Seòmar agus comataidhean

Once or twice: I can write to you with the dates.

Yes, and it has been raised and discussed by members of the group.

The group is not determining tax policy or tax rates. It is looking at where tax strategy needs to land to ensure that we maximise awareness, get high levels of compliance and have a system that is fair, understandable and easy to navigate. We want a system that takes cognisance of how it drives behaviours.

I absolutely accept that services are critical to tackling poverty. I also accept that, in constrained financial times, all services and layers of Government must make difficult choices. However, I point to what the Accounts Commission and the Scottish Parliament information centre have said about the relative position of local government which, despite the challenges, has had a real-terms increase in funding, and the fact that an increasing proportion of the Scottish Government’s funding has gone to local government. Local government has always asked for an increase in share, and that share went up by 1 per cent in the previous budget.

Is there more to be done? Yes, there is. One of the opportunities for local government and, in particular, for services such as employability is that, through the spending review that the UK Government is leading, which will report in the spring around resource and capital—I am sure that we will touch on it today—we can get back to multiyear envelopes for services. That is really important for employability, because it funds a lot of third sector organisations that provide those supports to parents. A one-year funding envelope means that those organisations struggle to retain staff, so moving to a multiyear scenario will help local government per se but also help with those discrete areas of service.

It was ever thus.

Those are discussions that we need to have. I would make two points about that. Having sat through the early years of the debate on prescription charges right through to their being abolished, I know that there are some complexities to the issue. For example, someone who requires a prescription of paracetamol in large doses will not get that over the counter; they will need to get that through prescription. I am not saying that that is always the case, but some people require regular prescription of pain relief that cannot be obtained over the counter.

I can see that removing paracetamol from the list sounds straightforward to do, but how would we deal with those who rely on pain relief in higher doses? How would they get it? It sounds straightforward but, as soon as you open up such things, there are always complexities to deal with, as you can imagine.

Should we continue to discuss such issues? Yes. We need to ensure that, in every area of Government, there are no closed doors to thinking about how things are done more efficiently and effectively. I know that my health colleagues are certainly not close minded on any of those things, but it is inevitable that something that sounds straightforward never is.

Yes, that was the figure. Let me say a few things about why we ended up with that pay policy. I should also say that I am mindful of where we go next with pay policy. We have to think about the purpose of pay policy. Is it about managing expectations? Is it about driving expectations? Is it about signalling the Government’s expectations to the wider public sector?

The UK Government does not set a pay policy, and I do not think that it has any intention of doing so. I am mindful of the purpose of pay policy.

The Scottish Government pay policy that was published at the end of May set out multiyear pay metrics. It took account of a number of things, including affordability, which was based on the known funding at the time. Under the previous UK Government, spending reviews were started and suspended and budget dates were moved—I should add that there was poor communication as well—so we had to base the pay policy on the best estimate of the available funding.

We looked at the economic conditions. Inflation was forecast to be 2 per cent for this year alone. We wanted to do multiyear metrics from 2024-25 to 2026-27 to give some certainty; we said that anything on top of that would really need to be funded through efficiencies, which has happened in some sectors in order to fund pay deals. I should also say that the civil service unions have more or less settled for the 2024-25 element of the pay policy, although we are in discussions about the future years. For civil service trade unions, the policy resulted in a positive outcome.

There is also the wider public sector, around which the UK pay review bodies’ recommendations are key. We had no idea what those recommendations would be, and the level at which they were set was a bit of a surprise to a number of people. We then had a choice of how to respond. The new UK Government’s acceptance of those recommendations gave us a huge challenge; when it then said that it would fund only two thirds, with the other third to be found through departmental savings, that was another challenge. All that resulted in my having to take action in order to create headroom through the savings that I announced, as the UK pay review bodies’ recommendations created an £800 million pressure.

The issue, which was discussed quite extensively at the finance interministerial standing committee in Belfast, is that the UK pay review bodies’ recommendations have a contagion effect. I do not mean that in a pejorative way; I mean that they set the bar for what other sectors will land on. We have no input into them and we get no information about the workings of why they have landed where they have. The UK Government can accept them or not without any discussion with the devolved Administrations.

