Local Government Finance (Scotland) Order 2003 (SSI 2003/42)

– in the Scottish Parliament at 3:10 pm on 6th February 2003.

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Photo of Murray Tosh Murray Tosh Conservative 3:10 pm, 6th February 2003

We move to the debate on motion S1M-3807, in the name of Andy Kerr, on the Local Government Finance (Scotland) Order 2003.

Photo of Andy Kerr Andy Kerr Labour 3:30 pm, 6th February 2003

The order that we are asking Parliament to approve this afternoon is of real significance to all Scottish councils and, indeed, to all council tax payers. The Local Government Finance (Scotland) Order 2003 provides the grant support for Scottish councils' revenue expenditure in 2003-04.

Revenue grant to local government accounts for a third of the total assigned budget. The order will distribute more than £7 billion of grant to local government, which is an increase of more than £500 million on the current year. Those resources provide tangible evidence of our commitment to improvement of public services for the people of Scotland.

The order commits substantial additional resources to deliver better public services including, for example: better teaching for our school children; more support for children and families who are experiencing poverty and deprivation, including early-years services and out-of-school care; better services for older people in their own homes and additional investment in long-term care; more support in the community for people with mental health problems; free off-peak travel, including for all people over 60 and people with disabilities; and further additional investment in policing.

Those key policy initiatives have been developed in consultation with local government and other key stakeholders. The settlement covers the full cost—I repeat, the full cost—of the improvements. Once again, the settlement includes additional grant to cover pay and price inflation, thereby maintaining existing services. It also includes the full cost of councils' increased national insurance costs.

On top of the grant totals that I am announcing today, we will give local authorities £20 million over the next year, as the first year's allocation from the £90 million cities growth fund, and £40 million to tackle deprivation through the better neighbourhoods services fund. We will also give them £43 million through the changing children's services fund and support towards £1.15 billion of additional investment in school buildings. The resources are being targeted outwith the general grant settlement and towards specific priorities that include improving the infrastructure in our cities, increasing opportunities for our deprived communities, supporting better integrated children's services and investing in our schools estate.

The distribution of grant is based on the formula that was agreed with the Convention of Scottish Local Authorities. The increases for 2003-04 range from 6 per cent to 11 per cent, which is substantially above inflation. The formula makes allowance for the additional costs associated with deprivation and with serving sparse rural communities, and it includes special provision for the islands.

The settlement also protects councils that have the most steeply declining populations by giving them more grant than their population share would have justified. There are no new ring-fenced allocations within the settlement; indeed, about £64 million of ring-fenced education funding will transfer to unhypothecated general grant.

Councils have already published indicative council tax figures for next year. With the resources that we are providing today, I see no reason why councils should move significantly away from their previously announced levels. In fact, I note that Glasgow City Council has announced a council tax increase for next year of 1.9 per cent, which is well below its indicative figure of 4 per cent. This year is the fifth in a row that Glasgow has announced a below-inflation increase in council tax. That should be welcome news to the people of Glasgow and I congratulate Glasgow City Council on its prudence and restraint. I hope that other councils will feel able to provide other council taxpayers with a similarly good deal.

The grant allocations should enable councils to improve the quality of life of their citizens. They include £50 million to improve the local environment by tackling graffiti and vandalism, making our streets cleaner and safer and providing additional services to our young people. We are committed to continuing dialogue with local authorities and to working with them to deliver better public services to the people of Scotland.

However, the issue is not just about resources. We recognise that local government is a key driver of improvement in public services. The Local Government in Scotland Bill, which the Parliament passed last month, will remove barriers and demonstrates increased trust in local authorities. It provides a new duty for local authorities to secure continuous improvement in services through best value; a new duty to work with their partners to improve services through community planning; a new power to advance the well-being of their areas; and a new power to enable authorities to decide for themselves how much to invest in improving local infrastructure. Recently, we published a separate draft local governance bill. Ultimately, people will judge the changes that we have introduced on whether they see and feel better local services in their communities and on whether the services make a real difference.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

Is the minister confirming that, if he is in power after the elections, he will progress that bill?

Photo of Andy Kerr Andy Kerr Labour

I will not make any commitments for the new Executive in the Scottish Parliament—doing so would be unwise, unfair and unrealistic. The draft local governance bill allows for a choice to be made at the appropriate time—it is there and ready on the stocks for discussion and I am sure that the member understands that that is its purpose.

I want to return to resources and the delivery of local services, which is what the order concerns. The order is about changing the lives of people throughout Scotland through the public services that are delivered directly to them. As I said, the order will distribute more than £7 billion of resources to local government, which is £500 million more than in 2002-03; it will provide councils with increases of between 6 per cent and 11 per cent.

In conclusion, the purpose behind the order is to improve the services that are delivered to the people of Scotland. My fellow ministers and I will continue to work in partnership with Scotland's local councils—we can deliver better public services for all the people of Scotland through working in partnership. Local government has a vital role in that partnership and, with its contribution and support, I look forward to further improvements in the quality of life of our communities and in the services that are available to all Scotland's citizens.

I move,

That the Parliament agrees that the Local Government Finance (Scotland) Order 2003 (SSI 2003/42) be approved.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party 3:37 pm, 6th February 2003

The line-up in the debate is becoming a bit of a habit on Thursday afternoons, especially given our future timetable.

I want to start by dealing with an area in which I hope there is a degree of cross-party consensus, because it is a problem that affects us as parliamentarians. I am not sure whether the minister told us today, but he has certainly told us previously that the local government settlement takes up more than one third of the Scottish Parliament's budget. However, the Local Government Committee's stage 2 report to the Finance Committee on the 2003-04 budget process states:

"if scrutiny of the local government budget is to be effective and, in particular, the Committee is ever to be in a position where it can make an informed judgement on the adequacy or otherwise of the proposed budget, Parliament will have to be given much fuller information about the Executive assumptions and thinking underlying the budget figures."

Each year, COSLA says that it has not been given enough money and each year the minister says that the settlement is the most generous on record; or rather, he does not always say that it is "the most generous on record", but he always says that the settlement is very generous. We can expect that there will always be tension between the Executive and COSLA, but it is interesting that COSLA has been much less robust in its criticisms this year. I leave it to members to work out for themselves whether that has anything to do with the forthcoming elections.

The Local Government Committee expressed concern at the divergence between the views of the Executive and those of councils and was especially concerned about its inability to assess which of the competing claims was correct. If our budget process is to be meaningful, Parliament must be able to scrutinise the huge matter in question more satisfactorily. In particular, the committee should be able to recommend whether it thinks that the proposed level of aggregate external finance is adequate. That the committee's report says that it lacks the information to reach a conclusion on that matter is a significant problem that should concern us all.

I echo the Local Government Committee's welcome of the new prudential borrowing framework. Under that system, perhaps there will be more protection against some of the excess profiteering to which my friend John Swinney referred at First Minister's question time.

Every year, the minister spends much of his time telling us how good the settlement is, but when we are out in our constituencies we all meet constituents who believe the opposite, because of what they see as being the reality of the delivery of public services. They see a road system that has as many holes as it has traffic jams. In rural areas, they see that if a new school is to be procured, its cost usually includes the closure of another rural school, which causes devastation to that school's community. People see what is, in effect, rationing of social services to young and old. That is what our constituents tell us all; it does not match the minister's rhetoric.

Even if local government services were an unalloyed success, I think that we would—in the interests of transparency—want to tell the whole story. We would want to set out what we are paying for the services. We know that we will pay extra taxes from 1 May and that income tax—sorry, the Government prefers to call it national insurance—will go up. What has happened to the other component of local government income—council tax? Since Labour came to power in 1997, band D of the council tax has gone up by 37 per cent over the rate during the last year of the Conservative Administration. Inflation has gone up by 16 per cent—less than half of the increase in council tax. I wish that ministers would be a bit more honest. When they talk about how proud they are of their record, they should tell us about the costs that go with the alleged benefits that they are delivering.

