Local Government Finance (Scotland) Order 2006 (SSI 2006/29)

– in the Scottish Parliament at 2:36 pm on 8th February 2006.

Alert me about debates like this

Photo of Trish Godman Trish Godman Labour 2:36 pm, 8th February 2006

The next item of business is a debate on motion S2M-3922, in the name of Tom McCabe, that the Local Government Finance (Scotland) Order 2006 be approved.

Photo of Tom McCabe Tom McCabe Labour 3:06 pm, 8th February 2006

I rise to seek Parliament's approval of the Local Government Finance (Scotland) Order 2006. The funding to which it refers will touch the lives of everyone living and working in Scotland. Without it, local government simply could not function.

There has been much comment on the funding of local government. Some of that comment has tried to justify above-inflation increases in council tax levels and some of it has even threatened cuts in services. Although those are the claims, I respectfully suggest to the Parliament that we would do well to consider the facts.

The order provides for the distribution of £8.322 billion in revenue grant support for local authority core services in 2006-07. There is more to the story than that. We will provide another £1.1 billion direct to councils through specific revenue grants, such as the £80 million for the delivery of new or refurbished schools through the public-private partnership school fund, the £75 million for criminal justice social work initiatives and the £63 million to help to achieve strategic waste targets.

On top of that, councils will raise more than £2 billion locally through council tax and around another £5 billion in sales, fees, charges and other income. In other words, councils will have around £17 billion to spend on services next year. To put it another way, that is around £3,350 for every man, woman and child in Scotland.

Let us look in a bit more detail at the core grant of £8.322 billion, which is £235 million, or 2.9 per cent, above the figure contained in last year's order. When we consider that almost £80 million has been taken out of next year's funding as a result of the transfer of responsibility for the national concessionary travel scheme, that means that, on a like-for-like basis, the overall increase is actually £315 million, or 3.9 per cent. That increase follows last year's increase of 5.5 per cent. Indeed, since 1999, all the increases come to £2.5 billion, or almost 50 per cent.

Therefore, the facts do not support the claims of underfunding. Indeed, it is surprising that we do not hear more about the substantial increase in the quality and quantity of services that has been possible as a result of those increases.

Photo of John Swinney John Swinney Scottish National Party

If everything in the garden is so rosy, why on 24 January 2006 did the minister write to the president of the Convention of Scottish Local Authorities asking him for his views on the "tight financial outlook" that now faces local authorities? If everything is perfect, why is there a "tight financial outlook"?

Photo of Tom McCabe Tom McCabe Labour

Had Mr Swinney been paying attention, he would know that, although it is unusual to do so, I have already acknowledged in a spirit of openness and transparency—which is what we want our dealings with local government to reflect—that the 2007-08 settlement is tight and that I am prepared to look at it again, depending on how local authorities respond to the efficient government initiative.

The order will do one other thing. It will give councils an immediate, additional one-off amount of just over £140 million, which we will pay out next month, to meet spending pressures that have arisen since the 2005 order was approved.

Photo of Margo MacDonald Margo MacDonald Independent

Although I appreciate that the minister has said he will look again at next year's settlement, I urge him to meet the City of Edinburgh Council's representatives to discuss capital city funding, not on a one-off basis, but as a continuing element of funding for the capital city.

Photo of Tom McCabe Tom McCabe Labour

I am more than delighted to meet the representatives of the City of Edinburgh Council. We normally have very constructive discussions and I look forward to further constructive discussions with them.

We have been quite open with councils about those sums of money. They cover, for example, antisocial behaviour, support for youth justice, help for parents in disadvantaged areas to access employment and funding for educational psychologists. The £140 million will come as no surprise to COSLA.

Amid all the rhetoric, people could be forgiven for thinking that those significant additional sums might have been overlooked. Taken together with the like-for-like increase for 2006-07, councils will have more than £450 million extra compared with the figures that Parliament approved this time last year.

Photo of Tom McCabe Tom McCabe Labour

Not at the moment. I need to make some progress.

That takes our spending to a record high and confirms our commitment to improved public services for people living and working in Scotland. It fulfils our partnership agreement to increase the number of teachers to 53,000 by 2007, and we are backing that up with an extra £18 million for teachers and a further £11.3 million for additional support staff. It fulfils our partnership agreement to provide free personal and nursing care. We have increased provision for health and community care by £96 million, including meeting in full the extra £37 million that councils told us that they needed for care of the elderly, and in next year's settlement we will give them the whole £57 million that they said they needed in that year. The money will provide more support for children and families and additional investment for our police and fire services, and it will enable the enforcement of the Smoking, Health and Social Care (Scotland) Act 2005, which will come into force later this year.

Of course, the order that we are discussing today is about revenue funding, but it will also provide £715 million in direct support to councils for new capital investment in 2006-07. When we add what councils are planning to borrow under the new prudential framework, we can see that they will be able to undertake capital investment of around £1 billion next year, providing new schools, community centres, roads, transport facilities, the regeneration of our city regions and other infrastructure.

