Local Government Finance Settlement

– in the Scottish Parliament at 2:34 pm on 23 November 2005.

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Photo of George Reid George Reid None 2:34, 23 November 2005

The next item of business is a statement by Tom McCabe on the local government finance settlement for 2006-07. The minister will take questions at the end of his statement, so there should be no interventions.

Photo of Tom McCabe Tom McCabe Labour 2:43, 23 November 2005

The purpose of today's statement is to outline to Parliament information that is important to both the public sector and the private sector. I will announce details of the local government finance settlement for 2006-07, as well as the non-domestic rate poundage and the small business rate relief supplement for the same period. In addition, I will have some good news for renewable power generators in Scotland.

We acknowledge that, in many respects, we have excellent public services in Scotland, but we are also in no doubt that they need to get much better. Local authorities deliver essential public services and the people of Scotland rely heavily on the core services that they provide. We are determined to secure improvements in the quality of those services for the benefit of everyone who lives and works in Scotland.

Following last year's spending review, I announced the local authority grant figures for the years 2005 to 2008. Those figures remain largely unchanged, although there are a few changes that I will explain shortly. However, there are important qualifications to the figures that I will announce today. Discussions continue with the Convention of Scottish Local Authorities about provision of more resources in specific areas, such as teaching, implementation of our smoking legislation, provision of additional support for Gaelic and reprofiling in connection with concessionary fares.

Today's provisional figures will enable councils to get ahead with setting their budgets for 2006-07 and will afford them the opportunity to comment on any details that require clarification. In submitting their comments, I expect councils to say not only where they think they have lost out but where they think they have been allocated money that is due to another authority. I expect openness, professionalism and transparency on all sides.

The local government finance order will allow final figures to be debated in February 2006; the order will create the statutory basis for the revenue support grant payments. With that qualification, I can confirm that the revised level of Scottish Executive grant support for local government core revenue services for the next two years is £8.3 billion in 2006-07 and £8.5 billion in 2007-08. Those figures represent year-on-year increases in total aggregate external finance of 3.2 per cent and 2.3 per cent—a cumulative increase of 5.6 per cent over the two-year period.

Those amounts build on the substantial sums that have been invested in local government in previous years. By the current year, funding has increased by almost £2.6 billion, or nearly 47 per cent, in the six years since 1999-2000. By the end of the current spending review period, funding will have increased by more than £3 billion—nearly 55 per cent—since 1999-2000. The increases year-on-year for each council vary, of course, but the averages of 3.2 per cent and 2.3 per cent are for all of Scotland.

The increases have, of course, to be set in the context of our efficient government programme. We believe that the efficiency target of £325 million that has been set for local government is achievable. Councils can retain £125 million of that to reinvest in front-line services. The level of grant announced today—together with those reinvested efficiency savings—will provide sufficient resources for front-line services over the next two years in a way that we believe will allow councils to exert downward pressure on tax levels.

Based on current figures, the extra funding that we are making available, together with what councils would get if they raised council tax in line with inflation will enable councils to increase their total revenue spending on core services by more than £300 million and £540 million in the next two years. Every percentage point by which they can raise their council tax collection rates would add another £17 million to those totals.

I accept that there will be tough decisions for councils, which are facing a range of pressures. Some of those pressures are demand led and none could have been foreseen at the last spending review. I have previously said that I would consider the case for additional resources for 2007-08 and I confirm that today. However, I emphasise again that a key determinant of how much progress we can make will be the performance of local government towards the efficient government targets.

That said, it is only right that I inject a note of caution. Our resources for 2007-08 are already committed and, following the Chancellor of the Exchequer's recent decision to postpone the next spending review until 2007, there is now no prospect that the Scottish block will be increased before then. Our room for manoeuvre is therefore extremely limited, so it becomes all the more important that councils work with us to demonstrate that they are playing their part in delivering—and, where possible, exceeding—the efficiency targets that we have set. Work on providing the evidence for that is well advanced and I expect a report in the near future.

