Chamber and committees

Thank you for your declaration, and welcome to the committee. I look forward to working with you.

Item 2 is pre-budget scrutiny of Scotland’s public finances in 2022-23 and the impact of Covid-19.

We will hear from two panels of witnesses. For our first session, we are joined remotely by Councillor Gail Macgregor, resources spokesperson, Convention of Scottish Local Authorities; Alan Russell, chair, Chartered Institute of Public Finance and Accountancy directors of finance section; and Linda Somerville, deputy general secretary for policy, equality and political liaison, Scottish Trades Union Congress.

I intend to allow around 75 minutes for the session. Members have received a paper containing background information, along with written submissions from our witnesses. Given that the witnesses are joining us remotely, if members wish to ask a question of a specific witness, I ask them to make that clear, and to allow a brief pause to let our broadcasting team activate their microphone.

I aim to give all witnesses a chance to respond to questions, but if any of you wish to respond to a specific point, please indicate to me and the clerks by raising your hand and typing R into the chat function of the BlueJeans software package.

I welcome our witnesses to the meeting. We will start by asking the COSLA and CIPFA representatives about key points in their joint submission, although Linda Somerville can, of course, add her thoughts as well. The submission states that:

“significant levels of investment ... must not come at the expense of critical services which Local Government needs to ... provide in recovery and tackling poverty and inequality.”

You also talk about the need to have a fair settlement for local government. What do you consider to be fair funding for local government? The Scottish Government would take the view that fair funding is currently deliverable, so it would be helpful if you could advise us in detail what you mean by that, particularly with regard to the volume of the resource that you believe should be allocated to local government.

I am sorry, but I have to interrupt you because of time limitations and the need to get in all witnesses during this session. I do not want to interrupt your flow too much, but I think that we fully understand the position that you are articulating. The issue is what do we do about it.

For example, we have been advised by the Parliament’s financial scrutiny unit that the real-terms increase in budget is likely to be 2 per cent across the board. Obviously, therefore, difficult decisions have to be made on the public finances. If additional resources were to be provided to local government—we do not know whether we will get any additional moneys related to Covid in the future—where should that money come from? Should there be additional taxation, or should money be shifted from other budgets? If there is additional taxation, who should pay, and how much should they pay?

Everyone who comes to the committee—we had a number of witnesses last week—suggests additional funding for their particular area of interest, but we are trying to find a balance. If people say that there should be additional funding, we need to know what additional resource is required, given the financial situation that we are in, otherwise we will not get any further forward.

Linda Somerville, your submission talks about the

“need for restorative pay settlements”;

the

“need to massively expand publicly owned housing”;

and the need for

“a street-by-street home retrofitting programme”.

It also mentions a number of other issues, such as Government support for

“providing good quality, unionised jobs.”

Have any costings gone into that? As I mentioned a few minutes ago, there are obviously significant pressures on the budget. You talk about taxation in your submission, so perhaps you can expand on that in your response.

David, the NPF has been around for some 14 years, so do you think that there are some transparency issues in relation to the NPF and how it works across Government?

Culture change is always a difficult challenge.

This will be my final question, as I want to let colleagues in. Ray Perman, you say in your submission:

“The RSE is concerned that new initiatives from the UK Government, including the Shared Prosperity Fund, Levelling Up Fund, and Community Renewal Fund will bypass the devolved administrations.”

Can you elaborate on those concerns?

I will move on to something that we have discussed. I am looking to find out from Gail Macgregor where the balance should be struck on local flexibility. In 2007 the Scottish Government abolished some 60 ring-fenced funds from the previous Labour-Lib Dem Administration and signed what is now fondly looked back on as the historic concordat of November 2007. The idea was that local flexibility would be restored across local government.

However, an issue arose, of course, for the Scottish ministers when they allocated funding for specific pots—for teacher numbers, for example. Local authorities would then decide that, as they had local flexibility, they would not spend the money on teacher numbers. The parliamentary party colleagues of those who had decided not to increase teacher numbers in specific areas would then attack the Scottish Government for failing to deliver on its manifesto commitment to increase teacher numbers. The Scottish ministers obviously thought, “We’re damned if we do and damned if we don’t.”

How do we balance that? The Scottish ministers do not want to be in the position of providing additional funding for specific areas of manifesto commitment policy yet being criticised for not delivering it. On the other hand, if they do not provide local authorities with flexibility, they will be criticised for that. Is there a way in which that can be balanced?

How can the Scottish Government fully fund local government, for example, if it is not fully funded through the block grant?

Joanne, you can have the last word.

Is LBTT or house price inflation more likely to inhibit people’s ability to move to larger properties? That is in places such as Edinburgh. I am not talking about North Ayrshire, which I represent and where, for £0.5 million, you can buy a palace, never mind a house. I have a five-bedroom detached house with a garage, which cost me £145,000. There is a big difference between house prices across the country. What is your view on that?