Meeting of the Parliament

Meeting date: Thursday, March 7, 2019

Official Report 1081KB pdf

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Local Government Finance (Scotland) Order 2019 [Draft]

The next item of business is a debate on motion S5M-16170, in the name of Kate Forbes, on the Local Government Finance (Scotland) Order 2019.

14:23  

The purpose of today’s debate on the Local Government Finance (Scotland) Order 2019 is to seek Parliament’s approval of the guaranteed allocations of revenue funding to individual local authorities for the next budget year. It is also to seek agreement to the allocation of additional funding for 2018-19 that has been identified since the 2018 order was approved at this time last year. Although elements of my speech and the debate will be quite technical, this is about ensuring that local authorities can deliver real services for real people the length and breadth of the country.

The 2019-20 budget delivers a fair settlement for local government under the most challenging circumstances. The funding package in 2019-20 provides local government with a real-terms increase in revenue and capital funding to invest in our public services and to deliver our key priority of achieving sustainable economic growth in partnership with local authorities.

In 2019-20, the Scottish Government will provide councils with a total funding package that is worth £11.2 billion. That includes revenue funding of £10.1 billion and support for capital expenditure of £1.1 billion. Today’s order seeks Parliament’s approval for the distribution and payment of £9.5 billion out of the revenue total of £10.1 billion. The remainder will be paid out as specific grant funding or other funding and will be distributed later, as agreed with the Convention of Scottish Local Authorities.

Next year’s overall funding package includes an additional £90 million to protect spending on day-to-day services, which was announced on 31 January during the Budget (Scotland) (No 3) Bill stage 1 debate; an additional £40 million of support for social care, for the implementation of the Carers (Scotland) Act 2016 and to extend free personal care for under-65s; an additional £120 million from health to local government, to support health and social care; an additional £210 million of revenue and £25 million of capital, to support the expansion of early learning and childcare to 1,140 hours by 2020; an additional £88 million to maintain the pupil teacher ratio and secure a place for every probationer who requires one; and the flexibility to allow local authorities to increase council tax by up to 3 per cent in real terms, which is worth an estimated £124 million.

The settlement and the other sources of income that are available to councils through increases in council tax mean that the overall potential increase in spending power to support local authority services amounts to £621.4 million.

An additional £65 million of revenue funding will be distributed once the necessary information becomes available, and that will be included for approval in the 2020 order.

The minister has listed the moneys that are available. Why, then, is every council cutting millions of pounds from its budget? Why are some councils making hundreds of people redundant?

Of course, at stages 1 and 3, the member voted against the Budget (Scotland) (No 3) Bill, which is ensuring that additional resources are going to local authorities. That is real money going to real people for real services the length and breadth of the country. The member need not believe me; he can believe the Scottish Parliament information centre’s independent analysis, which makes it clear that the overall funding going to local authorities is going up. He can also look at the comments made by the president of COSLA after stage 1, when she welcomed the empowerment of local authorities as part of the budget.

We work in partnership with COSLA and local authorities, recognising that they have commitments and that they have identified challenges, and we have ensured that, in this funding package, the finances are available to deliver on the many priorities that I have outlined. Those include extending free personal care to under-65s, expanding early learning and childcare and ensuring that local authorities have the basic capital that they need to invest in infrastructure. As I said, there is undistributed revenue funding. It is important that, when it comes to distributing it through the teachers induction scheme, discretionary housing payments and mental health school counselling services, we do so in conjunction with COSLA.

In addition to the revenue funding that is covered by the Local Government Finance (Scotland) Order 2019, specific revenue funding amounting to just over £507 million—including, as members will be aware, £120 million of pupil equity funding, £86.5 million of criminal justice social work funding and funding for the early learning and childcare expansion, for the northern isles ferries and for Gaelic—is paid directly by the relevant policy areas under separate legislation. The 2019 order also seeks approval for £54.1 million-worth of changes to funding allocations for last year, which have been made to fund a number of agreed spending commitments.

Obviously, the minister understands—we all do—that one council has to be at the bottom of the league table, but Aberdeen City Council has been in that position for a number of years. When does she expect Aberdeen City Council to receive a fairer funding settlement that will move it off the bottom of the table?

On the contrary, all local authorities receive their needs-based formula share of the total funding that is available from the Scottish Government, and they keep every penny of non-domestic rates to ensure that there is adequate funding. Although every local authority probably has a unique case to make on why it should get additional funding, it is up to COSLA to consider the distribution methodology. If all local authorities could agree to revisit that methodology, that would be a totally different question.

The minister is technically correct in saying that councils keep every single penny of additional business rates income, but does she accept that the Government claws back every single penny of additional business rates income from the general revenue grant?

It is technically correct to say that Aberdeen City Council and every other council keeps every penny of non-domestic rates. That is reflected in the funding settlement that they receive and the money that they have with which to deliver their core services. Every local authority has the ability to keep every penny of council tax and non-domestic rates, and the general revenue grant reflects a commitment to their keeping those rates.

On capital funding, although it is not covered by the order, the settlement for local government includes a capital budget of £1 billion, which is an increase of £207 million, or 24 per cent, on last year’s budget. That represents a significant boost to support local authorities’ investment in their schools, roads and other infrastructure.

