Seòmar agus comataidhean

I mentioned earlier that there is £100 million in the budget for health and social care to support the increase in the real living wage, as well as more funding in the deal for social care in the round. At the moment, it is still local government that is delivering social care. That is important.

As we move forward, we absolutely are committed to the principle of delivering a national care service. We would like to work with COSLA and local government to do that, but we hear and understand their reservations, and we need to work through those. Part of doing that will involve trying to work with those local authorities that are keen to make progress to demonstrate how things can be done in a different way.

I do not think that anybody could say that the current arrangements are ideal. I was a big advocate of integration, and I had high hopes and expectations of it. As a former home-care organiser, I probably know far more than I ever wanted to about the interaction between health and social care and some of the blockages in the system. Integration was an attempt to overcome some of those barriers, and everybody had a lot of hope for that, but it has not delivered in the way in which all of us had hoped that it would. Doing nothing and making no change is not an option.

The national care service, if it is delivered correctly—it will take time to get that right—can deliver a better deal for people who receive care. When you hear what they have to say, it is clear that there are very strong views in favour of reform and change.

Yes—and the fiscal framework is key. It intended to establish a new fiscal relationship, with not just multiyear budgets but established, agreed ways of working, including in how local government engages in the budget process—that might offset some of the issues that we talked about earlier—greater flexibility, and improved accountability. We absolutely should have them where we can, not just for local government. Earlier, we mentioned the third sector. Giving certainty to the third sector with multiyear funding would be a major step forward. Discussions about how that could work are going on.

Thanks very much, convener, for the opportunity to engage again with the committee.

We are all too aware of the many challenges that people currently face. Since my previous appearance at the committee—I think that it was back in September—we have put in place emergency legislation that has given people, whether they rent in the private sector or the social rented sector, reassurance around their current tenancies through the worst of the winter, even as their other costs have, unfortunately, been rising.

More recently, of course, we have set out the Scottish budget for 2023-24. We are using all the levers at our disposal to maximise investment and to support people and the economy, and are targeting our spending as effectively as possible. The Scottish budget for 2023-24 sets out more than £6.3 billion of capital spending to support employment and the economy through our large-scale infrastructure plans, to move us along the path to net zero carbon emissions and to underpin the provision of quality public services.

Our capital spending ambitions have been impacted by global trends—a position that has been exacerbated by United Kingdom Government decisions. In light of inflationary pressures and the wider market conditions, we have made hard choices to reprioritise our 2023-24 capital budget in order to deliver against Government priorities. In some cases, that has meant that portfolio budgets have reduced when compared with the May 2022 capital spending review publication. Where we have made choices to slow down or reduce available budgets, those are not choices that the Scottish Government has taken lightly.

We have to ensure, however, that we maximise the impact of our capital investment to deliver against our strategic priorities. Despite that, more than £3.5 billion will be available in this parliamentary session for delivery of more affordable homes. In the most challenging budget settlement since devolution, we are providing more than £13.2 billion in the 2023-24 local government finance settlement.

Following the flat-cash position set out in the resource spending review, we have listened to councils and are now increasing the resources that are available to local government next year by more than £570 million, which is a real-terms increase of £160.6 million, or 1.3 per cent. The 2023-24 local government finance settlement provides local authorities with £423.7 million of additional revenue funding for vital day-to-day services, which is a real-terms increase of £39.1 million. The settlement also provides an increase in capital funding of £147.1 million, which is a real-terms increase of £121.5 million. The 2023-24 budget has also baselined an additional £260.6 million for the 2022-23 local government pay deal.

In addition to funding from the Scottish Government, local authorities have a range of revenue-raising powers that are not available to other public services, including full flexibility on council tax rate setting and the newly devolved powers over empty property rates relief.

We also continue to work with our partners in local government to build on the Covid recovery strategy and to agree an urgent approach to improve the delivery of sustainable public services that are designed around the needs and interests of the people and communities of Scotland.

