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Chamber and committees

Meeting date: Tuesday, March 6, 2018

Meeting of the Parliament 06 March 2018

Agenda: Time for Reflection, Business Motion, Atrial Fibrillation, Topical Question Time, Climate Change (Emissions Reduction), Higher Education (Widening Access), Local Government Finance (Scotland) Order 2018 [Draft], Land and Buildings Transaction Tax (Relief from Additional Amount) (Scotland) Bill: Stage 1, Land and Buildings Transaction Tax (Relief from Additional Amount) (Scotland) Bill: Financial Resolution, Business Motion, Parliamentary Bureau Motion, Decision Time, LEADER Programme


Contents


Local Government Finance (Scotland) Order 2018 [Draft]

I ask members to get into their seats quickly. We are quite short of time, so I want to get a move on.

The next item of business is a debate on motion S5M-10794, in the name of Derek Mackay, on the draft Local Government Finance (Scotland) Order 2018.

15:09  

The purpose of today’s debate on the local government finance order is to seek Parliament’s approval of the guaranteed allocations of revenue funding to individual local authorities for 2018-19. The debate also seeks agreement to the allocation of additional funding for 2017-18 that has been identified since the 2017 order was approved at this time last year.

The 2018-19 budget delivers a fair settlement for local government under the most challenging of circumstances. The funding package for 2018-19 continues to focus on our joint priorities of delivering sustainable economic growth and protecting front-line services and the most vulnerable in our society. In providing a real-terms increase in resource funding to local authorities, the budget will ensure that local authorities have the funding available to follow the lead of the Scottish Government and lift the 1 per cent pay cap.

In 2018-19 the Scottish Government will provide councils with a total funding package worth £10.7 billion. That includes revenue funding of over £9.8 billion and support for capital expenditure of over £876 million.

Today’s order seeks Parliament’s approval for the distribution and payment of £9.5 billion out of the revenue total of over £9.8 billion. The remainder will be paid out as specific grant funding or other funding that will be distributed later, as agreed with local government.

Included in those figures is the £159.5 million that I announced on 31 January during the debate on stage 1 of the 2018-19 Budget (Scotland) (No 2) Bill. The remaining £10.5 billion—sorry; I will say that again—the remaining £10.5 million that I announced will be paid as a specific revenue grant in support of internal ferries for the northern isles. If I had announced £10 billion for ferries for the northern isles, that would be a whole different matter.

Of the extra £159.5 million, £125 million was allocated as an amendment to the budget bill at stage 2. It is included in the 2018-19 revenue support grant figures in the order, as I set out during the stage 1 debate. The remaining £34.5 million is included as a redetermination of the 2017-18 revenue support grant figures that are in today’s order. I hope that everyone got all that.

The overall funding package for 2018-19 includes an additional £159.5 million to protect spending on day-to-day services, as announced on 31 January as part of the stage 1 debate of the budget bill; £10.5 million for Orkney and Shetland councils to support internal ferries for the northern isles; £66 million to support additional investment in social care, in recognition of a range of pressures that local authorities are facing; and £52.2 million of revenue and £150 million of capital funding to deliver our ambitious programme for the expansion of early years education and childcare.

The cabinet secretary talks about a package that is intended to protect council funding and services. Will he explain why his own council area of Renfrewshire is looking at more than £24 million of cuts over the next three years and 200 job losses, as was outlined yesterday in an article in The Times?

Renfrewshire Council, like many councils—all of them, in fact—is setting priorities and making decisions. At the same time, it is investing more in roads and the environment and is expanding its services, as are many other councils. There are choices for local authorities. Renfrewshire Council is committed to having no compulsory redundancies—that is an example of a council making choices. My argument to Mr Kelly would be that local authorities are well resourced as a consequence of the budget and that the above-inflation uplift was good news for local government across the land.

I had begun to discuss a range of elements of the package. It includes financial support of £24 million to cover the full-year cost of the teachers’ pay award for 2017-18; £120 million for pupil equity funding, to be spent at the discretion of head teachers to raise attainment and close the attainment gap; £88 million to maintain the pupil-teacher ratio nationally at 2016 levels; and a £355 million transfer from the national health service to integration authorities in support of health and social care, which has been baselined.

In addition, local authorities will be able to increase council tax by up to 3 per cent, and they look set to do so. That is worth an additional £77 million to Scotland’s local authorities. Thirty local authorities have set their council tax levels for next year and the remainder are to do so this week. All of that represents a real-terms increase for local government.

There remains a further £47.6 million of revenue funding that will be distributed once the necessary information becomes available. It will be included for approval in the 2019 order. The amounts involved, as agreed with local government, are £37.6 million for the teachers induction scheme and £10 million, which will be the balance of the total sum available to ensure that the impact of the bedroom tax can be fully mitigated.

In addition to the revenue funding that is contained in today’s order, there is specific revenue funding that is paid directly by the relevant policy areas under separate legislation, which amounts to £273.7 million. That includes pupil equity funding, £86.5 million for criminal justice social work, £52.2 million for early years expansion, additional support for northern isles ferries and £4.4 million for Gaelic funding.

