Meeting of the Parliament (Hybrid)

Meeting date: Thursday, March 18, 2021

Official Report 1072KB pdf

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Local Government Finance (Scotland) Order 2021

The next item of business is a debate on motion S5M-24395, in the name of Ivan McKee, on the draft Local Government Finance (Scotland) Order 2021.

15:00  

The purpose of today’s debate on the draft Local Government Finance (Scotland) Order 2021 is to seek Parliament’s approval for the guaranteed allocations of revenue funding to individual local authorities for 2021-22. We also seek agreement to the allocation of additional funding for 2020-21 that has been identified since the 2020 order was approved around this time last year.

Although this is not included in today’s order, I take the opportunity to announce that an additional £40 million of general revenue funding will be allocated to local authorities in 2021-22. Councils will have complete autonomy to allocate the extra money based on local needs and priorities in their communities. Distribution will be discussed and agreed with the Convention of Scottish Local Authorities, and local authorities will be notified of their share as soon as possible.

Returning to the order, under the most challenging of circumstances, the 2021-22 budget delivers a fair settlement for local government. Including the additional £40 million of general uplift, the settlement now provides an additional £375.6 million for vital day-to-day services, which is an increase of 3.5 per cent, and a further £259 million of non-recurring Covid-19 consequentials, which local authorities will have complete autonomy to allocate based on the specific needs and priorities in their communities. That builds on the 2020-21 pre-Covid-19 local government finance settlement, which provided an increase in local government day-to-day spending of £589.4 million, or 5.8 per cent compared with the previous year.

In 2021-22, the Scottish Government will provide councils with a total core funding package worth almost £11.7 billion. That includes revenue funding of almost £11.1 billion and support for capital expenditure of more than £600 million. In addition, councils will receive a further £259 million of non-recurring Covid-19 support.

It is important to note that the total of the funding package is no longer up for debate, following the passing of the Budget (Scotland) (No 5) Bill last week. In today’s debate, we seek Parliament’s approval for the distribution of the approved total funding to individual local authorities. We seek approval for the distribution and payment of £10.4 billion out of the revenue total of £11.3 billion, with the balance mainly made up of specific grant funding, which is administered separately. The £10.4 billion is a combination of general grant revenue of almost £8.1 billion, the distributable amount of non-domestic rates income, which has been set at almost £2.1 billion, plus £259 million of non-recurring Covid-19 consequentials.

The settlement not only gives local authorities the resources and flexibility to respond to the challenges that the pandemic has created but, importantly, provides continued fiscal certainty that does not exist in England, through our policy of guaranteeing the combined general revenue grant plus non-domestic rates funding as set out in the order. That means that, unlike the position for councils in England, any loss of non-domestic rates income resulting from the impact of Brexit or Covid-19 will be compensated for by increased general revenue grant, which in effect underwrites that critical revenue stream.

As approved as part of the Scottish budget, the overall funding package for 2021-22 includes £134.8 million of general uplift for vital local services; £59 million of revenue to support the final tranche of increased funding for the expansion of funded early learning and childcare entitlement to 1,140 hours; and £90 million to compensate councils for choosing to freeze council tax levels.

It also includes, in addition to the £100 million that is available this year, a further £72.6 million, which will be transferred from the health portfolio to local authorities in-year for investment in health and social care and mental health services that are delegated to integration authorities. That brings the total that will be transferred from the health portfolio to support health and social care integration to £883.6 million in 2021-22.

The funding package for 2021-22 includes the on-going provision of £88 million to maintain the pupil teacher ratio nationally and to secure a place for all probationers who require one under the teacher induction scheme; continued provision of £156 million in support of teachers’ pay and £97 million in support of teachers’ pensions; an additional £7.7 million of support for inter-island ferries, which brings the total to £19.2 million; £5.3 million for Barclay implementation costs; and £10 million of additional capital funding for flood risk schemes and £12 million for the maintenance of local bridges.

The Scottish Government included £90 million in the local government finance settlement to compensate local authorities in the event that they chose to freeze their council tax at 2020-21 levels. All local authorities have now taken the decision to freeze council tax levels, thereby helping to provide stability and certainty at a time when so many households in our communities are under financial pressure.

As part of the process of securing support for the Budget (Scotland) (No 5) Bill, the Cabinet Secretary for Finance confirmed that the £90 million to fund the council tax freeze will be baselined for future years, which will protect vital local services and provide assurance for households that they will not be affected by higher increases in future years.