I have already touched briefly on business rates. The distributable amount of non-domestic rates income has been set at £2.8 billion in 2019-20. I have said this already, but I confirm again that all local authorities will retain every single penny of non-domestic rates income that is collected in their area, and the Scottish Government will continue to guarantee each local authority the combined general revenue grant plus non-domestic rates income.

I realise that the debate can be quite technical, but what we are doing will ensure that local authorities have the funding to deliver the services that need to be delivered to the people of this country, who rely on them day in, day out.

I move,

That the Parliament agrees that the Local Government Finance (Scotland) Order 2019 [draft] be approved.

14:31  

The Local Government Finance (Scotland) Order 2019 comes at the tail end of the budget process. Given that we have spent weeks debating the Scottish Government's tax and spending choices, it might seem at this point that there is little more to add. Nevertheless, this is still an important part of the parliamentary process.

The order before us allocates funding to each of Scotland’s 32 local authorities. We do not intend to oppose it, as that would simply deprive local government of much-needed resources for the coming year, but we have concerns about the overall allocation of cash to local councils.

I will start by being generous to the Scottish Government. As the chamber knows, I am a very fair-minded person, and, as such, I accept—with one important caveat that I will come to—the minister’s basic proposition that overall support from the Scottish Government to local councils has increased compared with last year. According to SPICe, it is up by 1.1 per cent in real terms, which amounts to some £110 million for revenue, and, once the capital budget is included, the increase is 2.8 per cent in real terms, or some £298.9 million.

However, that is not the fulI story, as the Scottish Government well knows. Some of that additional money is ring fenced for specific purposes and cannot be spent flexibly by local councils. Although the total budget has increased, the core budget, which councils have discretion over how to spend, is down on last year’s budget by 2.5 per cent in real terms, or £230 million. Those are the figures from SPICe, and they are indisputable.

Given that the Conservatives obviously do not agree with the order, I am puzzled by Mr Fraser’s statement that they are not going to vote against it. After all, if they voted against it and it did not pass, the Government would have to introduce a new one.

I think that it is reasonable for us to abstain on this. The Liberal Democrats might want to vote it down, but if the whole Parliament were to do so, there would be a real danger that councils, which in any case have set their budgets for the coming year, would be left in a black hole. I am not sure, therefore, that voting the order down is a particularly wise tactic—given that it is being put forward by the Liberal Democrats, it is not going to matter anyway.

Having set out in a very fair-minded fashion the overall picture, I am sure that the minister, who is equally fair minded, will, in her winding-up speech, accept the basic facts as I have set them out, including the fact that the core grant is down. In case there is any doubt about that, I point out that we are seeing it right across the country. If we open any local newspaper in any part of the country, we will see councils having to make cuts to the number of teachers, the length of the school week and school-crossing patrollers as well as closures of public conveniences, libraries and leisure centres. Those choices have not been made lightly by councils; they have been forced on councils by the Scottish Government.

At the same time, councils are having to choose whether to increase taxes and charges. Let us not forget that the Scottish Government was elected on a manifesto commitment that council tax increases would not be above 3 per cent, yet we now know that at least 11 councils of all political persuasions are going to increase their council tax by the maximum permitted level of 4.79 per cent.

Will the member explain why Tory councillors across the country have supported the maximum council tax rises?

I do not know whether the minister has checked, but the finance secretary’s council—Scottish National Party-run Renfrewshire Council—is to increase council tax by the maximum of 4.79 per cent. I will not criticise any council that has, when given an unpalatable choice between increasing taxes and cutting vital services, made a difficult choice to protect the services that local people rely on.

Councils are looking at what other revenue they might raise—for example, from a tourist tax, which the SNP said it would never introduce, or from the new car park tax, which would hit the lowest earners hardest as it is a regressive form of taxation. Councils are concerned that, if they decide not to introduce the new charges, the Scottish Government will penalise them for that in future years. It would be good to hear confirmation in the minister’s winding-up speech that the Scottish Government will not seek to claw back money from councils that choose not to impose the tourist tax or the car park charge.

That is all against a background of the Scottish Government’s block grant from Westminster going up in real terms compared with last year, so there was no need to make such cuts to local government funding and no need for the hard choices to be forced on local authorities.

We would have taken a different approach. It was interesting that the finance secretary said at the weekend that an independent Scotland would eliminate its deficit in “a few years” by growing the economy more quickly. That gives rise to the question why the Scottish Government is not growing the economy more quickly now, given all the powers that are at its disposal. If the Scottish Government thinks that it can eliminate a deficit of £13 billion in a few years by growing the economy, it can hardly say that it is unreasonable for us to argue that, by growing the economy just a bit faster than it is currently growing, we could generate additional tax revenues to provide better funding for local authorities.

We should never forget that, under the fiscal framework, it is our economic performance relative to the rest of the United Kingdom that matters. The Scottish Fiscal Commission’s projections show that, for each of the next four years, economic growth in Scotland and income tax revenues as a consequence are expected to lag behind the UK average. That means that we will have less money to spend, which is why the focus on growing the economy is vital.

As I said at the start, we will not oppose the order, because we do not want to penalise local government. However, that does not mean that we support the funding settlement. It will have a negative impact on councils across Scotland. We are already seeing increased council tax, increased charges and poorer services, and the responsibility for that rests firmly at the door of the SNP Government.