Photo of Richard Simpson Richard Simpson Labour

I understand the analysis that Alasdair Morgan is putting forward, but will he tell us whether he would reduce council tax in areas such as mine in Clackmannanshire, or would he increase other taxes to ensure that public services are effective? He has produced an analysis that needs squaring; he cannot have it both ways.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

I will make two points in reply to Richard Simpson. First, I am not a councillor in Clackmannanshire, so I cannot set its council tax. Secondly, my point is that we want more honesty and transparency from ministers. We do not want only one side of the story to be represented. There might be good reasons why council tax has increased as much as it has and why Government wants to load more on to councils and less on to other taxation or whatever. However, we should be given both sides of the story rather than the spin that concentrates on one side and tries to hide the awkward facts on the other side of the equation.

On council tax levels, Keith Harding said in the debate last year:

"We should let local people make choices through local democracy. If councils make huge council tax increases, local voters will know what is going on and will give the politicians their verdict on the tax level at the next elections."—[Official Report, 31 January 2002; c 6013]

The problem is that councils have been making large increases over several years—certainly since the previous local authority elections—but in many parts of the country voting does not change anything because of the built in first-past-the-post Labour majority in so many areas. It is not worth bothering to vote because the same lot are always with us and they set the council tax. I do not know whether the Conservatives will yet again ask for democracy to take its course—happy in the knowledge that most times it does not—or whether they will ensure that that is the case by voting against the Proportional Representation (Local Government Elections) (Scotland) Bill.

Photo of Johann Lamont Johann Lamont Labour

Alasdair Morgan seems to suggest that when people choose to vote in a particular way, they are not able to choose to vote in another way. The fallacy is being promoted that under the first-past-the-post system people cannot kick out elected representatives with whom they disagree. Unlike some proportional representation systems, people can always do that under first past the post. If Alasdair Morgan does not know of any examples of that, I will give him plenty from throughout the country.

Photo of Murray Tosh Murray Tosh Conservative

The member is in his last minute.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

I ask merely for a system under which a party gets into power if the majority of people vote for it, and under which a party does not, if only a tiny majority votes for it, end up with an overwhelming majority of councillors so that there is no possibility that others can influence decisions in the council. That is what turns people off voting. The evidence is all round Scotland and has been for many years.

I take it that I have almost exhausted my time.

Photo of Murray Tosh Murray Tosh Conservative

You have another half a minute.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

Oh dear, In that case, I will finish off by reiterating the question that I asked last week about the level of non-domestic rates. Will the minister—after revaluation takes place—extend his commitment to put up the poundage in the average rates bill by no more than the rate of inflation? There is no point in continuing to put up the poundage in line with inflation—the bills are what is important. If there is revaluation, it is in the power of the minister to adjust the business rate poundage to take account of that and I ask the minister to say, in his summing up, whether that is his intention.

Photo of Keith Harding Keith Harding Conservative 3:45 pm, 6th February 2003

As I look back on the debates on local government finance in the past three years, it is good to see that there have been welcome improvements. However, it is clear that the Executive could do a lot more for local government in Scotland. The Executive congratulates itself on delivering an 8.5 per cent increase in local government funding in the coming financial year, but can it explain why, after that year, the increases will slump dramatically to a paltry 3.9 per cent in 2005-06? If the settlement is so generous, why have councils increased council tax by more than double the rate of inflation while cutting services? Local government desperately needs fewer funding allocation restrictions in order to allow it to deliver core services.

COSLA has argued that, when non-discretionary spending is removed from the Executive's funding, the true year-on-year increase is only 2.5 per cent. The Executive's increased ring fencing of funding—it has not, as the minister claimed, decreased—results in local delivery of central services, not local government.

Photo of Keith Harding Keith Harding Conservative

No, thank you.

The Executive is the most centralising Government that Scotland has ever seen.

Photo of Andy Kerr Andy Kerr Labour

What about compulsory competitive tendering?

Photo of Keith Harding Keith Harding Conservative

The Executive has not cancelled CCT.

The Executive leaves councils with only one role, which is to choose which cuts they must make to deliver the Executive's centrally imposed priorities. Ring fencing is an erosion of local democracy. Why should Scots care about their councils when the election is buried by being on the same day as the Scottish Parliament elections, and when councils' decisions are determined by ministers? In line with the recommendations of the McIntosh committee, the Conservatives would move local elections to the mid-point of each parliamentary session, which would allow people to focus on local issues and to choose councillors who can best deliver local answers.

Instead of the top-down, one-size-fits-all remedies that the Executive implements, we would reduce ring fencing dramatically and transfer power from the centre to enable local authorities to design specific solutions to the problems in their areas. Local authorities should be given the power to control their budgets and to set the agenda for the delivery of services according to their area's demands. Diversity is the key—what works best in the Highlands might be inappropriate in cities such as Glasgow. At the very least, local authorities should develop the local government budget in partnership with the Executive, as COSLA has requested year after year.

COSLA has identified a £440 million funding gap in the settlement in relation to the funding of core services in the next three years. COSLA argues that, under the funding allocations, councils cannot buy new services and can fund only some of the existing services. Once again, under the Labour-Liberal Democrat coalition, investment in roads, pavements, street lighting, school buildings and other basic council infrastructure will continue to be neglected and will deteriorate year on year.

The Executive pledges less to local government while the public pays more. The average band D council tax bill in Scotland has risen by more than 30 per cent since Labour came to power in 1997. In some council areas, such as Aberdeen City Council's, council tax has increased by as much as 50 per cent. Council tax has become yet another stealth tax.

Photo of Keith Harding Keith Harding Conservative

No thank you.

COSLA has warned that unless the Executive increases funding considerably in future, councils might be forced to increase council tax more to allow them to make inroads into the backlog of local infrastructure investment. The Scottish Conservatives would alleviate the tax burden on individuals by giving additional funding to local authorities to allow them to freeze council tax in the next three years. We would also improve the poor collection of council tax in Scotland—a scandalous £133 million remained uncollected in 2001-02 and a grand total of £578.6 million is outstanding since 1997.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

Keith Harding said that the Conservatives would provide extra funding for local authorities to allow council tax to stand still. Will he say where that money will come from?

Photo of Keith Harding Keith Harding Conservative

Unlike the SNP, we cost our proposals fully, as will be revealed in our manifesto. The freeze is not for next year; it is for three years—[ Interruption. ]

Photo of Keith Harding Keith Harding Conservative

Mr Rumbles says that it will be efficiency saving; however, it will be additional funding.

Council tax has a collection rate of 90 per cent in Scotland compared to a rate of 96 per cent in England and Wales. Uncollected taxes lead to a larger tax burden on the individuals who pay their taxes, because they prop up the shortfall that is caused by Labour councils' inefficiencies.

The Local Government Committee concluded that it is difficult for Parliament to scrutinise the Executive's figures as they are currently presented. The committee suggested that the budget process should be linked to the spending reviews rather than to annual budgets, with the Executive producing information about spending levels and anticipated service outcomes. That would enable transparency and analysis in the local government accounts, such as is not possible at present.

In conclusion, the Scottish Conservatives would reverse the Executive's policy of centralising local government. We would reduce the ring fencing of funds, which would give local government the freedom to address its core service needs according to local priorities. We would alleviate the tax burden, giving councils throughout Scotland the opportunity to freeze council tax levels. We would remove the inefficiencies in council tax collection and give the electorate real choices at local government elections. Locally accountable councils would provide better services, engage better with their communities and provide better value for money.

Photo of Murray Tosh Murray Tosh Conservative

When members say, "In conclusion," that is generally a sign that they are about to end.

Photo of Keith Harding Keith Harding Conservative

I am about to end—I have only half a page to go.

Photo of Murray Tosh Murray Tosh Conservative

Half a page will take you to the seventh of your five minutes.

