Chamber and committees

When councils set council tax rates, we expect them to give careful consideration to local needs and services, while at the same time being mindful of the impact on residents and on household budgets, which are still under pressure.

As I said in my earlier answers, for 2025-26 councils will receive over £15 billion through the settlement. I think that that should mean that there is no need for any excessive, inflation-busting increases. What do I mean by that? I am not going to set a figure and say, “This is it, and anything above that is absolutely appalling.” I do not think that that would be helpful. I would hope that we will all be in a reasonable space and want to see increases kept to a minimum.

Each local authority will be different. I am aware that some of our smaller authorities might have additional pressures in areas where some of the larger authorities have more resilience. That is why it is important for us to look beyond the budget at the sustainability of some of our local authorities. How can they work together? How can we help them to become more resilient and more sustainable?

We have listened to the desire of local government not to have a freeze or a cap. The other side of that bargain is for them to recognise that, in setting the council tax, they should take account of the needs of local residents. I hope that we can get to somewhere that is a reasonable landing space.

First, you are right about variation—the 32 local authorities are all very different. Some quite substantial reserves were built up during the Covid period, but much of that is now allocated to specific purposes.

On the issue of debt, local government has borrowing powers—that is actually something that the Scottish Government does not have. Debt is not unusual, but what is important is how that debt is managed and its sustainability. For example, to compare the position of Scottish local authorities with that of local authorities in England, and considering the powers around general competence—it would not be described as that in an English setting—the level of risk in, and the appropriateness of, the decisions that got some English local authorities into difficulty would raise some eyebrows.

Here in Scotland, local authorities do not have the same ability to make those poor investment decisions and they are therefore not carrying the same level of risk that has led to some of the local authority bankruptcies in England. Local government in Scotland is very keen to have a wide array of powers, such as the power of general competence. I am sympathetic to that, but that needs to be done in a context of sustainability, financial prudence and, as Alexander Stewart pointed out, ensuring that debt levels are in a manageable space. Audit Scotland and the Accounts Commission have important roles here and they have detailed oversight of each local authority, as well as of the collective position. We proceed with caution around the expansion of powers, ensuring that any powers are used within the framework of responsibility that local government would want to operate within.

The approach of prevention and getting far more upstream in our public services is as applicable to local government as it is to any other services. Some local authorities are further along the road than others. In its children’s social work services, through better intervention with families and working in a different way, Glasgow City Council has reduced the number of children who are going into care by 50 per cent. If I was in charge of a social work department in any of the other 31 local authorities, I would be beating a path to Glasgow’s door to see how the city council has done that.

I saw for myself what the council has done. It involves a very different relationship between social work and the families, which has transformed the way that interventions happen in a very positive space. That has kept families together and supported them, and has avoided children going into care. We know that children remaining with their families—where it is safe for them to do so—is a better outcome.

We are working with local authorities in the fairer futures partnerships in Clackmannanshire, Dundee and Glasgow, where families are getting the help that they need where and when they need it. That is helping to maximise support, to get further upstream and to achieve prevention. We are now expanding that into Aberdeen, East Ayrshire, Inverclyde, North Ayrshire and Perth and Kinross councils. It is a matter of getting upstream and avoiding crisis.

There is a lot of other work going on that I am keen to support and to work on with local government. The single Scottish estate, where services can be shared within the public sector, should apply and must apply to local government, too. Instead of investing in a whole new building or utilising the buildings that we have, many of which are underoccupied, we need to get far smarter at sharing the estate and sharing services.

We have invested in the Oracle cloud system, which provides human resources, financing and purchasing capabilities. There are local authorities that are interested in that system, and I do not see why we should not have more and more onboarding of the public sector, so that we can have shared services and back-office functions.

On procurement, there is much more that we can do, through national collaborative procurement, to help bodies, including local government, to get better value for money in their procurement.

Those are just a few things. There are many other areas of reform happening, but I thought that those were probably the best ones to highlight.

Although we remain open to the idea of a motorhome levy, discussions with councils and land management organisations have highlighted some quite significant issues relating to how it would operate in practice. We would not want to have to build a costly and difficult administrative system. We will consider any developed proposals that work well to support the visitor economy. We recognise the impact of motorhomes on communities and some local authorities, and that some local authorities will want to receive support to manage it. We are open to the concept, but discussions are at an early stage.

It is a very important topic, and I am keen to support it. I will come back to the committee with details, because I want to make sure that I give you accurate information, which I do not have in front of me.

I certainly hope that that amount of money will be sufficient, given that it builds on other investments that have been made in the area. We will keep it under review with local government to make sure that any issues that emerge around the funding are picked up very quickly. I do not foresee any particular issues.