14:38  

The minister tried to put a good gloss on the figures that are being presented in the local government settlement, but the reality is that, despite the money that will be allocated as a result of the order, councils face increased responsibilities for delivery on childcare and through health and social care partnerships. That means that core funding for day-to-day responsibilities that councils have had to deliver year on year will reduce by £230 million in real terms.

The member seems to criticise the increase in childcare provision. Will he confirm that he opposes the 1,140 hours of childcare?

What Mr Mason says is inaccurate. I merely described the increased responsibilities for childcare delivery that councils will have; I was criticising the £230 million decrease in core funding.

The reality is that the funding that the Government has allocated means that councils are having to make cuts to their budgets. We can see the evidence of that across the country. That is undermining some of the Government’s main policy commitments. The Government is committed to creating jobs and growing the economy, which Scottish Labour agrees with, but analysis from Unison shows that since 2011, 30,000 jobs have been lost. That is 30,000 fewer people working in communities, local businesses and shops and making a contribution. That is detrimental to the economy.

The Government and the First Minister have made great play of education being the number 1 priority. However, in Dundee, the education budget has been cut by 3 per cent, which will reduce teacher numbers by 26 in that city council alone. In Moray, library closures are proposed—on world book day, of all days. That undermines the educational effort that the Government has been so keen to promote and that Scottish Labour supports.

The Government is also, rightly, keen to support vulnerable people in Scotland. However, in Clackmannanshire, support to citizens advice bureaux and food banks will end, undermining help for vulnerable people. Health and wellbeing is another big policy area for the Government. However, in Moray, we see that the sport development programme will be closed down. That undermines efforts to promote health and wellbeing and tackle issues such as obesity. In several key policy areas, the local government settlement will undermine the Government’s aim to make progress and achieve its targets.

As Murdo Fraser pointed out, we are now reaching the end of the process and it is useful to consider how we can move forward. Throughout the budget process, Labour has consistently argued that we should be more progressive on taxation. This is the first year of the new budget process, which tries to take a longer-term view of the budget and it is fair to say that it is still settling in. In the year ahead, we need to avoid the approach where all the budget effort is concertina-ed between December and February.

On that point, and in relation to parties making budget proposals, costing them and being clear about the tax proposition, there are many things in our budget and the Labour Party might welcome some of them, so how does Labour suggest that we improve the budget process when it comes to next year’s party negotiations?

I am glad that the minister made that intervention, because I am just coming to that point. The reality of the budget negotiation process this year was that the Government focused its efforts on the Greens because it had concluded that that was the party with which it was best placed to do a deal.

I met the cabinet secretary and outlined Labour’s budget priorities and the areas where I thought that tax should be more progressive in order to fund them. However, the cabinet secretary afforded me only 10 minutes. That does not show proper respect for the process.

We must all acknowledge that, year on year, local government funding has been reduced, which has made it difficult for local communities. If we want to adopt a different approach that will help local government, as well as helping the Scottish Government to achieve its policy objectives, the negotiations and discussions need to start earlier. I am prepared to be part of that. The Government must respect all the Opposition parties in the Parliament and not focus on just one.

Their proposals must have substance.

I take the point, but the Government needs to respect the other parties in those discussions.

Please conclude, Mr Kelly.

A 10-minute discussion is simply disrespectful; it is not taking the process seriously. Let us have a different approach from everyone next year.

14:44  

First, I thank James Kelly for his comments regarding the budget process and negotiations. As he will be well aware, I outlined my thoughts about that in the stage 3 debate and I hope that we can work together, if not to ensure that all parties support the budget next year, then to give a far greater prospect of the different priorities that different parties attach to the budget being secured.

As Murdo Fraser said, this is an important debate. Although it comes at the end of the process, we are asked to approve an order that allocates almost £9.5 billion to local government. As the minister said, that money will be used to deliver a wide range of vital public services, from education to social care, leisure, recreation, transport and housing.

As members know, following last year’s budget, the Greens made it clear that no negotiations could take place this year unless a serious, credible and substantive process was begun to increase the financial autonomy of local authorities, reform local taxation, shift the balance of funding from the centre to the local and put in place for local government the same sort of fiscal framework that exists between the UK and Scotland in relation to devolved budgets.

That is why, on 21 February last year, we wrote to the First Minister to outline why we need local tax reform. It is why, last March, we published a paper outlining what a fiscal framework for local government might look like. It is why I will introduce a member’s bill to incorporate the European Charter of Local Self-Government into Scots law, and it is also why we will support the motion, as we agreed a deal with the Scottish Government to do so. In any event, to vote against the motion is to deny revenue support to local government.

Following the Greens’ engagement with the budget process, the settlement mitigates some of the planned cuts to the general revenue grant and distributable NDR. It does not eliminate cuts, but that is not for want of trying. This year’s negotiations were genuinely difficult, and those parties with alternative ideas about how things could realistically have turned out differently need to reflect on how much effort was made and what they might have achieved that we could not.

