Meeting of the Parliament

Meeting date: Tuesday, November 28, 2017

Official Report 778KB pdf

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Urgent Question

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Council Reserves

To ask the Cabinet Secretary for Finance and the Constitution what his response is to news that councils are using their reserves to fund services.

Decisions on the use of reserves are rightly the responsibility of councils to take, when it is prudent and sustainable to do so. As today’s Audit Scotland report states,

“There is no prescribed minimal level of usable reserves.”

However, as of 31 March 2017, local authorities’ usable reserves amounted to £1.9 billion, which represents more than 18 per cent of the total funding that is being provided to councils by the Scottish Government this year. That excludes Orkney and Shetland, which have additional and extensive oil-related reserves.

Last year, councils cut £524 million from services and used £79 million of their reserves simply to balance their budgets. We are talking about cuts to schools for our children, cuts to social care for our elderly and cuts to basic services such as road repairs. The Scottish National Party has made some £1.5 billion of cuts to council budgets since 2010. Councils are now in danger of exhausting their reserves—in a couple of years’ time, councils such as Moray, Clackmannanshire and North Ayrshire will have nothing left. On top of that, 7,000 jobs have been cut from local government. If local government is such a priority for the cabinet secretary, why is the Scottish Government continuing to cut vital services?

The Scottish Government increased support for local services by around £400 million in our most recent budget. If we deduct the sums by which Labour authorities chose not to increase the council tax, that number is reduced but, overall, the support provided for local services through health and social care integration, the ability to raise the council tax and the multiplier ensured that more resources went to local services.

In addition, I would say that local government has been treated very fairly in the tough and challenging times that we have experienced at the hands of the right-wing United Kingdom Conservative Government, which has reduced our resources for discretionary public expenditure in Scotland. We have treated local authorities very fairly within an extremely challenging framework.

Members should not just take my word for it. The Scottish Parliament information centre says that that is the case. If we look at the past couple of years and take into account the complex nature of health and social care integration, councils’ ability to raise the council tax and the change in the multiplier, we can see that, in the budget that I presented to Parliament, local government got an even better settlement than any increase that we might have had in discretionary funding.

I accept that we are all operating in a challenging fiscal environment. That is why we need to have a mature debate on the choices that we have going forward and to recognise the pressures on our public services. I will continue to be as supportive as I can to Scotland’s public services, not least local government.

I am always happy to have that mature debate, but the cabinet secretary must recognise that, when he cuts a lot and gives a little back, it is still a cut in real terms.

Contrary to what the cabinet secretary said on the radio today—I listened carefully—the local government share of the overall Scottish budget has fallen. Mr Mackay is right to say that the cuts from the UK Government have reduced the amount of money that is available, but SPICe tells us that, taken over the past three years, the cuts from the Tories amount to 1.5 per cent. Over the same three years, the SNP’s cuts to local government funding amount to 4.6 per cent. The SNP has taken Tory austerity and more than doubled it in passing it on to local government. What we have here is SNP turbocharged austerity.

In almost two weeks’ time, the cabinet secretary has an opportunity to change course and properly fund local government. The question for all of us is whether he will be Santa or Scrooge.

I noticed that Jackie Baillie did not respond to my comment: if local authorities felt that they did not have enough resources, why did Labour authorities—including Jackie Baillie’s Labour local authority, West Dunbartonshire Council—choose not to increase the council tax by 3 per cent? Authorities across the country received an increase in resources. That is the fact of the budget that I presented to Parliament. The Labour Party opposed those extra resources going to local services.

In her analysis, Jackie Baillie excludes the money from council tax increases and the effect of the multiplier and health and social care integration. In presenting her figures to Parliament, she discounts real money. Scotland’s local services have been served very well and very fairly by the decisions of the Scottish Government, which has protected local services in the face of austerity from the right-wing UK Tory Government, whose most recent decisions have made the situation even more challenging. [Interruption.] The members on the Tory benches moan and groan, but I look forward to their question, because I have some very interesting figures on how the Tories treat local government in England.

The block grant from Westminster is going up in real terms. Therefore there is no justification for the Scottish Government to reduce local government budgets. Will the Scottish Government commit those funds to support and assist local councils with their commitments in the next financial year?

Alexander Stewart has just made the latest spending commitment from the Tories and asks whether I will commit any Barnett consequentials specifically to local government as opposed to the health service or any other service that the Tories might be interested in. Yet again the Tories are all over the place on tax and spend. You cannot have tax cuts and more expenditure at the same time. The Tories are choosing to spend resources time and again. The Tories wonder why local government is feeling pressure, but councils are feeling pressure because of Tory cuts coming from the Westminster Government. The further pressure that local government feels is a consequence of the Westminster Government.

The £2 billion that Alexander Stewart referred to is not a real-terms increase in the discretionary funds for our public services—we cannot spend it on council services. However, I am not surprised that the Tory front benchers do not understand that fact.

I am interested to hear the Tories saying today that their priority is local government. I have said that the Scottish Government has tried to protect local government from the reduction that we have endured, but the real-terms reduction in Scottish local government is about 5.5 per cent over a seven-year period. However, the reduction for local government in England is 28.3 per cent in real terms. Where the Tories are in power, their impact on local services is devastating and they are trying to devastate Scotland’s public services, too. That is why we are having a mature and reasonable debate about the powers that we have at our disposal to protect our public services across the board from a right-wing chancellor who is pursuing austerity as a matter of ideology.

The cabinet secretary may be aware that Councillor Walter Wilson, who resigned a few days ago because of the extreme right-wing views of his Conservative colleagues and the cuts that they were contemplating, was criticised by the leader of Moray Council for causing alarm, yet today, the leader of Moray Council is talking about being a few years away from bankruptcy, which will certainly cause alarm among local people. Will the cabinet secretary ask his officials to explore with Moray Council why it is the only council in Scotland to talk in such terms?

I have met several council leaders and I am happy to continue holding such meetings. I meet regularly with the Convention of Scottish Local Authorities to consider the future settlements. I engage with COSLA on matters of distribution. The Government will try to be supportive.

Richard Lochhead has fairly characterised the administration in Moray. As I have said, the Scottish Government will be helpful. However, some people should apply some pressure to the right-wing Tory Government in Westminster as well, because the reductions that the Scottish Government and the country are facing in real-terms spend on local services comes from the direction of the Tory party.

The cabinet secretary has criticised councils for complaining about their financial position if they did not choose to use their flexibility to increase council tax. However, is it not clear that the many of us who have long criticised council tax as a fundamentally unfair tax need to take responsibility for that? The cabinet secretary is in a position to decide how much revenue should be raised fairly and progressively through reform of income tax and how many councils should be put under pressure to use an unfair council tax change to raise their revenues. Is it not clear that people on his salary and people on my salary need to pay more income tax next year than we did this year if we want to fund our local services properly?

Patrick Harvie touches on the point that I made about the discussion that we are having on the role of income tax in Scotland’s budget. I am happy to engage with all political parties, stakeholders and the public on that and I am actively doing so. I look forward to presenting the budget, with our tax proposition, on 14 December. That debate is live and kicking.