There remains a further £115 million of revenue funding that will be distributed once the necessary information becomes available, and it will be included for approval in the 2022 order. In addition to the revenue funding for which today’s order provides, there is £775.9 million-worth of specific revenue funding that is paid directly by the relevant policy areas under separate legislation.

The 2021 order also seeks approval for £1.3 billion of changes to funding allocations for 2020-21. The full list of changes can be found in the report on the 2021 order. Although all those sums have been announced previously, an unprecedented sum of additional funding is being made available to deal with these unprecedented times. That funding includes more than £1.2 billion to address Covid-19 pressures, including the additional £275 million that was announced on 16 February and the £200 million for the lost income scheme. Taken together with the additional £259 million that will be allocated next year and the additional fiscal flexibilities that were announced on 8 October, that brings the value of the overall Covid-19 support package for councils up to almost £2.1 billion.

In summary, next year, the Scottish Government will provide local government with a total of almost £11.7 billion of funding. The funding proposals reflect the key role that local government will play as we focus on how to rebuild and renew our communities. The Scottish Government will continue to work in partnership with local government to improve outcomes through first-class public services as we move towards a healthier, greener and fairer society.

I move,

That the Parliament agrees that the Local Government Finance (Scotland) Order 2021 [draft] be approved.

I call Bill Bowman to open the debate for the Conservatives. This is Mr Bowman’s final speech.

15:08  

This is my last speech here, and I would like to say a few words about my time in the Parliament.

I joined the Parliament following a sad event—the untimely passing of Alex Johnstone—and I leave it following the untimely passing of my wife, Helen, last October. It has been an honour and a privilege to serve here, but I will always have bittersweet memories because of those two events.

When I came to this chamber, I was surprised and disappointed to find that not enough attention was paid by Government to parts of my region such as Dundee, Scotland’s fourth-largest city, and Angus, the people of which sometimes feel as though they get only scraps from Holyrood’s table, so I have done my best to represent those people in this place. That was made possible only on the back of a strong Conservative vote.

It has been my privilege to raise constituents’ issues, which I hope has led to real change for some people. I am sure that all my colleagues will agree that casework runs the gamut from the everyday to vast multiagency efforts that take months to resolve, if they can be resolved at all.

There are a number of things that I am proud to have raised—limited only by my recollection and by the time available. They include the issues surrounding “Do not resuscitate” notices and end-of-life care for people during the pandemic; hospital parking, which is still not resolved in Dundee, despite many claims to the contrary; difficulties faced by the erosion of general practice across my region and the centralisation of local services; a child and adult mental health crisis that emerged long before Covid-19; various wrong-headed moves by Dundee City Council, including the so-called shower tax, if members can believe that, and cuts to municipal swimming lessons; the need for Angus Council to keep its recycling centres open, which I pressed the council on; advocacy for pensioners and the need for there to be an understanding of funeral costs for families who may not be able to rely on savings that some take for granted; and the need to make the Scottish Government treat the spiralling incidence of drug deaths as an emergency—I count my work on that as a positive, although it fills me with sorrow to do so.

In my five years in the Parliament, I served first on the Economy, Energy and Fair Work Committee, under the convenership of my colleague Gordon Lindhurst. I then moved to the Public Audit and Post-legislative Scrutiny Committee, convened by Jenny Marra, with stand-in parts for Jackie Baillie and Anas Sarwar when she was on maternity leave.

I also served as deputy convener of the Scottish Commission for Public Audit, a body that is probably not so well known to many. As the Parliament’s link to Audit Scotland, the commission gave me an interesting insight into how the body that carries out the work of the Auditor General for Scotland functions.

Finally, I was appointed convener of the Delegated Powers and Law Reform Committee. This is a body that is not a headline grabber, but it fulfils a vital function by examining all the powers in a bill that have been delegated to ministers, ensuring that, where strong powers are delegated, strong scrutiny by the Parliament is included. It does so not by telling others what to do, but by influencing by suggestion. It brought about important changes to the recent Covid legislation, and I encourage my successor, whoever that is, to continue the consensual approach that has been so successful up until now.

Since you are in the chair, Deputy Presiding Officer, I should mention that I was also on the committee chaired by you that considered the Solicitors in the Supreme Courts of Scotland (Amendment) Bill, a private bill, which I actually found very interesting—perhaps not everyone did; I see that John Mason is here.

Getting out and about in the North East region to visit organisations and meet constituents was a very rewarding aspect of the job. That is particularly the case when we can help them with the issues that they raise. Those issues tend to involve health boards or councils and, unfortunately, it can take a member of the Parliament’s involvement to find a resolution—but that is now for others to resolve.