Photo of Keith Harding Keith Harding Conservative

I am sorry. I shall leave it there, thank you.

Photo of Murray Tosh Murray Tosh Conservative

I ask members not to take interventions in their final minute and not to ask for another half a minute and try to take an extra two minutes. We are not too badly off for time this afternoon—

Photo of Keith Harding Keith Harding Conservative

I did not ask for extra time.

Photo of Murray Tosh Murray Tosh Conservative

Yes. Let us move on to Iain Smith for the Liberal Democrats. You have five minutes, Mr Smith, but I will be reasonably flexible and compensate for interventions that you take.

Photo of Iain Smith Iain Smith Liberal Democrat 3:53 pm, 6th February 2003

Please do not, Presiding Officer.

It feels a bit like groundhog day as we come yet again to this debate. I wonder why the debate is taking place in the chamber, because the statement that was made before Christmas gave all the information. It would be much more appropriate if the order were to be debated in the Local Government Committee—not that I am asking for any more work for our overburdened committee. However, as the committees deal with most statutory instruments, it would be more appropriate for the Local Government Committee to consider the order—which is just a technical division of the moneys that go to local government—than to have a full debate on a matter that has been debated through the budget process and through the statement that was made before Christmas. It would save us all a bit of time and it would save us from having to make another attempt at the same speeches.

It is always helpful to follow Keith Harding, because he gives me plenty to say without my having to prepare too much in advance. I find the Conservatives' sudden conversion to the wonders of local government quite fascinating. They spent most of the 1980s and 1990s taking powers away from local government, either by adding its powers to those of quangos or by centralising them. Suddenly, they want to do the opposite—although, if one reads between the lines of what they say, one realises that they want to take away from local government the major powers and the major matters for which it is responsible.

For example, they want to remove the responsibility for education from local government—the biggest single power that local authorities have. They also want to take away social services from local government and give them to quangos—they do not really want to improve the lot of local government. That is the policy that they have stated previously. They want to give community care—which is, if I remember correctly, a social service—to quangos. The Conservatives are not the friends of local government—

Photo of David Davidson David Davidson Conservative

What about the health service?

Photo of Iain Smith Iain Smith Liberal Democrat

That was a quango, the last time I saw it. The national health service is a quango—it is an appointed, rather than an elected, body. I believe that local government is core, and that the Conservatives are not the friends of local government. I am fascinated by their budget proposals. They would freeze council tax levels and give extra money to local government to make up for it, but I wonder where that money would come from. Which other services will they cut to provide the money? They have not told us. They have a fully costed budget, according to Mr Harding, but they have not told us where a penny of the money will come from.

Photo of Brian Monteith Brian Monteith Conservative

Did the member come with a prepared speech? It sounds as though he is making it up as he goes along in answer to everything that Keith Harding said.

Photo of Iain Smith Iain Smith Liberal Democrat

My understanding was that this is a chamber in which we debate issues and respond to what people say in a debate. I thought that was the point of a debate. I am responding to comments that were made by the member.

I will clear up a Conservative myth. They keep telling us that local government would be so much better if authorities collected all the council tax that was due to them. They tell us that there is £133 million floating around that they have not collected. That is not true. Local government collects significantly more council tax than is paid by 31 March. Local government does not stop collecting the council tax on 31 March; it continues to pursue it. If we look at the latest figures from 30 September 2002 for collections for 2000-01, there is not £141 million in uncollected council tax as was the position on 31 March 2002, but only £95 million. Some £46 million was collected between March and September. Councils are still collecting it. The mythical £133 million that the Conservatives would use to fund local government does not exist. We will never get a 100 per cent collection system for council tax because it is an imperfect tax. I agree that we should be moving towards a better system of collection and that every council should aspire to be as good as the best.

I welcome the statement today and the increase in funding for local government. There is to be an 8.5 per cent increase in the first of the three years. The figure decreases year on year to 3.5 per cent by the third year, but that is after the 3.5 per cent on top of the 8.5 per cent on top of the 4.8 per cent of the previous two years. That is a significant increase in the funding of local government.

I am surprised that the Conservatives did not welcome the small business rates scheme: actually, I am not surprised, because they opposed it. The scheme will bring a great deal of benefit to small businesses in my constituency, including many small shops, guest houses and hotels. The scheme will be funded largely from the much larger businesses for which rates are not such an important part of their overall turnover. Rates make up a bigger proportion of the turnover of small businesses than they do for larger businesses, upon which the rates do not impact. Indeed, the 0.6 per cent increase in non-domestic rates for the larger businesses comes at a time when the rest of the rate is being frozen. That is a less-than-inflation increase for those larger businesses, so they will not suffer.

I will clear up one final myth. Since the Liberal Democrat-Labour Administration came to power, council tax has increased by only 14 per cent in the past three years. In the past two years that the council tax was set under the Conservatives, the increase was 25 per cent. At the same time, local government budgets were cut left, right and centre. Under the Liberal Democrat-Labour Administration, council tax, services and budgeting are increasing. The council tax is being kept to a reasonable level of increase.

I welcome the order.

Photo of Sylvia Jackson Sylvia Jackson Labour 3:58 pm, 6th February 2003

I thought that I would give a balanced speech today, considering local government funding, the reforms that are coming through and various bills. I planned to consider some of the issues from my constituency. After listening to Alasdair Morgan and Keith Harding, I wonder why I try to be balanced, but here goes.

As Iain Smith described, record levels of funding will go to local authorities over the next three years. I will concentrate on the distribution of those monies, which is based on the formula that is agreed with COSLA and which, in the most recent case, is based on the 2001 population census as well as the 2002 school roll figures. The formula makes allowance for additional costs associated with deprivation and serving sparse rural communities. There are other monies for the better neighbourhood services fund. The minister outlined the additional pockets of money.

In my constituency, there are smaller pockets of deprivation that sit side by side with areas of affluence, which often mask the former. Does the minister feel that the existing formula takes into account those smaller pockets of deprivation?

There is also some concern from authorities such as Stirling Council that the fast increase in population may not be taken adequately into account. Rising populations obviously impact on school provision and other services. I know that Bruce Crawford and Brian Monteith will have picked up that issue.

Photo of Sylvia Jackson Sylvia Jackson Labour

I was going to outline the issue, but Bruce Crawford can fire away.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

In referring to Stirling Council, does Sylvia Jackson accept that, when Labour came to power, council tax in band D stood at £678, that in 2000-01 it had risen to £954 and that this year it went over the £1,000 barrier? Does she think that that is fair to the constituents of Stirling?

Photo of Sylvia Jackson Sylvia Jackson Labour

I shall come back to that point in a minute, but I would like to finish what I was saying about schools, which is important—as is Bruce Crawford's point, obviously.

The issue of rising populations is compounded when, for whatever reason, a high concentration of families move into the area with more younger children than would be expected. That has happened recently in Dunblane, where the children-to-house ratio is several times higher than the figure put into the formula by local councils to plan for schools. Where we get the money from is a real issue that confronts us in making extra school provision. Will the minister comment on how local authorities address that and other issues to do with rising population? As I understand it, the figures from 2000 to 2006 have been based on the 2002 figures. I think that that is what we were told.

In December, the minister outlined how reforms, such as the prudential framework, would radically help local authorities, giving them more freedom and the incentive and support to increase investment in services. The Local Government in Scotland Bill gives councils the power to decide for themselves how to invest. That and other reforms are to be welcomed, as that is certainly the way ahead.

As the minister knows, one of the big issues in my area is that of roads and bridges. I endlessly go on about that.

Photo of Brian Monteith Brian Monteith Conservative

Will Dr Jackson take an intervention before she gets into the last minute of her speech?

Photo of Murray Tosh Murray Tosh Conservative

That is another one in the last minute, but I am sure that you will be brief, Mr Monteith.