All that I have announced so far is designed to maintain and improve the standard of services that are received by taxpayers across Scotland. They rightly take great interest in that, but they also have an interest in the amount of local tax they pay. I have already said that the announced figures should allow councils to exert downward pressure on tax levels and, with the proper approach from all sides—including the Executive—the discussions that we will have on next year's settlement should contribute to that.

Notwithstanding those discussions, it is fair to say that the Convention of Scottish Local Authorities has expressed the view that our aspirations are challenging. We believe that they should be. We believe that councils can do much to ease pressures, to maximise their income and to ensure that spending is properly focused on their priorities. As I said, improving council tax collection rates will be an important part of that process.

In keeping with previous settlements, the Executive and COSLA have agreed on a stability measure—known as the floor—to protect councils that have declining populations. The level of the floor was set in the last settlement and is unchanged. It guarantees that councils that have declining populations will receive increases in grant support of at least 2 per cent in 2006-07.

I turn now to non-domestic rates. Few people would challenge the proposition that a successful economy is key to our future prosperity. Such an economy should be populated by successful businesses that drive our economic growth. In that respect, we are helping business in a variety of ways and, within the resources that are available to us, we continually seek to target rates relief where it will provide maximum benefit.

In my statement on 6 October, I said that we will from 1 April next year reduce by half the gap between the Scottish and English poundage rate. In 2006-07, the poundage rate for Scotland will be reduced from 46.1p in 2005-06 to 44.9p. A technical note that explains how the figure was derived will shortly be published on the Scottish Executive website.

The 2005 non-domestic rating revaluation showed that, on average, rateable values in Scotland had increased by 13.3 per cent, compared with 17.7 per cent in England. As a result of our policy of limiting rates increases to the level of inflation or below, the rates burden on Scottish businesses has, relative to England, also been falling over the last five years. That and the 2006-07 poundage rate will ensure that businesses here will have significantly reduced operating costs, which will give them a greater competitive edge. I look to them to take full advantage of that opportunity in the interests of our economic competitiveness.

I turn now to the small business rate relief scheme. After an independent evaluation and further consultation, the scheme will continue in its present form, which means that about 72 per cent of non-domestic subjects in Scotland will continue to receive rate relief of up to 50 per cent. I also announce that the supplement on the poundage rate payable by larger businesses to cover the additional costs of the scheme will be reduced to 0.4p from 0.45p in 2005-06.

On renewable energy and our on-going commitment to generate 40 per cent of Scotland's electricity from renewables by 2020, I should first point out that offshore wind farms are not rated in England and Wales. Where practical, we wish to harmonise our rating practice. As a result, we will soon introduce a statutory instrument to bring the Scottish position into line with that south of the border and we will ensure that the instrument is in force before the first offshore wind farm comes into operation.

More generally, we are committed to developing Scotland's tremendous renewable energy potential and to supporting as wide a range of technologies as possible. We want new jobs and potentially a new industry that places Scotland in the lead. Renewable energy will provide a substantial contribution to Scotland's economy and it will safeguard our environment from harmful emissions. In the years to come, such technologies will give our economy a competitive and comparative advantage. I therefore intend to issue in the first half of next year a consultation document on possible rates relief for renewable generators and thereafter to make an announcement on the way forward.

Today's announcements build on already high levels of investment and will underpin better services for the people of Scotland and better opportunities for business in Scotland. They will help to improve our quality of life, provide new opportunities and contribute to closing that all-important opportunity gap by drawing more people into economic activity. That process will offer our society increased stability and security.

I commend the measures to the Scottish Parliament.

Photo of George Reid George Reid None

I will allow 20 to 25 minutes for questions to the minister on issues that were raised in his statement.

By the way, I advise members that, because of opposition to tonight's business motion and another motion, I have to find 20 to 25 minutes of extra time. Members should take that as an early warning that decision time tonight might be at about 5.15 pm.

Photo of John Swinney John Swinney Scottish National Party

I thank the minister for the statement and for advance sight of its contents and I welcome his announcement on the offshore renewables sector.