There has been a lot of scaremongering about how high council tax levels will be. Council tax levels will be announced tomorrow, and when we look below the headlines, we can see that COSLA's figures indicate that several councils are planning increases at or not far above 2.5 per cent. Of course, not everyone starts from the same base, but it is self-evident that some can constrain the council tax burden on their community.

I confidently predict that, because of the hard work and diligence of their council, a good number of taxpayers in Scotland will experience increases of below 2.5 per cent. Councils need to consider carefully their responsibilities. It will be for them to justify their decision to their electorates and, once the Executive sees the information, it will be for us to consider how we respond.

Photo of Tommy Sheridan Tommy Sheridan SSP

Will the minister explain to the citizens of Glasgow why it is acceptable that although their council tax increase will be 2.5 per cent, they will lose their pest control and consumer advice departments? Is that a justifiable trade-off?

Photo of Tom McCabe Tom McCabe Labour

Mr Sheridan might be prepared to predict a 2.5 per cent increase in Glasgow, but I am not.

Today's order is about funding for 2006-07, but it is also part of a three-year settlement that we announced up to 2007-08. Three-year finance settlements were intended to provide councils with greater certainty and to allow them to plan ahead. As I have already said in response to Mr Swinney, the figures for 2007-08 that I announced last year would not normally be revisited. However, in a spirit of co-operation with our local government colleagues, I have undertaken to look again at the local government finance order for 2007 against the background of the performance in efficient government.

Of course, our local government colleagues are aware that the spending review has been delayed by a year and that that restricts our room for manoeuvre. However, if they can perform adequately with regard to the efficient government initiatives—and there is much evidence that they can do just that—we will do our best to respond. A general efficiency saving of 2 per cent, which equates to £168 million, was applied to local government over the current three-year settlement. Despite all the anguished comments that have been made, we have yet to see any evidence that our targets are unrealistic.

Photo of Tom McCabe Tom McCabe Labour

Not at the moment. I need to make some progress.

The independent report that was published last month showed efficiency savings of £122 million for 2005-06 alone. With two years of the settlement still to go, there are more savings to come. The more local government can save and the more efficient it becomes, the more money it will be able to reinvest in front-line services.

The order makes perfect sense for local government in Scotland and for the people of Scotland. We need less rhetoric and scaremongering. We need an adult relationship that does not use the people of Scotland as pawns in some anodyne debate between councils and the Executive. Moreover, we need people to apply themselves to what we know they can do best: delivering excellent services in the most effective and efficient way.

I move,

That the Parliament agrees that the Local Government Finance (Scotland) Order 2006 (SSI 2006/29) be approved.

Photo of John Swinney John Swinney Scottish National Party 3:17 pm, 8th February 2006

It is inevitable that this debate will cover some of the ground that we covered on 12 January when we debated the inadequacy of the local government finance settlement. At that time, in light of the finding in the Finance Committee's report that there was a gap in local authority funding, we advanced the argument that councils faced a stark choice between increasing council tax above the rate of inflation and inflicting damaging cuts on essential public services due to the Government's difficult financial settlement.

We are beginning to see the early decisions that councils are taking. For example, yesterday, it became clear that North Ayrshire Council did not meet the 2.5 per cent target; in fact, it delivered a 4.6 per cent council tax increase.

Photo of Tom McCabe Tom McCabe Labour

I note that Mr Swinney is predicating his arguments on the Finance Committee's report. I hope that he acknowledges that, when we discussed the matter last year, the aggregate external finance was £258 million. Of course, that was the figure in the draft order. The AEF now stands at £315 million, which means that the gap highlighted in the committee's report has been closed by £57 million. Mr Swinney should be prepared to take that into account when he advances his arguments.

Photo of John Swinney John Swinney Scottish National Party

I think that I shall take into account the report by the Finance Committee's budget adviser, which was published this morning. It indicates a shortfall of £85 million in local authority budgets, which is what the Finance Committee asserted before Christmas. Ministers would do well to read some of that material before they make remarks such as those that they have already made.

On 12 January, the Scottish National Party proposed that Government support to local authorities should be increased by £93.2 million to close the funding gap and to deliver a real-terms freeze in council tax. We advance the same proposal in the amendment that Parliament will vote on this evening.

I came to this debate hopeful that, even at this late stage, the Government would, in the process of setting council tax, see sense and come forward with an alternative proposal that acknowledged the reality in council offices around the country. I was indeed heartened by Mr McCabe's claim to be interested in less rhetoric and in having an adult and mature debate between the Scottish Executive and councils. Is this minister associated with the First Minister who, over the weekend, was telling us that unless councils toe the line their number will be cut and council tax rises will be capped? Apparently, the First Minister is incandescent and is losing patience. What sort of adult contribution to the debate is that from the First Minister and his Minister for Finance and Public Service Reform? Of course, some of those comments were made by sources close to the First Minister and the minister. However, we all know what that really means—they were made by the First Minister and the minister. If ministers want to have an adult debate, they should have it. They should not bandy about such comments and then try to fool everyone by saying that they are involved in some great adult debate.