Photo of Brian Monteith Brian Monteith Conservative

I shall be very brief. I hope that Dr Jackson will reach the point where she is able to answer Bruce Crawford's question.

Photo of Sylvia Jackson Sylvia Jackson Labour

I do not think that I will.

Photo of Brian Monteith Brian Monteith Conservative

Will Dr Jackson confirm that there is, in fact, a member of the SNP who supports the Labour council and votes for the large council tax increases that Mr Crawford mentioned?

Photo of Sylvia Jackson Sylvia Jackson Labour

I think that I shall ignore for a moment the political opportunism of both Bruce Crawford and Brian Monteith and continue with my speech.

I welcomed Lewis Macdonald's statement the other day that there would be extra money for local road maintenance. He also said that the national survey by the Society of Chief Officers for Transportation in Scotland would be used as a basis for more investment. This is an increasingly important issue. If we leave those roads for much longer, we will need more money in the longer term to fix them. I encourage the minister to continue with all the good work that he is doing, but I urge him to listen to what local councils are saying. They are still asking for a little bit more flexibility, so that some of the budgets, as Keith Harding was saying, can be redirected. We can then move some money into road maintenance, although we also need more money.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party 4:04 pm, 6th February 2003

The order before us today is a very mean document indeed. It is ill-prepared and covered with hand annotations, but there is a more fundamental problem with it than that. The tables use 6 point print, and my old eyes no longer find it easy to read.

Photo of Richard Simpson Richard Simpson Labour

He should get some glasses.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

With my presbyopia, myopia and hypermetropia—I have got them all—it is difficult to read.

In paragraph 3.1 of the Scottish ministers' report—the Local Government Finance (Scotland) Order 2003: Report by the Scottish Ministers under paragraph 2(3) of Schedule 12 to the Local Government Finance Act 1992 (SE 2003/16)—I began the hunt for the £14.077 million.

Paragraph 4.1 of the Scottish ministers' report purports to explain the non-domestic rate income—this print is too small for me to read—and the revenue support grant for the coming year. We have the explanation of taking £14.077 million out here and putting it back there, and unfortunately the figures balance: I congratulate you, minister.

Distributing an order that is hand annotated and in 6 point print invites the sort of scepticism with which I began to read the document, and that is unnecessary. I must say that the minister does rather better in the report, which is, at least, in 10 point print—thank you for that. I shall move on to some more serious points.

The one thing that comes across in the report is how little flexibility local government has these days. So much of the money that is allocated to local government is hypothecated for particular issues, and indeed some of it is also being used for competition.

It is time that we had another look at the business rates system, which is penalising town centres at the expense of retail parks. The reason for that is not just that there are small businesses at the centre and large ones at the periphery.

Although there has been an above average—and very welcome—rise in funding for Aberdeenshire Council, it still leaves the council very near the bottom of the table in per capita funding. Indeed, the funding that has been provided shows little recognition of the rurality of the area. People too often associate it with Aberdeen, which is unwarranted as far as funding is concerned.

That said, I should point out that the Executive is doing some good things. For example, three-year funding is much better than one-year funding, and we welcome that approach.

However, I have spent much of my life looking at numbers, and I return to those numbers, particularly the missing ones, which always give me cause for concern as far as local government and the Scottish Executive are concerned. For example, interest charges are dealt with in a rather arcane way in local government, and it is not at all clear against which assets the charges are being calculated. Indeed, we do not have a statement of the assets or liabilities of local government or of the Scottish Executive. One would have such statements for a commercial company or a business. The lack of such a statement makes it very hard to judge whether our assets are being used effectively—and I say so entirely objectively. In particular, the fact that the liabilities associated with the private finance initiative have not been included means that we are in danger of missing any potential problems when we come to supervise budgets.

As for some of the allocations—for example, those to the quality-of-life initiatives—it appears arbitrarily that half of the money has been given to education and half to other issues. Furthermore, staff are being diverted into pretty meaningless competitions at the expense of doing the job in hand and getting money for their departments.

There are still unfunded obligations such as the national road strategy, the climate change levy, the education bill and the McCrone agreement, which is a big issue, particularly in rural areas. Councillors go to councils with great enthusiasm, although some resign—such as a Tory in Aberdeenshire recently—because they feel that they cannot make a difference. However, that is the Tories for you.

At 35 per 100,000 people, Scotland has the fewest elected politicians of any country in Europe. In England, that figure is more than 40, while in Greece it is 650. Our councillors need the best possible support and the funding to enable them to do the job. I am far from certain that we have given them either.

Photo of Brian Monteith Brian Monteith Conservative 4:09 pm, 6th February 2003

Before I go on to my prepared speech, I should nail my colours thoroughly to the mast and say that we need fewer politicians rather than more. [ Interruption. ] I will gladly put myself up against everyone in the May elections. I have no fear of contest.

I want to participate in this debate because some of the points that I made and questions that I raised about cultural spending during last week's debate on the Budget (Scotland) (No 4) Bill were not adequately answered. I will revisit those points with regard to local government spending on culture.

I recently received a letter from Bridget McConnell, of Glasgow City Council, pointing out that there was deep concern in local government about spending on recreation, leisure and cultural activities. It suggested that spending has dropped by about 14 per cent in the years since council reorganisation. I am aware that since the formation of the unitary authorities, the new councils, having identified their responsibilities and which theatres and sports complexes they run, might have made changes in their budgets. We must recognise, however, that the overall tax take has remained broadly the same, if not higher.

In East Lothian, for instance, the Brunton theatre company found that its funding disappeared. Effectively, the council that used to fund the theatre company decided to take its money away, as the additional funding that had come via Lothian Regional Council no longer existed.

Photo of Andy Kerr Andy Kerr Labour

It was the Tories who got rid of the regional councils.

Photo of Brian Monteith Brian Monteith Conservative

That is true, but it was for the new East Lothian Council to make up the difference, as indeed it did in support of Musselburgh race track. The council took a local decision, which one has to respect, but the Scottish Arts Council also withdrew its funding at the same time.

What I am trying to stress, without trying to score any party-political points, is that there have been changes in the financial support structure for various cultural activities, and there comes a point when we need to take a look at that.

An additional factor has come into play in the district of Stirling. Funding from the national lottery, particularly capital funding, has brought us a number of welcome new facilities. However, those facilities have been predicated upon business plans. Many of those plans, in the rush to obtain the money available, were poorly worked out. The funding for the McLaren community leisure centre in Callander now requires Stirling Council to put in practically a quarter of a million pounds each year. I accept and admire Stirling Council's commitment, but that illustrates the strain on local government funding of various cultural activities.

We are approaching the stage when, because of the sudden demands on councils and on their current account funding streams for such new leisure facilities, because of the changes that have been made and because of the withdrawal of funding from the centre, we require some sort of review involving local government, the Scottish Arts Council, those in the cultural world and central Government in order to work out how we go forward. There are real difficulties, which I do not think would have existed if it were not for those factors. Otherwise, Bridget McConnell would not have written to me.

Photo of Iain Smith Iain Smith Liberal Democrat

The Conservative spokesman at the start of the debate spoke about giving more power to local government; Brian Monteith seems to be talking about holding more power at the centre.

Who speaks for the Conservatives?

Photo of Brian Monteith Brian Monteith Conservative

I am not talking about power; I am talking about a recognition that local authorities face difficulties. A change in the funding priorities and support that we give local authorities may be required so that they may take their local democratic decisions. I am not second-guessing what the outcomes might be.

Generally, the tax take has remained the same or has increased. I want to find out what we can do to ensure that there are viable local facilities that are supported by communities. I look forward to hearing what the Deputy Minister for Finance and Public Services might say in winding up.

Photo of Brian Monteith Brian Monteith Conservative

I am sorry—I enjoyed the deputy minister's Monty Python references during last week's budget bill debate. I thought that we might get "The League of Gentlemen" this time, or perhaps "Smack the Pony" or "Jackass". However, it is not to be. I look forward to hearing what the Minister for Finance and Public Services thinks that we can do to ensure that cultural facilities have adequate funds to keep their doors open.

