The Local Government Finance (Scotland) Order 2005, which we ask Parliament to approve, has significance for all the people of Scotland. The order provides for the distribution of £8.087 billion in grant support for Scottish councils' revenue expenditure in 2005-06, which represents an increase of £419 million, or 5.5 per cent, over the figures for 2004-05 that were contained in the Local Government Finance (Scotland) Order 2004.
That level of resource builds on the substantial sums that have been invested in local government since 1999—an almost 40 per cent increase in Executive grant against an inflation rate of 12.7 per cent. The order confirms our commitment to improve public services for the citizens of Scotland and provides record levels of investment to deliver better public services by, for example, fulfilling our partnership agreements on free personal and nursing care, providing more support for children and families, providing additional investment in policing to make Scotland a safer place, and providing resources to fund the modernisation of the fire service.
On 8 December, I announced provisional increases over the three-year period for every local authority. The order confirms the funding increases for 2005-06 that I announced then. The increase in the revenue grant allocation in 2005-06 will mean an average increase of 5.5 per cent, as I said, and will result in increases for individual councils that range from 3.9 per cent to 9.1 per cent.
I confirm that we viewed the bid from the Convention of Scottish Local Authorities with significant seriousness fully to fund the bid. That is contained in the order.
I mentioned increases in previous years. The settlement in 2004-05—of 5.3 per cent overall—was generous. However, I announce that we are adding a further £169 million to that settlement.
Councils will shortly confirm their council tax levels, but I reinforce what I said on 8 December: we expect local authorities to keep rises as low as possible for 2005-06. I say that because we have an average grant increase of 5.5 per cent against the current consumer price index of inflation of only 1.6 per cent. The case is therefore made for asking councils to exercise restraint in setting council tax levels.
I hear what the minister is saying, but does he agree that an even more appropriate comparison can be made with the consumer price index? There is an even starker difference between the rates of council tax rise that we are witnessing and the consumer price index rate. Why are council taxes increasing so much compared with the CPI, despite the increases in grants? Whose fault is that?
Perhaps I was speaking too fast. I referred to an increase of 5.5 per cent against the current consumer price index of inflation of 1.6 per cent—that is the comparison that I made. I repeat my exact words: the case is therefore made for asking councils to exercise restraint in setting council tax levels.
Not at the moment; I need to make progress.
The order is for 2005-06, but it is part of a three-year settlement that offers councils the opportunity to plan ahead and to manage their priorities within the available resources.
I am happy to confirm that the substantial revenue grant allocations for 2005-06 include £70 million for the quality-of-life fund. Over a five-year period we will invest £280 million in that area. It would therefore be nonsense to suggest that any year represents a cut: I am talking about £280 million of new money, which was not previously available.
In addition to the revenue funding for core services that I am announcing today, local government will receive about £1.1 billion in revenue grants for specific initiatives in 2005-06—an increase of no less than 11.6 per cent—to fulfil
However, we will go still further. Local authorities will receive record levels of support for capital investment. Capital grants will increase in each of the next three years to give a cumulative increase over the period of 32 per cent, which is substantial by any measure. In addition, local authorities will receive loan charge support to provide annually for around £300 million of new capital investment.
The minister announced about £1 billion of extra money to be issued outwith the main financial settlement. Why was that money not included in the main financial settlement? Does the minister accept that the problem is that the councils have to set up bureaucracy to run all the separate schemes, rather than include them in their existing systems? Is that not an ad hoc approach that has in-built problems?
There is nothing ad hoc about reducing class sizes or providing new or refurbished schools, for which communities have waited for generations. The money has been made available to ensure that such measures happen. Nor is there anything ad hoc about providing loan charge support for £300 million of capital expenditure in each of the next three years.
In recognition of the crucial part that our city regions play, we will make available more than £40 million for the cities growth fund. We want our city regions to be engines of economic growth that deliver sustainable long-term improvement. We need them to respond to the demands of global competitiveness and to improve the quality of urban life for all citizens.
In the previous period of the cities review, there was a concern that, certainly in Glasgow, the money seemed to be spent almost entirely within city boundaries, although the intent was to improve regional services. Will the minister assure me that, this time, ministers will ensure rigorously that regional services as well as city services are considered in the allocation of resources?
I stress the term "city region". In conversations that I have had with city leaders, they have expressed willingness to ensure that the benefits of the fund go beyond the boundaries of cities.
The settlement is about not only the level of inputs, but public sector productivity and what the general public get back for the substantial investment. As I said, the order will distribute £8.1 billion of resources to local government, which is a
My ministerial colleagues and I will work with local government and community planning partnerships towards the common goal of improving quality of life and delivering high-quality public services to all citizens throughout Scotland. We will spare no effort in explaining to the people of Scotland just how much has been invested in local services and we will spare no effort in rebutting any suggestion to the contrary.
I am pleased to speak in support of the amendment in my name, which would, even in a small way, help local councils.
The finances of our local authorities require a significant contribution from central funds, so I am pleased to see that the full ministerial financial team is present for today's debate. Tavish Scott missed the beginning of last week's budget debate, which was a pity because his contribution always adds to the occasion. When he was accompanied by his then boss, Andy Kerr, Tavish Scott would play bad cop to Andy Kerr's good cop. Now though, there is some confusion, because with his boss being Tom McCabe, we have two bad cops on the front bench to beat up those MSPs who might speak up for our councils.
"as a sinister local government hardman".
Compared with that, I am positively effusive about the minister and the work that he does.
I shall carry on with compliments.
The minister has earned that reputation as a local government hard man because of his taciturn style, but also because of his commitment to value for money, spreading best practice and finding efficiencies. I welcome the minister's prudent approach in those matters, although members will forgive me if I harbour a suspicion that he takes that approach because, having led a local authority himself, he knows where the bodies are buried or, more euphemistically, where the savings can be found.
What fun it would have been to be a fly on the wall at the McCabe Christmas get-together, when the brothers grim, Tom and Jim McCabe—Tom the minister and Jim the council leader—fought over the turkey leg. Who got the stuffing? Who found the sixpence in the Christmas pud? Who was left empty-handed after pulling the cracker? The atmosphere must have been electric, for we know that councils are preparing for hard times ahead. We have heard today that spending is up to record levels, but we know that the commitments for councils are getting larger and larger. Despite the words of the First Minister, council taxes will go up by more than 2.5 per cent; indeed, the rise will be closer to 5 per cent, with the average band D total breaking through £1,400 a year.
