in allocating that money to meet local priorities. I also confirm my intention to provide councils with full discretion over council tax; indeed, that was the most frequent request of COSLA leaders throughout our extensive engagement.

When I appeared before the committee to give evidence on the 2025-26 budget, the local government settlement was just over £15 billion. In this year’s budget, the settlement for 2026-27 is £15.7 billion. That represents an increase of £650.9 million, or 4.3 per cent in cash terms; in real terms, it is the equivalent of a 2 per cent increase. Those figures represent a true like-for-like comparison and are transparently set out in table 4.15 of the Scottish budget document.

Additional funding was, of course, made available to councils throughout the year, as it has been in every previous year and invariably will be in the years to come. However, factoring in that 2025-26 funding without any crystal ball to confirm what will happen in 2026-27 does not provide a like-with-like comparison and risks being misleading.

It is also not possible to know, or to second guess, what else will happen over the course of the spending review process, as it sets out high-level spending envelopes for portfolios to support medium-term planning. Those envelopes are intended to provide multiyear planning assumptions, and do not represent multiyear budget allocations.

I recognise that the envelopes will be extremely challenging for local government, as they will be for all public services, but I want to offer the committee a few points of context. First, the Scottish Government remains committed to working with councils and COSLA to ensure the sustainability of local services, including exploring local government’s role in delivering our broader public service reform agenda.

Secondly, the portfolio approach adopted for the spending review does not take into account the impact of in-year transfers. I have baselined more than £2 billion into the local government settlement since the Verity house agreement was published, but it remains the case that hundreds of millions of pounds of funding in the health and education portfolio spending envelopes is likely to be transferred to local government over time to support joint priorities.

I appreciate that those might sound like warm words, but I believe that the evidence supports my case. The 2022 spending review indicated a core revenue allocation in 2026-27 of £10.7 billion. In contrast, the Scottish budget delivers almost £14 billion.

Finally, I want to acknowledge that the Scottish budget also sets out a strong non-domestic rates package in the context of our revaluation. I remind the committee that the Scottish Parliament welcomed the move to three-year revaluations, and that revaluations are administered by assessors who are independent of the Scottish Government and local government, another move that was widely welcomed at the time. With average growth in rateable value of 12.23 per cent, the Scottish budget confirms that I have lowered the basic, intermediate and higher property rates, delivering the lowest basic property rates since 2018-19. I have also maintained the most generous small business support relief anywhere in the UK.

It is true that some rateable values have increased. As a result, we have introduced transitional reliefs to ensure that the increases in net liabilities will be capped significantly lower than the percentages that are often quoted. In total, the budget supports a domestic rates relief package worth an estimated £864 million in 2026-27. As a result of the measures in the Scottish budget, the total revenues raised from NDR will actually be 6 per cent lower than they were before Covid.

I hope that those points have been helpful to set the context for this morning’s session, and I look forward to your questions.

COSLA’s ask was for £750 million of new money for social care for 2026-27. That is more than the entirety of all the resource consequentials that the Scottish Government has available for the whole spending review period. Money of that quantum simply did not exist.

With regard to what did exist—the quarter of a billion pounds—I could have said, “That money’s for social care,” but local government would have said, “We’re supposed to be getting away from ring fencing—you should give us flexibility.” My decision was that it was better to put the £253 million in the general revenue account, as that would allow local authorities to spend it on social care or on other priorities as they see fit. They also have full discretion over council tax.

Our spending review outlook is determined by what we know that we have in front of us from the UK spending review, which is very tight. We can put out our assumptions only on the basis of what we know.

However, I re-emphasise the point that no Government spending review in history has ever remained as it was set out, because funding shifts. There is a Scottish Parliament election coming up, and there will be a general election in 2029, which I suspect will lead to additional funding flowing. History tells us that assumptions are assumptions, but the actual funding that is available moves significantly. I set all that out in my letter to the COSLA to provide some reassurance around the flat cash spending outlook, and I will continue to provide such reassurance.

The first thing to say is that all commentators acknowledge that the local government settlement represents a real-terms increase. The issue then is whether you compare this year’s figures with the ABR figures or with last year’s budget.

The local government settlement is subject to a large number of in-year transfers and in-year funding shifts. I agree with the Scottish Parliament information centre. On the front page of its briefing, it says:

“Comparing Budget document 2026-27 to the previous Budget document, as SPICe has done in the past, we see both cash and real terms increases in the overall revenue allocation to local government”.

The SPICe blog sets out why you should not use the comparison with the ABR. There are two fundamental reasons why the comparisons are different. If you compare the budget figures with the ABR figures, you need to remember the two significant funding moves that took place in 2025-26. The first was the £144 million that was added to the 2025-26 budget for employer national insurance contributions. That was done after the budget was published. On top of that, there is the £109 million that was added to the 2025-26 budget for pay. Those additions inflated the ABR position.

If we compare it to the ABR with that additional funding in it, it gives us a different comparison than comparing budget to budget. Similarly, there will be movements in 2026-27—some of which we know about and some of which we do not—that will shift the comparator to the 2027-28 budget.

11:45

My contention is that, as the Scottish Parliament information centre has set out, because of the uniqueness of local government, we cannot really make a comparison to the ABR. I point members to table 4.15 in the budget document, which, for transparency, sets out all the areas of funding that move. That is why we have that table: instead of making a comparison to the ABR, it shows why we are saying what we are saying. We did not know, for example, when the employer national insurance contribution money would come and what level it would be. To compare it to that, considering that that funding came after the draft budget, is not to compare apples with apples. That is our position. Because of the uniqueness of the local government budget, we have done it like this for many years. SPICe seems to think that that is a reasonable way to compare.