The 2018 order also seeks approval for changes to funding allocations of £148.6 million for 2017-18, which have been added to fund a number of agreed spending commitments. Those include £42.3 million for the council tax reduction scheme, £37.5 million to support the teacher induction scheme and £22.5 million for temporary accommodation.

There is a strong increase for capital funding as well, primarily supporting the Government’s efforts on early learning and childcare. There are also further investments, which have been debated previously, to meet our ambitious housing targets.

I argue that our business rates package is the most generous in the United Kingdom and that our specific measures support growth. The business community has warmly welcomed our decision to cap the uplift at the level of the consumer prices index rather than at that of the retail prices index.

In summary, the total funding from the Scottish Government to local government next year amounts to £10.7 billion. Our funding proposals continue to deliver a fair financial settlement for our partners in local government that will be strengthened by continued joint working to improve outcomes for local people by improving educational attainment and through health and social care integration.

I move,

That the Parliament agrees that the Local Government Finance (Scotland) Order 2018 [draft] be approved.

15:16  

We, in the Scottish Conservatives, have been clear that we do not believe that the Scottish Government’s funding settlement for our local councils is fair. It falls well short of the revenue increase of £545 million that the Convention of Scottish Local Authorities has said that local authorities require to maintain current levels of service. Such a poor settlement is symptomatic of this Scottish National Party Government’s approach to local democracy. Unlike the Scottish Conservatives, who believe that local authorities can be real engines for local growth, the Scottish Government seems to treat councils with contempt. I spent 18 years as a councillor and am well aware of what Governments have done to local government in that timescale. Over the tenure of this Government, it has certainly done that.

Will the member give way?

I would like to make some progress.

Although we acknowledge that it is an extremely disappointing and difficult settlement, we shall vote for the Scottish Government’s motion to ensure that our local councils receive their funding.

It is clear, from the carefully choreographed public relations stunt that we saw in the negotiations between the SNP and the Greens earlier this year, that the draft budget’s proposal for a real-terms cut to local government budgets has been reversed, but that has gone by no means far enough. In fact, it was very much the case that the Scottish Government could give only sufficient financial provision to ensure that councils receive their funding.

Audit Scotland’s financial overview of local government highlighted that local government faces real challenges as we move forward. Rather worryingly, the report revealed that Scottish councils are, on average, spending 10 per cent of their revenue budgets in servicing borrowing. It also suggested that some councils could run out of funds completely in the next two or three years. Such problems are very much the fault of the Scottish Government, which has made a 7.6 per cent real-terms cut in local authority funding since 2010-11. Moreover, the pressure that the SNP has put on local authority budgets has forced many councils across Scotland to use fees and charges to fund vital services, which is totally unacceptable.

It is not only the level of funding itself that the Scottish Government has got badly wrong this year. Its incompetence was in plain sight when it emerged that provisional local government settlements, including ring-fenced funds for criminal justice, had been erroneously allocated in two areas of the budget.

Local authorities are also facing significant shortfalls. Double counting means that they are facing bigger challenges. Councils had planned their budgets on the basis of the figures that were set by the Scottish Government’s draft budget, and these problems only created even more difficulties for them.

I want to ensure that the record is accurate: there was absolutely no double counting.

The consultation phase that comes after the circular enables local authorities to engage and come back to the Government if there is a different choice of methodology or other matters. That is exactly what happened: there was a different way in which to allocate the resource.

I know that Alexander Stewart would, first, welcome the fact that the Scottish Government consults local government on distribution and is willing to respond and would, secondly, not want to continue to make a totally inaccurate suggestion that there was double counting when there was not.

The words “a different way in which to allocate the resource” say it all.

It is not just incompetence that we have seen from the Scottish Government in recent months, with the cabinet secretary dealing with the settlement in many different ways. There has also been some sleight of hand in relation to the pay rise for council workers. The 3 per cent pay rise that the Scottish Government has agreed and funded for core staff technically does not cover all of Scotland’s 240,000 council workers. Scottish ministers have now admitted that an expectation that council staff will receive a 3 per cent rise has been created but that that is not necessarily going to be the case. COSLA has warned that the main challenge for local government finance is the Scottish Government’s public sector pay policy.

Will the member take an intervention?

I want to make progress.

We have heard that, if every local authority in Scotland raised its council tax by the maximum allowed, that would raise £77 million. However, the cost of increasing council staff wages by 3 per cent is nearly three times that, at £210 million. The funding that is required is not there. The issue highlights a wider problem with local government financing in Scotland, which is the lack of transparency on the part of the Scottish Government.

We have said that we will vote to approve the order that is before us, but we are uncomfortable about doing so, because it means that the Parliament cannot properly debate local government financing for 2018-19 in the full knowledge of the impact that there will be. Today, we are going through a purely procedural matter. There will be an opportunity for us to deal with the financial circular when it comes forward, but that will not happen until later this year, long after this debate.

The Scottish Conservatives will vote for the motion, but we do not believe that it is the right way to go forward or to manage the business of Scotland’s finances. Hardworking Scots up and down the country are being asked by the SNP Government to pay more in taxes while their local public services are being cut. The Scottish Government is taking with one hand and then taking with the other—that is a double whammy for people across this country.

The Scottish Government urgently needs to rethink its approach to local government finance and make the process of funding allocations to councils more transparent so that the issue gets the proper parliamentary scrutiny that it deserves.