I stress that the settlement is not a funding allocation that we would like to vote for. It is fundamentally wrong that so much of the revenue and capital budgets of local government is determined by this Parliament. In 2014, COSLA’s commission on strengthening local democracy published its final report, in which it argued that

“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 a familiar argument—I am sure that the minister will recognise it from the 2014 independence debate, when much the same argument was made by those who supported Scottish independence. However, for more than 50 years, local democracy in Scotland has been eroded to the point where Scotland is one of the least democratic countries in Europe, with the weakest structure of local governance and the least fiscal freedom. Across most European countries, at least 50 per cent of the budgets of municipalities and communes is raised locally. That delivers a sense of accountability that is entirely missing in Scotland and means that the local government politicians who decide about raising and spending money are elected by people who meet them every day, on the street, in the shops and in the school playground.

It is a particular affront to local democracy that the limited and regressive tax power that it has—the council tax—remains the most regressive tax in the UK, is based on a tax base that was last assessed 25 years ago, and has in place rate capping that in my view is unlawful and would not be allowed in most other European countries.

I do not feel comfortable sitting in this Parliament and voting on how much money local government should receive. However, we are where we are, we reached a deal, and we will support the order at decision time.

14:49  

This year was supposed to mark significant movement on the reform of local government finance. It was supposed to empower local councils and mark the end of harsh budgets. It was also supposed to mark the end of the council tax, but the council tax has not been scrapped—it has been increased. That is Green Party folly number 1 in the budget process.

The budgets for councils were set to be cut by £230 million as a result of this budget. The Greens said that that could be fixed with £90 million. That is Green Party folly number 2.

Will Willie Rennie take an intervention?

Not just now.

Social care budgets are under threat to the tune of £50 million. Apparently, that is flexibility, but it could be a cut to social care. That is Green Party folly number 3.

Will the member take an intervention now?

I will take one in a second.

What about the supposed new tax powers that were dressed up as reform? That is the grandest folly of them all. Handing councils a bunch of taxes that they do not want, that will not work and that will not raise the money that they need is certainly not reform. It is another example of this Government treating councils with disrespect. The Greens have sold out local government, because they are too afraid to stand up to their allies in the SNP.

Mr Rennie mentioned the council tax. He is well aware that it is defined in law and that primary legislation would be required to get rid of it, so there was never any prospect that this budget would scrap the council tax. The budget deal reached an agreement and I hope that Willie Rennie and his party will join us in sitting down to agree a future that can lead to published legislation and a commitment to legislate in two and a half years’ time.

Mr Wightman predicted what I was about to raise.

The Greens sold out for a ropey promise on local government finance reform, as there is no commitment from the SNP. It is a promise to hold yet more talks and to do some more work, and a promise that new legislation might be possible—possibly after the next election—if there is a possible agreement. If that is a cast-iron agreement, it is very rusty. The Greens should be ashamed for selling out and accepting that deal.

Will Willie Rennie take an intervention?

Not just now.

The SNP and the Greens tell us that they have got more money for local government, but, if that is the case, why is SNP-run Dundee City Council increasing the cost of breakfast clubs from £1.25 a day to £10 a week? If there is more money for councils, why is Conservative-run Moray Council charging families £370 a year for school transport? If there is more money for councils, why is SNP-run Fife Council slashing education spending by millions of pounds? If the local government settlement is so good, why is SNP-run Falkirk Council increasing charges for childcare and social care meals?

What have the Lib Dems delivered through budgets in the two and a half years of this parliamentary session? The Greens have delivered a lot more than the Lib Dems have.

The Greens have sold out local government, while the Liberal Democrats have stood up for a variety of things, including ensuring that mental health services are the top priority, despite the Government’s opposition to that proposition.

The Greens have sold out for that ropey promise on local government finance reform. I say to the minister that of course we will work together for change. We want to see the end of the council tax. We want local government finance reform, so that councils have the freedom to raise the majority of the money that they spend, just as the Parliament in Holyrood does.

However, we refuse to be duped again. We wasted our time in the previous talking shop, when the SNP ignored 16 of the 19 recommendations. If, and only if, the SNP sets out precisely what it is prepared to support, and if that support is for substantial change, will we sit down and take part.

We have talked endlessly over the past decade and seen nothing for it. The SNP has shown no signs of changing, and it is about time that it recognised that.

I turn to the subject of Aberdeen and Edinburgh councils, which has been my favourite subject during the past few financial settlements for councils. We were promised that Aberdeen and Edinburgh councils would receive at least 85 per cent of the national average funding for councils. For years, the SNP flouted that promise and commitment, and provided them with less than 85 per cent of the average. What did the SNP do? It did not give more money to Aberdeen and Edinburgh; instead, it fiddled with the figures and changed the formula. It took out the highest spending councils so that the average is lower. That is a con for Aberdeen and Edinburgh, and the SNP and the Greens should be ashamed of that.

14:54  

Today, Parliament will, I trust, approve the guaranteed 2019-20 revenue funding allocations for local authorities, thereby ensuring that we will deliver the settlement that has been reached through the work that has been undertaken at all three stages of the Scottish budget process.

The Scottish Government is being pushed towards ever more difficult choices when it comes to public spending and finance, thanks to successive Labour, coalition and Tory UK Governments, whose cuts have ensured that we now have a budget that is £2 billion less in real terms than it was in 2010. In that challenging context, the Scottish Government will, in 2019-20, provide councils with funding of £11.2 billion, which is a £287.5 million, or 2.9 per cent, increase on this year.

The settlement will also add £54.1 million to this year’s funding, which will allow councils to continue to deliver, to the most vulnerable people in our communities, front-line services in a range of areas, including health and social care, transport, environmental health, leisure, recreation, housing and education.