Another critical area of work has been the short-life task and finish group on the Cost of Living (Tenant Protection) (Scotland) Act 2022, which successfully concluded its work just before Christmas, when agreement was reached with the social sector on plans for social rents in 2023-24. The Convention of Scottish Local Authorities and the Scottish Federation of Housing Associations have published statements setting out their members’ intentions for rent in 2023-24. COSLA has committed to keeping local authority rent increases to an average of no more than £5 per week. Members of the SFHA and the Glasgow and West of Scotland Forum of Housing Associations have reported planned increases averaging 6.1 per cent.

Finally, the use of average figures rather than a fixed cap allows for flexibility to honour the outcomes of the statutory tenant consultations on rent setting that social landlords must undertake each year. That outcome ensures that tenants are protected from unaffordable rent rises while allowing social landlords to continue to invest in the delivery of more affordable homes, where their business plans allow them to do so.

Those were some updates on key areas. I look forward to exploring those and other issues that the committee may wish to discuss this morning.

First, I do not think that a council tax freeze would have been right in the current financial context. The policy of freezing council tax rates was appropriate for the time but, in the current financial climate, it would be very difficult to justify. As you know, council tax is, by nature, a local tax and, quite rightly, is set and administered by individual local authorities. The setting of that is a local democratic choice, and councils need to be accountable to their constituents for the level at which it is set. I would hope that, in the midst of a cost of living crisis, some cognisance would be taken of affordability for the local population.

It is also worth noting that, despite increases, council tax is generally lower in Scotland than it is elsewhere. The average band D charge in Scotland is £619 less than in England and £430 less than in Wales so, by comparison, people here still have lower local taxation than people elsewhere in these islands. Ultimately, it is for local authorities to justify to their local population where they end up landing on council tax.

First, councils have autonomy over 93 per cent of their funding, which is about £12.3 billion of funding for 2023-24. For the other Scottish Government portfolios, I can give you some examples. There is quite a list, so I can write to the committee with the full list, if that would be helpful. It includes, for example, a new £22 million for additional adult social workers; a new £32 million through the whole family wellbeing fund to support families to stay together and reduce the number of children in care; a new £2.4 million for local heat and energy efficiency strategies; an additional £100 million for health and social care to support the increase in the real living wage; an increase of £16 million for free school meals; and £521.9 million to support the expansion of funded early learning and childcare.

As I said, there is quite a list, and I have just been told that it is in table 5.16 of the budget document, but we can write to the committee as well, if that would be helpful. There is also additional capital of £80 million for some of the infrastructure costs for free school meals.

That said, I know that you will be aware of the discussions that we are having with local government about increasing flexibility. That is the right discussion to have. We need to find a way forward to achieve confidence in some of the priorities being delivered, if that is not being done through ring fencing.

As you will know, in the chamber Scottish Government ministers are often asked about the delivery of local government policies. We would need assurance about those joint priorities if we were to move away from ring fencing on some of those matters. From my portfolio interests, including local government, I am very much in favour of trying to do that, but we need to do it in a properly organised way.

Yes. Definitely.

We know that the social security budget is a great example of how the agreement does not work. The limitation on borrowing powers is a major impediment, and that has been exposed hugely through Covid and the cost of living crisis. As a matter of urgency, those are issues that need to be opened up. If we can get that opened up, and if we can get a different budget settlement for the Scottish Government for those flexibilities and borrowing powers, that would have a knock-on benefit to parts of the public sector. Therefore, that is very important.

Discussions have been mooted, but they are not in any way at a detailed level, as far as I am aware. Is that correct, Ian?

I will perhaps ask colleagues to come in on some of the detail of financial transactions. Financial transactions are available to the Scottish Government. It is for it to decide how to allocate them. Because there are restrictions on how financial transactions can be used, housing has done quite well out of them when they have appeared. They have fluctuated, however, so we do not really know well in advance what financial transactions allocation we will get through the UK Government. The allocation comes quite late, so it is hard to plan a 10-year investment around financial transactions. When we have had notice of financial transactions availability, the affordable housing supply programme has generally done quite well out of that. This year, we have seen an increase of £17.6 million in financial transactions, which has helped with the balance of capital availability.

I do not know whether anybody wants to add anything on FTs.

Are you referring to the open market shared equity scheme?