The statement bears a remarkable similarity to the local government settlements that were delivered by numerous Conservative secretaries of state, who added new burdens to local authorities, but did not provide new funding to deliver those burdens and demanded efficiencies to make up the difference. Does the minister remember that in the old days he used to attack those dreadful settlements from the Conservatives? Does he accept that once inflation is taken into account, the grant to local authorities will fall by £10 million by 2007-08? Is the minister aware that COSLA has identified more than £200 million in extra costs that local authorities will have to pick up in the next financial year, beyond the pressures that were referred to in his statement? In the light of that factor, will the minister confirm to Parliament his view that no council should increase the council tax by more than 2.5 per cent in the forthcoming financial year?

Will the minister also consider two possible measures to improve the financial position of local authorities? First, will he consider allowing local authorities to retain all of the £325 million in predicted efficiency savings for investment in their front-line services? Secondly, will the minister consider allocating to local authorities some of the £220 million that is held by the Treasury and is not yet allocated to public spending programmes—which he confirmed in a parliamentary answer to me on Monday—to assist in the delivery of key front-line services? If the minister refuses to accept the case for greater support to local authorities, does he understand that he will be responsible for inflicting significant council tax increases on already hard-pressed council tax payers throughout Scotland?

Photo of Tom McCabe Tom McCabe Labour

If ever there was an example of a distortion of the actual position, that was it. Mr Swinney is right, although I have been in a position that I do not think he has ever been in: I have been leader of two councils, during a period that is incomparable to the one in which councils now exist. I was leader of a council when we had to take horrible decisions because the Conservatives tried to devastate local democracy and local accountability.

In the five or six years since the turn of the century there have been increases that I was never able to see as a council leader. Those increases amount to something like £2.6 billion by 2007 and £3 billion—or 55 per cent—by 2008. I have had discussions with local authorities in the past 24 hours, and they acknowledge that there have been significant increases in the resources that have been made available to them. Of course, they also say that in 2005 they are delivering services of greater volume and greater quality, but so they should be, given the significant level of public resources that has been pumped into the services that they deliver. However, they have acknowledged the extra resources; Mr Swinney is wrong to deny that, because what he says does not reflect the accurate position in Scotland.

I am a wee bit confused. On the one hand, when it comes to efficient government there are those who say, "You won't meet all the targets you've set—it's unrealistic." On the other hand, Mr Swinney tells me that all those savings I have identified for local government should be retained in local government. Those two positions are inconsistent.

On Mr Swinney's second point, I am sure that he was listening attentively to the statement and that he read in detail the copy that the Executive provided in advance of my making it. I made it clear that I am willing to discuss with COSLA the settlement for 2007-08, subject to a range of other conditions. Not least among those conditions is councils' performance relative to efficient government, their willingness to ensure that they focus resources on their priorities—as we are doing in the Scottish Executive—and the strong requirement that they pursue the highest possible level of council tax collection. Against that background, I am willing to discuss how we could assist in next year's settlement.

Photo of David Davidson David Davidson Conservative

I thank the minister for the copy of the statement that I received before we came here today.

However, it is not smoke and mirrors that we have; what we are getting this week is rod now and carrot later, by the sounds of it. I find it unbelievable that the minister can talk about reduced operating costs and a greater competitive edge for business when his Government made the situation worse by increasing business rates in the first place.

The minister has identified £325 million of efficiency savings—although obviously if COSLA is discussing that with him it means that it disagrees. Where does the minister think those savings will come from? Can he spell out exactly what councils should be doing? Has he identified any benefits to councils that have resulted from savings on those fronts? Will the savings come from jobs, from service cuts or from increased council tax?

The minister spoke about recognising demand-led pressure and COSLA talks about new burdens. How much has the minister allocated to allow for those pressures, which he recognises? I would like an answer because his statement was ambiguous: he said that some money may be available in 2007-08, only on the following page of his statement to say that the Executive has committed all its resources. Will the money come out of the war chest that he is so obviously building?

