Chamber and committees

Again, there is some progress. While we have to remove some of the ring fencing and flexibilities are important, there is recognition from local government that there also needs to be transparency and accountability on their side of delivery.

With 32 versions of delivery, as is ever the case with anything, we will have some local authorities performing better in some areas than in others. The Accounts Commission regularly gives reports on where it thinks that there needs to be improvement. The issue that comes up more often than not—I have seen the Accounts Commission talk about this—is transformation and change, the pace of which needs to be upped not only in local government but across the board.

We have more control over that pace in other parts of the public sector, but we rely on local government partners to get on with it, if you like. We can oil the wheels with things such as invest to save but, ultimately, they have to want to get into the discussions about shared services and doing things differently. As autonomous bodies, we cannot force them to do that; they have to want to do that. Again, we will not see everybody moving at the same pace with that. The Ayrshires, for example, are further along the road, and we need to see that happening in other places.

It is also a question of good practice. I will take the example of the work that Glasgow in particular has done through changes to social work services, which have led to a massive reduction in the number of children coming into care. All 32 local authorities should be doing that. If it works—and if it is so obviously delivering better results—authorities would have to have a pretty good reason as to why they would not want to go down that road and adopt those practices.

With the investments in the national public bodies, there are increases in those areas, particularly in forestry, peatland restoration and so on. However, convener, it might be best if I take that specific issue away and have a look at it, if you are happy for me to do so.

I accept that. We have 32 local authorities. If we were starting with a blank sheet of paper, we might not draw that situation up in the way that it is now. However, I am also conscious that, if we embark on a whole-scale local government boundaries review, with the best will in the world, it will tie us up for a decade. We could, however, accelerate the shared services space, where things happen more quickly by negotiation. In the neck of the woods that you are familiar with—Stirling, Falkirk and Clackmannanshire—there are discussions about the art of the possible around shared services. I encourage that, because it provides more flexibility and economies of scale and it also reduces the cost base. We are trying to encourage and support that type of thinking.

It is table 4.15.

It is really important that services are quality and are provided in a timely fashion. We are providing £2.3 billion of funding to social care, and we are supporting the real living wage. That investment in social care goes well beyond—by about £500 million, if I remember correctly—the commitment that was made in the Parliament a few years ago on the trajectory of increasing social care spend.

I understand the importance of local services, and it is important that we work with local government to focus on ensuring that services are maintained. However, how they are provided might need to look a bit different, in the same way that all other parts of the public sector are looking at delivering things in a different way. That is just the reality of where we are. We have to ensure that we change services so that they can meet the current demands and demographic challenges. Doing things in exactly the same way will not achieve that, so that is an important component. We are trying to oil the wheels of things such as the invest to save fund; local government will get access to that, too.

We are very cognisant of the impact on household budgets, which is why a good part of the budget is about trying to enhance some of those supports, whether that is the wraparound services during the school day, such as the addition of breakfast clubs, or extending the school day and trying to provide support for working families without additional cost to them, which is important. We have in place many other supports—they are not available anywhere else—that are designed to support household budgets.

I should have said earlier that council tax rates in Scotland are still significantly lower than they are elsewhere in these islands. For example, our average band D property has a significantly lower council tax rate than elsewhere, and water bills are lower than elsewhere, too.

I will make a point on the survey. As I understand it, the survey was carried out before the budget, so it was forecast before the actual uplift was known. It is for councils to consider their position in the light of what they now know.

I recognise that some councils will be in a more challenging position than others, particularly those that are smaller. That comes back to my earlier point that we must look at the shape of that across Scotland and at where there are opportunities, whether we are looking at single-island authorities or at that shared services landscape, where councils can come together, share services and reduce the cost base.

I think that that would be tricky, because that information all has to be digested, but I will ask Ellen Leaver to come in on that.

The spending review outlook on capital is very difficult—full stop. That is because there is a real-terms reduction in capital in the spending review. We cannot escape the fact that that has a flow-through to every part of the public sector; it is on a downward trajectory.