The Parliament these days is nothing like the one that I joined. The pandemic has virtually emptied this place. I am concerned about how new members will take to the system if it remains so slimmed down. I am sure that that is being considered by parliamentary authorities, but it means that current members who return will have, in my view, an even greater obligation to help bring new members on board in what is a much more virtual Parliament these days.

I thank all the staff I have worked with: my own staff here in Holyrood, my constituency staff, the staff in the Parliament—those who look after our facilities and security and those who work with us in committees and in the chamber. Thank you.

I will briefly say something about the topic of this debate. Although we are disappointed in the settlement, we will support it. With the Scottish budget last week, the Scottish National Party had the chance to put Scotland’s recovery first. Unsurprisingly, however, it chose to prioritise another independence referendum. It had the chance to agree a fair funding deal for cash-strapped councils, awarding them a set proportion of the Scottish Government budget, which was one of the Scottish Conservatives’ demands. Instead, Scotland’s councils are set to receive a finance settlement uplift of less than 1.5 per cent in 2021-22—

Will the member take an intervention?

Of course. How could I resist one last chance to be corrected by Ivan McKee?

The member will realise, of course, that the proposal by the Conservatives to give local government a fixed percentage of the budget would have meant not only that health spending would be significantly reduced, in particular, during the current Covid pandemic, but that, in certain years, local government’s increase would be lower than it has been.

No, I do not realise that—but I thank Ivan McKee for letting me know.

The SNP Government’s total budget has risen to £44.1 billion in 2021-22. In comparison, the total budget for local government is rising to £11.6 billion. Furthermore, the amount of money that the Government gives to local authorities has fallen by about £270 million in real terms since 2013-14. That is despite the SNP Government’s budget from the UK Government increasing by more than £1 billion during the same period. Local councils have been betrayed. The SNP has voted against our plans to create a Barnett-style formula to ensure that Scotland’s councils get a fair share of the Scottish Government’s budget each year, which would give them greater certainty and the ability to plan ahead.

As a result of the pandemic, Scotland’s councils are facing a serious budget shortfall. Despite the promise of some extra funding from the SNP, concerns around the settlement remain. The SNP has failed to heed the warnings of the Scottish Conservatives and COSLA, and, as such, has failed to produce a fair funding deal for cash-strapped councils across Scotland.

Despite those funding issues and the critical and challenging operating environment of the past year, key workers across all Scotland’s councils have continued to carry out their jobs. I put on record the gratitude of the Scottish Conservatives to local authority key workers, who have continued to carry out their work during these very challenging times.

It has been an honour to serve as an MSP during this session of Parliament and to give my last speech before I stand down. Thank you.

Thank you, Mr Bowman. I am thrilled that you mentioned the Solicitors in the Supreme Courts of Scotland (Amendment) Bill Committee—a highlight for both of us.

15:15  

I offer Bill Bowman my very best wishes on his retirement from the Parliament.

Yet again, local authorities have a settlement that does not meet their needs. If members do not believe me, they should believe the motion that was drafted by COSLA leaders last Friday, which says:

“Leaders express their deep disappointment with the final local government settlement and note that the increase in public pay sector policy with no additional funding for local government and the reprofiling of capital funding for town centres and bridge maintenance over two years instead of the total being available in 2021-22”

means that

“the financial position of local government has effectively worsened compared with the publication of the initial draft budget.”

In the past days, COSLA leaders have asked for a meeting with the cabinet secretary and ministers to discuss what they believe is a gap in public sector pay policy. I hope that the minister will confirm in closing that ministers will agree to meet COSLA leaders about that concerning gap in pay policy.

Since it came to power, the SNP has moved continually to centralise control of local government budgets over the past eight years, and there has been cumulative underfunding of local government. We need a reset of the relationship between central Government and councils in recognition of that cumulative effect over many years. We must push powers down to councils and allow them to decide local priorities, as they are best placed to do so.

The SNP Government has presided over more than a decade of chronic underfunding of our councils. In fact, councils have faced real-term cuts to their core funding of approaching £1 billion over an eight-year period. That has had a direct effect on their ability to continue to provide essential services and protect public sector jobs.

Scottish local authorities also face a continued squeeze on capital resources from the Government in the form of a reduction in the capital budget. It is extremely worrying that that is set to worsen, because there are no increases planned for the next five years, which represents a real-terms cut to capital income. I find that astonishing. Let me be clear: less capital funding means less investment in key infrastructure such as schools, housing, community renewal and roads—which, for the general public, that means that their potholes will not be filled.