Photo of Margo MacDonald Margo MacDonald Independent

Does John Swinney agree that, in order to take the heat out of a futile argument between central and local government in Scotland, it might be a good idea to have an independent standing commission to examine all the possibilities so that, on the other side of the election, when there is a better temper in the chamber, we can discuss the matter sensibly?

Photo of John Swinney John Swinney Scottish National Party

There may be some merit in that idea, but I think that Margo MacDonald should have confidence in the report that was agreed by all members of the Parliament's Finance Committee, on which five political parties are represented, which said that there was a funding shortfall in local government. That report provides a pretty dispassionate piece of information that should underpin today's debate.

I would like to put in context the difficulty that faces local government in Scotland. It was put no better than by the leader of East Dunbartonshire Council, Councillor John Morrison, who is not one of my party's supporters but somebody with whom the Liberal Democrats may be acquainted. He told "Newsnight Scotland" on Monday that

"One of the reasons for us saying it's not going well this time around is that instead of having around 39% of the Scottish block going towards local government, which was the case in 1997 when Labour came to power, you will find that at the end of the spending round, the proportion of the Scottish block going in local government terms will be only about 31%."

There never seems to be any problem finding more money for the quangos—extra cash for the Water Industry Commission for Scotland or the Scottish Environment Protection Agency—but there always seems to be a problem finding money for local authority services. Councillor Morrison's comments help us to understand the difficult balancing act that many local authorities have to perform. I am sure that Mr McCabe is now going to denounce a Liberal Democrat member and the leader of a local administration.

Photo of Tom McCabe Tom McCabe Labour

I am going to supply some helpful information to Mr Swinney and to the leader of East Dunbartonshire Council. In 2005-06, local authorities' share of the Scottish budget—that is, all the money that goes to local government—was 37.2 per cent of our entire funding, and the figure for health was 32.1 per cent. In 2006-07, local government will get 34.9 per cent and health will get 32.5 per cent. In 2007-08, local government will get 33.9 per cent, even on existing figures, and health will get 33.6 per cent. COSLA's further claim that 40 per cent of the Scottish block goes to fund quangos is, of course, utter nonsense.

Photo of John Swinney John Swinney Scottish National Party

I noticed that Mr McCabe gave no comparative figures for the position in 1997, when Labour came to power. If I understood his figures correctly, local government's share of finance is actually going down.

Ministers have encouraged local authorities to follow a number of different routes to solve the problem. First, there was joint working—co-operation across council boundaries to deliver back-office services. That is an admirable aim, but the local authority representatives to whom I speak say that the financial gains from joint working will be realised not in this financial year but in two to three financial years, and the books must be balanced in the current financial year.

Secondly, local authorities have been encouraged to undertake a commendable range of efficiency savings, and it is absolutely right that such savings should be made. However, local authorities have seen a significant proportion of those savings clawed back by the Scottish Executive, an act made even more irritating by the fact that some of the departments over which Scottish ministers preside seem to be impervious to the demands for efficiency that are made by the Minister for Finance and Public Service Reform. Some Scottish Executive departments are making derisory savings compared with the performance of local government. Mr McCabe gave us a figure of £122 million and listed all the achievements of local government, but we should all pay a lot more attention to the cash-releasing savings that are identified, rather than to the time-releasing savings, because we all know that it is easy to pauchle the time-releasing savings.

My final point relates to the letter that Mr McCabe sent to the president of COSLA. It refers to "the tight financial outlook" and encourages local authorities to use reserves to balance the books in the course of the financial year. That is one of the most reckless pieces of financial advice that a finance minister has ever sent to local authorities. Mr McCabe encourages local authorities to use one-off reserves—reserves that cannot be used again—to prop up revenue budgets. That goes on already, but I have lost count of the number of health boards in this country that the Government has had to bail out because they have used one-off reserves to support revenue funding. When are we going to learn lessons about how stupid that is in financial planning terms? For the Minister for Finance and Public Service Reform to suggest such a thing shows that either he has no idea of what is contained in the letter that he signed or he wants to inflict real financial havoc on the council tax payers of Scotland.

Ministers have asked local authorities to make contributions out of reserves to meet the costs of single status and equal pay. The deputy minister told me at committee last week that £250 million was a fair amount of money to allocate against those costs, but the equal pay claims are now estimated to amount to about £500 million. There is little in the reserves to bail out the council tax this year.

The issue cannot be ducked. Ministers have been lashing out for weeks on the subject. The data show that unless the Government is prepared to give local authorities the resources that we refer to in our amendment, this Scottish Executive will be responsible for punishing council tax payers yet again.

I move amendment S2M-3922.2, to insert at end:

"but, in so doing, considers that, in order to protect council tax payers from above-inflation increases in council tax that will arise from the inadequate financial provision in this Order, local authorities should be permitted to retain £58.5 million in efficiency savings and obtain a £34.7m share of the public expenditure arising from the pre-Budget report to close the financial gap in support for local authority services that exists."