The pain looks set to increase in the years ahead. Peter MacMahon goes on to say:
"McCabe is a subtle and forward-thinking politician"— the minister said that he would prefer compliments—
"who realises that the unprecedented levels of public spending in Scotland cannot be sustained."
Public spending levels that cannot be sustained: those are the words that the Conservatives have been saying for years about the spending programme. That is why councils are concerned, not so much about this settlement but about the settlement that they will face in future years, and the driving up of commitments that in later years they will not be able to fund.
It is possible that Bristow Muldoon missed the budget debate last week. I gave a guarantee then and I give a guarantee now that, because of the arrangements that have been drawn up by Oliver Letwin, the future Chancellor of the Exchequer, there is no shadow of a doubt that the same Barnett consequentials—the same extra funding—that would be made available by Gordon
I must close, as the Presiding Officer is bearing down on me. It is important that we recognise the difficulties that councils face. It is not enough just for them to improve their collection levels, although they must do that. It is not enough just to ensure that we give more support where we can. Our amendment proposes that. We must loosen and deregulate councils so that ring-fencing constraints on them allow them freedom and manoeuvrability. Local councils need all the help that they can get. That is why we lodged our amendment, which we ask the Parliament to support.
I welcome the chance to debate the Local Government Finance (Scotland) Order 2005. This debate has the reputation of being a graveyard slot, but at least the anoraks of the Finance Committee have been joined by some from the Local Government and Transport Committee. If any confirmation were required of the slot's status, one has only to consider the fact that in the same slot in the first week after the recess we will debate the Edinburgh Tram (Line Two) Bill.
I genuinely welcome the debate, because it is one of the few financial debates in the Parliament during which we can talk about the levels of taxation that our citizens pay, even if we cannot decide them. Far too often, we talk about how we are going to spend money rather than about how our citizens pay the money that they contribute to the Exchequer. Today, we can at least talk about the proportion of total taxation that is made up by the council tax, and we should be in no doubt that the level of council tax is largely dependent on the decisions that are made in the order that we are considering today.
Mr McCabe would have it that increases in council tax, other than the most modest ones, are due simply to inefficiencies or choices on the part of our councils. Funnily enough, such inefficiencies seem to be a phenomenon that afflicts all councils throughout the land, be they Labour controlled, Liberal controlled, SNP controlled, independent controlled or coalition controlled. One has to either believe that the level of local profligacy and mismanagement is the same the length and breadth of Scotland or draw the more obvious conclusion that the Executive continues to place more and more burdens on councils while failing to provide the cash to pay for them.
Since the tax year 1996-97, when the Conservatives were last in power, council tax has
"I am proud of this Parliament's record of having lower council tax increases every single year since 1999 compared to the increases under the Conservative Government".—[Official Report, 7 October 2004, c 11130.]
I would say to the First Minister, first, that that is nothing to do with the Parliament because the Executive makes the decisions, and secondly, that the comparison with the dim and distant history of the Conservatives is, frankly, meaningless.
The significant comparison for every man and woman who is asked to pay the council tax is between the rise in council tax, the rise in the price of goods and the rise in the level of their wages, their pension or whatever other source of income they depend on. When we look at those figures, we get an entirely different picture. I apologise to the minister for mishearing him earlier, but I will use the consumer price index, to which he referred. The figures for council tax rises over the years, as a percentage of the previous year, have been 4.6, 4.8, 6.7, 4.9, 4.9, 3.6 and 3.5. The increases in the consumer price index during the same years were 1.9, 1.6, 0.6, 1.1, 1.3, 1.5 and 1.2. Every year, the council tax has gone up by twice or three times as much as every other price, and sometimes by more. Is it any wonder that council tax payers are, justifiably, beginning to come to the ends of their tethers?
That leads me to the point that I want to make in closing. We all knew that the council tax was unfair when it was introduced, but because it was a relatively small tax the manifest unfairness—that is, the difference between the level of taxation and the ability to pay—was for the most part tolerable and tolerated, especially in comparison with the odious tax that the previous Conservative Administration had foisted upon us. However, because of mismanagement and the deliberate loading of the consequences of the Executive's decisions on to the backs of the council tax payers, and because of the huge rises that have been inflicted on us every year since the Labour party came to power, we have arrived at a situation in Scotland in which the unfairness of the council tax is no longer tolerable. Given the pressure on those who are on fixed incomes, the value of whose properties bears no relation to their income or ability to pay the tax, the unfairness is now a national scandal.
I am sorry, but I am just finishing.
All that the Government does is to hold yet another inquiry and to say how wonderful this
This is my first speech as the transport and local government spokesperson for my party. In life, there are certain painful experiences that we try to obliterate from our memories. Three of them stick out in my mind. The first is childbirth, about which I will say no more in order to avoid embarrassing everybody; the second is the entire higher chemistry curriculum; and the third is everything that I learned about local government finance in my time as a councillor. Unfortunately, I now have to regain my grasp on that latter subject, which is complex but highly important. Today, the minister has set out the resources that local government will be given by the Executive to perform crucial functions for all our constituents in areas such as education, social work, community care, transport and environmental services. Further, the settlement has a major impact on council tax rates, which we all want to be kept at a reasonable level for as long as council tax remains.
I take exception to the point that was made by Alasdair Morgan, who keeps peddling the myth that the council tax has increased by more than 50 per cent since 1997. Everyone knows that, in the first year of that period, the figure had already been set by the outgoing Tory Government. I think that he is being rather disingenuous.
Come on, guys, give me a chance.
I want local government to have a strong role as a partner of the Executive but with significant freedoms and the ability to work for and serve communities. That will happen only if we have the commitment of both sides to work in partnership and if we have in place a reasonable and realistic settlement. I believe that this year's local government finance order goes some way towards achieving that.
Thanks to the Scottish Executive, in the five years since 1999, local government funding has increased by £2.1 billion, or almost 40 per cent. By the end of the current spending review period,
The Executive has made a number of changes to the way in which councils receive support. The introduction in 2004 of greater flexibility in capital borrowing, coupled with increases in capital grant, has meant that there has been a 70 per cent increase in local authority capital investment. Total capital support for councils will exceed £2 billion over the next three years, which is a record level.