The Scottish Government must leave local authorities in a financial position that helps communities get back on their feet as we emerge from the pandemic. Local authorities have provided vital services throughout this national crisis, distributing financial support to families and businesses in need. COSLA asked for £770 million in additional funding for 2021-22 to deal with Covid, based on local government expenditure last year. The Scottish Government has announced less than half of that, with £259 million in flexible funding. The Covid shortfall against the COSLA ask is a staggering £511 million.

Social care workers have risked exposure to Covid every day for more than a year to care for people who depend on their support. It is time to give them well above the wage that they earn now. During the budget process, Scottish Labour called on the Government to consider a £12 an hour baseline, proceeding to £15 an hour in the next session of Parliament, which would be transformational in terms of the value that we place on our care workers.

We welcomed the cabinet secretary’s concession last week to increase the funding allocation for local authorities. However, set against more than a decade of underfunding, £90 million is a drop in the ocean.

Local authorities need consistent, adequate funding so that they can pay for local services. They must have a fiscal framework that ensures that they are able to do long-term financial planning. That framework must include both capital and revenue spend, and its detail should be determined through discussions between the Scottish Government and local authorities. However, a reset of that relationship is urgently needed now.

Due to the general direction of the Scottish Government’s funding policy for local government and the long-term implications of continuing to underfund the revenue and capital budget, Scottish Labour will not vote for the order at decision time today.

15:20  

I congratulate Bill Bowman on his final speech and wish him well for the future.

I ask for your forgiveness, Presiding Officer. As we are overrunning slightly, I might need to leave the chamber a few minutes before the end of the debate in order to reach home in time to connect for decision time.

You put that so sweetly that I feel that I must accept.

I am grateful, Presiding Officer.

Inevitably in such debates, there are those who ask for perfection, and those who defend imperfection as though there is no imperfection. The reality is that, as with several other local government finance orders in recent years, this order is a significant way short of perfect, but progress has been made. As we can see, the general uplift is significantly higher than the non-recurring Covid expenditure that is given to local government, which should be recognised.

Taken together, the additional funding that was announced before the budget and the extra £40 million that the minister mentioned in his speech mean that the gap relating to the impact of the local government pay settlement that will have to be negotiated has been closed somewhat. It is important that we approve the order to make sure that local government has access to the funds that it needs to be provided with.

I will say something about the future. Even before the pandemic, this parliamentary session has been another period of collective failure to reform a broken system of local government finance. After so many elections in which people, including those in parties that won and became the Government, promised the reform of local government finance and a replacement for the council tax, the Greens made serious efforts to try to improve matters and move the issue forward. We tried to bring people around the table to begin to make progress. If it had not been for the pandemic, we would be expecting the publication of a draft bill for consideration in the next session as a result of those cross-party talks. However, the pandemic stalled all of that.

As the Finance and Constitution Committee’s report on the budget makes clear, Parliament in the next session will have to take on a deep re-examination of the whole of Scottish tax policy. As the committee’s report at paragraph 177 says, we will have to look at

“the breadth and nature of the tax base ... the impact of economic activity on the size of the tax base”,

and

“the relationship between local, Scottish and UK-wide taxes.”

If we are serious about having tax policy that will both support services—including services at a local level and local autonomy within that—and help to develop a fairer, more equal and sustainable economy in Scotland, it will not be good enough to have yet another session of the Scottish Parliament during which we fail to grapple the admittedly difficult but urgent issue of local tax reform. That local government simply has to wait for a handout from central Scottish Government should be every bit as unacceptable as it would be if the Scottish Government had to wait for whatever it gets in a grant from the United Kingdom Government.

Back in the days of the single, simplistic block grant, at least there was a framework that said how that block grant should be calculated. Now, we are in a much more complex scenario, and a wider range of taxes is available to us in Scotland. Therefore, we should be pushing that fiscal power down the chain to local government level. If that can be taken on in the next session of the Scottish Parliament, it will be long overdue.

Thank you, Mr Harvie. You kept within your time.

15:24  

I knew Bill Bowman’s wife, Helen. She was a kind and generous woman, and certainly formidable to anybody who met her. I met her as one of my constituents, and I was truly sad when she passed. I wish Bill well in the future, and I am sure that he will continue to make good use of the services of his MSP in his retirement. He can retire from this place knowing that he did his bit in the service of his country. I wish him well for the future.

