Meeting of the Parliament [Draft]

Meeting date: Wednesday, February 28, 2024

Official Report 1084KB pdf

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Local Government Finance (Scotland) Order 2024 [Draft]

The next item of business is a debate on motion S6M-12130, in the name of Tom Arthur, on the Local Government Finance (Scotland) Order 2024. Members who wish to participate should press their request-to-speak buttons now or as soon as possible.

14:52  

The motion on the Local Government Finance (Scotland) Order 2024 seeks Parliament’s approval for the guaranteed allocations of revenue funding to individual local authorities for 2024-25. It also seeks agreement on the allocation of additional funding for 2023-24, which has been identified since the Local Government Finance (Scotland) Order 2023 was approved on 1 March last year.

We cannot ignore the hugely challenging circumstances in which we have had to agree the Scottish budget this year. Our block grant funding for the budget is derived from the United Kingdom Government’s spending decisions and has fallen by 1.2 per cent in real terms since 2022-23. That is a real-terms drop of £500 million. Our capital spending power is due to contract by almost 10 per cent in real terms over the next five years.

The reality is that the amount that Scotland has available to spend is still largely driven by the block grant that has been set by successive UK Governments, whose constraint of public expenditure has prolonged the austerity that public services feel. Scotland and the rest of the UK require more money for infrastructure, public services and fair pay deals.

The UK Government did not deliver for Scotland in the autumn statement, and we have no advance information on what lies ahead with the spring statement on 6 March. However, we will always do our best with the powers that we have, and the 2024-25 Scottish budget is built on our values. In tough times, it sets out to protect people, sustain services and take pragmatic steps to address the climate emergency.

The Scottish Government is providing more than £14 billion in the 2024-25 local government finance settlement. The revenue funding of almost £13.4 billion includes £147 million of funding for councils that have chosen to freeze council tax in 2024-25. We are also providing almost £700 million of support for capital expenditure. Including the funding to freeze council tax, we are increasing the resources available next year by more than £574.6 million. The 2024-25 local government finance settlement provides an additional 4.3 per cent in funding, or a real-terms increase of 2.5 per cent, compared with 2023-24.

In addition, as outlined yesterday, the Deputy First Minister has confirmed her intention to pass on up to £62.7 million of Barnett consequentials following the UK Government’s spring budget, as a result of the recent announcement on ring-fenced adult social care funding in England. That funding will be available to councils to protect their households by freezing council tax, and local authorities will have full autonomy to allocate the additional funding based on local needs and priorities, without the need to produce productivity plans, as is required in England.

The Deputy First Minister confirmed her intention to pass on any consequentials that are associated with increased teacher pension employer contributions and to prioritise the £4 million increase in the islands cost of living fund in direct response to concerns that some island authorities have raised about the cost of living and delivering services in island communities.

The budget invests in the Verity house agreement by baselining almost £1 billion of funding across health, education, justice, net zero and social justice, prior to agreement on an assurance and accountability framework.

The minister mentioned the Verity house agreement. Has he checked with the First Minister whether it is still a thing? Does it still exist?

In his eagerness to make an intervention, the member might not have heard me. We have baselined almost £1 billion into the local government funding settlement as part of the Verity house agreement, and we are committed to taking that forward across a range of areas, some of which the Deputy First Minister set out yesterday.

As we do every year, to reach the number that we have presented today, we have compared budget with budget, because that provides the best like-for-like comparison of available funding. Adopting any other approach would be to mislead Parliament.

It is important to note that the total funding package has already been finalised following the passing of the Budget (Scotland) (No 3) Bill. Today’s debate is about seeking Parliament’s approval for the distribution of the approved total funding to individual local authorities. The motion seeks approval for the distribution and payment of almost £12.8 billion of the revenue total of almost £13.3 billion, with the balance being made up mainly of specific grant funding, which is administered separately.