15:22  

I welcome the opportunity to speak in this afternoon’s debate and to oppose the local government finance order—

Will the member take an intervention on that very point?

Just let me finish the sentence, please, Mr Mackay.

I will oppose the local government finance order that has been laid by cabinet secretary Derek Mackay.

I appreciate Mr Kelly letting me intervene after he has been speaking for only 14 seconds.

I simply want to make the point that—as I am sure James Kelly knows—to oppose the order is to oppose the money that is going to local government. The Tories have at least accepted that although we have a difference of opinion about the sums, the order is a technical one that will release the money that has been allocated. If the Labour Party wishes, it can, by all means, campaign for more money to be allocated. However, if Mr Kelly’s attempt to ensure that the order is not agreed today is successful, it will mean less money going to local government.

The cabinet secretary makes the point that this is a technical order in a technical debate, but we will not sign up to what is, in effect, an allocation of cuts to local councils. We hear time and again speeches from SNP members about opposing austerity and standing up for progressive policies. However, if we look at what is happening in local government, the figures are stark. Even before this year’s budget, there was a cumulative £1.5 billion of cuts and COSLA reckoned that £545 million was needed in order to fill the black hole in the SNP’s budget. I acknowledge that there was movement between stage 1 and stage 3, but that still left a stark hole of £368 million. That reflects points that were made in the Audit Commission’s report of November last year, which gave some stark examples of how councils are struggling to fill the gaps after year-on-year cuts.

Mr Kelly is painting what he describes as a “stark” picture. If things are so stark, why did Labour councils refuse to raise the council tax last year when they had the ability to do so?

It is SNP members who—year after year, and for seven years in a row—have pressed their buttons in this Parliament to allocate cuts to local council budgets.

An analysis in The Times yesterday helpfully looked at what is happening on the ground, council by council. Let us take the example of jobs. In Aberdeenshire, 370 jobs will be lost; in East Renfrewshire, 300 jobs will be lost; in Renfrew—Mr Mackay’s own area—200 jobs will be lost; in Fife, 190 jobs will be lost; in North Ayrshire, 50 jobs will be lost; in the Scottish Borders, 35 jobs will be lost; in Orkney, 14 jobs will be lost; and in Angus, 16 teaching posts will be lost. The total number of jobs that will be lost is just short of 1,200. If that number of jobs was being lost in an industry or in a factory, the Scottish Government would rightly be setting up a task force as a matter of urgency; instead, the cabinet secretary has come here today to ask us to vote for an allocation that will cut jobs and services.

The cabinet secretary tells us, in reasonable tones, that it is a well-resourced budget. Again, let us look at what is happening across the country. Yesterday, West Dunbartonshire voted for a budget that will result in £2.5 million of cuts to services such as meals on wheels. Such cuts will have a real impact on local communities.

I contend that the cuts to council budgets will not help the Government to achieve its policy objectives. The Government will, understandably, want to see improvements in educational performance and the statistics for the crucial skills of reading, writing and arithmetic, but it is difficult to see how we can make that happen if we are taking teaching and classroom assistant posts out of schools, as some councils are having to do.

Will the member take an intervention?

I am sorry—I am nearly at the end of my speech. I have taken two interventions.

If we drain resources from education, that does not join up with the aim of growing the economy. Councils have told me that they sometimes have to cut back on business planning and local economy units, which will undermine the ability of the councils to contribute to local economic growth. That does not make sense in terms of the Government’s overall policy priorities.

We will not stand on the sidelines and cheer on the cuts, like the SNP MSPs. We will stand up for local communities and oppose the order at 5 o’clock tonight.

15:28  

This is an important debate, and it is not just a technical one. In many ways, though, it is a debate that we should not be having. I will explain why in a moment.

As the cabinet secretary says, the order delivers almost £9.5 billion in revenue support grant and non-domestic rates for councils across Scotland. The money will be used to deliver a wide range of vital public services, including environmental health, social care, leisure, recreation, transport, housing and educating Scotland’s young people.

Following the Greens’ engagement with the budget process, the settlement represents a real terms—if modest—increase in revenue spending for local government. That was a key demand in budget negotiations and I am pleased that it has been secured. This is therefore a settlement that we will be voting for at decision time. However, as I mentioned at the outset, this is not a settlement that we would like to be voting for. It is fundamentally wrong that so much of the revenue and capital budgets of local government is determined by the Scottish Parliament.

In 2014, COSLA’s commission on strengthening local democracy published its final report, in which it argued:

“The case for much stronger local democracy is founded on the simple premise that it is fundamentally better for decisions about these aspirations to be made by those that are most affected by them.”

That is an argument that I know that many members will recognise from the 2014 independence debate, when largely the same argument was used to advance the case for Scottish independence. However, for more than 50 years, local democracy in Scotland has been eroded to the point where Scotland is now one of the least democratic countries in Europe, with the weakest structure of local government and with the least fiscal freedom.

In most European countries, at least 50 per cent of the budgets that municipalities and communes raise is raised locally, and that delivers a sense of accountability that is entirely missing in Scotland. The politicians who make those decisions about raising and spending money are genuinely local; they are politicians whom one would meet daily on the street, in the shops and in the school playground.