The funding includes an additional £88 million to maintain pupil to teacher ratios, and £25 million in capital to fulfil our commitment to expanding early learning and childcare to 1,140 hours by 2020. It will finance the new £50 million town centre fund to support economic improvement in our towns and drive inclusive growth.

In the current year, council tax at band D is, on average, £453 a year lower than it is in England and, from April, it will be £456 a year lower than it is south of the border.

Those are just some examples of how the Scottish Government is not determined merely to maintain the status quo, but is working to build a fairer and better Scotland. Of course, some members would rather exclude some funding from their calculations, but funding of important day-to-day services such as nursery provision should never be considered in any other way.

The finance order means that the resource and capital that will be available to North Ayrshire Council will increase by £26.66 million—from £279.842 million to £306.502 million, which is a 9.5 per cent uplift. In Cunninghame North, my constituents will also benefit from increased health spending, as NHS Ayrshire and Arran’s budget is to increase by 3.6 per cent to £720 million.

The 2019 budget also seeks to empower local authorities. For example, it will give them the power to apply a transient visitor levy. COSLA made a strong case for councils to have that power, and it was a key issue for the Greens. An amendment to the Transport (Scotland) Bill will also enable local authorities to exercise a workplace parking levy, and devolution of empty property rates relief to local authorities will deliver more fiscal freedom and enable decisions to be made closer to communities.

In recognition of the need for longer-term budget stability for local authorities, the Scottish Government has also committed to working with COSLA to move towards three-year budget settlements from 2020-21, which will furnish councils with the ability to pursue longer-term and more sustainable financial planning. When I asked the Cabinet Secretary for Communities and Local Government, Aileen Campbell, last week about Scottish Government action to protect local government from the near collapse that has been experienced in England and Wales, she pointed out that whereas councils in England and Wales have faced real-terms budget cuts of 28 per cent between 2011 and 2018, the Scottish Government has sought to treat local government fairly.

This week in Cardiff, which has a population of a third of a million people, the Labour Cardiff Council cut 55 jobs, to add to the 1,632 that have been lost in the past seven years. It will cut a further £93 million from its budget over the next three years, adding to the £218 million that has been cut over the past decade. That council will also put the council tax up by 4.9 per cent in April. We would say that Tory austerity is to blame, but even when the Welsh Labour Government is forced to reduce council budgets, I expect Labour MSPs to blame the SNP Government. It is grossly hypocritical for Labour and Tory MSPs to claim that SNP ministers are squeezing Scottish councils, when their parties are crippling local authorities in England and Wales.

“Strong and stable” has become a much-maligned phrase in recent years, but we have delivered stability. A local authority settlement that delivers certainty to our public services cannot be underestimated at a time when the UK Tory Government appears to be self-destructing. We are using our powers in a progressive way to protect and invest in our public services, and we are boosting funding for North Ayrshire Council and councils across Scotland. That means greater resources for our schools and hospitals, and for all the vital services that protect the most vulnerable people in our communities. By voting for the finance order, we will vote to protect Scotland’s local government services and their recipients.

14:58  

I declare an interest as a councillor on Aberdeen City Council.

In a year in which the Scottish Government has more money, in real terms, to spend on public services, the situation that local authorities face is difficult, to say the least. Across the board, councils are facing funding gaps. They are not just numbers on a page—we are talking about people’s jobs and about the services on which we rely.

It must be mentioned that the failure to produce a revised finance circular before our debate seriously hampers the ability of the Parliament and MSPs of all parties to scrutinise Scottish Government decisions properly and effectively. That is not acceptable, so I urge ministers to review how that process operates before the Government makes its budget deal with the Greens next year.

However, we must work with the figures that are available. According to the version of the finance circular that we have, every single council in Scotland faces a reduction in its revenue support grant—every single one, that is, except Renfrewshire Council. I forget which constituency the Cabinet Secretary for Finance, Economy and Fair Work represents, but I am sure that it has nothing to do with that.

In any case, the information that we have indicates a cut to the discretionary spending support that is being made available to councils from the Government—down from nearly £6.8 billion last year to just over £6.6 billion this year. I reiterate for members’ benefit that the Scottish Government has more money to spend than it had last year and that cuts to local authorities are therefore not just entirely avoidable, but have come about only through the political choice of the SNP Government.

Will the member take an intervention?

No.

It is rich indeed to say that councils are a priority, while leaving Aberdeen City Council in my region, for example, facing a cut of £41 million in one year alone, just to stand still. That had to be decided in just the past few days. It would have been better if we could have kept the £28 million in non-domestic rates—

It keeps every penny—

You will let us have £28 million, will you?

—every penny of domestic rates.

All comments should be made through the chair, please.

I ask the minister to ensure, in her summing up, that she guarantees that we get the £28 million back.

The result has been more than 200 jobs lost and cuts to community organisations including Sport Aberdeen, VisitAberdeenshire and Aberdeen Performing Arts. It was even proposed that £2,000 could be saved by reducing colour photocopying, which is an example of local authorities being taken back to the black-and-white era because this SNP Government will not fund them properly.

It was unfortunate, then, that when faced with such central budget cuts, the minister who is responsible for supporting local government was missing in action, even in his own area. His silence was deafening.