The £12.8 billion is a combination of the general revenue grant of more than £9.7 billion and the distributable amount of non-domestic rates income, which has been set at almost £3.1 billion. There remains a further £201 million of revenue funding, plus the funding of the council tax freeze, which will be notified to local authorities once the distribution has been discussed and agreed with the Convention of Scottish Local Authorities. That will be included for approval in the 2025 order. There is also specific revenue funding amounting to more than £263 million, which is paid directly by the relevant policy areas under separate legislation.

The 2024 order also seeks approval for more than £403 million of changes to funding allocations for 2023-24. The full list of changes can be found in the report on the 2024 order.

The Government recognises the financial challenges that local authorities across Scotland and the whole public sector are facing. The fiscal constraints that we share emphasise the need for us to focus urgently on improving the delivery of public services and on designing them around the needs and interests of the people and communities of Scotland. We must also continue to press the UK Government for additional funding for our shared priorities and pressures, and I would welcome support from across the Parliament for that.

The Budget (Scotland) (No 3) Bill, which Parliament passed yesterday, ensured that total funding from the Scottish Government to local government next year increased in cash terms and in real terms. The order confirms the distribution to individual councils, and the proposals reflect the crucial role that local authorities and their employees continue to play in our communities.

I move,

That the Parliament agrees that the Local Government Finance (Scotland) Order 2024 [draft] be approved.

14:58  

I am pleased to speak on behalf of the Scottish Conservatives on the order. From the outset, it is right that we acknowledge that the 2024-25 local government settlement has been decided in the context of a number of challenging fiscal circumstances. Inflation might have fallen significantly since the heights that were seen in 2023, but we are still dealing with its global effects. The illegal war in Ukraine continues to affect energy prices, and disruption to trade in the Red Sea risks further disruption to European economies.

Despite that, analysis by the Scottish Parliament information centre makes it clear that the Scottish Government’s overall budget has increased this year in real terms. However, any hopes that that would mean councils receiving relief from years of underfunding did not last long. COSLA described this year’s financial settlement as

“leaving councils at real and significant financial risk for the coming year”.

In practical terms, the budget means that councils are planning yet more cuts to local services. To take just one example, West Dunbartonshire Council, in my region, is having to close an £8.3 million budget gap. Potential cost-saving measures include increasing fees for school breakfast clubs and reducing financial assistance for school uniform costs. Such decisions are not easy for councils to take, but they have become too common in recent years.

The Scottish National Party often complains about how the UK Government treats the devolved Scottish Government, but if members want to see an example of a disrespectful relationship between two tiers of government, they need look no further than the Scottish Government’s approach to local councils. Let us take, for example, the continued controversy around the SNP’s council tax freeze, which was announced without councils even being consulted. The SNP repeatedly promised that the policy would be fully funded, but we now know that that is not the case. Despite COSLA having asked for £310 million to fund the freeze, the 2024-25 budget offers just £147 million. The irony is that that botched policy announcement came just a few short months after the SNP Scottish Government announced the Verity house agreement, which promised a renewed relationship with local government—one that would involve “improved engagement” on budget issues.

Councils have said that a change in the relationship is desperately needed. They want to have a more long-term relationship that is focused on outcomes. The Verity house agreement gave them hope that such a relationship was coming. However, from having spoken to nearly every local authority in Scotland, it is clear to me that the Verity house agreement is falling short.

Here are some of the things that councils have said directly to me in meetings about the SNP’s relationship with local government on the Verity house agreement:

“The agreement is not worth the paper it is written on”. [Interruption.]

“We have a degree of optimism but a huge amount of scepticism”.

“Like a zombie still has life but bleeding to death by Scottish Government requirements, including teachers numbers and the National Care Service”. [Interruption.]

“The role of local government is not valued”.

“Talk is cheap, but actions are now required”.

“The Scottish Government is not delivering their side of the agreement”.