There are some anomalies in local government’s capital position. There has been one-off capital funding of £40 million for ScotWind, and funding of £20 million will continue for 2026-27. However, local government knew that that funding was not guaranteed. We are now profiling flooding funding in a way that more realistically reflects how it will be spent, because that funding was continually being underspent.

On top of that, we are trying to find imaginative ways of growing the envelope. I have been keen to open the prospect of accelerator deals with individual local authorities. That prospect will depend on their borrowing capacity and their debt levels, and not every local authority will be in the same position, but the accelerator model deal that we had with Edinburgh has allowed Granton to become a major infrastructure expansion area, not just for housing but for transport and all the rest of it. We are looking at West Lothian for Winchburgh station. We are looking at the island authorities for infrastructure investment in the Western Isles, Shetland and Orkney. I am keen to have further discussions with individual local authorities about whether we could have one or a cluster of local authorities around some of those infrastructure investments.

It is about trying to grow the pot because the capital departmental expenditure limit outlook is so restricted. We have used financial transactions mainly for the affordable housing supply programme, and local government gets its share of that in housing investment. Against a challenging backdrop, we are trying to be imaginative in the ways that we are looking at expanding what we can deliver where.

First, I reiterate that I understand some of those concerns. It is important to put on the record again that the average growth in rateable value is 12.23 per cent. That is not to say that there are not some increases that are much higher than that, but the average is 12.23 per cent. We have also lowered the basic, intermediate and higher property rates, delivering the lowest basic property rates since 2018-19.

In recognition of the concerns, we have done two things. First, we are providing revaluation transitional reliefs to protect those who are seeing the most significant increases in rateable values, ensuring that the gross bills of an estimated 60,000 properties are lower in 2026-27 than they otherwise would have been. That will smooth out the increases over the next few years, rather than it being a big bang and potentially affecting the viability of businesses. There is £184 million of investment in that alone.

In addition, there is the relief for retail, hospitality and leisure premises, which is 15 per cent for basic or intermediate property rates for properties with a rateable value of up to £100,000. That is the relief in mainland Scotland—we are going further in the islands and in some remote areas, where the relief is up to 100 per cent. For the first time, retail and leisure will also benefit from that; we previously had a relief for hospitality only.

12:15

Finally, although it is a bit opaque, you will be aware of some of the press speculation about whether the UK Government was going to move further on hospitality, given its revaluation exercise down south. The UK Government has intimated that there may be further support for hospitality. I have written again—that is now two letters—to the Chief Secretary to the Treasury to say that we need to know whether that is going to happen and, if so, whether there will be consequentials. If there are consequentials, we are looking to give further support to the hospitality sector through that process.

Taken together, we have a package of reliefs which, as I said in my opening statement, is estimated to be worth £864 million. That is substantial and I hope that there will be recognition that the transitional reliefs will go some way to smoothing out the issues for those who are facing additional costs.

You are right to point to what is a significant investment. I guess that it goes back to the point about choices; it means that we are putting—or, I should say, nailing—our colours firmly to the mast. I was trying to think of the right expression there.

We are being explicit about where we are putting capital, but it does mean that other areas will perhaps not get quite so much. The £926 million of capital funding will absolutely ensure that progress continues towards meeting the affordable housing supply programme target of 110,000 affordable homes by 2032. It is part of the ambitious multiyear investment of £4.9 billion, £4.1 billion of which is public investment over the next four years, with the other £800 million being levered in from the private sector for things such as mid-market rent. That will support the delivery of around 36,000 affordable homes, which is estimated to provide up to 24,000 children with a warm, safe home. It is a big deal, and a big investment.

We need partners to deliver that. Local government is clearly a key partner, as are the registered social landlords. We want the private sector to play its part, too, particularly in areas such as mid-market rent and build-to-rent properties, where there is clearly a demand and a market.

I would also point out that construction inflation is still impacting on house building, so we have to try to ensure that money goes as far as possible. In that respect, more homes Scotland, the new housing body that Màiri McAllan has announced, is an attempt to ensure that we extract best value for money in terms of land availability and economies of scale. There is a lot happening in the housing space that we should be quite excited about.