The introduction of three-year financial settlements has given councils greater certainty and allowed them to plan ahead. However, it would be good if we could ensure that councils passed on that arrangement to the voluntary sector organisations with which they have partnerships.
I agree with the minister that we need to have in place robust outcome agreements to ensure that the key policies that ministers announce in the Parliament are delivered by local government. Crucial to that is the need for the Scottish Executive to fund in full key policy initiatives and strategies. I welcome the minister's comments in that regard.
Councils receive one third of the Executive's budget, therefore it is obvious that they have to play their part in finding efficiencies. I am sure that they can do that through procurement, better collection regimes and so on. However, I understand that the Convention of Scottish Local Authorities has some dispute with the Executive about the way in which the issue has been handled. I hope that the minister will touch on that in his response.
At the risk of being parochial, I would like to raise some Edinburgh issues—that is the main reason why I did not give way to my two colleagues. In giving extra support to Lothian and Borders police, the Executive has gone some way to accepting the argument that the City of Edinburgh Council and Edinburgh MSPs of all shades have made for parity of treatment with the way in which Westminster is treated by the UK Government. I ask the minister to examine that issue further and, for example, to think about how the issue of day visitors might be taken into account in the grant distribution system to recognise the impact that they have on the need for culture and leisure facilities and other services, not only in Edinburgh but in other parts of the country.
In relation to one specific area—care home fees—Edinburgh appears to be getting hit hard. I hope that the minister will listen to the council's concerns on that issue, which is having a detrimental impact on bedblocking in the city.
In my constituency, I have been heavily involved in the campaign to scrap council tax. The Liberal Democrats will continue to say that they believe in a fair local income tax. I have received more than 1,200 petition slips in connection with the campaign from local residents. The council tax remains one of the most unfair and regressive taxes, with increases hitting hardest the elderly and those who are on low incomes. The current discredited system should be swept away. I look forward to the review producing a local income tax alternative—a proposal that was put forward by the Liberal Democrats—in the near future. We will continue to argue for a fairer system that is based on ability to pay, which will lead to a neutral or beneficial position for the vast majority of Scottish council tax payers.
Overall, I believe that the Scottish Executive is committed to working with local government to improve public services in Scotland, and I support the order.
Being a member of the Local Government and Transport Committee, I have spent a lot of time listening to various local government representatives to establish for myself a picture of Scottish local authorities' current financial position. Having also served on the Local Government Committee during the previous session, I remember vividly the situation that we inherited in the late 1990s. I recall COSLA representatives telling us that the gulf between central funding and their assessment of what local government actually needed was in excess of £1 billion.
In my assessment of the current situation, it is clear just how different things are for local government now and how much has improved. On that basis, I welcome the minister's speech today. Brian Monteith asked whether the minister remembers from his time in local government where the bodies are buried. I am not sure about that, but I certainly know where Tom McCabe led to the burying of the Tories and the Scottish nationalists in local government.
I fully endorse the more open and collaborative approach to local government that the Executive has developed. I welcome the focus being turned much more towards accountability to the people whom local government serves and supports. To sustain robust local authorities, we require to share our priorities and to work together to attain and further the highest standards of public service provision. It is vital that we work in partnership to ensure practical results on antisocial behaviour, transport and crime in particular.
Local government will receive many more benefits from its new budget. I am reassured, in particular, that the Executive's commitment to tackling antisocial behaviour has led it to provide money to allow greater support to be given to initiatives in that area, for example the community safety partnerships that have been funded through local authorities, which will help effective warden schemes to operate throughout Scotland. Only through reform and modernisation can we secure best value for every penny that is spent.
Under this budget settlement, the Executive will provide Scotland's local authorities with more than £30 billion in the next three years. That will enable local authorities to make significant progress across the board and will help local government to meet the public's aims. I am especially pleased that the Executive has identified more than £1 billion of revenue grant outwith aggregate external finance for each of the three years of the spending review period. That will assist in such areas as the strategic waste fund, the community regeneration fund and the changing children's services fund. The revenue support for schools will allow for many more improvements in our school infrastructure, which we badly need.
It is always worth remembering that we would not have that support if the anti-private finance elements in this place had their way. The nats and the Scottish Socialist Party would deny our schools many of the positive results that will undoubtedly come from the spending proposals for schools. Those will include not only the provision of new or refurbished schools, but more teachers, smaller class sizes, greater opportunities and more protection for the most vulnerable, with grant-aided expenditure provision increasing in 2005-06 for that purpose.
The aim of spending under the local government heading is to plan public finances and manage them prudently to deliver excellence in public services and support in growing Scotland's economy, which will enable local democracy to flourish—and I have to say amen to that.
The regeneration of our neighbourhoods; the standards of and within our schools; closing the gap between the rich and the poor; making opportunities available to all; improving standards in transport, health, social care and social justice; and making our streets safe places in which to live—that is what local government is all about.
Having listened to my colleagues in local government, I know that some apprehension remains. I urge COSLA to remember where we were only five years ago. In partnership with local authorities and other service providers, and with the resources that we should approve today, we can deliver on all the aspirations that I have
I fully agree with the comments that have just been made regarding the importance of local government. Indeed, no one should ever underestimate local government's importance. I fully acknowledge the funding increases that have been made. However, it is a question of efficiency and effectiveness in how the resources are used in the provision of core services.
I wish to focus my comments on the practical effects of the settlement on councils, illustrating my concerns through the Angus situation.
The £9.725 million increase in Angus Council's grant allocation looks generous until it is analysed. Some £1.7 million of that total is dedicated to the A92 road project, which is essential for the future economic well-being of the local economy and was initiated and carried through as a result of the foresight of Angus Council. Therefore, the reality is that the £9.7 million increase is actually an £8 million increase. If the £5 million ring-fenced, hypothecated Scottish Executive initiatives and Scottish Executive new responsibilities are added in, there is, in fact, only a £3 million increase in the central Government grant.
I want to finish the point. The Executive's generous increase is actually a massive financial shortfall if the £7.5 million pressure on services is taken into account—that is even before the effects of inflation, service development and the funding and maintenance of existing provision are considered. It is especially galling that many cost pressures—from, for example, pay awards and centrally directed policy decisions—are outwith the control of Scotland's local authorities. The generous settlement turns out to require £4.5 million of cuts and increased council taxes to meet the difference between what the Government claims and what actually has to be funded.