“The relationship is broken ... there is a lack of trust, a lack of transparency from the Scottish Government”. [Interruption.]

“We are not buttoned up the back”. [Interruption.]

“This is the worst settlement we have seen”.

Given those damning verdicts, it is perhaps not surprising that, two weeks ago, council leaders wrote to the Scottish Government to declare a “fundamental position of dispute”.

Before I conclude, I would like to make it clear that we will not—

Will the member give way?

I think that the minister should listen to me say how we are going to vote.

Will the member give way?

Do we have enough time, Presiding Officer?

It is up to the member whether she gives way. We are tight for time, but she will get a little bit of time back.

I am grateful to Pam Gosal for giving way. She said that she has spoken to councils. Were the responses that she has received from councils sent in their corporate capacity as local authorities, or were they from individual councillors to whom she spoke? Will Ms Gosal clarify that for the record, please?

That is a good question, and it is great that I can clarify that. I have spoken to 31 council chief executive officers. I have gone right to the top of the chain to speak about the cuts that the SNP Scottish Government is making, which will be devastating for local services. I hope that that satisfies the minister.

Before I conclude, I make it clear that we will not vote against the order at decision time, as the order is required so that councils can receive the revenue funding that they have been allocated, but nor can we support the order, which will only continue the trend of ever-worsening council budgets. We will therefore abstain in today’s vote.

With this year’s budget, councils have yet again been left with a financial settlement that leaves them unable to deliver the services that their communities expect. Instead of deciding how to improve local services, councils are currently signing off budgets that will deliver more cuts to services. We badly need to see a new approach to how councils are funded—an approach that empowers councils to deliver for their communities in the way that they know best.

The Scottish Government says that it wants to build a relationship with local government that has “mutual trust and respect” at its core. The onus is now on the SNP to deliver that.

15:04  

We will not oppose the order today, because we know that it is necessary to get the funding allocated to councils. However, although we will not attempt to block it, we cannot support it.

As we indicated during various stages of the budget process, we do not support the 2024-25 budget because people are paying more and getting less. Councils—and the democratic mandate that they receive from communities—have been treated with complete contempt, and decisions seem to have been made in a haphazard and chaotic way. The chaotic and disrespectful way in which councils have been treated also seems to have put the final nail in the coffin of the Verity house agreement.

From the very outset, the decision to impose a freeze on council tax has had a whiff of “The Thick of It” about it. The First Minister, panicked by a by-election drubbing, announced a freeze at the party conference, in front of astounded SNP councillors, without letting his Cabinet, civil servants or even his coalition partners know about it, never mind have any input—in direct conflict with the Verity house agreement that had just been signed with local authorities. The Cabinet Secretary for Finance was then sent out to assure councils and Parliament that the freeze would be fully funded.

On that point about consultation, can the member confirm that Councillor Stephen McCabe consulted Mr Griffin, as the party’s local government finance spokesperson, before he wrote to Michael Gove, asking Michael Gove to bypass this Parliament? Can Mr Griffin confirm whether that is something that he approves of?

Mr McCabe is a democratically elected leader of his own council and acts in that capacity without any instruction from me or anyone else. He has his own democratic mandate, and it is about time that the Scottish Government started recognising and respecting the democratic mandate of councils, because not doing so is how we got this problem in the first place.

As I said, the Cabinet Secretary for Finance was sent out to assure councils and Parliament that the freeze would be fully funded, but she completely failed to give any details, repeating over and over that it would be down to negotiations with the valued partners in local government who were snubbed by that very announcement.

The minister appeared at committee and could not give any explanation of what a fully funded council tax freeze meant. We then got the details of the result of those in-depth negotiations with councils, which seemed to be a case of the Government just plucking a figure of its own out of the air because COSLA rejected it completely. Then, after weeks of the Government insisting that the council tax freeze was fully funded, all of a sudden it was not fully funded, because another £63 million was found. However, the kick in the teeth to local councils was that that funding came mostly from UK Barnett consequentials, which should have been going to councils anyway. It would be funny if it were not absolutely tragic.

