Chamber and committees

One way of doing that is to apply fair work conditionality. For example, if a company cannot access a grant or get a public contract unless it is investing in its employees, there is an incentive for it to invest in its employees. The primary way of creating incentives is through conditionality. We are trying to embed conditionality in all forms of business support.

I think that they get it, increasingly. My sincere hope is that they take the approach that once a strategy is published it will become a defining mission. There is a lot to be considered about dealing with structural inequalities in participation and about the benefits of a thriving economy. I think that the enterprise agencies are getting there. A more nuanced approach is being taken. Clearly, enterprise agencies are—to go back to the previous question—leading the charge on net zero, for example. They have expanded their approach.

Yes, we are absolutely doing that. The primary way that we do it is through working with Co-operative Development Scotland and the enterprise agencies to support the growth of co-operatives and other alternative business models. The matter is very much on our radar and we have mechanisms to work with and invest in alternative business models.

We have extended the deadline for the voucher scheme because we understand some of the challenges for businesses. The overall value of a voucher is determined by whether a household or business property is likely to get access to commercial build or R100 build. The voucher is worth less for those that are in the scheme’s scope. That might have come into it, but the deadline has been met. In terms of overall contract delivery date, you are probably more interested in the R100 north lot contract, which is expected to be let by 2026-27. The delivery years for the central lot and the south lot are earlier because the more remote and rural areas will require more investment and will take longer.

I will answer the question in two parts. The first is that, although I do not want to constantly compare households north and south of the border, it is important to do so, because the same overall settlement is involved, as a result of the Barnett formula. Shona Robison has said that council tax is lower in Scotland than elsewhere. We should remember that, on average, council tax went up significantly in England last year after a number of years of rises, whereas, in Scotland, there has not been the compounding effect of an increase last year. That is precisely why, on average, band D charges are about £590 more in England and £423 more in Wales than they are in Scotland.

On what we are doing, witnesses on the previous panel alluded to the fact that, from April, we are reforming the council tax reduction scheme, with £351 million being baselined in the local government budget for the policy costs. We have changed the scheme to ensure that we do not miss people as a result of changes to universal credit. In other words, we are trying to cover as many eligible households as possible. For the past few years—certainly the past five years—the money that we have provided to cover council tax reduction schemes has been higher than the demand, so there has been headroom for local government to manage that.

My final point is that we cannot look at council tax arrears in isolation. Challenges with paying council tax are part of a challenging financial situation for households. We cannot look at the council tax reduction scheme, for example, in isolation from our wider budget commitments. There is £197 million in my budget to double the Scottish child payment and extend it to under-16s. Over the past few months, Shona Robison has taken forward a huge amount of work to provide additional support to households.

We need to look at the wider support. Without getting too political, a lot of that is compensating for a welfare system that does not help families when they need to be helped. Removing £20 a week from households will not help them to pay their council tax.

I assume that you are talking about the funding for business support relating to omicron.

I have another meeting with my counterpart in the UK Government in the next few weeks—in fact, it might be this week. I think that it is. I apologise; it has been brought forward because of omicron. Covid consequentials are one of the most frequently raised issues on my agenda for meetings with the UK Government, so I will again talk about the need to cover them.

Off the top of my head, I cannot think of any budget that has been immune to the impact of Covid. Whether it is justice remobilisation or the need to remobilise hospitals and wider social care services, Covid has an impact right across the board. Nonetheless, we have a budget from which Covid consequentials have been stripped out. Over the past two years, they have amounted to about £14 billion. Last year, it was about £4 billion. That money will not be available but we still need to absorb the costs of Covid because we cannot wish it away. That means that Covid is clearly a priority, so we rightly have to meet the costs of it, but that puts pressure on other things that we want to do. That is how I frame the matter.

One of the last things that I did in the past financial year, just before purdah started, was to allocate an additional £275 million of Covid consequentials to local government, over and above the £259 million—if memory serves—of Covid consequentials in the settlement for local government. A considerable amount of funding was allocated to help local authorities with Covid pressures.

However, those payments were clearly one-off Covid consequentials in the same way that Covid consequentials are one-off payments for us, which makes it harder for local government—in the same way that it makes it harder for us—to deal with the on-going costs of Covid without additional funding to deal with it.

Will I answer that one?

I will resist setting out any expectations, because that completely flies in the face of giving local authorities discretion. However, on average, a 1 per cent increase in council tax raises about £30 million, so 3 per cent would raise about £90 million, which is what we used to fund the freeze last year. That is the kind of ballpark figure that you are talking about when you reference 3 per cent.

It is good to join you this morning, convener. I appreciate that you have had a long evidence session already this morning, and that the Deputy First Minister and Cabinet Secretary for Covid Recovery provided you late last year with a detailed written response to a range of questions, so I will keep my opening comments fairly brief.

I will start with a comment that you will not be hearing for the first time, but I need to be clear at the outset: this project has been hugely challenging. The Scottish Fiscal Commission, which is the key forecasting body, states in its economic and fiscal forecasts report:

“Overall the Scottish Budget in 2022-23 is 2.6 per cent lower than in 2021-22, after accounting for inflation the reduction is 5.2 per cent.”

It is against that backdrop that we are discussing the local government budget this morning.

Our budget has had a laser-like focus on three key challenges: tackling child poverty, climate change and economic recovery. We are endeavouring, in the budget, to strike a balance that will, with limited resources, ensure parity of funding across sectors. The budget that has been published for next year confirms that even in the face of the significant economic uncertainty that has been caused by the pandemic, we are providing councils with—among other things—a real-terms increase of more than 5 per cent to their overall budgets for our shared priorities for the coming year. Local authorities have been key partners with the Government—perhaps never more so than during the pandemic, as we tackled it together to protect communities, businesses and public services. They will clearly play an important leadership role, as we move forward.

I recognise the importance of planning as part of the process. Our transformation of the planning system will help both to streamline the system and to free up resources to enable the good-quality development that we will need in the future. To support that, we will introduce new fees regulations that will help to ensure that applicants, rather than the taxpayer, cover the costs of processing planning applications. We are also investing in digital transformation of the planning system. I mention that because I know that it has been raised in the past.

I will stop now and hand over to my colleague, Shona Robison, who will say more about the settlement in relation to her portfolio.