Scottish Greens want to see a fundamental shift in political power, from Holyrood to local communities. Thus, this is the last budget on which we will be willing to enter negotiations, unless a serious, credible and substantive process is begun to increase the fiscal autonomy of local authorities, reform local taxation, shift the balance of funding from the centre to the local, and put in place the kind of fiscal framework that exists between the United Kingdom and Scotland in relation to devolved budgets.

That is why, on 21 February, Patrick Harvie wrote to the First Minister to outline why we need local tax reform, as envisaged by the commission on local tax reform. That is why, following the budget last March, we published a paper outlining what a fiscal framework for local government might look like. That is why I will soon put out for consultation a proposal for a member’s bill to incorporate the European charter of local self-government into Scots law.

In particular, it is an affront to local democracy that the limited and regressive tax power that local government does have—the council tax—remains the most regressive tax in the United Kingdom, based on a tax base last assessed more than a quarter of a century ago. It is wrong that council tax rate-setting powers have been appropriated by the finance secretary in a form of Tory rate capping in order to cajole local government to bend to the will of central Government and to punish councils if they do not meet the preferences of Scottish ministers. That is a process that would be unlawful across most of Europe and is, in my view, unlawful under international law.

I do not feel comfortable sitting in this Parliament and voting on how much money local government should receive, but we are where we are, and we will be supporting the order at decision time.

15:32  

I commend Andy Wightman for his remarks about local government finance. I believe that, just as this Parliament should be able to raise the majority of the money that it spends, local government should have the same power, because if a body can control the purse strings it can control its own destiny. If we have that, we can have true local democracy, rather than the control that we have by central Government over local government.

I agree with an awful lot of what Andy Wightman has just said. I think that we should be putting power back in the hands of local authorities. Taking back control is incredibly important for them, because if we are going to improve local accountability so that the local electorate can hold local councillors to account for the decisions that they make, there is no point in central Government dictating how much money local councils are going to get in the first place. That should change, and I hope that we get a good debate over the coming year, to encourage that kind of reform so that we can get true local government.

I commend my colleagues Tavish Scott and Liam McArthur for achieving even more than they thought for the northern isles ferries. I heard the Cabinet Secretary for Finance and the Constitution commit to £10 billion for new ferries for the northern isles. Those luxury ferries will provide a bed for every passenger with waiters on tap, and think that that is a great innovation by the minister.

I am experiencing a wee bit of déjà vu. If I really did put £10 billion in the budget for the ferries, would even Willie Rennie vote for it?

The cabinet secretary has taken the words right out of my mouth. It would still not be good enough, I am afraid, because the SNP always falls short of what is required.

However, I want to focus on a serious element of today’s statement. For the sixth year in a row, we have had the failure of the SNP Government to match a commitment from its 2011 manifesto—the manifesto that said, “Re-elect Alex Salmond”—which said:

“We will introduce a new Funding Floor to ensure that no Local Authority receives less than 85 per cent of the Scottish average in terms of Revenue Support. This will be funded by additional money from central government.”

In the Scottish Parliament information centre briefing—I admit that it is based on the draft budget, but, having looked at the figures today, I see that the percentages have not changed substantially—the figure for Edinburgh is not 85 per cent but 80.7 per cent, and the figure for Aberdeen is 81.5 per cent. That is well short of the funding floor that was promised.

Instead of fixing the funding for local government and providing more money for Edinburgh and Aberdeen—particularly for the latter, which has suffered a shortfall of nearly £20 million in each of the six years since 2011—the SNP has just fixed the formula. The Government now says that it includes council tax income, which miraculously takes the figure right up. That was not the commitment back in 2011.

Will Mr Rennie take an intervention?

Mr Rennie is in his final minute.

There are shortfalls again this year: a £28 million shortfall for Edinburgh and a £7.3 million shortfall for Aberdeen, based on the promise that was made in the 2011 manifesto. Yet again, the Government has failed to meet its 85 per cent funding floor commitment. I hope that we will get a revision of that from the Government, so that it meets its commitments in the future.

The north-east has faced considerable problems in recent years because of oil and gas, and the infrastructure in that part of the world is poor. The national health service has been underfunded by £16 million a year on average. Change is needed to meet the commitment and to provide a fair deal for Aberdeen and Edinburgh.

15:37  

I am always happy to speak on the budget and, once again, I am happy to tell the Tories why they are wrong.

Although the focus today is on local government finance, we also need to look at the wider issues of how we raise revenue and how we spend it. I suspect that most members will argue today that local government should get more money rather than less, although the Conservative policy of cutting or freezing tax would mean that either local government or other sectors would have their funding cut.

We should acknowledge the Green Party’s push on this issue and its agreement with the Government to raise income tax a bit more in order to fund our councils a bit better. However, there is only so far that we can go down that route without killing the goose that lays the golden egg.

Scottish Labour has suggested much higher taxation, but apparently without doing much research, exploring how it would work in practice or having the figures independently checked. It is interesting that a party that supported having an independent Scottish Fiscal Commission that would do the forecasts instead of the SNP Government is not quite so keen on having its own forecasts properly verified.

Assuming that we do not have scope for raising the tax take much more at this stage, parties that want to give more to local authorities presumably want to take that money from other sectors such as the health service.