Photo of Tom McCabe Tom McCabe Labour

Business in Scotland has warmly welcomed the initiatives that we announced on business rates. It has welcomed year on year over the past five years the fact that we have held increases to the rate of inflation or below. I know from representations that I have received that business will welcome again today our announcements on renewable power. It will welcome the fact that here in Scotland there is a Government that acknowledges the needs of future generations by ensuring that we produce adequate quantities of power from renewable sources.

It is remarkable to listen to someone such as Mr Davidson. What percentage of our people was economically active when his Government was last in power? The greatest-ever percentage of our people is economically active now. We have, second to only one other country in Europe, the highest number of people in gainful employment. Those conditions bear no resemblance whatever to the conditions that existed when Mr Davidson's party was last in power, when millions of people were unemployed. I make no apology for saying that again. Then, macroeconomic conditions were in freefall and a Chancellor of the Exchequer almost ruined our entire economy. A Conservative Chancellor made a fool of our entire country by dancing in and out of the Treasury and forcing mortgage rates through the roof. He forced hardworking families out of their homes because his Government was incapable of running an economy, yet the Conservatives have the cheek to criticise a situation in which people in Scotland are enjoying levels of prosperity that are unprecedented in our history.

Photo of Des McNulty Des McNulty Labour

I thank the minister for his statement, but I make reference to the fact that several of the authorities that will be at the floor have declining populations and high levels of multiple deprivation. Instead of setting an arbitrary figure for the floor, will the minister consider the same kind of arrangement that exists for the Barnett formula? That would allow a declining population to impact on new money only at the margins, rather than on mainstream grant-aided expenditure.

Photo of Tom McCabe Tom McCabe Labour

I am more than willing—I have said so to the Convention of Scottish Local Authorities—to look at the overall distribution methodology. Over the years, initiatives could have been taken but, because of the required collective nature of decision making, such initiatives have been difficult to implement.

I recognise that there are authorities in Scotland that consistently hit that floor calculation and over time they are being prejudiced. There are many views about how that situation could be rectified, but I am more than willing to confirm that I am keen to discuss with COSLA how we can re-examine the distribution methodology. There are authorities that are consistently challenged and unless we take corrective action—which requires a collective decision by all local authorities—that situation will continue. That would be unacceptable.

Photo of George Reid George Reid None

Following those opening questioners, I would be grateful for shorter questions and answers.

Photo of Mark Ballard Mark Ballard Green

I thank the minister for advance sight of his statement and for his clear support for the renewable energy industry in Scotland. In that context, I very much welcome his commitment to harmonisation of our rates for offshore wind power with those south of the border. I also welcome the consultation on rates relief for the wider renewables industry.

Is the minister aware of the issues around the changes to rates for the energy generation industry that came into effect in April 2005? Since then, rates have not been set by prescription; they are set by local ratings officers. That has meant that rates have increased by a factor of four for many renewable energy generators, whereas the rates for coal, oil and gas generators have declined. Does the minister accept that that situation cannot continue if the renewables industry is to meet the potential that the minister set out in his statement? Can the minister therefore confirm that there will be not just a consultation, but real rates relief for renewable energy generators that face that fourfold increase in their ratings?

Photo of Tom McCabe Tom McCabe Labour

I would not dream of pre-empting the consultation. People in public life are accused often enough of issuing consultations on matters that the public think are predetermined. It would be very wrong of us to do that. I hope that what I said about the importance of renewable power shows that we are keen to consider ways of assisting that industry. We recognise its worth to the Scottish economy and the service that it will do for future generations, as sewerage and clean water have done for us. One of the crucial legacies that I believe we will leave to future generations is the ability to generate power sustainably and dependably.

We are mindful of the needs of the renewables industry and we are willing to work with it. I have received various representations from different sectors of industry and there are conflicting views about the best way ahead, but I will continue discussions and I will be receptive to suggestions.