Photo of David Davidson David Davidson Conservative 3:25 pm, 8th February 2006

We have had the usual spin and rhetoric from the minister to start the debate. He even gave an early election bribe when he said that he will revisit the 2007-08 settlement. I would like to see the figures and to know when he intends to deliver on that.

We heard about carrots and sticks from the minister today. He mentioned a list of extra moneys that he will give. However, will any of those moneys not be ring fenced? That is a huge issue that we hear about from councils of all persuasions. In a local government debate in the chamber in 1999, I said that we should start not by looking at local government finance but by deciding the role and responsibilities of local government. Once we have agreed them, we can set up a funding package and allow councils to become accountable and to deliver what they are supposed to deliver within that package.

Since Labour came to power, council tax has risen by about 55 per cent, and more increases are to come. The First Minister said that the increase would be only 2.5 per cent this year. In fact, in November, he stated:

"unless local authorities decide to increase their expenditure through decisions of their own free will, there is no need for them to increase council tax by more than 2.5 per cent next year."—[Official Report, 10 November 2005; c 20582.]

We are now in the war zone—there is a war between the Executive and local authorities. The Executive has demonstrated a lack of understanding of the impact of the settlement not only on local government but, ultimately, on the council tax payer and the taxpayer in general. It is sometimes difficult to take sides, because Labour is in government and Labour is often in charge of local authorities. These people are in the same party but they cannot agree on how to speak to one another and how to come to a deal. The public are likely to be caught between a rock and a hard place: either there will be cuts in public services; or there will be increases in council tax. It is interesting that the Deputy Minister for Finance and Public Service Reform stated his belief that the increase should only be 4 per cent, given that that is certainly not what the minister said today.

The Conservatives are very much in favour of efficiencies being delivered across Government—whether national or local—but councils need some breathing space so that they can examine their services from a strategic perspective. They should not rush into a knee-jerk reaction without consideration or consultation, because that will only postpone the problems for another year.

I find it ironic that the ministers are demanding efficiency savings from councils but are not demanding savings of the same level from their own departments.

The First Minister talked about councils making decisions

"of their own free will".

That would be fine if we did not have the huge level of ring fencing that is set in place by the Executive. What we have seen under the coalition Executive is a manifestation of central control that is almost reminiscent of eastern Europe.

Photo of Tom McCabe Tom McCabe Labour

The member lodged an amendment that refers to the core settlement and the huge amounts that are ring fenced—he has repeated that comment. In fact, only 9 per cent of the core settlement that goes to local government is ring fenced. Is that what the member considers a huge amount?

Photo of David Davidson David Davidson Conservative

What about all the other moneys that are specifically labelled?

Photo of Tom McCabe Tom McCabe Labour

The amendment refers to the core settlement.

Photo of David Davidson David Davidson Conservative

I am not arguing; that is what local authorities get. However, we must remember that it is the finance at the edge that is crucial—not the largest sum, but the money that councils can manipulate within their budget. From my experience, 9 per cent represents a huge lack of freedom to manoeuvre.

The minister is assuming efficiencies—he even puts them into his settlement figures. He has come out with some more figures today, which we will have to check carefully, no doubt. The Finance Committee and the Local Government and Transport Committee expressed serious concerns about the minister's assumptions. Councils in England and Wales will get help to cushion council tax increases—not so here.

It must be highly embarrassing for the Executive that they are leaving councils with only one role this year: that of choosing which cuts to make to allow them to deliver the centrally imposed priorities. That is what councils are telling us.

Photo of Jeremy Purvis Jeremy Purvis Liberal Democrat

Every time that Mr Fraser and Mr Brocklebank speak in debates in the chamber, they say that public spending in Scotland is too high and should be reduced. If that is the case, how much does Mr Davidson think it should be reduced by?

Photo of David Davidson David Davidson Conservative

I am not going to play semantic games. Local government is only one aspect of public service.

The figures are disputed. Are the First Minister and the Minister for Finance and Public Service Reform running local government or are they preparing the Executive to allow local authorities to become really accountable so that they can face the electorate at election time and justify what they have done? At the moment, both councillors and the Executive are saying, "It wasnae us". Who is to blame? What is the point of local government without giving councils freedom, accountability and responsibility? Local government is becoming a branch office of the Scottish Executive. That approach does not allow for the different needs of the different parts of Scotland.

It is time for the minister to sit down with local government to work out—in the adult fashion that he referred to at the beginning of the debate—how to develop a three-year package that actually works. The only losers in all this are the service users and the council tax payers.

I move amendment S2M-3922.1, to insert at end:

"but, in so doing, considers that there is a lack of democratic accountability at the local government level due to the high level of ring-fencing attached to the Scottish Executive's revenue support grant, and further considers that only when councils are freer to set their own spending priorities will local needs be better met."

Photo of Mr Andrew Arbuckle Mr Andrew Arbuckle Liberal Democrat 3:32 pm, 8th February 2006

Tomorrow, along with more than 1,000 local authority councillor colleagues, I will help to set the council tax level for the coming year. During the discussions tomorrow, no doubt there will be adverse comments about the settlement from the Scottish Executive. It was ever thus. In fact, after a period of relatively benign settlements, this year's can be described as challenging, to say the least.