It is not sufficient to take an axe to central revenue funding and then invent some new and unpalatable tax ideas, such as the hated car park tax, so that councils can take the hit in cleaning up the mess that has been made by the Government.

The Conservatives will not oppose the order, but ministers should not mistake that for endorsement of their underfunding of local government. This local authority finance settlement is a story of cuts to public services—and only because this Government took the conscious decision to make them necessary. Put simply, Scotland deserves better. Instead of being treated as an afterthought, vital local services need a funding settlement that recognises their needs. I hope that, in time, ministers will reflect on that and take responsibility for the mess that they have created.

15:02  

This debate marks the formal conclusion of the annual budget process for local government funding, but as other members have said, it is the tough decisions that councils have had to make up and down the land that are the real-life outcome of that process.

Local councillors are rightly accountable to their electorates for the decisions that they make, but this year, once again, those decisions are largely about what cuts to make to which services, rather than about how to grow or enhance the services that they provide. That is very limited accountability. Responsibility for the larger decisions on local government finance lies here, which is why the debate can never be a mere formality. If the funding that ministers choose to provide means cuts to services or jobs, ministers as well as councillors have to be accountable for those cuts.

This year’s settlement also highlights wider issues around the accountability of local councils to local people. Year on year, ministers have reduced central Government’s contribution to local government funding, but they have failed to loosen their grip on local government’s ability to make its own decisions.

In my home city of Aberdeen, local council tax payers, local business rates payers and citizens who pay fees and charges for council services now contribute a whopping 87 per cent of the city council’s revenue budget. There is a case to be made for councils being self-sufficient. The problem is that, despite being funded almost entirely from local resources, Aberdeen City Council still cannot make its own funding and spending decisions. When an additional £28 million comes in from non-domestic rates, none of the benefit stays in the city, as the minister has acknowledged. Every penny is clawed back through a reduction in the general revenue grant.

That is the context in which the general revenue grant for Aberdeen this coming year has been cut by a third in a single year and is now on a par with the smallest mainland and island councils, rather than with Scotland’s other cities.

Despite the challenges, I am delighted that, this week, Aberdeen City Council was able to protect the community projects that the fairer Aberdeen fund supports, and to reject the suggestion to make savings at the expense of staff terms and conditions. In the face of a multimillion-pound funding gap, that was the right choice to make, but tough choices still had to be made, and some options remain effectively closed by Scottish ministers.

For example, Aberdeen City Council owns the largest fleet of hydrogen-powered buses in Europe, but the buses are operated by private companies. The council would like to have the option of creating its own bus company, but—despite amendments to the Transport (Scotland) Bill to that effect being lodged—ministers have so far refused to contemplate a public bus company that would compete with private operators.

VisitAberdeenshire has been mentioned. It is an effective, innovative and well-respected agency that promotes the city as well as the shire. I am sorry that in order to avoid cuts elsewhere its funding from the city council will be cut. That funding gap could have been filled by a transient visitor levy, were one in place by now—

Would the member take an intervention?

In a moment.

However, ministers spent too long resisting a tourism tax, even though it was strongly supported by many members of the minister’s own party in local government.

We are already over time, so an intervention will be removed from your own time, minister.

It is just a quick intervention.

Why, in that case, did Lewis Macdonald vote against the budget and the agreement with the Greens that would have enabled Aberdeen to get that levy?

Quickly, please.

That was because—as the minister has acknowledged—in real terms, the money that her Government provides to the council is clawed back in another way.

We all recognise the need for local government funding—both in relation to council tax and business rates—to be reformed. More than that, the whole relationship between central and local Government must be revisited, so that councils either get the funding that they need from the centre, or have the freedom to make their own decisions—preferably both. At the moment, a dynamic and progressive council like Aberdeen City Council has neither the funds nor the freedom that it needs. If we are to have truly accountable and effective local government in the future, that must change.

We are already over time. I give members due warning that I will probably have to cut the closing speeches.

15:07  

I am pleased to take part in the short debate this afternoon to confirm the cash settlement for local government this year. It will see an increase of £287.5 million in cash terms—a 2.9 per cent increase that brings the total revenue spend for local government to £11.2 billion, which is almost a third of the total Scottish budget. It also delivers an increase in capital spend of £207.6 million, which is a 23.7 per cent increase. In all, the budget will be £620 million higher.

That is being done against a backdrop of continuing austerity, which we must not forget is a political choice of the Westminster Tories that was introduced when they were in coalition with the Liberal Democrats. We know that it hits hardest those who can least afford it. We have been told that austerity is about to end, but we have not seen a single bit of evidence for that.

Much nonsense is spread about local government funding—that nonsense has been perpetuated by Mike Rumbles again today. I do not know how many times the minister has reiterated in the chamber that councils retain all the moneys that are raised through non-domestic rates and that that is taken into account in the local government settlement and distribution to individual local authorities. I have heard that the money should not be taken into account, but we also hear that it should not be taken into account only when income from that source is rising and not when it is falling. It is essential that the Scottish Government can use its powers to deliver equity across the country.

Of course, the Scottish Government and COSLA keep the distribution formula under constant review. I hope that the minister can confirm that the distribution formula indicators are updated every year to ensure that each local authority receives its fair share of the total available funding. I have not seen any recent indication from COSLA of a desire to change the formula: indeed, at a COSLA meeting a few years ago, Aberdeen City Council and Aberdeenshire Council could not even agree to support each other on that.