Photo of Mr Andrew Arbuckle Mr Andrew Arbuckle Liberal Democrat

I thank the minister for his statement, which challenges local authorities to improve their efficiency. I particularly welcome the commitment to maintain the system of small business rate relief, which makes a real difference to the 72 per cent of Scottish businesses that are better off under the scheme. I ask the minister to confirm that that excellent system will be maintained with equalised rates.

Does the minister agree that local authorities must be responsive and accountable to their electorates, and that that aim cannot be achieved should local authorities face replacement of the council tax by a nationally set service tax? Does he also agree that we cannot responsibly legislate for an end to the unfairness of council tax without consensus in Parliament on which system should follow in its wake?

Photo of Tom McCabe Tom McCabe Labour

I very much welcome the supportive statements that the member makes. I do not want to predetermine future years' announcements. We value the worth of the small business rate relief scheme. I have been asked about the matter previously. Year on year, businesses become concerned that we will somehow make major alterations, but I have seen nothing to support a case for major alternations to be made now or in the future. Of course, circumstances can always change, but I hope that what I have said at least provides some reassurance.

People will of course propose different methods of collecting local tax, on which the Executive and the Convention of Scottish Local Authorities often have robust discussions. COSLA has put forward many alternatives but, I am glad to say, it has yet to propose a service tax, as has been proposed by some people. Whatever the proper level of tax is and whatever frank discussions might go on between COSLA and the Scottish Executive, COSLA wants to maintain the link between democratically elected councillors and the level of tax that is set. That link is very important.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

I am sure that the minister will agree that the level of council tax is significantly affected by the local government revenue budget, or aggregate external finance—AEF. Does he also agree with the statement that Bristow Muldoon made at the Local Government and Transport Committee on 1 November that the settlement

"implies a marginal reduction in real terms of £10 million in the revenue budget"?

Bristow Muldoon went on to state:

"The point that I am making is that revenue support is broadly static over the three years."

George Lyon, the Deputy Minister for Finance, Public Sector Reform and Parliamentary Business said:

"I take your point about revenue".—[Official Report, Local Government and Transport Committee, 1 November 2005; c 2990.]

The figures have not changed since 1 November. Given that revenue support to councils is broadly static in real terms and that councils are expected to deal with new demand-led financial burdens in areas such as adult care, waste management and—not least—equal pay, everyone in the chamber will be asking themselves whether the target that the First Minister has set on a number of occasions of a council tax increases that are within 2.5 per cent is realistic. Does the minister support that target, which was entirely absent from his statement?

Photo of Tom McCabe Tom McCabe Labour

We have a confusing system of local government finance and I greatly favour our efforts to simplify it. We use terminology that must be difficult for the general public to understand in taking a view on what is happening. We talk about aggregate external finance and grant-aided expenditure, but what do those mean to somebody who is just trying to raise a family and get on with their life, and who hopes that the level of tax that they have to pay in their area is reasonable? The truth is that such phrases mean next to nothing.

However, such phrases allow people such as Mr Crawford not only to try to interrupt ministers when they are answering questions but to distort the position. Mr Crawford conveniently mentioned aggregate external finance, but he did not say that sitting alongside that is an additional £1 billion in other revenue streams that go towards local government. He did not say that there is also a prudential borrowing regime that is transforming local government's ability to meet communities' demands. In his efforts at disinformation he should not just mention one element of local government but all the elements that impact on people's lives.

Photo of Bristow Muldoon Bristow Muldoon Labour

One of the cost pressures on local government in years to come will be the pressures on local government pension funds in funded and unfunded schemes. What engagement has there been between the minister, the Office of the Deputy Prime Minister and local authorities on addressing potential gaps in pension funds?

Photo of Tom McCabe Tom McCabe Labour

The member is well aware that the Office of the Deputy Prime Minister is conducting negotiations on the local government pension scheme south of the border, where public pensions in general were discussed in a separate forum. The Scottish Public Pensions Agency attends all those meetings. As members know, the generalities of pension policy are reserved to Westminster; however, Scottish ministers have the power to make regulations to put certain things into effect. The SPPA observes the discussions and involves itself in consultation and discussion with relevant trade unions in Scotland. That situation will continue into the future.