The picture in Angus is mirrored in local councils throughout Scotland—there will be proof of that when council tax announcements are made. I say to the minister that I am worried that there seems to be less and less correlation between funding and actual local needs or existing services, and that that must be addressed. I am talking about core local services.
I put it to the minister that Angus Council has been one of Scotland's most cost-effective councils and has provided high-quality and
Angus Council has received a 6.8 per cent increase, which is £10.6 million in cash terms. I have seldom heard such a circular argument. If we subtract every line of expenditure, and every line that is mentioned is a council priority, we can argue that there is no increase whatever.
That is taking the argument to an absurd level. I am saying that if one analyses the "generous" settlement and considers what services are offered, it will be found that it is less than generous.
The report that accompanies the order has two pages of Government initiatives, many of which are quite good and I support. However, those initiatives are central Government policy, which is being forced on local government, irrespective of local needs and local perceptions. I am concerned about the decision-making powers of local authorities.
There must a radical rethink about the relationship between local and central Government—about their relative powers, duties, status and constitutional positions. Otherwise, the annual ritual financial manoeuvring will continually fail to meet the actual needs and responsibilities that are placed on Scotland's councils. There are so many ex-councillors here that I am surprised that there is not more concern and sensitivity about what councils do.
I accept that set-piece grant distribution formulae will always pose difficulties, but I note that paragraph 6.3 on page 4 of the report states:
"The purpose of the distribution of AEF is to provide local authorities with a level of grant support that would notionally allow all authorities to set the same level of council tax ... provided their planned expenditure was the same as Scottish Ministers' estimate ... and they provided an equal standard of service".
I suspect that that statement will produce laughter and groans in equal measure in council offices throughout Scotland.
Central Government financial dominance has opened up a massive gap between what central Government wants and what local councils need. There must be a much more rational national system that is founded on a strategy that is agreed between local and central Government and based on a concordat that clearly sets out the correct relationships between both democratically elected
In the light of what Mr Monteith said about Tom McCabe being the "local government hard man", I do not want to be misconstrued—I do not like violence. Nevertheless, I invite the minister to take a walk with me down to Union Street in Glasgow. I would like him to witness the 3,000 buses and 13,850 other vehicles that use Union Street every day and to tell me why that street attracts the same level of central Government expenditure as a single-track road in Aviemore. I invite the him to come with me to the Clyde tunnel—I would not want us to go into the tunnel, as we might get knocked down, but we could stand near it—witness the 60,000 vehicles a day that use the tunnel and tell me why it attracts the same level of expenditure as a rural track road.
There is an important distinction between the overall level of finance that is available to local government and the methodology that is used to distribute that money. I state clearly on the record that, if the Convention of Scottish Local Authorities wishes to discuss changes to that methodology, the Scottish Executive is eager to participate in those discussions.
The minister will know that I speak on behalf of the area that I represent, which is Glasgow. Glasgow wants that funding methodology to be re-examined because Glasgow does not accept that the four determinants that are currently used—road classification, road length, car ownership and the length of road on poor ground—are good enough. They result in the ridiculous anomalies that I have just cited and in the gross underfunding of Glasgow City Council for roads expenditure. The reality is that the council currently has to spend £9 million a year more on roads maintenance than is allowed for under the Scottish Executive's funding arrangements—£9 million that is not being spent on social work, education and closing the social exclusion gaps. That is why the spending mechanism has to be addressed.
Tommy Sheridan makes the case for Glasgow City Council being underfunded, yet that council receives far more per head of population in expenditure from the Government than most other local authorities receive.
Aberdeenshire Council has a fair share campaign, as it receives only 90 per cent of the average allocation per head of population. The fair share call for Glasgow must, therefore, be put in perspective.
I hope that the member accepts that the basis of need should be the most important determinant in the distribution of any funds from the Parliament. Just using population figures overlooks the serious and complex factors that relate to need. The reality is that, given the concentration of deprivation, low pay, low income and educational underachievement that we have in Glasgow, basing Government expenditure simply on the average figure per head of population would be a scandal.
Unfortunately, the distribution of expenditure for roads takes no account of the fact that 50 per cent of the commuter traffic in the city of Glasgow is not generated by Glaswegians. Car ownership is taken into account in the distribution mechanism, and we might expect the car ownership figure for Glasgow to lower the level of expenditure that is required, as Glasgow has a lower-than-average level of car ownership. However, our roads are used more by commuters, and 50 per cent of that commuter traffic is generated by those who come into the city to work and earn but then leave the city at the end of the day. That has to be addressed, for the sake of fairness. It is a basic element that the distribution mechanism does not take account of.
Let us look at the difference between Glasgow City Council and, for instance, Highland Council. In 2001-02, Highland Council used only 48 per cent of its road maintenance allocation, whereas Glasgow City Council spent 152 per cent. Although the mechanism takes into account road length as a factor—yes, Highland Council has 6,650km of roads compared to Glasgow's 1,775km—Highland Council's expenditure per kilometre of roads was £966, compared to Glasgow City Council's £8,775. The reason for that difference is the extra usage that is made of Glasgow's roads, which is not taken into account by the mechanism.
I hope that all members, even those who do not represent Glasgow, will accept that a distribution mechanism should not compare Union Street's five lanes of traffic and 13,000 vehicles a day or the Clyde tunnel's 60,000 vehicles a day with a single-track road in Aviemore. For the sake of the city of Glasgow, I ask the minister to address that problem in his reply.
Following on from the transport-based theme of Tommy
Everybody knows that if we were to redo public sector finance, we would not start from where we are now. Over the years, the settlement has been built up as a delicate balance between competing priorities. It takes account of new pressures as needs and lifestyles change and of costs that do not always rise in line with the retail price index or consumer price index. Although its standard indicators and distribution formulas are not perfect, I can inform Mr Sheridan that they at least take account of more than just population.
I congratulate the Executive. As one who formerly had a particular interest in local government finance—a few years ago, I might have been arguing from the other side of the fence—I can say that the system has changed beyond recognition from what I remember of it when I came into local government.
Let me make this point first.
Three-year settlements and capital funding changes have given local authorities the scope to manage services and structural changes. They can now build partnerships to allow for new measures that are introduced.