Photo of Richard Simpson Richard Simpson Labour 4:14 pm, 6th February 2003

I have listened to the speeches of SNP and Conservative Opposition members, which were extraordinary. Members speak as if the budget for local government were being cut, which is not the case. Clackmannanshire Council, which is receiving a funding increase of 9.2 per cent, described that as a severe cut. When can a real-terms increase of that size be described as a cut? That can happen only when the wish list of a local authority is totally out of control.

Brian Monteith, Bruce Crawford and Sylvia Jackson discussed the situation in Stirling. Council tax in Clackmannanshire, where the council is SNP controlled, has risen exactly in parallel with council tax in Stirling, which has a Labour-majority council. This is not a matter of party politics.

At the outset, I must make one serious point. One of the major problems with local government finance is its complexity. Even the brief report that we have received contains an alphabet soup. It refers to grant-aided expenditure, or GAE, AEF, total estimated expenditure, or TEE, and NDRI—the list goes on and on. MSPs and members of the Finance Committee—let alone lay people—have difficulty understanding that terminology.

Over the next three years, the balance between the amount of money that central Government is investing and the amount that local government is expected to raise is changing slightly. However, 82 to 83 per cent of local government funding will still come from central Government. That is not appropriate in the long term.

I want briefly to discuss one of the three local authorities that fall within my constituency—Clackmannanshire Council. Clackmannanshire Council is the smallest mainland authority in Scotland, with a population of 54,000. It is one of the 15 most deprived local authorities in the United Kingdom. Within central region, it has a higher unemployment level than either of its neighbours—almost three times that of Stirling and one and a half times that of Falkirk. Although, along with the rest of Scotland, unemployment has fallen in Clackmannanshire from 11 per cent to 6.5 per cent, the male unemployment rate within that is still 11 per cent.

Employment patterns are changing. Those changes relate not only to gender, but to types of employment. The breweries and mines have gone, and the textile industry has been reduced to a pitiful state, compared with the position 10 or 20 years ago. Many new jobs are part time. It is difficult to attract new industry to the area. Why? The authority has no trunk roads or rail connection. There are traffic jams at either end of the county, as people try to get out to work in the morning and to get in the evening. To add insult to injury, from 1996 onwards the authority was left with a partially completed 10m-single-carriage road.

I am glad that, through funding that it has provided and through partnership with local government, the Labour-led coalition has started to change things. Even Bruce Crawford will recognise that the completion of the A907 has benefited the local population significantly. The Executive has worked with the Strategic Rail Authority and the local council to produce a private bill that will advance the rail agenda and allow a railway line to open in 2005-06. The new bridge across the Forth—which I hope will be called the Clackmannanshire bridge—will open us up for business.

The infrastructure that the Executive is developing, through local government funding, is equally important. The £1.2 million that has been announced this week for school refurbishment is very important, although Clackmannanshire Council has delayed the benefits that public-private partnership could bring by endlessly reworking its proposed not-for-profit-trust system. The SNP first mentioned the system in 1997, but it has still provided no details of a workable solution. Such delay affects pupils adversely. I object strongly to the fact that the SNP is playing politics with their lives.

My final point is not dissimilar to a point that Brian Monteith tried to make. The complexities of lottery, central Government, local council and other forms of funding are creating problems. I will illustrate those with reference to the Scottish Further Education Funding Council. Because there is a need for urban regeneration in the centre of Alloa, we must move Clackmannan College from its current, run-down premises to a site next to the social inclusion partnership area. However, the funding for that comes through the Scottish Further Education Funding Council, whose remit does not allow consideration of the urban regeneration question. Further, because the scheme is not entirely to do with urban regeneration, the Government cannot or will not put any money in. Still further, because the scheme is not a council issue, the council cannot put money in either. The result is, the regeneration of Alloa is being held up because things are not being joined up. There is an absolute necessity, given the complexity of funding, that those issues are addressed.

When he sums up, can the minister send a strong message that the voluntary organisations should receive three-year settlements, like the local authorities? There are voluntary organisations in my area that are still waiting for their settlement for next year and have had to send redundancy notices out again. That is unacceptable to staff.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat 4:20 pm, 6th February 2003

Over the years, there has undoubtedly been a trend towards greater and greater centralisation of local government funding. Central Government, more than ever before, effectively decides the level of local government spending throughout Scotland. A fundamental principle of Liberal Democrat policy is to ensure that more council revenue is raised locally and that taxes relate more closely to people's ability to pay. While it has not been possible to tackle such major issues during this Parliament, I hope that it will be possible to do so in the next Parliament. That said, as the minister outlined earlier, there have been significant achievements by the Executive in reforming local government finance during this Parliament. Further, the draft local governance bill that has just been published gives me confidence that we will be able to achieve radical change in the next Parliament.

I am pleased that, after years during which Aberdeenshire Council received less than the average amount of funding per head of population—in fact, almost 10 per cent less—this year it is to receive a rise of more than 9 per cent and, over the next three years, a cumulative rise from the Scottish Executive of almost 20 per cent. That is above the average increase for Scotland, and is a welcome step in the direction of redressing the balance of underfunding in Aberdeenshire.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

Where does that leave Aberdeenshire Council relative to the other 31 councils?

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

As Stewart Stevenson well knows, in 1999, when the Scottish Parliament was elected, Aberdeenshire Council received only 90 per cent of the average funding per head of population. The Scottish Executive—the Labour party and the Liberal Democrats working together to deliver for the people of Aberdeenshire—have changed that situation dramatically. We now have a local government finance settlement that is above the average. That is an amazing and significant step forward for the constituents whom I represent in West Aberdeenshire and Kincardine and for Stewart Stevenson's constituents in Banff and Buchan. The current settlement goes some way towards balancing underfunding in Aberdeenshire relative to other local authorities.

There has been a rise, from some £263 million in this financial year to £316 million by 2005-06. I know that a good deal of that is ring-fenced funding, but it represents an increase of more than £50 million over the next three years for Aberdeenshire. That is good news for my constituents.

As I said earlier, the current situation is significantly different from the situation that pertained in the first year of this Parliament, when Aberdeenshire's budget was under a great deal of pressure and the convener of the council and the councillors came to the Parliament to lobby MSPs. That situation was due to years of underfunding by Conservative and Labour Governments. Because I felt in that first year that the Executive was failing to address the issue, I felt compelled to vote against the Executive's expenditure plans for Aberdeenshire.

I am delighted to be able fully to support the motion before us. The Labour and Liberal Democrat Executive is delivering for the people whom I represent. I look forward to seeing the fruits of the extra £50 million over the next three years.

Photo of Bruce Crawford Bruce Crawford Scottish National Party 4:25 pm, 6th February 2003

I remember well the dying days of the Tory Government, when I met other council leaders throughout Scotland to discuss the implications of the financial settlements. We shared a common cause against the Tories, who had subjected local government to 15 years' hard labour and had mounted successive attacks on local government communities. I remember well the palpable anger that was felt as the Tories attacked the very roots of communities throughout Scotland. I also remember how frustrated many council leaders were by the spin and the smoke-and-mirrors games that successive Tory Secretaries of State for Scotland played.

Keith Harding—who, sadly, is no longer in the chamber—gave us more spin. He made it plain that the Tories have no serious intent of fighting the Scottish parliamentary elections, but intend to focus on the council elections and protecting the council tax payer. More smoke and mirrors will be involved.

I shared those council leader meetings with people such as Kate Maclean, Frank McAveety, Tom McCabe and even the man who is sitting in the front row of the Labour benches—Peter Peacock. I find it hard to accept that the same games of spin and smoke and mirrors are being played by the people who so despised Tory practices. I ask the Executive not to continue to embrace the Tory games of smoke and mirrors but to treat local government with the honesty that it deserves and to accept with dignity that, although extra money is going in, there is still a £440 million shortfall.