Surely it is not so much about whether we should raise more tax to give to local government, but a question of whether local government should have the fiscal levers to decide for itself how much revenue it wishes to raise in its local area.

I basically agree with Andy Wightman’s argument and what he said in his speech today, and I look forward to the introduction of his bill. However, we are where we are for 2018-19, and Labour failed in that it could not introduce new tax proposals in time for April.

We find it difficult to get some of the other parties to admit this, but more money for local government means fewer nurses, fewer doctors, fewer medicines, fewer students or fewer trains, or one of the other options. The Tory suggestion of making savings through less wastage is just another way of making cuts and the Tories have not told us which department should get those cuts. Will it be local government or somewhere else?

As a Glasgow MSP, I want as much funding as possible for our city. I consider that funding allocations must be based on need and not on arbitrary percentages, as Willie Rennie seemed to suggest. I accept that need can be hard to measure, but our allocations to local government must be based on need.

The top four local authorities by funding in the provisional figures are the three island authorities plus Argyll and Bute Council, which also has many islands. Having been heavily involved in the Islands (Scotland) Bill, I think that that level of funding is appropriate, given the extra costs and challenges that islands face. The next three on a per capita basis are Inverclyde Council, West Dunbartonshire Council and Glasgow City Council. Most people would feel that that was appropriate, given the needs in those authorities.

Compared to those in England, local councils here are getting a good deal. This week is apprenticeship week and, yesterday, I visited an organisation in my constituency that provides care for adults with learning disabilities and others with severe needs. It was good to hear that that organisation puts a huge emphasis on training not just for apprentices but for all its staff. It was especially encouraging to hear that it is able to pay its workers in Scotland £1 more per hour than workers in England get, because local authorities here are willing and able to pay that bit more. In turn, that is because local authorities in Scotland are better funded than their counterparts down south.

Of course, we would all like more money for almost everything, but we have to live in the real world and that means living within our means. Maybe in future years we can raise taxation more or maybe other sectors will need less money but, for 2018-19, we have set a pretty reasonable and fair budget and, in particular, a pretty reasonable and fair settlement for local government.

15:41  

Last year, I stood here and bemoaned a finance settlement that left councils making cuts, axing services and losing staff. Here we are again. I ask members to remember the figure of £15 million—which is a lot of money—because I will return to it.

Scottish Conservatives will vote for the order because councils need the money, but as Alexander Stewart said, our support should not be seen as acceptance that it is a fair settlement, because it is not. Local government has been squeezed year after year by the SNP. Regardless of how Derek Mackay and John Swinney try to dress it up or even hide the true picture, councils have been making cuts every year under them.

Mr Mackay was once a promising young council leader who stood up for local government. Now, he cuts a figure from a Dickens novel. [Laughter.]

I missed that.

Mr Mackay cuts a figure from a Dickens novel. First, he is Mr Micawber, presenting a draft budget hoping that “something will turn up”, as it surely did, in the shape of Patrick Harvie. However, at the same time, he is Mr Scrooge, swinging the axe on local government. He is a complex man, indeed.

I was a councillor for 10 years, and in every year in which the SNP was in power, we had to make decisions about what to cut. The council tax freeze was in place, which was something at least, but we held our nerve when it ended and continued it because that we had pledged to do that. Keeping our promises on tax: what a novel concept that is.

This year, the current crop of councillors was set up to expect a massive cut in their budget, so when that cut was not quite as bad as they first feared, some of the more naive among them were delighted. We even had the rookie SNP council leader John Ross drooling that it was

“the most progressive budget for South Lanarkshire Council for many years”,

and praising a better-than-expected settlement.

Derek Mackay and his outrider Mr Harvie might be able to fool the likes of Councillor Ross, but his council has still had to make £15 million of cuts—there is that £15 million—and is losing more than 100 full-time equivalent members of staff. On top of that, hard-pressed council tax payers in South Lanarkshire can now look forward to a 3 per cent increase in what they give the council to manage potholes. I cannot wait. If that is progressive, he can keep it.

South Lanarkshire Council is no different from any other council. What about Labour-run North Lanarkshire Council? Its challenge was slightly easier, but it still had to make £2.6 million of cuts and lose more than 50 full-time equivalent staff. There is also the familiar council tax increase. At least the council leader, Jim Logue, knew who to blame this time, and noted

“the devastating impact that the continued level of austerity enacted by the Scottish Government’s lack of support for local government”.

That just about sums it up. The Scottish people are starting to realise the consequences of the SNP’s incompetence on service delivery by local government.

The annual charade by Derek Mackay and Patrick Harvie may con SNP council leaders, but not everyone is as easily fooled. We can expect the same dance next year.

Council staff throughout Scotland could be forgiven for expecting a 3 per cent pay rise. The bad news is that the Scottish Government, having created that expectation, will not pay for it. Is that fair funding? I do not think so.

15:45  

The budget debate this year has been marked by contorted rhetoric and even more contorted mathematics in order to try to claim largesse and generosity in the settlement for local government. That is nothing short of a cruel irony, because in 10 years of SNP Government, local government has seen 10 years of austerity and £1.5 billion of cuts being passed to it.