Photo of Carolyn Leckie Carolyn Leckie SSP

I thank the minister for the advance copy of his statement.

It really is amusing that the Liberal Democrats felt that they had to pre-empt a question from the Scottish Socialist Party. It is testament that the sweat is dripping from their backs because they are under pressure on their supposed policy to abolish the unfair council tax.

However, I am going to ask a question that the minister might not have pre-empted, which might be a mistake. Why was his statement absolutely silent on equal pay and on an overdue bill to get councils and the Executive to meet their obligations on achieving equal pay for women? The minister referred in a Finance Committee meeting to a holding account from which he was prepared to pull down funds to cut business rates. Why is he not prepared to pull down funds to meet councils' obligations to achieve equal pay for women who, in effect, have been subsidising public services for years? Is not it true that the minister is announcing a cuts and redundancy package, but is abandoning low-paid women and other vulnerable groups who can least afford the unfair council tax, and is just too much of a coward to be explicit and honest about it?

Photo of Tom McCabe Tom McCabe Labour

In deference to you, Presiding Officer, I will not answer all those questions. I have been doing this for a long time and, fortunately, some things just slide off me now, such as Ms Leckie's last comment. However, I cannot resist the temptation to say that, if my party had performed as badly in the Cathcart by-election as Ms Leckie's did, the sweat would be dripping off my back.

On many occasions, we have said that the pay and conditions of local government employees are matters for local government. We are talking about an agreement that was struck in 1999. That is important because, from 1999, Scottish local authorities have experienced record levels of increases in the resources that have been made available to them. I trust that, over that period, they took account of the need to meet the demands that Carolyn Leckie mentioned and that they have tried to make provision for them.

In discussions that I have had with the Convention of Scottish Local Authorities in the past 24 hours, it has confirmed that it is in discussion with its members and is trying to arrive at a consensus position that will enable it to discuss with me in detail the issues that are faced. I look forward to those discussions.

Photo of Derek Brownlee Derek Brownlee Conservative

I thank the minister for his statement and for his lecture on economic policy as it was when I was 18 years old.

In relation to the efficiencies that John Swinney touched on and which the minister and I would agree are important parts of the settlement, the minister said:

"I expect openness, professionalism and transparency on all sides."

We would all echo that. In the spirit of openness and transparency—and, I hope, professionalism—will the minister later today publish details of the areas and programmes in which he thinks savings could be made, broken down by local authority area? That will enable local taxpayers to hold their local authorities to account. Will he also publish details—activity by activity and council by council—of the impact of all additional requirements that have been placed on local authorities since 1999?

Photo of Tom McCabe Tom McCabe Labour

The member might have been quite young not so long ago and I think that he is still quite young.

Never at any point has it been our intention to dictate policy to local government in the way that Mr Brownlee has just suggested. The people in local government are democratically elected and it is for them to decide which areas it would be most appropriate for them to deal with in order that they achieve their efficient government targets.

A firm of consultants has been employed by councils to analyse the efforts that are being made with regard to efficient government. I know that that report is due to be published in the near future and I think that it will paint a positive picture of local government's efforts, and allow councils to demonstrate where the savings are coming from. That does not surprise me. Local government has an excellent track record of identifying efficiencies year on year—it always has and there is nothing to suggest that the situation will change now or in the future.

Photo of Christine May Christine May Labour

Has the minister made any assessment of the potential impact on Scottish manufacturing of derating offshore wind farms? Can the minister confirm that the consultation process that is about to be embarked on will include power that is generated from municipal solid waste, sewage sludge and clean coal technology as well as biofuels for agriculture, transport and industry?

Photo of Tom McCabe Tom McCabe Labour

On the second point, renewable energy is renewable energy, so the consultation will be as wide ranging as it needs to be.