Photo of Andy Kerr Andy Kerr Labour

I am glad that the member acknowledges that more money is going in. Will he also acknowledge that I was not crowing about the settlement and that I described it as being challenging but fair? I admitted that it would stretch local authorities, but we expect that across all Executive portfolios. The settlement is challenging but fair for our local councils, our public servants and all those in public services.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

At no stage in the minister's speech did he accept the scale of the problem that exists, which is about £440 million. Why is it so difficult for the Liberal and Labour Executive to acknowledge that the order will mean that, despite the extra resources, councils will still be underfunded to that extent? COSLA, which is controlled by the Labour party, says that, not the SNP.

Throughout Scotland, councils are struggling to cope with the new burdens that are being placed on them. I am seeking honesty and dignity for local authorities. On McCrone, we are already receiving reports that councils are having problems in supporting the classroom assistants. On recycling, there are capital investment and infrastructure problems. Particular problems for the elderly are arising in the delivery of community care. Energy efficiency measures, which are a prime target for spending to save, are suffering from problems to do with renovating old buildings and dealing with old plant.

On affordable housing, in places where there is little housing stock debt, such as East Lothian, councils do not want to transfer their houses. For such councils, stock transfer is a bureaucratic problem that consumes resources. They need more section 94 consents, and that is what they are calling for.

I want to deal with a specific issue that affects roads. There is a problem in rural Scotland and in Stirling in particular. The present formula is based on the amount of miles of road, and the money is applied in each area according to that formula. However, we require a formula that is based on need, which would enable authorities to obtain the right amount of money and to focus it on the right areas.

Richard Simpson mentioned the benefits of PFI in schools and how it made up for years of neglect. He spoke about the things that Labour is supposed to have done for Clackmannanshire. It is interesting that the SNP's "Connecting Clackmannanshire" manifesto for the 1998 council elections put roads, railways and bridges at the top of the list, and all of them have been delivered since Clackmannanshire got an SNP council. I applaud that council's approach to PFI. If it wants to put more money into schools rather than into the pockets of profiteers, I say, "Good on them." I have referred previously to the problem of the level of increase in council tax in the Stirling Council area. Labour tells people on the street that councils are getting millions of pounds in extra resources, but the result is that Labour councils get hammered for large council tax increases.

If there was an honest debate and an acceptance that the new burdens are not always fully covered by settlements from Government, the council tax payer might just be able to have a greater degree of faith in local government. Today, I ask members to recognise that real problems still exist. To do otherwise would be to undermine even further the role of local government.

We will not get democratic renewal in Scotland until we get honesty, transparency and fairness. All the other things that go on—whether they come from Executive bills or other bills—will not improve the turnout at local authority elections unless that honesty and transparency exist. [Interruption.]

Photo of Andy Kerr Andy Kerr Labour

Is Bruce Crawford making a spending commitment?

Photo of Bruce Crawford Bruce Crawford Scottish National Party

I would applaud the minister if he were to do so. When he sums up the debate, I ask him to admit that there is a £440 million shortfall in the money that has been provided. If he says that, I shall indeed applaud him.

Photo of Tom McCabe Tom McCabe Labour 4:31 pm, 6th February 2003

If Bruce Crawford thinks that the situation that is faced by local government today is closely comparable with that which was experienced under the Tories, he is suffering from selective amnesia.

Only a disingenuous politician would suggest that the local government finance order that is before us today is anything but good news for local government. It would be equally disingenuous for anyone to deny that the order represents a reversal of the constraints and mistrust that central Government visited upon local government during the long Conservative years. I am happy to concur with Iain Smith's scepticism about the views that have been expressed by members of the Tory front bench this afternoon. I have never been burdened by the worry that the Conservatives have any chance whatsoever of winning the next Scottish election. This afternoon's comments from the Conservatives confirm to me that they are not burdened with that worry either.

Some people would trade on the view that local government finance is extremely complicated—too complicated for ordinary people to understand. They would therefore spin the line that today's settlement is a disaster, no matter how good the figures are. They would be fundamentally wrong to do that, and would risk being exposed as self-serving if they were to try. An increase of 8.5 per cent for 2003-04 is a substantial injection of cash for local government. Let me put that another way—

Photo of Tom McCabe Tom McCabe Labour

I shall in a moment.

To put it another way, anyone who was currently involved in a wage negotiation would be very happy to be offered an 8.5 per cent no-strings-attached increase.

Photo of Brian Adam Brian Adam Scottish National Party

Of course anybody who was offered a wage increase of 8.5 per cent would be delighted. However, would Tom McCabe care to tell us—we have not heard this from the minister—how much of that 8.5 per cent increase relates to new burdens, some of which are a direct consequence of legislation that has been widely supported in the Parliament?

Photo of Tom McCabe Tom McCabe Labour

I certainly hope that a proportion of that 8.5 per cent relates to new burdens. We were elected to the Parliament on a commitment to expand local services. When local services are expanded, local government takes on new burdens. We are in the business of creating new burdens and that is why we will win the next general election. The SNP will lose that election because it does not recognise that.

Photo of Tom McCabe Tom McCabe Labour

In a moment.

Local government is critical to the fabric of our society, so it is important that it is properly funded and managed and that it is open to the necessary changes and challenges of the 21st century. Let us look at what that means for the people who depend on local government services. To avoid any notion that the debate is about abstract things, let me make it clear that that includes every person in the chamber as well as all the people whom we represent.

We will have more police on Scotland's streets than at any time in our history. With proper management, local government can further develop free personal and nursing care for older people and strive to be world leaders in the care of the elderly. There is more money to improve our environment and clean our streets. The new prudential borrowing scheme for capital investment will revolutionise the opportunities that are available to local government. Councils that are prepared to work in partnership with other agencies are in a better position than ever before to compile for their areas medium to long-term plans that can become a reality. Under a decade ago, councils throughout Scotland struggled with the limitations of section 94 consents. They could only dream of the opportunities that are now being presented to them.

It is important for all concerned to remember where we were in order fully to appreciate where we are now. It is important to remember that, although the Local Government Finance (Scotland) Order 2003 is a substantial part of the story, it is only a part. In addition to the order, the better neighbourhood fund provides a further £120 million and a stream of allocations, some of which were mentioned by the minister, for specific services.

All that is in contrast to the past and is a challenge for the future. The Executive is right to demand best value and continuous improvement. Local government is obliged to the people it serves to recognise that duty and to meet that challenge. The redevelopment and expansion of local government services are critical if we are to meet the public's needs and aspirations. Those are the tough choices that lie ahead for local government and the funding in the order will make it possible to make them. The lateral thinking and vision of committed local people will make that a reality.

Photo of George Reid George Reid Scottish National Party

My regrets to Brian Fitzpatrick. I am afraid that we are out of time.

Photo of Donald Gorrie Donald Gorrie Liberal Democrat 4:36 pm, 6th February 2003

I am happy to support this settlement, unlike the first year's settlement, which I felt continued the squeeze on local authority spending that was started by the Conservative Government and then carried on by the Labour Government. However, we have got over that now and the settlement is very welcome.

It is open to argument that the settlement could be better still, and I think that that is quite right. However, if local authorities have been pushed down to the bottom of a deep valley by successive Governments, they cannot expect to get up to the mountain top, where they would like to be, in one bound like some television character. We have advanced significantly up the hill and will do more in the next few years. The settlement is welcome.

In particular, I welcome something that does not come in until next year—the prudential borrowing powers. In recent years, councils have had grave problems over capital expenditure and the proposition that they should be allowed prudential borrowing powers is very sensible. Although it is not strictly a subject for local government, we could consider extending those powers to Communities Scotland and to housing associations so that they could use their resources to borrow more, build more and help solve our housing problems.