The minister has given us updated figures showing exactly how the settlement is seen from the Executive's point of view, and I welcome the additional cash commitment. However, he also recognised that local authorities face additional commitments. As a member of the Finance Committee, I have expressed the view that the rigour that the Scottish Executive applies to local government expenditure should be applied to all Government departments. I do not say that that should be done equally, but if the Scottish Executive is driving ahead with a major efficiency programme, it would have been more palatable to local authorities and more acceptable to the public for similar treatment to be applied throughout Government.

The detailed proposals that Fife Council and other local authorities will deal with tomorrow have been achieved largely by looking at how services can be better delivered without affecting the front-line customer. I know from councillor colleagues who have been working on the budget that that operation has not been easy. It would ease the burden on local councils if the Scottish Executive looked sympathetically at financing proposals to allow them to get over the financial barrier that they will face. The Executive could do that by introducing more leeway in the use of capital receipts or by allowing programmes of planned expenditure to run over longer periods. Another option might be to introduce legislation to allow councils a short-term borrowing facility.

Although the recommendations are already in the public domain, the minister is right: we cannot presume what all the individual outcomes will be. The big issue for many councillors is not what the outcome of tomorrow's debate will be but what will be done in preparation for the 2007-08 financial year. Everybody knows that that is when the real costs of the equal pay settlements and the implementation of single status deals will kick in. Estimates of those costs have been widely circulating, but no overall outcome figure is available yet—although it will be high. In addition, most local authorities will be operating on depleted reserves and consideration must be given to rebuilding them to a sustainable level.

Photo of John Swinney John Swinney Scottish National Party

Does Mr Arbuckle accept that to meet the costs of equal pay and single status, it would be prudent for local authorities to maintain their reserves at an acceptable level? Given that those reserves can be used only once, is it foolhardy for councils to use them to reduce the council tax?

Photo of Mr Andrew Arbuckle Mr Andrew Arbuckle Liberal Democrat

Mr Swinney has pointed to a fundamental flaw in his amendment. As far as the Liberal Democrats are concerned, we are quite happy to allow councils, as devolved bodies, to make their own decisions. The SNP's amendment advocates centralist decision making.

Photo of Tommy Sheridan Tommy Sheridan SSP

Will the member give way on that point?

Photo of Mr Andrew Arbuckle Mr Andrew Arbuckle Liberal Democrat

I want to finish dealing with Mr Swinney's intervention.

Photo of Mr Andrew Arbuckle Mr Andrew Arbuckle Liberal Democrat

It is correct to allow councils to decide what to do with their reserves.

Photo of Tommy Sheridan Tommy Sheridan SSP

My point is about centralisation and councils deciding what to do with their money. Does the member agree that the Liberal Democrats should support the return to local authorities of the ability to set and retain non-domestic rates?

Photo of Mr Andrew Arbuckle Mr Andrew Arbuckle Liberal Democrat

No, I do not.

The councils face additional financial burdens, including that of the allocation of more cash to pension provision. Another factor is their future delivery of targeted Scottish Executive priorities. In my area—the Fife Council area—some 400 employees are working on a wide range of Executive initiatives such as those on school travel, healthier eating and community wardens. Not only the Executive's ring fencing of money, but its provision of top-up cash is problematic for those posts. Given that the Executive will support most of the initiatives in question for only a short period, finding the cash to continue supporting them will be a major issue for local authorities, which risk losing those staff.

Margo MacDonald was right when she said that decisions have to be made on the relative responsibilities of the different levels of government. As usual, the Liberal Democrats are on top of the case. That is why we have established the Steel commission.

All these issues would make it impossible for councils to bring forward any kind of reasonable settlement for the 2007-08 financial year, and I welcome the minister's promise to look again at the settlement for that year.

Photo of Murray Tosh Murray Tosh Conservative

We move to the open debate. I call Bristow Muldoon to be followed by Fiona Hyslop. I will be very strict with time as the debate is oversubscribed.

Photo of Bristow Muldoon Bristow Muldoon Labour 3:37 pm, 8th February 2006

As Mr Swinney remarked, today's debate has a familiar feel to it: we debated many of the issues in the debate on local government finance that took place on 12 January and covered some of them again in last week's debate on the Scottish service tax. Nonetheless, today's debate on local government funding remains important for two reasons. First, vital local government services, including education and social services, depend to a significant extent on the settlement that we are discussing today. Secondly, the settlement will be a significant factor in the decisions that councils announce tomorrow on council tax levels.

Best value, efficiency and the modernisation of local government are important factors in the debate. We need to examine the relationship between the Executive and local government, which must become more mature. Many of the headlines in recent days may have provided good copy for journalists, but they have not done much for the continuous improvement of public services in Scotland.

I agree with the minister that the core settlement of £8.3 billion this year and £8.5 billion next year must be considered in the context of the 47 per cent increase in central Government core funding that has taken place since 1999 and the £1 billion that the Executive has provided through other budget lines. We should not forget the increased flexibility for local government that has resulted from the prudential borrowing regime.