It is the councillors from every political party, including the SNP, in all 32 local authorities who are having to make the heartbreaking decisions—decisions that are of this Government’s making. It is this Government that has cut billions of pounds cumulatively from council budgets and from council services—services that the most vulnerable rely on—since 2013. Roads are crumbling, teacher numbers are being cut, libraries are closing and bins are overflowing. Now, it is being left to those councillors to make those tough decisions to balance the books. They are taking the tough decisions on whether to accept the freeze to protect households or whether to try to protect services.

We should all be concerned about the context of the discussions that councillors are having on whether to accept it. I have been told that, as a result of the damage to the relationship between national and local government and the lack of any trust whatsoever between those two spheres of government, those who are making decisions in councils, at political and officer level, are making recommendations on budgets and on freezing council tax on the basis that they cannot trust the Government to baseline the freeze funding. There are councils that are, right now, working on the basis that the Government will give with one hand and take away with the other and that, next year, they will have to impose huge increases in council tax just to stay afloat.

The fact that hard-working, non-political council officers in council chambers of all political make-ups have that level of distrust in the Government should shock and appal everyone in this chamber, and it shows just how damaged and toxic the relationship between local and national Government has become.

I hope that the minister will reflect on that, and I hope that we are not in the same position as we are now when we consider the equivalent order next year.

15:10  

Let us remember that the Verity house agreement, the existence of which the minister could not confirm when I intervened earlier, talked about a “positive working relationship”, “mutual trust”, “respect”, “joint leadership” and “shared priorities”. It said:

“Where we disagree, we will seek to deal with these matters constructively in the spirit of cooperation, through the engagement mechanisms described in Section D of this agreement”.

That was before the conference decision that the First Minister made—overnight, in a matter of minutes—to freeze the council tax without consulting any local authorities, his advisers or any officials in the Government, and probably without consulting any of the SNP back benchers who are here today. That process would probably make Liz Truss blush, because it was reckless and cavalier, and it drove a coach and horses right through the Verity house agreement.

The Verity house agreement is as good as dead, and the minister should acknowledge that. The trust between local and central Government has completely disappeared and there is no chance of its recovering under the current Government. It is not just in the mechanisms where it is clear that the agreement has broken down. I listen to ministers in private and I hear what they say about councillors. Members of this Parliament complain about the disdain and distrust at Westminster, but that is exactly how ministers treat local councillors—I have heard it.

For example, the language about local authorities on teacher numbers is appalling. The implication is that councillors do not care one jot about schools and that their only intention is to cut teacher numbers. However, that argument has had a hole blown in it, because Glasgow City Council, which is led by the SNP, proposes to cut 450 teachers over the next three years—

Will the member give way?

Not just now—I am sorry.

Do councillors in Glasgow City Council not care about education? Of course they care. It is because they have no money and are right up against it that they have had to make that decision. The Minister for Community Wealth and Public Finance and all other ministers carry on as if councillors are either stupid or do not care. Ministers need to change that attitude, because it is not the way for Government and local government to work together.

To repeat, the agreement talks about a “positive working relationship”, “mutual trust”, “respect”, “joint leadership” and “shared priorities”. That is all bunkum—it does not mean anything. The councils were duped from the very beginning, because the Government had no intention of working in that way. Any time that any pressure was put on, the Government was going to do the dirty on local government, and that is exactly what has happened.

I have never seen public services in local councils in such a bad state. I have been in politics for 18 years in various Parliaments and I have never seen things as bad as this. Housing, the roads and social work are all crumbling because the Government does not respect local authorities. The Government is making cuts to local government that are way more than it needs to do, and it has done so for years. We are now paying the price for that. The pressure-cooker atmosphere in schools is astonishing. I have never seen staff so depressed, and that is because of the way in which the Government ignores their fears about what is happening in classrooms. That is what the Government is reaping, because it sowed the seeds of this situation a long time ago.