I also praise local government staff, who have done an exceptional job during the pandemic. They went above and beyond, as usual. They spent extra hours—all weekend, and extra shifts—making sure that money got out the door for businesses and that services were provided when people needed them. We should all recognise that service.

Scottish Liberal Democrats will vote for the order this afternoon, because we supported the budget, with its additional £300 million of extra support for mental health, education, business support, training for the north-east and funding for councils as well as climate. Some of that money is reflected in the order that is before us today, as the minister set out, including £259 million in non-recurring Covid consequentials—the additional £375.6 million and, of course, the further £40 million that he referred to. We support that, because it is important that councils get that funding for such things as the pupil equity fund supplement and the bounceback support for education in schools, but also because it is important that councils get the £90 million in future years as part of the council funding baseline.

I was pleased to see additional support for Aberdeenshire Council and Aberdeen City Council, as well as for the City of Edinburgh Council, Orkney Islands Council and Shetland Islands Council. I presume that, for Orkney and Shetland, that additional funding has been given in part for internal ferry services—something for which my colleagues Tavish Scott, Beatrice Wishart and Liam McArthur have been advocating for some time.

I am also pleased that, for the first time in some years, all councils are above the 85 per cent floor, so I do not have to give my usual speech berating the Government for failing to meet that threshold. I am pleased that it has been met, because councils in the north-east were underfunded for a number of years, and that floor did not protect them.

We also secured in the budget £15 million of additional training support for the north-east, as part of the transition from oil and gas. That was done partly to reflect the fact that that part of the country has not been adequately supported.

I am not as optimistic as Patrick Harvie clearly was about the ability of the council tax reform group to achieve its goals. All he had to do was to look at the face of the minister’s predecessor when that group had to be cancelled because of the pandemic—it was a picture of relief. I do not believe that the Government had any intention of reforming the council tax and was only too happy for the group to be abandoned. However, there will be an opportunity in the next session of Parliament to make that change, because council tax needs to be reformed. It needs to be fairer, and we need to provide the extra levers and dynamics needed to raise the appropriate money and give councils responsibility for raising the majority of the money that they spend. We would support some form of land value taxation as part of that, but we need to make sure that we make progress on that and do not let off the hook whoever is in government next time around.

I will not make my final plea, because I am going to conclude my speech on the dot, Presiding Officer.

If your final plea is brief, be my guest.

No; I would not want to encourage that.

You are content. That is wonderful.

I call the minister, Ivan McKee, to close the debate.

15:28  

I thank all members who have taken part in the debate, albeit that it has been very short. I thank Bill Bowman for his time in the Parliament, and I wish him all the best in the future.

I also thank local authorities and their staff for the tremendous efforts that they have made throughout a very difficult and challenging time. It is right that we are here to vote for the order that will give them the finance that they need and deserve.

To pick up on Pauline McNeill’s point, the letter from COSLA is under active consideration by the Cabinet Secretary for Finance, who will respond on those matters shortly.

The motion seeks parliamentary approval for the guaranteed payment through the Local Government Finance (Scotland) Order 2021 of £10.4 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 and support that they expect and deserve. The order distributes £10.4 billion, but that is not the whole story, as it does not cover the £775.9 million of specific revenue grants, which includes funding for the expansion of early learning and childcare, criminal justice, pupil equity funding and additional support for ferries and Gaelic. That represents real money for vital local services, and it should not be discounted when trying to make funding comparisons. That means that, next year, the Scottish Government will provide local authorities with a total funding package worth almost £11.7 billion, delivering an increase of £375.6 million, or 3.5 per cent, for vital day-to-day services.

Further Scottish Government support of £650 million will be paid outwith the local government finance settlement for the attainment Scotland fund, the schools for the future programme and city deals. That money is paid to local authorities, bringing the Scottish Government’s total investment to more than £12.3 billion. That investment in public services underpins the Scottish Government’s commitment to supporting our young people to fulfil their potential and ensures that the people of Scotland get the right care and support in the right place and at the right time.

In partnership with local government, the Scottish Government will continue to deal with the current crisis and, more important, ensure that we recover from it as quickly and efficiently as possible. I need not remind Opposition members that failure to approve the order would result in Scotland’s local authorities and, as a consequence, all our local communities being deprived of almost £2 billion of additional Scottish Government investment, including £1.5 billion to respond to the Covid-19 pandemic and £375.6 million for vital day-to-day services.

I encourage Parliament to support the local government finance order.

That concludes the debate. There will be a short pause before we move on to the next item of business.