In every year since devolution, the amount of core funding that has been provided to councils has increased above the general level of inflation. Improvements that have been made in a number of services have had cost implications, most notably in the case of the McCrone agreement and the provision of free care for the elderly. On the whole, those improvements in service have been welcomed across the political spectrum and the costs have been incorporated in the settlements. However, I appreciate that on-going assessment of the actual costs of services is necessary, especially when the services are significantly demand led. The level of sustained increase in local government funding cannot go on forever. Although the settlement for the current year is lower than in previous years, it is still above the rate of inflation. Many recognise that the settlement for next year will be tighter, but there is a willingness to review it.

As a result of favourable settlements, council tax in Scotland has not risen at anywhere near the same level as it has risen in England. Ten years ago, council tax per household in Scotland was significantly higher than that in England; now, the figure per household is almost £100 lower. Tomorrow we will know the actual figures for the forthcoming year's council tax. From evidence given and from media reports, it seems that the majority of councils will announce council tax increases that exceed the 2.5 per cent target that the Executive believes they should be able to achieve. However, it also seems likely that several councils will set council tax increases at or around the 2.5 per cent target. Debate will legitimately centre on whether those councils that choose to set higher council tax rates are as effective in managing resources as those that set the tax at the average 2.5 per cent.

I welcome the minister's willingness to discuss further the 2007 settlement. It will be essential that councils secure agreement on single status and fully consider its impact. That will be important in their discussions with the minister.

Many councils have made much progress in securing best value, modernisation and efficiency. For example, West Lothian Council—the one I know best—is widely regarded as a progressive council. I acknowledge that other councils are examples of best practice. West Lothian Council was praised in last year's Audit Scotland report, which recognised the council's clear commitment to best value in community planning. The Minister for Finance and Public Service Reform, Tom McCabe, has recognised its culture of continuous improvement in partnership working and the openness that exists within it. The council has been recognised for several awards, within the Labour Party and by the Local Government Chronicle, which, for the second year running, has short-listed it for the council of the year award.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

I recognise the plaudits for West Lothian Council, but does the member acknowledge that they have come at a price? Successive Labour administrations have increased band D council tax by 89.3 per cent.

Photo of Bristow Muldoon Bristow Muldoon Labour

Fiona Hyslop's party has consistently made budget proposals that would substantially reduce expenditure on front-line services in West Lothian Council. Meanwhile, Labour Party budgets have enabled rapid modernisation of services such as the use of smart technology to support older people at home, the development of effective partnership with the national health service to reduce the time that elderly patients must remain in hospital and a highly regarded housing service. I do not see the record as Ms Hyslop sees it.

Much of the recent media coverage has been unhelpful to the relationship between local government and central Government. The fault for that does not lie entirely with local government; the Executive, too, needs to review some comments that were made. However, COSLA and the local authorities must reconsider some of the ridiculously inflated council tax projections that have been made for 2007. Some of the intemperate language that was used in the letter in The Herald yesterday should also be reconsidered.

This year, the budget settlement has increased at a lower rate than in previous years, but it is still above the rate of inflation. It is a reasonable settlement that will allow local authorities to set their budgets close to the rate of inflation, if they choose to do so.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party 3:44 pm, 8th February 2006

Having not taken part in the various debates in recent weeks, I hope to bring a fresh perspective to the issue. I want to explore what the proposals will entail and their consequences in human terms. Until the Parliament has power on wider issues such as the economy and benefits, too much of our time will be spent on debating local government financial settlements, because it is in local government that most responsibilities still lie.

One positive suggestion that has been made is that, because the same issues will arise time and again, we should have a standing tripartite convention or committee involving local government, the Executive and the Parliament that meets regularly. If the minister and his colleagues do not want to have to respond to irate letters in the press from local government leaders at the time of the local government settlement, it is important that we have regular dialogue that is based on partnership, not a one-to-one bipartite arrangement between the Executive and local government. That is a positive suggestion for the way forward.

The Finance Committee paper that was published this morning makes absolute sense about where the problem lies. Paragraph 18 talks about

"the discrepancy between the Executive's inflation provision and its inflation forecast."

It does not take a financial genius to work out that there is a big gap that needs to be closed. The issue is whether the gap has been closed sufficiently to ensure that local government does not have to make above-inflation council tax increases.

The minister said that we do not want rhetoric. He said that the Government is employing more teachers and reducing class sizes, but—hang on—when Dennis Canavan asks, as he does, what progress is being made on reducing class sizes, the Executive does not know. It is interesting that the targets on class size reductions and employing more teachers are for 2007-08, while the spending to produce those changes is coming through now in the 2006-07 settlement. Given that the spending is coming through in the core funding for local government, should we not expect to see some results in 2006-07? Local authorities say that, because of the pressure on budgets from single status, they are considering school closures. We know from the efficiency programme statements that councils should not touch the revenue costs that relate to the number of teachers who are employed, but if councils are considering school closures, how are they ensuring that there is a sufficient number of teachers?