I am a big fan of community asset transfers when they are done well. They are not about offloading surplus buildings to unwilling communities, but about partnership when communities want to take on assets that are underused or are surplus to requirements. When facilities are taken over by communities, something that is hard to explain sometimes happens: facilities suddenly blossom and take on a new lease of life because they are run in a different way, and communities, through their connections, manage to bring people in and breathe new life into facilities. I have seen that happen many times.

That does not mean that community asset transfers are appropriate in every case, but the Government, local authorities and—for that matter—other public bodies should be very open to the idea when there are community interest, demand and willingness. That should certainly be supported.

Every £1 million of employer national insurance contributions that is not fully funded by the Treasury is £1 million that cannot be used for the delivery of public services or, indeed, to settle pay deals with public servants.

There is also a read-across to council tax. Every £100 million for local government equates to just over 3 per cent in council tax. To be blunt, if there is a £100 million shortfall in employer national insurance contributions for local government, that could equate directly to 3 per cent on council tax bills that we would rather were kept to a minimum.

All those moving parts are impacting on one another. The basic premise, however, is that Scotland and Scotland’s public services should not be punished for investing in teachers, nurses and other public sector staff to a level beyond that of a Barnett share. I would have thought that that would be recognised as good investment. However, as I say, there are three outstanding pieces of correspondence with the Treasury, and we are chasing it to get to a final position.

I should have said earlier that I am aware that local government will start to set its budget soon, so time is of the essence. We do not have a lot of time to get an answer from the Treasury—we need an answer now.

It is challenging for local government in the same way as it is for the rest of the public sector, because of the enormousness of it. We need to lever in private investment on the back of well-used strategic investment of public finances.

Let me give you one example. Glasgow is quite far advanced on heat networks. Its concept is that it uses public buildings as an anchor to lever in private finance. Through the heat network, those public buildings have a revenue stream, which enables a hub-and-spoke model that brings in other buildings. A heat network could be built up around such a model. That approach is being used in other parts of the UK and in other countries.

We cannot do that through public funding alone. We must lever in private finance, but to incentivise that investment we need to have derisking and clear revenue streams. One of the reasons why I was keen to give local government some of the ScotWind money was to make sure that the benefits of ScotWind reached all communities. It was also so that communities would be able to use that money in an imaginative way to lever in some of their own external funding sources, and to make choices to collaborate with each other and with other public bodies. That funding was very flexible in order to be able to oil the wheels of investment.

In this space, some local authorities are further ahead of others. It was ever so; 32 local authorities do not all move at the same pace. The cities have an important anchor in the city region. It is more difficult for some of the smaller local authorities to have the capacity and leverage that other, bigger authorities perhaps have, so we will probably see more local authorities working together on a regional basis.

Good morning. Thank you for inviting me to give evidence to the committee.

The 2025-26 Scottish budget seeks to improve the lives of the people of Scotland and to deliver on the Government’s priorities to eradicate child poverty, grow the economy, tackle the climate emergency and support sustainable high-quality public services. The budget recognises the importance of local government and it provides local authorities with a record funding package of more than £15 billion in 2025-26, which is a £1 billion increase on the budget for 2024-25. Independent analysis by the Scottish Parliament information centre confirms that the 2025-26 local government settlement includes a cash and real-terms increase for both resource and capital.

Through the Verity house agreement, the Scottish Government has renewed its commitment to a relationship with local government that is based on mutual trust and respect, and has agreed to seek new ways of working together to ensure that the people of Scotland receive the public services that they expect and deserve.

As we discussed in the evidence session prior to the budget, the Verity house agreement and the fiscal framework represent a journey, not a destination. We are never going to wake up one day and find that all the challenges have been magically resolved. As with any relationship, it takes time and hard work to make things better. We have invested a lot of time and hard work during the first year of the Verity house agreement and there has been demonstrable positive progress in the implementation of the agreement’s principles. That has included joint work on local government pay; enabling councils to double the full rate of council tax on second homes; delivering a new national allowance for foster and kinship carers; and close engagement around the Circular Economy (Scotland) Act 2024.

The settlement has been informed by extensive engagement with local government, at both an official and a political level. That has allowed for evidence to be jointly developed and an improved joint understanding of the challenges that both spheres of government face. The positive impact of that engagement has been recognised by the Convention of Scottish Local Authorities and acknowledged by the Scottish Parliament information centre in the briefing on local government finance that it published on 20 December. The briefing also emphasised COSLA’s positive response to the 2025-26 budget and I welcome COSLA’s acknowledgement that the settlement has increased substantially. I remain committed to continuing to make progress against our shared priorities in partnership with local government and to ensuring that we work collectively to deliver sustainable public services across Scotland.

I look forward to engaging with members and to answering any questions that the committee might have.