Does the member agree that it would be helpful, both for today's debate and in the on-going battle that takes place every year between councils and the Executive, if the Executive always included in its presentation information on what proportion of the increase was for new burdens? That would remove a significant part of the contention between the parties.
It is up to local authorities to determine what proportion of the increase is applied to new burdens. As Brian Adam well knows—if he does not, I am happy to give him the 40-hour course—the total settlement takes account of the overall need. In addition, the Executive guidelines are no more than that. The Executive issues guidelines for services, but local authorities make determinations as they see fit.
Certainly, when I was leader of Fife Council, I wanted to be left alone to do that.
Today's announcement is welcome. The £280 million of new money will help to deliver services that are the priorities not just of the Executive but of local people. I have listened to members complaining about Executive priorities putting pressures on local councils. Are they saying that their communities do not want better public safety, improved health, increased quality of life, more jobs and more infrastructure investment?
We have had money for care of the elderly, transport improvements, community safety initiatives, waste management, energy efficiency and extra staff who will be environmental and community wardens or undertake health improvement measures in partnership with health boards and the voluntary sector. In addition, council tax collection levels are increasing, although I accept that room for improvement exists. Money has been made available as a result of efficiencies that were made possible by previous years' investments by the Executive. Community planning priorities have been funded, which means that across a range of public and private sector organisations, better use can be made of money.
Concerns and pressures remain and I have spoken to the minister in the past about concerns that my local authority has raised with me. However, I welcome Mr McCabe's statement that he is willing to work with COSLA and local authorities to take account of those pressures when it can be shown that despite all efforts to achieve efficiencies and to maximise income from the modernising government fund, particular concerns remain. I invite the minister to accompany me, if he has time in his diary, to meet the leader and the finance spokesperson of Fife Council, should a need be identified in years 2 and 3 of the settlement, when I understand that issues may arise over the supporting people programme, for example.
All of us who are elected must make it a priority to ensure that the public and the communities that we serve have the best quality of service for the money that they pay, not only through council tax, but through the taxes that they pay on income and in charges on goods that they buy. We owe them that.
It is wrong to equate inflation rises in a range of goods and services with the percentage rise in council tax. That is easy to do, but the elements are not directly comparable. Members who know anything about the council tax gearing effect will know that such a comparison is wrong.
I welcome the statement. At the end of the debate, which has been good, I hope that
We have heard much about bodies being buried. Despite its graveyard slot, the debate is important. That is because it deals with council tax, which is the only tax—apart from business rates—for which the Executive has responsibility, albeit indirectly. I am sure that all members receive regular complaints about the burden of the council tax. As we have heard, the tax has increased by 50 per cent since 1997. The public are becoming increasingly concerned about the level of tax that they pay.
The point has been made that the subject is an issue particularly for those who are on fixed incomes, such as pensioners. They may well live in larger houses, but that does not reflect their income position. The year-on-year increases in council tax rates mean that they continue to be penalised. Sadly, there is no sign that that will end with the current settlement.
In previous years, the Conservatives were part of the administration of Perth and Kinross Council, which is in my area, so they could restrain council tax increases as far as possible. I have no doubt that had it not been for Tory involvement in the administration, the council tax increases would have been much higher over the years. Sadly, the Tories are no longer part of that administration. Instead, we have an unholy alliance of the Liberal Democrats and the SNP. That is bad news for local council tax payers, because the restraint has been removed. We could be heading for a council tax increase of 5.5 per cent, which is well above the inflation rate. That increase will be unaffordable for many people.
One early act of the new Liberal Democrat-SNP administration on Perth and Kinross Council was to create a new special responsibility allowance for an arts and culture spokesman, which was given—surprise, surprise—to a Liberal Democrat member. That was unprecedented and was rightly condemned by opposition councillors from the Conservatives and Labour. Members of the council's administration appear to be more interested in lining their pockets than in working to keep the council tax down.
With respect, I do not think that that is the issue. I simply think that people would view it as rather unsavoury for a party in a new administration suddenly to create all these extra allowances to ensure that every one of its councillors got an additional payment.
The Liberal Democrats and the SNP want to replace the council tax with a local income tax, because they no doubt think that such a stance will serve them well when they come to make a play for the pensioner vote. However, changing the current system in such a way simply robs Peter to pay Paul. A local income tax is a tax on the hard-working families and couples who are already paying income tax and national insurance before they can pay their rent, mortgages, other household bills and all the expenses incurred in bringing up a family. An average working couple in Scotland on average earnings will pay £1,053 for the average band D council tax bill. However, under the Liberal Democrats' proposed local income tax, that same couple will pay £1,224, which is £174 more than they pay at present. That is equivalent to a 16 per cent increase in the average band D council tax rate.
As I said, I will come to my solution directly. However, I should point out that the member's party is proposing simply to shift the burden of that taxation from one set of taxpayers to another.
Under SNP proposals, the situation would be even worse, because the average working couple I mentioned would have to pay £181 extra, which is equivalent to a 17 per cent increase in council tax. Of course, the increase would be even greater for people who earn more—so much for trying to encourage people to live in Scotland.
Moreover, no one has yet given a satisfactory answer to the on-going problem of council tax benefit. Without the £294 million that councils receive from the Department for Work and Pensions, the local income tax would be even higher.
I suspect that the real issue about the council tax is not the system itself but the size of the bills that people have to pay. Indeed, Alasdair Morgan acknowledged as much in his opening remarks. That is why the Conservatives' plan to reduce
I am sorry—I am in my last minute.
The council tax is a stealth tax. Nevertheless, it hurts far too many people who can ill afford to pay it. As we face yet another round of well-above-inflation increases, it is time to address the central problem of the very high level charged for the tax. Such a solution is far better than changing the current system which, as I have said, would simply transfer the burden from one set of taxpayers to another.
As we are in some danger of indulging in navel-gazing, I want to begin by quoting an external view from the most recent edition of Holyrood magazine. It says:
"As expected by some, the establishment of the Parliament has resulted in the centralisation of power," which, as we have just heard, is firmly supported by Murdo Fraser,
"an increase in" ring-fencing
"to develop the Executive's priorities and a growth in central dictat."
The article continues:
"This year will also see the Executive squeeze local government for a disproportionate share of efficiency savings."
Those are not my words; they belong to an analyst who is outside the narrow confines of this debate.
Interestingly, the article does not come with a name. I, too, will be interested to find out who wrote it. The point, of course, is not who wrote the article, but the fact that someone outside the Parliament who observes what we do is seeing the same things that we see.