If sufficient resources are being put in and we are making progress on teacher numbers, why is it that, in Glasgow, nursery teachers are being pulled out of nursery classes to save £370,000? Only last week, the Education Committee heard that a higher proportion of nursery teachers improves young people's life chances, although I appreciate fully that we have a range of provision in nursery education. With all the money that is going into education, why are cuts being made now, especially given that education should not be targeted under the Government's efficiency proposals? That is worrying and perhaps reveals a discrepancy between the finance order for 2006-07 and the Executive's delivery targets, which are for the following year.

My worry, which is shared by various local authorities, is that the preservation and protection of education is not happening in the here and now. Some spare capacity and resources in education are being used to shore up budgets to deal with other financial pressures on councils. That does not suit the Executive's proposals for education and it certainly does not suit pupils. The worrying aspect is that we may be storing up problems for the future.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

I am conscious of the time, so I will move on.

In West Lothian, an extra £600,000 needs to be provided for residential child care, specialised foster placements, child protection and care of children with special needs. We have introduced legislation on special needs, but it needs to be resourced through core funding. Only last week, the First Minister talked about the need for children of drug misusing families to have temporary or permanent care places, but that costs money, which should be provided through core funding.

By and large, local authorities throughout Scotland have to spend 50 per cent more than their grant-aided expenditure allowance on children's services to protect Scotland's children. No local authority in the country would jeopardise child protection services as a result of financial pressures in the budget. Local authorities face tough practical choices in relation to the children of this country. The issue is not just about the pounds, shillings and pence in the local government settlement; it is about the rationale.

Photo of Murray Tosh Murray Tosh Conservative

The member is in her last minute.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

On that basis, I ask the minister to consider rationally the proposals from the Finance Committee about the discrepancies, so that we can protect existing proposals. We must consider seriously the differences between the Executive's targets for 2007-08 and the finances in the order. We need to consider whether that money will reach the people whom it should reach.

Photo of Mark Ballard Mark Ballard Green 3:50 pm, 8th February 2006

Tom McCabe started the debate by asking us to consider the facts. The fact is that local authorities' funds are being cut in real terms. In effect, that means that there will be a budget freeze for the next financial year and, according to the draft budget, there will be a cut in real terms on 2005-06 funding by 2007-08. Of course, that ignores any pre-election rabbits that Tom McCabe may pull from his hat. However, the budget proposes a real-terms cut for local authorities.

According to that draft budget, the Scottish Executive insists on

"protection for all services already being provided".

As we have heard again today, the Executive is calling for local authorities to keep council tax rises at 2.5 per cent. The budget settlement represents an impossible equation for local authorities. We heard Tom McCabe say that new moneys are going to local authorities, but on reading through the statement, it is clear that each of those new moneys is tied to specific projects.

The Finance Committee has been talking about the budget gap. New money may be going in, but if new demands and new burdens are placed on local authorities, the budget gap remains. The Scottish Executive's response to the Finance Committee stated, bizarrely, that the budget gap does not exist. The Executive calculated one set of figures using the inflationary pressures that were forecast in 2004, but those figures are completely different from the inflationary figures that are in the 2006-07 draft budget. That could be accountancy sleight of hand but, because the inflation figures in 2006-07 are different, the Treasury figures are higher. That leaves a gap between what was predicted in 2004 and what will happen in 2006-07. The Finance Committee has identified that gap as a problem, but ministers have still not told us what they will do about it.

What are the options for local government? We are all worried about services being cut and we have discussed council tax being racked up. Our debate on 12 January made it clear that the soft services, such as voluntary support and education, which Fiona Hyslop talked about, will be cut. Those cuts will hit the poorest and most deprived the hardest. The Executive responds that local authorities should take the difference out of their balances. Local authorities have spent years building up those balances. As John Swinney said, that is accounting nonsense. The balances should not be used as a one-off to deal with what will be a recurring gap. The same could be said of Andrew Arbuckle's proposals on short-term borrowing. The problem is that there is a long-term revenue gap that cannot be met by a one-off raiding of the family silver.

I turn to the efficiency proposal. There will be £58.5 million of efficiencies next year and £114.2 million the year after that. Nobody denies that some councils could make major efficiencies. However, the Finance Committee heard well-run local authorities say that they cannot make those efficiency savings and that there will be cuts in services as a result. The Executive should reflect on what the Finance Committee has said. The committee, with its Executive majority, said that that inability to save will effectively mean cuts in services. It also said that local authorities have been treated very differently from other branches of Government.

Photo of Tom McCabe Tom McCabe Labour

Sometimes, one has to wonder about what one hears in the chamber. The member says that local authorities cannot make those savings. It was not the Executive that produced the recent independent report that identified savings of £122 million that have already been made—it was local government. Perhaps the member might pay attention to local government publications.