With regard to the impact of derating offshore wind farms, the representations that I have received over the past year from the industry have expressed the strong view that such a measure would be an incentive to companies in the sector and would boost efforts to meet the ambitious targets that we have set. As I said earlier, those targets are critical if we are to leave a proper legacy to future generations.

Photo of John Swinburne John Swinburne SSCUP

I congratulate the minister on his excellent statement. In one paragraph, he talks about rates of council tax collection, which he and I know are abominably poor. Millions of pounds go uncollected every year, which impacts on pensioners, who are at the margins and who do not get the benefit of their council tax being waived. Pensioners who have to pay the council tax find it an intolerable burden and the higher the amount of legitimate taxation that is not collected, the greater the burden becomes. How will the minister address that problem?

Photo of Tom McCabe Tom McCabe Labour

I agree with the member's sentiments. The rate of council tax collection in Scotland is lower than is desirable and I have expressed that view to COSLA. The average collection rate is lower in Scotland than it is south of the border. As I said in my statement, every 1 per cent improvement in that rate would generate an extra £17 million in revenue for local government, so it is not an inconsequential matter.

We have made it clear to local government that we encourage bids under the efficient government programme for more efficient forms of collection and we have encouraged local authorities to think laterally about how they can pursue unpaid debts.

I stress that there is a council tax benefit system. The rate of take-up of council tax benefit is not as good as it could be and I recognise that we need to work in conjunction with our colleagues at the Department for Work and Pensions to improve that take-up. However, councils need to recognise that pursuing unpaid debt does not necessarily involve pursuing the poor: far from it. There is a considerable amount of evidence to show that people whose means are adequate for them to pay—people who have access to different forms of professional advice—still owe considerable sums. They should live up to their responsibilities, like the vast majority of citizens. We strongly encourage local government to take that approach.

Photo of Jeremy Purvis Jeremy Purvis Liberal Democrat

Scottish Borders Council proposes to close schools and to cut the number of teaching staff. Will the minister condemn the council—which is Conservative run, incidentally—especially in the light of the 4.3 per cent increase that it will receive under the minister's statement? Notwithstanding the minister's comments about areas that have declining populations, does he accept that there is a problem with areas that have growing but aging populations, particularly given the demands that such populations place on social work departments and the funding that they require?

Photo of Tom McCabe Tom McCabe Labour

I did not quite catch the second point but I think I got the drift of it.

We face considerable demographic challenges in Scotland. As has been mentioned in the chamber on many occasions, our population is aging. In the next 15 years, there will be a 55 per cent increase in the number of people aged 85 or over. That will produce real challenges for our care services and our health service. The Scottish Executive is closely examining those issues and is trying its best to predict the model of requirement for the years to come. I do not have specific details of Scottish Borders Council's proposals, but clearly it has to assess its own requirements.

I know that Conservative Governments in the past have never shown a lack of willingness to wreak havoc in communities. However, I am not fully acquainted with the particular circumstances of the area that the member mentioned.

Photo of Brian Adam Brian Adam Scottish National Party

The minister rightly referred to the effects that any council tax increase would have on hard-pressed working families. What rises does he expect in the coming year as a consequence of the settlement? Should the cap—as the First Minister suggested would be appropriate—be 2.5 per cent?

Having discussed issues such as equal pay with COSLA, will the minister tell us what impact that might have, not just on council tax levels but on services? Might he be willing to discuss those costs with COSLA?

Photo of Tom McCabe Tom McCabe Labour

Our discussions with COSLA are wide-ranging. The First Minister has made clear our expectations, as I have. I said in my statement that the resources that are made available, together with efficient Government success, a drive to ensure that councils' expenditure is properly targeted and a drive to increase their income generation will ensure that councils in Scotland should be exerting downward pressure on tax levels. We have never said anything different. We will continue to say that— [Interruption.] We will continue to say that even when we are rudely interrupted by Scottish National Party members.

Photo of Murray Tosh Murray Tosh Conservative

I am sure that members will appreciate the minister's sensitivities in the future.