Let us be clear: that is an SNP choice. Since 2013-14, the Scottish Government has had a cut of 1.5 per cent to its revenue grant, but has passed on a cut of 4.5 per cent in revenue funding to local government. That has been despite the fact that much of the SNP’s largest public policy change proposals require the use of local government—for example, the expansion of childcare and tackling the attainment gap. The reality is that while the SNP increasingly adds to the local government jobs list, it gives local government less and less.

The biggest receiver of funds outside local government is the NHS, so how much would Daniel Johnson take out of the NHS budget to fill the gap that he claims exists?

The reality is that the SNP has year after year failed to use the powers that this Parliament has. The way to fill the gap is through progressive taxation.

Can Daniel Johnson tell members why Labour councils have chosen not to increase the council tax next year, which would have filled a few gaps, as he would put it?

Just a wee minute. Daniel Johnson will stand up when I call him—I know that he is desperate to reply. I call Mr Johnson.

Thank you, Presiding Officer. The reality is that the council tax is a regressive form of taxation. The SNP used to think that; why does it not think that any more?

This is an odd debate. I will echo some comments that were made by Andy Wightman. We have to make local government fiscally responsible again, but we also need a transparent budget process. Although we debated the budget two weeks ago, we still do not have the clear and final detail, according to the Scottish Parliament information centre. When I entered the chamber, we still did not have the local government financial circular, which shows a disturbing lack of transparency. I urge the cabinet secretary to reflect on that so that we have an improved and more transparent budget process in future years and, indeed, more stable funding for local government.

I thank Willie Rennie for mentioning Edinburgh; it is generous of him to speak up for an area other than his own. This year’s deal is terrible for Edinburgh, which will have a £2.6 million real-terms cut, according to the latest figures that we have. That comes off the back of a budget settlement last year that was described by the council’s leader as the worst settlement since devolution.

Edinburgh has much of what is needed to be successful, including a high number of tech start-ups, universities and a high number of graduates, but investment is needed to make good on those success factors. However, such factors can hide underlying poverty. In 10 years of declining budgets, we have seen real impacts in the vital services that some of the poorest people in our communities need to get by. Cuts have resulted in growing class sizes and fewer teachers, and those teachers increasingly teach in older schools. I raise again the case of Liberton. I have four high schools in my constituency and Liberton high school, which was built in the 1950s, has barely seen investment since.

Edinburgh is, behind Aberdeen, the second last council in terms of funding per head, and has consistently had twice the level of cuts of the Scottish average. It has had a 10 per cent cut in its funding since 2013-14, which is more than £150 per person.

I agree with James Kelly: we cannot support the financial settlement because, to be frank, it short changes local government and the vital services that it provides.

15:49  

There is no question: the Government is being pushed into making ever more difficult choices when it comes to public spending and finance. There is also no doubt that we would like to give more to local authorities, but let us not pretend that the block grant is not being cut. Obviously, that has the impact that day-to-day spending is decreasing across the board.

I said that the Scottish Government’s revenue grant has been cut by 1.5 per cent, so why has the Scottish Government cut revenue funding to local government by 4.5 per cent in the same period?

I touched on the answer to that in my intervention, but Daniel Johnson refused to answer the question. Obviously, the SNP Government has made spending in the NHS a priority, and we have protected local authorities as much as possible with the financial settlement for councils. I do not see where the money would come from for any of the fantasy projects that Labour keeps on suggesting. If people make suggestions, they have to say how they will pay for them. I have not heard them do that.

Over the next two years, the block grant will fall by more than £500 million. As a councillor in Glasgow City Council, where I was a group leader for a while, and as a Glasgow MSP in the years thereafter, all that I heard from the then Labour-led administration was cries over and over again for the council tax to be unfrozen. Freezing the council tax for families across Scotland was a progressive policy, and it benefited households across the country. However, as every member knows, I am a reasonable man, and I can understand that that needed to change. The Scottish Government unfroze the council tax: councils have the option to increase it by up to 3 per cent, which would raise a total of £77 million. I am puzzled by the unwillingness of many Labour-led administrations to grab that opportunity with both hands. Labour asked for that, but refuses to use it.

Last year, for example, Labour in North Lanarkshire cut posts. They protested outside Parliament and claimed that the SNP was responsible for those staff losses. However, this year, they refuse to increase the council tax, even for the richest households, to an extent that would allow them to save any of those staff. Members may call me cynical, but there was a local authority election last year, so I have to wonder whether votes were more important to that administration than protecting services and workers.

This year, North Lanarkshire Council and many other Labour-led administrations are again cutting jobs, often backed by Tory votes. Those cuts include cuts in numbers of classroom assistants, which James Kelly mentioned. Things do not need to be that way. We should compare what those councils are doing with the excellent local budgets of SNP-run administrations.

In my city of Glasgow, the local authority has agreed on one of the most progressive budgets in a long time. I have been passionate about taking Cordia (Services) LLP back into the local authority for a long time, because that service will clearly work better if there is a close partnership between the social work department and the local authority. The public want investment in city infrastructure and a commitment to fixing roads, pavements and lighting. They want a commitment to improving everyday lives, which is happening in Glasgow.