The whole subject of local taxation is under review by a very excellent fellow called Peter Burt, who used to be my boss. I am reminded of a question I was asked a few years ago, when the Scottish Parliament had just been established. Peter Burt's colleague Gavin Masterton—who subsequently became the boss of the bank—asked me whether he should join a Government task force. I said, "Yes, of course you should, Gavin. To keep an eye on the"—I cannot repeat the word that I used, because the rules of parliamentary language forbid it. However, engagement between business and Government is certainly appropriate.
I love to see Peter Burt's signature—especially on banknotes, rather than reports. Let me warn the minister that Peter Burt is a dangerously innovative man. It will be fascinating for the minister to hear what he says. I have sat and discussed taxation and private finance initiatives with him. PFI projects, in general, lock in a payment stream for 25 or 30 years. However, in this morning's debate and in parliamentary answers that I have received, I have heard from various ministers that the Government does not know what will happen even 10 years from now. Does local government have psychic powers meaning that it can be forced to plan its expenditure 30 years ahead? Is such an approach common?
The SNP would use a different financing model that would raise the money in a different way. When we consider the PFI payments that local government has to pay, should we not align them as far forward as we are able to foresee? In France, for example, la concession—which is the French equivalent—is generally for a period of between seven and nine years, rather than for a period of 30 years.
On 8 December, the minister and I had a little exchange on collection rates in local government. The minister suggested that one thing that local government could do to improve its income would be to step up the collection rate. That was an absolutely fair comment, but, of course, the minister was making no allowance for the fact that some councils are relatively efficient. I am sure that the minister will be glad to be reminded that the Lanarkshire councils are doing pretty well. Some of the McCabes can get some things right some of the time.
However, councils that have been highly efficient have less scope and less headroom to improve their performance. The minister and the Executive are looking for significant efficiency savings from councils, but the playing field out there is not level. We are in danger of penalising the very people who have been successful.
The law of unintended consequences also applies to the subject of roads. I do not necessarily come at this issue from the same position as Tommy Sheridan, although I welcome—as would Tommy—the minister's preparedness to sit down with local government to discuss the way in which distribution of money is worked out.
Aberdeenshire has a rather high proportion of roads that are unadopted and therefore not the responsibility of the council. Quite properly, those roads are not taken into account in considerations of the money that the council should receive. However, many of those roads are important roads for public services. For example, several of them are privately owned unadopted roads that are the only access to schools. The paradox is that the council is unable to take into public care roads that are used for public purposes.
I note that we are increasing the hardship fund for white-fish relief by the grand sum of £28,000. The reality is that we are paying out very little.
We have to look into the power ratio between central Government and local government. We passed a very useful act that created the power of well-being. However, I say to the minister that that phrase has a very hollow ring as long as we control the purse strings as we do. We should give councils limited financial independence. It is time to look at the system again.
As someone who was born and raised in the Springburn area of Glasgow, I genuinely do not fear the so-called hard-man reputation of Tom McCabe—or, for that matter, that of Tavish Scott. If that is Peter MacMahon's representation of a hard man, he should get a life.
I have never claimed that Glasgow has had a fair deal. I do not know whether it is because I am a Glaswegian, but I think that our city faces severe and complex challenges. A large number of studies on Glasgow have been carried out by underemployed consultants. I respectfully suggest that they should consider how services in Glasgow could be delivered more effectively instead of telling us the problems of which we are all well aware. We need to examine how to tackle the problems.
Although Alasdair Morgan finds it difficult to do so, we must remind ourselves of the Tory years. I make no apologies for doing that, because the people of Glasgow suffered during those years. In 1996, a massive secondary school building project was required. That was delivered in 2004, when 29 brand new secondary schools were built in Glasgow. In 1996, there were no proposals on investment in Glasgow's housing stock. In 2004,
Let us continue to move forwards. We must keep an eye on the Tories, who were the constant enemies of local government services. Councils strove to deliver front-line services in our communities in spite of the predatory approach that the Tories took to them during their years in Government.
The balancing act that the Minister for Finance and Public Service Reform has to perform is a serious challenge. He has committed to scrapping the bridge tolls for the 12,000 inhabitants of Skye, but when he makes such decisions, he has to take into account the fact that he is removing the opportunity to provide additional funding for Glasgow to deal with the serious challenges that it faces. I am conscious of the balancing act that the minister has to carry out, but I think that he should take into account the complex problems that Glasgow faces, such as the serious health situation that the statistics remind us of daily.
I welcome the commitment to provide an additional £64 million to police forces throughout Scotland. However, on a number of occasions I have called for a top-to-bottom review of how police services are delivered in our communities. It is all very well to provide additional investment for police officers and to use the buzz words, but it is important that local elected members have a role in examining how policing is delivered. It is crucial to ensure that the investment that is made in the police force is used to best effect.
I welcome the additional £227 million increase in funding for education. As I have said, I welcomed the investment that resulted in the building of 29 brand new secondary schools in Glasgow, five of which are in my constituency. That has resulted in a significant improvement in pupil and teacher morale in those schools. It is now time to consider primary school provision in Glasgow, so that we can raise educational attainment in that area. In my constituency, the number of people who leave school with no qualifications is 240 per cent above the Scottish average. We must invest in our primary school education to ensure that we deal with that issue.
The debate has been welcome. I welcome Brian Monteith's after-dinner speech, but it is unfortunate that, like the other Opposition
Before I respond to points that were raised in the debate, I will spend a bit of time considering what the settlement means for local government. It means a commitment of £30 billion funding over the next three years. The aggregate external finance will be £8.1 billion in the forthcoming financial year, £8.3 billion in 2006-07 and £8.5 billion in 2007-08. In addition, there are additional revenue grants of more than £1 billion per year, and resources from prudential borrowing will be available to local authorities, as will capital grants of in excess of £1.2 billion over the three years.
The resources are only one side of the coin. Many members have spoken about what we intend to do with those resources, which is the more important point. The resources will allow local authorities to address priorities that are not only the Executive's, but those that are shared by most of local government in Scotland. There will be £227 million—5.7 per cent—extra investment in education and young people, which will allow local authorities to continue to provide new schools, more teachers and greater opportunities. An additional £96 million will go into community care, which will allow an extra 6.1 per cent of funding for care services. There will also be additional resources for police services, which will allow for more police and safer communities in Scotland. That is to touch on only a few of the priorities.