We have talked about the funding floor. It was fought for by my late colleague Brian Adam and implemented by the Scottish National Party Administration—not by the previous Liberal Democrat-Labour Administration.

Maureen Watt mentioned the 85 per cent funding floor. Does she acknowledge that this year the funding settlement for Aberdeen City Council is at 81 per cent of the national average?

I acknowledge that the percentage change for Aberdeen City Council is an increase of 5.7 per cent and for Aberdeenshire Council it is 4.34 per cent, when the Scottish average is 4.03 per cent. The people of Aberdeen can see that they have had a higher increase than the average.

Of course, it is up to local authorities themselves to decide how they spend the money. I do not know whether the Tories, Labour and the Liberal Democrats read what comes into their inboxes or read the Public Sector Executive online, which shows every day that councils south of the border are facing bankruptcy, which is not happening in Scotland.

I hope that the minister agrees that it ill behoves the Aberdeen City Council administration, which consists of Tories and councillors who have been excluded from the Labour Party, to moan about its settlement when it continues to mismanage its funds. For example, the council’s debt repayments are £42 million—an increase of £9 million this year alone.

Please come to a close.

Aberdeen City Council has been completely unable to keep projects within budget—for example, the Broad Street redesign and Lochside academy. I could go on and on. There is also an £8 million overspend on the Union Terrace gardens before the work has even started. That is what Aberdeen city residents face.

We move to closing speeches. Alex Rowley has no more than four minutes.

15:12  

I was first elected to Fife Regional Council back in 1990, and I became chair of the finance committee in 1994 and then leader of Fife Council. Over the years, I have seen local government becoming much more efficient and effective. Key to the way that local government works is that the finances and budgets are linked to policies and strategies, so that councils know what they are focusing their spend on.

I am not sure that the same could be said for the Scottish Government, which has a budget of more than £37 billion. There is room to start looking at how effectively and efficiently that budget is being spent and how it is contributing to the strategies and policies that the Scottish Government says are its priorities.

There are many examples to look at. We have strategies and legislation, but, as James Kelly said, the budget decisions undermine a lot of those strategies and that legislation. Legislation on child poverty targets and fuel poverty targets is coming forward. The Government says that closing the educational attainment gap is a key priority, yet, as Willie Rennie said, in Fife millions of pounds are being stripped out of secondary education budgets right now. Tell teachers, pupils and parents that there is a real-terms increase in the budget and they will not believe it.

I have two quick points to make. First, the local government outturn figures for 2017-18 show quite clearly that the figures for education spend were up. Secondly, on this year’s budget, there has been much talk of a real-terms increase to our budget, but we have passed that on to health, which means a cut to every other area. What does the Labour Party suggest that we should do in respect of the efficiency of the Scottish Government process? Where would we find the money to do all that the Labour Party wants to do?

I will give you up to four and a half minutes, Mr Rowley.

I will come back to that point. The budget has increased in real terms, but Derek Mackay acknowledged when he came to the Local Government and Communities Committee that the Scottish Government has brought forward £400 million of new spending commitments that local authorities have had to pick up. That is why local authorities’ core budget has been cut. Rather than politicians in the chamber arguing back and forward about whether it is a cut or an increase, the fact is that out there on people’s doorsteps, across Fife and the whole of Scotland, people are seeing the cuts to local government services. They are experiencing those cuts, so they do not need to hear politicians in here going back and forward with these arguments.

James Kelly said that we should try to learn from this and move forward to look at how the parties in the Parliament can come together. Let us look at how we can have meaningful debate and discussion and ask whether the Scottish Government expenditure of £37 billion is being spent in the most effective and efficient way. Is that expenditure tuned into the Government’s strategic goals and objectives when it comes to tackling poverty and increasing educational opportunity? From a local government perspective, I would have to say that the answer is no, it is not. The council cuts are impacting on the ability to deliver the very strategies that the Government has put forward.

Let us have some consensus at the end of this process. As Andy Wightman said, that consensus can be that we should look at the process of how the Parliament reaches its conclusions on the budget. Let us start to work together, because that is what the people of Scotland want. They want an end to the cuts to front-line services and they want investment in their communities. We can do that if we start to look at working together on the budget process. That is the challenge that the minister and the cabinet secretary need to address in moving forward.

15:16  

As my colleague Murdo Fraser indicated in his opening remarks, we will not be opposing today’s local government finance order. I make it absolutely clear, however, that that is to ensure that councils receive their funding and it certainly does not mean that we agree with the content—far from it.

As I have mentioned in the chamber many times before, the Scottish Government’s attitude towards local government has been one of disrespect and contempt. While funding to the Scottish Government from the UK has increased, the SNP has continued with its programme—

Will the member take an intervention?

Time is tight; I want to make progress.

Despite repeated cuts to their core budget, councils are still being asked to do more. A report in The Herald in January suggested that 58 per cent of funding for councils is now ring fenced. Although in many ways ring fencing protects services that we rely on, such as education, childcare and health and social care, it means that there are funding reductions in other areas—culture, roads, economic development and planning are all being hit. It is unbelievable that many such council functions are being eroded and removed as a result of the money that is available.