We have to work out ways of getting better value from our existing money, but our systems are still quite faulty. I will give one example out of many. The Justice 1 Committee recently took evidence in Inverness. Highland Council and Aberdeen City Council have set up systems to try to help in the field of youth justice. The Inverness system had eight different funding sources, and the one in Aberdeen had seven. Each of those sources had its own criteria, time scale and monitoring system so that it was impossible for the councils to deliver those services and get good value for money, despite the fact that the council departments and the voluntary sector had been brought together in a harmonious way.

I know that it is difficult to co-ordinate different departments, agencies such as the national lottery and local and national Government. However, we must tackle that problem because, at the moment, we are not getting the value for money that we should be getting. That applies particularly to the voluntary sector, but it also applies to councils.

Those in authority seem to love new projects and to neglect the core funding of both councils and the voluntary sector. There is an illusion that everything new must be good, but that is not the case. We must put more effort into core funding and into keeping existing good projects going. It is said that it is harder to get money to keep a good project going than it is to get money to start up a completely new project.

A lot of the well-intentioned funding of new projects is wasteful. We would do better putting money into the core funding of councils and voluntary organisations, and getting better co-operation between national Government, local government and the voluntary sector, to deliver between them a harmonious and well-organised policy, which would produce much better value for money and make everyone concerned much happier. I hope that we can aim for that in the future.

This settlement is a distinct improvement, and there is a better attitude to local government now than there has been in past years, going back a while. The settlement is welcome, and I hope that everyone will support it.

Photo of David Davidson David Davidson Conservative 4:40 pm, 6th February 2003

We are not mean spirited on these benches. I have to welcome some aspects of the settlement, particularly the fact that the minister will make good the national insurance increases and pay and costs inflation for local authorities. That is very much welcomed by the Conservatives, as I am sure it will be by everyone else.

The move to three-year funding is helpful to local democracy, as it will allow local authorities to plan properly and will mean that they do not have to lurch from year to year. I agree with Donald Gorrie that that move should also apply to voluntary sector organisations that get their funding through local government, because that would help them with their efficiencies. On a personal basis, I particularly welcome the uplift in the north-east support, which is a bit behind time. The question now is, will the minister do the same to raise our funding levels for the health service to a more equitable level?

Some of the speeches were quite interesting, and there were a number of common themes in the debate. One theme that emerged clearly was thoughts on ring fencing, which I will come back to. Other common themes were transparency and complexity, which were mentioned by all parties in the chamber. For example, Alasdair Morgan referred to documentation, the layout of which is, to say the least, quite confusing. I agree with Iain Smith that more information needs to be given to the committees at an earlier stage, so that there can be a clear and proper discussion in the committees before we reach the final stage. We always seem to be scrabbling around trying to get the information, and we just have to accept the documents when they come through.

Alasdair Morgan mentioned that COSLA was not as robust in its criticism. The COSLA document that I have states:

"The targeting of the substantial proportion of the year-on-year increase in resources by the Scottish Executive demonstrates an unhealthy concentration on national priorities."

That is moderately robust, although it is quite fine language. COSLA also states that

"the level of non-discretionary expenditure and its resultant perverse effects and associated bureaucracy continues to be of concern."

The document continued on that theme. It is just a pity that COSLA did not make that view more public earlier in the debate.

My colleague Keith Harding did something that nobody else did when he talked about policy commitments, although I think that Bruce Crawford raised a good example afterwards. I forget the phrase that was used, but the point was that policy commitments should be about central services, not local government. When I was a councillor, there was a debate—it is still going on with councillors of all persuasions—that more and more was being ring fenced and that more burdens were coming through. Richard Simpson mentioned new burdens. In fact, everybody managed to mention new burdens. New burdens are nothing more than central Government policy. It is quite dishonest—in fact, it is nonsense—for Tom McCabe to talk about an unfettered 8.5 per cent when 6 per cent of that has labels on it. We cannot have that sort of dishonesty in this kind of debate for much longer. I have been informed that the phrase that was used was "no strings attached".

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

I agree entirely with David Davidson that the settlement comes with strings attached, but it is still real money. Does he agree that although councillors often talk about burdens, they are not burdens but services that are being provided to his constituents and to my constituents?

Photo of David Davidson David Davidson Conservative

I use the language that the councillors use. I said it clearly a minute ago: they mean Government policy being delivered through local government.

I got the impression that Bruce Crawford almost committed an SNP Administration to make good the funding gap of £440 million that COSLA has identified.

Photo of David Davidson David Davidson Conservative

That is what it sounded like. Perhaps we can have some clarification.

In general, we have a long way to go on how we deal with local government finance. We need to have a healthy debate—I hope that we will do so after the elections—about what we want local government to be responsible for. We need to create a meaningful financial structure in which local government can be left to get on with its work without too much interference from the centre, while becoming more accountable.

The Executive has not done a very good job this year. It still has not taken account of under-collection of council tax or other matters. There are many things to do.

Photo of David Davidson David Davidson Conservative

I do not have time. When we return after the elections, we must seriously examine local government and set it free to do what it is supposed to do—serve local communities.

Photo of Brian Adam Brian Adam Scottish National Party 4:46 pm, 6th February 2003

The Tories' speeches have been interesting. The minister described the settlement as challenging and the Tories will find some of the proposals that they announced today rather challenging. It is inconsistent for them to suggest that we need to examine and rebalance local government finance to make local government more meaningful and more responsible while also suggesting a council-tax freeze, which would inevitably increase the percentage of funding from the centre, from businesses or from both.

If the Tories are concerned about how few services are being delivered and how locally accountable services are, perhaps the best way of tackling inefficiencies would be to examine the voting system, yet the Tories consistently set their face against proportional representation, which would undoubtedly change the face of local government and make it more responsive to individuals' needs and wants.

I agree with David Davidson's fundamental point. A challenge for all the political parties is squaring the circle of local politicians' clear local mandate with the small proportion of the overall tax take for which they are responsible. There is no instant answer to that. That challenge will continue and I hope that it will be tackled in the next parliamentary session by whoever is responsible for dealing with such matters. That is not a party-political point. We all need to deal with that.

Interesting comments were made about the McCrone settlement and personal care. We have also been lobbied by COSLA. It is interesting that several local authorities have felt so disappointed with COSLA's approach that they have left the organisation. I understand that Highland Council is considering leaving COSLA because of COSLA's handling of the McCrone settlement. The formula has failed to deliver for Highland Council and I presume that the council's background problems with personal care and the formula for that have also had an effect.

Photo of David Davidson David Davidson Conservative

Many councils are swapping notes about eligibility for free personal care, because they cannot see how the money will be squared. They do not have the resources to meet their burdens. Does the SNP have a solution to that?

Photo of Brian Adam Brian Adam Scottish National Party

I will talk about free personal care, because that relates to why I chastise Tom McCabe, as did David Davidson. The new burdens—that is what councils call them—are a real part of the 8.5 per cent uplift. It is appropriate to legislate to give councils new burdens, but we should recognise that we have done so and not hide such burdens behind an overall settlement. We should recognise such burdens separately from the settlement.

The not inconsiderable sum of £125 million is required to deliver free personal care. It is important that the Parliament agreed on free personal care. Some of us made it a greater priority than others did, but that is neither here nor there. That is what will happen. It has been suggested that 8.5 per cent is generous, but it is meant to deliver what we want.

As well as free personal care, the supporting people programme is to be established, which is part of legislation from the Parliament.

One of the welcome parts of the budget is the £145 million that the Executive rightly wrested from the Department for Work and Pensions as part of the settlement. However, that money is not really new money, or money that local councils have discretion over; it is money for new burdens. That is the case with national insurance and pay.