I welcome the fact that, in his opening speech, the minister added a further £169 million to the figures that had been previously announced. He also rightly stressed the need for us continually to improve efficiency in government at all levels, which includes local government.
Brian Monteith's amendment shows how little the Tories value devolution, as it calls yet again for the automatic transfer of the additional resources that follow any increase in grant to English and Welsh local government without the Executive or the Parliament expressing a view as to what those resources should be used for. It might be the case that those resources would be addressed to priorities that we share with local government, but it is right that the Parliament decides on the use of the resources that are made available to it through the devolution settlement.
All local authorities that complain about the current financial settlement should think back 10 or 12 years to when Mr Monteith's party was in power and ask themselves seriously whether they want a return to those days or whether they recognise the considerable support that the Executive gives to, and the considerable investment that it is making in, local government. Mr Monteith appeared to guarantee local government that it would be spared the sword in the unlikely circumstances of Mr Howard's coming to power. Does that mean that he is giving an absolute guarantee that Scotland would be spared the sword of any reductions that are planned by the shadow chancellor if the Tories were to come to power? If that is not the case, what other services in Scotland would be cut to provide the guarantee that he appeared to offer? I suspect that it is a hollow promise.
I do not have time to give way again, and, given Mr Monteith's jocular response when I intervened on him, I do not think that even he believes that the Tories will come to power in the forthcoming general election.
The Scottish National Party's position is equally intellectually dishonest. Again and again, speakers from the SNP complained about the level of council tax and the pressures on local government finance, but failed to identify what alternative funding priorities the SNP would have. The SNP members' only answer was the introduction of a local income tax, which many with considerable wealth, but hidden income, would potentially be able to evade, thus leaving the pressure on many middle-income earners who pay tax through pay as you earn. The Conservatives made an interesting point about the impact of the SNP's plans. It will be interesting to see exactly how much attention the SNP gives to its policy in the former Tory seats that it will defend in the forthcoming general election—not a great deal, I suspect.
I apologise to the speakers whom I have not mentioned. The choice today is clear. As usual, it is a choice between investment in opportunity, as delivered by the priorities that the Labour and Liberal Democrat Executive has set, and cuts and abandoned communities, as promised by the Conservatives or the Scottish National Party. I am confident that today Parliament will make the right choice and support the Executive on the Local Government Finance (Scotland) Order 2005.
Clearly, an election is coming. It is fascinating that only two months ago Tom "the enforcer" McCabe was telling councils that they had to cut their coat according to their cloth and that council tax increases for the forthcoming year should be pegged or capped at about 2.5 per cent. If I have understood correctly the figures that he has provided, it now seems that an extra £419 million is available to them.
That figure has been magicked, apparently out of thin air, to support local councils at new record levels for next year alone. Tom McCabe and Tavish Scott tell us that councils must use the money wisely and efficiently. However, as Brian Monteith pointed out, we can be absolutely sure of one thing. Despite all the extra money, council taxes will inevitably go up, as more and more burdens are being placed on councils. That is as sure as death and taxes.
Alasdair Morgan drew attention to the alleged misdeeds of all local councils, whatever their political persuasion. Although he did not offer many solutions, he was right to point out that the problems of council tax are first and foremost the problems of the Scottish Executive. When more burdens are placed on councils, their knee-jerk reaction is to employ more people. The biggest employer in Fife, the council area in which I live, is Fife Council, which now employs nearly 17,000 workers—more than any local authority in Scotland outwith the city of Glasgow. I hope that Tom McCabe will take up Christine May's invitation to visit Fife, to find out whether all of those 17,000 workers are gainfully employed—on behalf of council tax payers, rather than on behalf of themselves.
The most recent quarterly figures show that the number of local council workers in Scotland has rocketed to the quarter of a million mark. An extra 7,230 staff were employed in the latest quarter, and staffing levels have increased in every quarter since 2000. Margaret Smith, who is no longer in the chamber, disputed the figure of 50 per cent that is given for the increase in council tax rates since 1997, when Labour came into office. By 10 February this year, they will have increased by 56 per cent. However, the member was right to say that we should encourage council efficiencies. That includes encouraging local authorities to improve their council tax collection rates. The latest figures show that councils in Scotland collected just over 91 per cent of taxes, leaving more than £150 million uncollected. If Scottish councils improved their collection rate to that of
Both Margaret Smith and the "dangerously innovative" Stewart Stevenson, from one of his many previous incarnations, saw local income tax as providing a solution. However, as Murdo Fraser pointed out, local income tax immediately becomes a tax on hard-working families and couples in which both persons are working and already pay income tax and national insurance. Under the Lib Dems' proposed local income tax rate, a young couple on average male and female weekly earnings would have to pay a further £1,224 pounds a year in local tax. That is £171 more than they pay at present—a 16 per cent increase in band D council tax. As Murdo pointed out, under the SNP's similar LIT scheme, a couple on average earnings would pay £181 more than they currently pay.
From our understanding—Brian Adam can get the SNP's researchers to talk to our researchers—that is not the case for people on average earnings. That is what we are talking about.
A change to the council tax system will inevitably produce losers as well as winners. We are saying that it is sensible to have a broadly-based tax system with a combination of income, consumption, capital and property taxes rather than a system that is based solely on income.
I must say that Tommy Sheridan is right about one thing—local government in Scotland is scandalously unfair to many people and scandalously inefficient. We are not convinced by hard words from a tough minister about the need for councils to cut their cloth while he simultaneously throws more and more public money at them to allow them to build up ever more bloated numbers of local government workers.
The local government finance debates are always interesting. Many members have experience of running councils and proposing alternatives to council budgets. Local government budgets will be set next week and I suspect that the public at large will be much more interested in what the local councils have to say than in what we have to say, because that will directly affect them whereas today's deliberations will affect them indirectly.
The report that the Minister for Finance and Public Service Reform has laid before Parliament gives us the background as to how GAE and AEF is worked out. It might be interesting for us to look at appendix C, which points out that a client group approach has been taken. That is an objective method used to estimate GAE for local authorities that takes into account a whole variety of things. The complexity of local government finance is probably not well understood and a series of anomalies arise; members have highlighted some in the debate. Tommy Sheridan raised the anomaly in connection with roads. I will raise another obvious one, which is the social work budgets, particularly for demand-led children's services.