The local government benchmarking framework shows that between 2010-11 and 2017-18 there was a 22 per cent reduction in culture and leisure services, a 34 per cent reduction in planning budgets, a 15 per cent reduction in spending on roads and a 10 per cent reduction in environmental services. Those cuts are having a massive impact on communities across Scotland, although it is difficult to know the current full impact on non-ring-fenced services.

Taxpayers want a fair deal. The minister talks about having a fair settlement, but taxpayers did not get a fair settlement—they will pay more to get less. The SNP has simply passed the buck to local authorities to make up the funding shortfall by raising taxes and increasing fees and charges. New taxes such as the workplace parking levy and the tourism tax are being introduced. Clearly, the SNP has broken its 2016 election manifesto pledge by allowing councils to raise council tax beyond the 3 per cent cap. Many councils have suggested that the reduction in core funding has forced them to propose increases beyond the 3 per cent cap, directly at the behest of the Government. In some cases, council tax has increased by the new maximum amount: an eye-watering 4.79 per cent. When it comes to local government, the SNP is taking with one hand and asking councils to take with the other.

Councils have been forced to borrow more for their capital projects and the overall level of council debt across Scotland increased to £15.1 billion by the end of 2017-18, which was an increase of 4.3 per cent on the previous financial year. Such debt leads to increased borrowing costs and puts yet more pressure on the already difficult revenue budget situation.

This funding settlement is neither fair nor necessary. While funding to the Scottish Government has increased, core funding to councils has decreased. The present crisis around local government finances is entirely of the SNP’s making and it is forcing councils and councillors to take the blame for the Scottish Government’s cuts.

As I have said, the Scottish Conservatives will not oppose the order—not because it is a good one, but because we want to ensure that local government at least gets something from this deal. Education, tourism, culture, social care, leisure and planning have all been affected in my region. Perth and Kinross, Stirling, Fife and Clackmannanshire are all suffering from this Government’s cuts. They believe that they are being sold out and many constituents I meet across my region are telling me that too, so I cannot accept that the SNP Government believes that it is a fair settlement. It is not.

15:20  

This has been a good debate and I am delighted to say that it is the last debate in the budget process, so congratulations to us all for getting to this point.

There has been much talk about the overall quantum of funding that is going to local authorities. For the Opposition parties to make their point about cuts, they have to deliberately exclude ring-fenced funding, which presents a distorted picture of the resources that are available to local councils. That funding is real money to be spent on real day-to-day services—for example, in our schools and nurseries. Those are areas that have been identified by councillors and COSLA as areas of challenge and we have ensured that funding is available for them.

It is important to view the settlement package as a whole. SPICe has confirmed that it provides an increase in local government day-to-day spending for local services in cash terms and real terms.

If the situation is as rosy as Kate Forbes just painted it, why is it that in every local paper in the land, we hear about the sort of cuts that we have heard about this afternoon from many different members, in which councils have to make really tough choices about cutting what people would regard as vital services?

I am certainly not trying to present a totally rosy picture. I said in my opening statement that these are challenging financial circumstances for us all, including the Scottish Government. There is talk about the Scottish Government’s budget going up, but if we remove the health uplift, the Scottish Government’s block grant funding is going down by £340 million—1.3 per cent in real terms.

That means that we have to make difficult decisions when it comes to other areas, but we have ensured that we protect local government funding and we have ensured that local authorities have the spending that they need to deliver core services. We have treated local government fairly.

Is it not somewhat contradictory to, on the one hand, argue that if we ring fence Barnett consequentials, it means a cut to the Scottish budget, and on the other hand, not apply the same argument to the revenue grant for Scottish local authorities?

I missed the word that was used, but when it comes to areas of challenge, we recognise that health is a challenge, so we are delighted to pass on the health consequentials to the health service. However, that means that we have to ensure that we use the other finances that we have available well and wisely, and that we work in partnership with local authorities to deliver the services that the people of Scotland expect us to deliver.

There has also been talk about Aberdeen and Edinburgh and the 85 per cent funding floor. It is this Government that introduced the 85 per cent funding floor; all local authorities receive at least 85 per cent of the Scottish average revenue funding per head. We want to ensure that every local authority in every part of this country gets a fair deal, which is why all local authorities receive their needs-based formula share of the total funding available from the Scottish Government.

A few points have been made about council tax. It is important to note that the increases come after a 10-year freeze that was put in place in order to protect families, and that the rises this year are still lower on average than the council tax rises that have been seen in England.

In a challenging fiscal environment, we have tried to protect local authorities, we have tried to ensure that they get their fair share of funding, and we have tried to ensure that the services that people rely on are protected.

There has been much talk of action to empower local authorities. When it comes to this budget, the Government has agreed that we will consult on a number of different actions to empower local authorities—there will be perhaps the most significant empowerment of local authorities since devolution. Those actions include a locally determined transient visitor levy, an amendment to the Transport (Scotland) Bill and the devolution of non-domestic rates empty property relief. They will also include cross-party talks on replacing the current council tax.

I want to conclude with a point about process that was well made by James Kelly and Alex Rowley. My request to the other parties is this: if you want a better process next year, will you commit to bring forward sensible, costed proposals that we can all consider well and early in the process? That would certainly improve the process from the Government’s perspective.