As convener of the Education and Skills Committee, I have to congratulate councils such as South Lanarkshire Council that have found ways to increase the uniform grant to allow children to attend school with the very basics that are required in order for them to learn and to feel that they belong. Glasgow City Council plans to tackle child hunger by offering free school meals during the holiday period. Such policies will change the lives of children and young people across those council areas. As we strive for a fairer Scotland, we should all welcome that.

As a former councillor, I understand that there are frustrations about finance, but we must recognise that the Government is being ever more financially restricted by Westminster, and that we need to protect services including the NHS. We still have to find a way that benefits people in local authorities across Scotland. I suggest a pay rise for public sector workers and a new progressive tax system. The excellent budgets that some of our biggest councils are delivering are the way to do things—until we are an independent country, of course—and to ensure that we not only survive but thrive in these tough economic times.

I support the Government.

I say gently to James Dornan that I do not like the word “them” and would prefer to hear “the Opposition” or “the other Government”.

15:54  

A number of interesting points have been made in the debate.

I was interested in Alexander Stewart’s contribution, his stout defence of local government, and his view that the Tories supported a fair funding settlement for local government. I certainly agree with some of that. However, during the budget process, it seemed to me that although the Tories wanted to keep taxes as low as possible, they did not have any solutions on how they would fund local government, so I am not sure that Mr Stewart’s rhetoric backed up the reality of the Tory position. I know that there are members of other parties who disagreed with Labour’s approach to the budget, but at least we set out our views in an alternative budget, how much money we sought to raise and how that should be spent. The Tories did not go through that exercise.

A number of members mentioned pay. Although the cabinet secretary does not have direct responsibility for pay, he has made a number of announcements on policy intent, so there is—quite rightly—an expectation from council workers that they should at least receive the terms set out in his announcements. The reality is that, from the very start, the budget was short by £200 million and no additional money was included for pay. That puts councils in a position of having to choose between giving a fair pay settlement and cutting services and jobs. Indeed, that is why we are seeing the extent of job cuts that I touched on in my opening speech. I did not include the 100 jobs that Graham Simpson highlighted are being cut from South Lanarkshire Council, which takes the figure up to 1,300. That shows the scale of the problem.

Some members talked about how to improve the budget process. Daniel Johnson was right to talk about transparency, because how can we properly debate the allocations when the financial circular is not in place? I make it clear to the cabinet secretary that it would be useful if more information was available on the underspends that are recorded throughout the financial year. That has clearly become part of the budget process, given that, each year, he digs into the underspend in order to fund the deal with the Greens.

Andy Wightman made a strong contribution in which he made it clear that local government needs to be more of a priority next year in relation to not only funding, but local democracy. That is very important.

Fundamentally, we need a different approach. Year on year, local government is penalised. If we want to change next year’s debate, we need to look at progressive taxation and at redistributing more power and services to local government, otherwise local councils will continue to be penalised. We will oppose the motion at 5 o’clock tonight on the basis of those penalties.

15:58  

Daniel Johnson said that this is “an odd debate.” He was right: the Scottish Government purportedly seeks to improve education and outcomes, protect public services and support job creation and growth, but its local funding policies have exactly the opposite effect.

Mr Dornan said that this is a “progressive” settlement, but that is far from being the case, because local councils and our communities will be hardest hit by the SNP’s budget choices.

Will the member take an intervention?

I have just started—let me make some progress.

Many members have talked about job losses in their local council areas. Closer to home for me, Inverclyde Council has made viable proposals to cut 60 council jobs. That is a lot of jobs, and cutting them will be a huge loss to that part of the world—and councils across the country are doing the same thing. Inverclyde Council is also looking to close community centres and a whole other bunch of services.

I spent most of Monday dealing with a case in Inverclyde involving a constituent who has very limited access to a number of services that were previously available to help those suffering from the blight of addiction. A number of services that tackle some of Scotland’s most deep-rooted problems have been cut in recent years. The cabinet secretary can stand up here in the chamber and talk about real-terms this and cash-terms that, but when we go back to our constituencies—

Will the member stand here and take an intervention?

May I finish? We are the ones who have to go back to our constituencies and deal with the fall-out from local authority funding. The cabinet secretary says that local councils are making choices. They are doing that, but I assure members that they are making choices that they do not want to make.

There is the local and then there is the national. If Jamie Greene was finance secretary and had to approve an order today, by what sum would he increase the allocation and from where would he find the resources to do so?

It is unfortunate that I have not been the finance secretary for the past 10 years, because I would have grown the Scottish economy at the same rate as the rest of the UK economy is growing, which this cabinet secretary has simply failed to do. I hope that that answers his question.

The cabinet secretary made an important point when he said that councils are making difficult choices and cutting vital local services that affect people in our communities.

Members talked about transparency in the process. Conservative members will vote for the motion today for the technical reason that local councils must get funding, but it is disappointing that the Parliament is not privy to the updated financial circular that accompanies the order. We are being asked to vote on key budget information without seeing it, yet SNP members are putting out press releases that contain specific numbers for their local councils’ settlements. I would hate to think that they know what their councils are getting before SPICe and other MSPs know.

We do not need to know the exact figure for each local authority; we know that allocated funding will be a challenge for many authorities. To the unsuspecting eye, the £170 million additional settlement might seem promising at first glance, but the reality is that the settlement nowhere near covers the £545 million that COSLA says that local government needs if it is to maintain services at current levels, let alone provide additional services.