I hope that the Executive will not dismiss Professor Arthur Midwinter's recent report out of hand, but will consider it seriously, not only with COSLA—such discussions are usually local authorities squabbling among themselves about how they will come up with a solution. This objective report highlights that most councils are spending way above GAE on social work and on children's services in particular. We must seriously examine that issue, which particularly impacts in the city of Aberdeen, where I represent many folk. Councils have no control over the demand-led side and therefore cannot manage their priorities, and they have to pick up the consequences.
Some members invited various ministers to take walks or join them in their constituencies. I happened to notice that a number of Executive ministers were in a close huddle with the political leadership and a number of officials from Aberdeen City Council. I hope that the representations that were being made by Aberdeen City Council did not fall on deaf ears, because they have done up until now. However, the problem that I have highlighted with regard to demand-led children's services is not exclusive to the city of Aberdeen and it is worthy of consideration by the Executive.
I note a point about which the Executive parties are extremely sensitive. The point is that since Labour has come to power council tax has risen by 50 per cent. Protests about that point come from the Liberal Democrats because the Tories set the rate in the first year. However, Labour could have changed that; it had the power to do so, but it did not exercise that power. Even if we ignore the year when rates were set very high, council tax has still risen by 34 per cent against an inflation rate of only 9 per cent—a 25 per cent difference.
There is nothing mysterious about all that; it is all about shifting the blame for higher taxes on to local authorities and protecting the interests of central Government. We are not getting clear, transparent policies from the Executive. On a
I compliment whoever drafted the order on the clarity with which the structure of what is happening has been laid out. However, perhaps the order lacks a narrative that explains the Government's goals and targets and indicates how outcomes will be measured. The structure is vastly improved, but a narrative that explained the Government's point of view would have enhanced the order.
I whole-heartedly agree with my colleague.
It was amusing to learn that the Conservatives have a new speech writer. I am delighted to learn that Peter MacMahon found it easy to move from new Labour to the Tories, although the distance is not very far these days. Perhaps Brian Monteith will be happy to offer Peter MacMahon a position with the Conservative group.
I am always delighted to take part in finance debates. I invite the minister to provide, if not during the debate then in writing, a detailed analysis of how the Scottish Executive calculations for the two years that succeed this one will be such that council tax rises will be no more than 2.5 per cent—
From the outset of the debate, there has been considerable
Is the minister aware that the Executive seriously underestimated the funding of police boards this year? Councils from Dundee, Clacks and Stirling to Lothian and the Borders are facing a serious shortfall. Councils had planned their budgets but must find more money because Executive departments underestimated how they should be funded.
Mr Monteith is sadly wrong. The 17 per cent increase that the Minister for Justice sought and secured through the spending review and the local government settlement that we are discussing represents exactly the kind of approach that is necessary in meeting the requirements that have been laid out in partnership with the appropriate authorities.
Mr Monteith's amendment is the same as the one that he lodged last year. In fairness, he is nothing if not consistent. However, it is important to acknowledge that the pre-budget report consequentials are for one year only and amount to just £12 million, compared with the £419 million in 2005-06 that the Executive is investing in local authorities.
I hope that Stewart Stevenson and others who mentioned ring fencing—and always raise the issue—will acknowledge that only 9 per cent of the 2005-06 settlement will be ring fenced and that more than 70 per cent of the 9 per cent figure represents police specific grant.
I did not quite follow the tenor of Andrew Welsh's argument. He spoke about a generous settlement but then appeared not to support particular measures in Angus. I am sure that he supports those measures; indeed, he said that he supported the new road initiative in his constituency and a number of other areas in which Government policy is taking issues forward.
I will quote Mr Welsh's colleague Mr Ingram, who on the radio this morning said:
"No, it's a local authority responsibility".
In fairness, he was talking about education. He added that local authorities
"get a large package of money into education. How they split it up between the various priorities in education is down to the councils."
I am sure that Mr Welsh will be happy to discuss that with his colleague. Mr Welsh also mentioned the need for a narrative—he will find all the
We have had considerable discussion about methodologies, an issue that was raised by Tommy Sheridan, Christine May, Mike Rumbles, Paul Martin and others. I hope that Mr Sheridan will accept that the road maintenance distribution methodology includes a secondary indicator to allow for the number of vehicles that use the roads. Just as we can have a series of suggestions in relation to urban deprivation, we can have a series of suggestions that relate to sparsity.
Murdo Fraser came up with the new concept of the council tax as a stealth tax; it must be the only stealth tax that comes in a brown envelope through the post. To Mr Brocklebank, I say gently that it is not appropriate to say that all council workers in Fife are interested only in themselves; that is just a cheap shot at council workers. We expect better of the Tories.
I inform Mr Adam that we are analysing the report by Professor Midwinter that he mentioned and that we take it seriously. However, as Mr Adam knows, Professor Midwinter recommends several actions that councils can take to improve services and deliver the more effective use of resources.
I have dealt with the point.
Councils in Scotland already benefit from the three-year local government settlement that we have introduced. In the next three years, local authorities will benefit from a cumulative increase of 10.4 per cent in Scottish Executive core revenue support. As Bristow Muldoon, Margaret Smith and others mentioned, since 1999, local authorities have benefited from an increase of £2.1 billion, or 40 per cent, in revenue funding, which is surely a significant advance in any terms.
Margaret Smith, Michael McMahon, Bristow Muldoon and others mentioned the range of positive initiatives that we have taken in relation to local government. I will add to the list: we have introduced the three-year revenue and capital allocation, the prudential borrowing regime, the abolition of spending guidelines, revenue grant increases, council tax powers over second homes and the independent review of local taxation, which are all positive developments for local authorities in Scotland.
If SNP members sorted out their views, I might have some sympathy for them. Once again, we got calls on the one hand for spending and on the other hand for taxing. They never can sort out their views. As we know, the SNP wants lower corporation tax, business rates and water rates—
By approving the Local Government Finance (Scotland) Order 2005, the Parliament will confirm the revenue grant support for each council for the coming year. The allocations within the order will enable councils to keep council tax rises in line with previously published estimates for the coming year. I urge councils to keep those increases as low as possible. The order will deliver better services for our citizens and a fair deal for local taxpayers. I commend it to the Parliament.