Some interesting pleas were made today. Brian Monteith made an interesting plea on behalf of culture, although I am not sure that I agree with his analysis. I agree with the plea that was made by Donald Gorrie and Richard Simpson that we need to ensure that the local government settlement delivers three-year funding for voluntary bodies, as well as for councils.

Although I could comment on many parts of the announcement, I wish that the minister would be more open about the process and not try to dress up allocations as freely given money with which councils can do what they will.

Photo of George Reid George Reid Scottish National Party

We are absolutely on time, which means that Mr Kerr has eight minutes in which to wind up the debate.

Photo of Andy Kerr Andy Kerr Labour 4:51 pm, 6th February 2003

I begin by paraphrasing Tom McCabe, who spoke about where we were and where we are now. It is true that there is no comparison, and that what the Executive has delivered for local government is clearly measurable. We have delivered the stability of three-year grant allocations. In that respect, I agree with the point that was made about voluntary organisations, and I will continue to consider the matter. Guidance is available, but I will seek discussions with COSLA and others on the issue.

As I said, we have delivered stability. We have also abolished capping guidelines, developed a new prudential regime for capital funding, and abolished CCT. We have introduced best value, the power to advance the well-being of local communities, and community planning. To comments that were made about centralisation, I can only say, "I think not." In response to comments about power being given to local communities, I agree that that is the case.

Comments were also made about the COSLA funding gap. I have frequent discussions with COSLA on financial matters. COSLA aspires to deliver more and better services for the communities that its members serve. We are talking not about a real funding gap, but about what COSLA members think they need and what the Executive, through GAE and our discussions with COSLA, assesses councils' spending to be.

It is not all bad news—let us examine the settlement. We have fully funded all the so-called burdens, including free personal care for the elderly, free travel for our elderly citizens, peace in our schools, and the recognition of the professional role of teachers within schools. We have also given more money for our local roads and for nursery places for our children. Those are not burdens, but jointly agreed and discussed Executive priorities, which need to be delivered to make the lives of our communities better.

The settlement includes full support for all national initiatives, national insurance costs and pay and price inflation at 2 per cent. The settlement reduces ring fencing. Our calculations make no call on local council tax increases—decisions about council tax increases are made by locally accountable and directly elected local councils.

Members should consider the quality of life initiative, which was discussed and agreed in detail with COSLA and the other local authorities. The initiative is being delivered throughout Scotland—members will have seen it announced in local press releases. The initiative is increasing the quality of our public services in local communities.

I have received correspondence from SNP members, saying that they want ring fencing in areas such as free personal care for the elderly. It is interesting to see them suddenly change their position and go down the road of reducing ring fencing. We need to get the facts right. The fact is that we have reduced ring fencing. The £64 million that we took out of education and put into the general unhypothecated fund reduced ring fencing. Specific grants to local authorities account for 8 per cent of AEF. If the police grant is taken out of the total, the figure is 2 per cent.

Photo of Brian Adam Brian Adam Scottish National Party

I did not have terribly long to speak, and I meant to ask the minister about the unallocated funds that he has retained within AEF. When does the minister plan to distribute them and how will he do so?

Photo of Andy Kerr Andy Kerr Labour

I believe that we are talking about the 2 per cent. I do not know whether Brian Adam is talking about police funding and what we should do about it, but I do not think that he is. I am in constant dialogue with our local authority colleagues. As I said in the last local government settlement announcement, and as I have said today, we have reduced ring fencing and increased unhypothecated resources. We are talking about a process. I say to Brian Adam that we will continue to pursue the matter with our colleagues in local government. That said, hypothecated funds in any shape or form account for less than 0.1 per cent of the general grant that goes to local authorities.

We choose to work in partnership with local authorities and they have recognised that.

Many members—particularly the Tories—mentioned council tax increases. Over the past three years, since we reformed local government finance, council taxes have increased by 13.5 per cent. Some figures that have been bandied about go back to the last years of the Tories—the local government settlement was so poor that council taxes had to increase. I said that Glasgow City Council has led the way with five years of below-inflation increases for its communities. I expect similar announcements in due course.

Alasdair Morgan spoke about limiting increases in average rates bills to the level of the retail prices index. That relies on the valuation of properties, which we do not control. He is the SNP's finance spokesperson and it would be daft of him to commit to such a limit when we do not know the outcome of independent valuations throughout Scotland. He can make such a daft commitment if he wishes to—after all, the SNP has done many daft things in respect of finance. No Government would make such a commitment. Although we want to say that we will restrict poundage, no Government can predict what will come out of the independent revaluation.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

Is the minister saying that if the valuation puts rateable values up considerably—it is not likely to put them down—it is possible that he will simply retain the extra revenue above inflation, rather than keep business burdens at an inflationary level?

Photo of Andy Kerr Andy Kerr Labour

As a result of valuation decisions, we are freezing business rates. The business community has welcomed that, as it has a real impact. Some £35 million will come not to the Executive but will be allowed to remain in the business community. That is a good measure, which everyone in the community welcomed.

It is interesting that Alasdair Morgan's own council, Dumfries and Galloway Council, has received increases of 9.3 per cent, 5.4 per cent and 3.9 per cent—that is a fair settlement.

Photo of Brian Fitzpatrick Brian Fitzpatrick Labour

As one of the members—[ Interruption. ]

Photo of George Reid George Reid Scottish National Party

Order. Members cannot hear Mr Fitzpatrick. I ask members to keep the noise down.

Photo of Brian Fitzpatrick Brian Fitzpatrick Labour

I am obliged to you, Presiding Officer. I welcome the above-average increases for East Dunbartonshire Council. However, is the minister aware that, as early as 29 June 2002, relatives and carers of very vulnerable people in my constituency were told that no moneys would be made available, as the Scottish Executive had provided insufficient funds to East Dunbartonshire Council to deliver free personal care? Is he aware that, notwithstanding those claims, some £357,000 of resources are unused by East Dunbartonshire Council? Will he consider carefully an external investigation of the reasons why that underspend has happened? More important, will he consider better measurement and evaluation of how that key policy is being implemented?

Photo of Andy Kerr Andy Kerr Labour

I have met the council a few times and pointed out that the settlement should be adequate to provide the services. I find the situation that the member describes surprising.

Keith Harding talked about centralisation. I worked in local government for a time and I remember centralisation. He criticised local government for lack of council tax collection. With the poll tax, which the Tories introduced, collection rates were 67 per cent—that is a disgrace. The Tories delivered the poll tax to the Scottish community.

Sylvia Jackson rightly spoke about local roads. We have made a number of interventions in respect of local roads—some £70 million was made available last year and some £15 million this year. The quality of life money means that councils can take local decisions to reflect local communities' desires for services. Such money is making a difference and attempts to redress the balance with regard to under-resourcing.

Stewart Stevenson and Mike Rumbles talked about Aberdeenshire. Some £1.1 million out of the £15 million that the Executive has issued for local roads has gone to Aberdeenshire. That is fair on the people of Aberdeenshire and reflects need. Bruce Crawford spoke about having indicators to reflect need. If there are big roads and non-trunk roads in an area, that needs to be reflected in the settlement and extra resources need to be provided.

What Bruce Crawford said was confusing. I think that there was another SNP spending commitment of £440 million. That adds up to—[Interruption.]

Photo of George Reid George Reid Scottish National Party

Order. There is too much noise in the chamber.

Photo of Andy Kerr Andy Kerr Labour

In the past two weeks, I have written to John Swinney about the SNP's spending proposals in respect of Gaelic, money for transport, the dualling of the A9, Kenny MacAskill's commitments, the national theatre, university funding and funding for VisitScotland, to which the spending commitment that I mentioned adds. The SNP has made commitments in all those areas and, as usual, those commitments are uncosted.

One face of the SNP is its pro-private sector face, but the SNP's anti-private sector face in the chamber today is also worth noting. The SNP cannot have things both ways, although it always tries to do so.

I am sure that colleagues will support the Local Government Finance (Scotland) Order 2003.