On the public sector pay rise, members on the Conservative benches have been positive about the need to increase income in the public sector, but a question remains: who will pay for the increases? COSLA says that a 1 per cent pay rise will cost about £70 million and a 3 per cent increase will cost about £140 million.

The SNP has left local authorities to foot the bill for its promised public sector pay rises. The idea is that council tax increases are the great panacea for local government. There are two points to be made in that regard. First, it is being suggested that council tax payers, not central Government, should foot the bill for stagnating investment in local authorities. Secondly, an increase in council tax, which we know will be the approach of pretty much every council in Scotland, will not even scratch the surface of the shortfall that most councils will face over the next few years, and that fact is being ignored.

This Government’s poor economic strategies have left hardworking Scots facing increased taxes while their local services are being cut. The funding will not lead to more reliable, well-funded public services from local councils. Council tax payers the length and breadth of Scottish will pay more and get less. I ask the cabinet secretary to reflect on that.

16:03  

The Local Government Finance (Scotland) Order 2018 that is before us today seeks parliamentary approval for the guaranteed payment of £9.5 billion in revenue support to Scotland’s 32 local authorities, to enable them to provide the people of Scotland with the full range of services that they need and fully deserve.

Scotland’s local authorities will continue to play a pivotal role in the Scottish Government’s transformative programme of public service reform as we continue to build on the priorities in the 2017 programme for government and focus on delivery of our joint priorities.

Before I get into the detail of the order and respond to some of the comments that have been made in the debate, I want to thank everyone who was involved in minimising the disruption and inconvenience that was caused by the extreme weather that we experienced last week. Many of those people are employed by our local authorities the length and breadth of Scotland.

As you well know, Presiding Officer, the Cabinet Secretary for Finance and the Constitution acted immediately when he was asked by the Scottish Borders Council to trigger the Bellwin scheme, which can provide emergency financial assistance. By triggering the scheme, the cabinet secretary has allowed any council to submit a request for additional funding under certain circumstances. I can confirm that we have also been contacted by Dumfries and Galloway, Perth and Kinross, Aberdeenshire and Angus councils.

I turn to the matters at hand. We have heard some interesting comments from members today. I will start with some of the comments that were made by Mr Stewart in his opening remarks. He failed to tell the chamber where the Conservatives would find additional moneys to give to local government. As Mr Kelly pointed out, Mr Stewart’s party wanted to rip £500 million from the Scottish budget. I would be very interested to hear any comments from him about from where the Conservatives would find the money. No, I thought not.

Mr Stewart scaremongered a lot about other things, too. He said that councils might run out of money in the future. For the chamber’s knowledge, as of 31 March 2017, local authorities’ usable reserves amounted to £1.9 billion, which represents 18 per cent of the total funding that is provided to councils by the Scottish Government. I will take an intervention from the economic wizard, Jamie Greene.

It is nice to receive a compliment from the minister for a change. Does he accept that local government debt has reached nearly £17 billion? His idea that it is sitting in huge swathes of cash is simply unrealistic and bonkers.

Mr Greene obviously does not know the difference between a compliment and sarcasm.

Local government reserves amounted to £1.9 billion, which is 18 per cent of the money that goes from Government to councils. That is not an insubstantial sum. It is not up to central Government to tell local government how it should spend resource in terms of capital spend. However, a huge amount of the money that is being paid out is through public-private partnership charges; that scheme would never have been allowed, and has been stopped, by this Government. Others in the chamber should reflect on that.

Will the member take an intervention?

I will take Mr Rennie’s intervention in a little while, because I have got some things to say about him, too.

I turn to pay. Inflationary pressures on councils include pressures on pay. Pay makes up an average of 60 per cent of a council’s revenue budget. It is therefore wrong to claim—as members have done today—that councils need a real-terms increase in overall funding, plus additional money to allow pay to keep pace with inflation. We are providing local authorities with a funding increase of £174.9 million in the 2018-19 budget. That includes £24 million as our contribution to increase teachers’ pay for 2017-18. Taken together with the £77 million that can be raised through the council tax, councils will have access to an additional £252 million in revenue funding. That is a 2.6 per cent increase in cash terms and a real-terms increase of 1.1 per cent. COSLA estimates that the additional costs that councils will face as a result of the 2018-19 pay policy are around £220 million, so councils have the money to increase pay. Mr Kelly was right, for once, in his summing up: the Cabinet Secretary for Finance and the Constitution does not have locus on local government pay. That is entirely a matter for local authorities.

I want to make one point in response to Mr Rennie. This order always gives me the opportunity to pay tribute to the late and great Brian Adam—the man who suggested the funding floor that this Government implemented. That funding floor, which did not exist under the previous Labour-Liberal Democrat Administrations, provided a fairer settlement for the likes of Aberdeen City Council and the City of Edinburgh Council.

I will finish on this point—

You must finish.

Aberdeen City Council has £3.9 million more in 2018-19 than it had in 2017-18, which includes an additional £8.7 million because of that floor. I pay tribute to Brian Adam for achieving something that was never achieved under previous Administrations.

I urge members to support the order.