The four of us at the standing committee concluded that we needed to do things better than that. There needs to be a way of co-ordinating public sector pay across the UK that does not generate huge pressure for the devolved nations. That is about the timing and purpose of, and the input into, the recommendations. The Chief Secretary of the Treasury is cognisant of all that, and we need to see where that gets to.

I am keen to get away from single-year pay deals and maintain the multiyear look. Knowing what the resource envelopes will be from the spending review will be incredibly helpful for us in potentially considering multiyear rather than single-year envelopes. It will give clarity about the parameters over a longer period to those negotiating on both sides in the public sector, who will then be able to consider how much is front-loaded and back-ended and to examine reform and efficiencies. That is what my thinking is going towards—I want to take that forward on a multiyear basis. It leaves the question of 2025-26, but I will say something on pay and workforce as part of the budget.

I am sorry—that was a bit of a long-winded answer, but there is a lot of complexity in there.

That is what we could afford, based on the budget and the intelligence that we had about available funding. I could not set a pay policy that did not have funds available. I would have had to make savings at the beginning and to set a floor. If I had said 4 per cent, that would have become the floor and I would have had to announce a swathe of savings to create that floor.

We will provide it with that, and I will reflect on all of the lessons—

That is not something that I am aware of, to be honest. I was under the impression that the work on SLARC was positive and that they were getting on with it. Where the difficulty arises is who pays for it and who funds it. That was the difficulty in 2011, and that is the difficulty now. Are you saying to me that the council tax freeze decision has been a bit of an issue in a whole load of discussions with COSLA? Yes, it has, because COSLA does not agree with it. The issue has surfaced in many discussions with COSLA, but I do not think that it was an issue that got in the way of SLARC.

The bigger issue is that we all agree on most of the recommendations but it is then about how they are funded. It was understood that there was never any commitment given at all that the Scottish Government was going to fund this. In an attempt to be helpful and to move it beyond where it got to in 2011, there is a route there, but it has to be a cross-party route. You can understand why I am saying that. In the current climate, money is tight and, therefore, there will have to be a cross-party agreement that this is a priority. There is a strong argument for trying to set the ground in advance of 2027 to encourage new people to come in to serve in local government.

As I said in my opening statement, I do not think that remuneration is the only issue, but I do not disagree that it is a barrier. It is one barrier, although politicians around this table will fully understand that are many other areas that are difficult. If we collectively agree that this is important, we collectively agree that it is important in terms of the budget.

COSLA asked for SLARC to be set up and the Scottish Government agreed, because we recognise that there is a remuneration issue. I do not recognise the council tax issue having delivered something different in terms of the recommendations. The recommendations are positive and have been largely accepted by the Scottish Government, so I do not see what the council tax issue has changed. I do not think that it would have changed any of the recommendations and the report that popped out at the end of that piece of work. It is as it would have been whether or not there was a council tax freeze, in my opinion.

As for the funding of the recommendations, at no point has the Scottish Government said, in SLARC or anywhere else, that the Scottish Government would pay for the remuneration of councillors, for the very reason that it never has. It has never been something that Scottish Government has paid for; it has always been paid for by local authorities themselves out of the settlement.

The same issue arose in 2011, when the Scottish Government made the position clear that any uplift and change to remuneration would have to be funded by local government. At that point there was no agreement, so nothing changed. At this point there could be agreement, but Pam Gosal, as an Opposition spokesperson, will understand the importance of moving this forward cross-party. If the local government leadership groups and COSLA, which are multiparty, all agree that this is a priority for the local government settlement—when we are negotiating we get into a lot of detail around the local government settlement—that for me is a signal that there is cross-party support for it.

The regulations will require cross-party support in this place. We need to all be on the same page if this is to go forward and money is to be found because, bluntly, I will not fund this in the face of opposition from other parties—I just will not. My challenge is this: if this is a priority, let us take it forward cross-party. I think that it is a good report—regardless of whether the council tax freeze happened or not—and it has a lot of merit, but we need to agree on a cross-party basis.