As for any suggestion that we will reform the council tax, I do not know how many working groups I have been on, but the Greens, who are not here today—well, the Green back-bench members are not here; I presume that the Minister for Green Skills, Circular Economy and Biodiversity has been compelled to turn up—seem to believe that they have a new dawn and that somehow we are going to reform the council tax. Apparently, the citizens assembly will come up with an answer, and there is a new working group on top of all the other working groups that exist. Ministers are laughing at all of that. The reality is that they have no intention of doing anything on council tax reform; they are just stringing local government along and are doing exactly what they have done for years in treating it with contempt.

15:14  

The Local Government Finance (Scotland) Order 2024, which is before Parliament today, seeks approval for the guaranteed payment of almost £12.8 billion in revenue support to Scotland’s 32 local authorities. Next year, the Scottish Government will provide local authorities with a total funding package that is worth more than £14 billion, delivering an increase of more than £574.6 million, or 4 per cent. That is a real-terms increase of 2.5 per cent despite the challenging circumstances that I outlined in my opening speech.

There is also further Scottish Government support of almost £629 million to be paid outwith the local government finance settlement. That includes the attainment Scotland fund, the schools for the future programme, the home energy efficiency programmes and the city deals funding that is paid to local authorities. That brings the Scottish Government’s total investment to almost £14.7 billion.

The settlement also provides continued fiscal certainty through our policy of guaranteeing the combined general revenue grant plus non-domestic rates funding, as is set out in the order. That means that any lost non-domestic rates income will be compensated for by an increased general revenue grant, thereby effectively underwriting that critically important revenue stream.

The Scottish Government will continue to work in partnership with COSLA to empower councils through a new fiscal framework and by increasing discretion to determine and set fees and charges locally in the coming year. We are also committed to finalising, in the coming months, an accountabilities and monitoring framework to underpin the Verity house agreement.

The Scottish Government is committed to a fairer, more inclusive and fiscally sustainable form of local taxation. We have convened a joint working group on council tax reform, which is co-chaired by Scottish ministers and COSLA. Together, we are exploring proposals for meaningful changes to council tax to be introduced. The joint working group is considering exploring a broad range of potential measures, including citizens’ engagement on long-term reforms to the system. Those reforms will have a core aim of providing fairness in the system and support to those who need it the most.

Bearing in mind that the overall quantum was confirmed when the Budget (Scotland) (No 3) Bill was agreed to, Opposition members should note that a failure to approve the order would result in Scotland’s local authorities and, as a consequence, all our communities being deprived of more than £403 million of additional funding in the current financial year and almost £575 million of additional Scottish Government investment next year.

I say to any member in the chamber who does not vote for the order that that means local authorities and local communities being deprived of more than £403 million of additional funding in this financial year and £575 million of additional Scottish Government investment next year.

I listened closely to Pam Gosal’s remarks earlier, and I will be checking the Official Report to see exactly what she said and what remarks and statements she is attributing to chief executives of local authorities. I think that that will make for very interesting reading in the Official Report.

As for Mr Griffin, I find it remarkable that, as his party’s local government spokesperson, he has no opinion whatsoever on whether the UK Government should be directly funding local authorities and on whether this Parliament’s role should simply be cut out—[Interruption.]

I am sorry, but it is a bit much for Mr Rennie to come to the chamber and start criticising austerity when his party was the midwife of austerity and given the cuts that it has inflicted on communities across these islands and the butchery of public services. I wonder whether he now thinks that the Fixed-term Parliaments Act 2011 and the alternative vote referendum made it all worthwhile. What a shameful contribution from Mr Rennie.

The order provides additional funding for local government this year and next year, and I urge members to back it at decision time.

That concludes the debate on the draft Local Government Finance (Scotland) Order 2024.