Photo of Mark Ballard Mark Ballard Green

I would like the minister to pay attention to reports that are produced by committees of the Parliament. The Finance Committee—with its Executive majority—has said that local authorities are being treated unfairly and that 63 per cent of the cash-releasing savings on the baseline are falling on local authorities. That 63 per cent compares with the 31 per cent of public services funding that they receive, according to the Finance Committee, or even with a figure of 34 per cent, which the minister mentioned. We have heard nothing from the minister to explain how that is fair.

Equal pay liabilities, which have been covered in the debate, will place a huge burden on local authorities. We can argue about whether more should have been done about them earlier, but the reality is that those burdens will hit local authorities in the next few years. Will that mean cuts in services or increases in council tax? We need a major rethink on local authority funding. I welcome Margo MacDonald's call for a commission to be set up after this session.

We need to widen the tax base. We have heard from the Green Alliance about the need to consider tax incentives with regard to rubbish collection, for example. Congestion charging would have been a good start. I agree with Tommy Sheridan that the setting of and revenue from business rates should be brought back under local authority control. I agree with Margo MacDonald's point that there is a strong argument for Edinburgh to have capital city funding, like Westminster City Council has.

We need to put in the money now to close the funding gap. I am disappointed that the order does not close that gap, which the committees of the Parliament have identified.

Photo of Kate Maclean Kate Maclean Labour 3:56 pm, 8th February 2006

I welcome the opportunity to speak in the debate on behalf of my constituents, who are facing an above-inflation increase in their council tax bills along with a reduction in the amount of money that is being spent on services. I also wish to speak on behalf of councillors and officials at Dundee City Council, who, year after year, have managed difficult budgets. Even when it has seemed impossible, they have managed to square the circle and bring in reasonable increases while protecting front-line services and jobs.

People in Dundee could be forgiven for thinking that, this year, they should have an increase in their council tax of only 2.5 per cent. They have picked up their newspapers to find that the First Minister and the Minister for Finance and Public Service Reform have said that councils should be able to achieve that level of increase. One can only forgive them for being puzzled if, as I suspect will happen, Dundee City Council tomorrow announces a figure in excess of that. I put on record my support for Dundee City Council in saying that it would not have been possible for the council to set a 2.5 per cent increase while protecting jobs and services at the same time.

Photo of Tommy Sheridan Tommy Sheridan SSP

Does Kate Maclean agree that Dundee, just like Glasgow, has yet again received less than the average settlement to local authorities across Scotland? Does that not show that the Executive is discriminating against two of the most deprived cities in Scotland?

Photo of Kate Maclean Kate Maclean Labour

I will come later to the level of settlement and what I think can be done about it.

Dundee City Council could not have imposed a 2.5 per cent increase while protecting jobs and services and making prudent arrangements to retain balances that would be reasonable as a percentage of the revenue budget.

The minister said that some people, thanks to the diligence and hard work of their councils, will face an increase of 2.5 per cent or lower in their council tax bills. Dundee City Council's councillors and officials are diligent and hard working, but because of the mechanisms that are in place, they cannot set such an increase.

The minister spoke about facts, but they are different for different areas. I do not disagree with what the minister said about the global sum. However, the grant settlement figures, which are based on updated grant-aided expenditure calculations—which are, in turn, heavily dependent on population estimates—mean that, given Dundee's declining population, the grant-aided increases are minimal. Due to a reduction in the AEF floor mechanism, Dundee City Council, along with three other councils—including Glasgow, to which Tommy Sheridan referred—has received a below-inflation increase this year. For 2006-07 and 2007-08, the increases for Dundee have been 2 per cent and 1.7 per cent respectively, compared with Scottish averages of 3.3 per cent and 2.3 per cent for those years.

Given that pay awards are expected to come in at 3 per cent, with inflation running at 2.4 per cent this year, I would be grateful to know how the minister would suggest that Dundee City Council squares that circle. I am not aware of the situation in all councils, although the minister has said that there is adequate funding to meet the Scottish Executive's aims. That might be the case, but COSLA does not seem to agree. Enough has been said about the public disagreements between COSLA and the Scottish Executive. There is fault on both sides.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

Statistics can be used in various ways. Aberdeenshire Council has the second highest level of increase in Scotland, but it starts from a lower level per head of population than Glasgow City Council or Dundee City Council. We can pick and mix statistics.

Photo of Kate Maclean Kate Maclean Labour

I am speaking on behalf of Dundee City Council. I am sure that if Mike Rumbles wants to speak on behalf of Aberdeenshire Council, he will be quite at liberty to do so.

I am objecting to the sweeping generalisations about the situation with local government funding. Anybody who knows what the mechanisms are knows that there are huge differences between councils. At one time, prior to local government reorganisation, there was little difference from council to council. Local tax levels were based largely on spending decisions, which made councils accountable to the electorate. That simply is not the case now. Our having a look at the distribution formula is long overdue. The fact is that the flawed formula exacerbates problems for Dundee City Council in a range of areas. The fact that funding for the McCrone agreement, concessionary fares or free personal care is based on a flawed formula means that Dundee often loses out whereas other councils sometimes make a profit. That was discussed yesterday at the Health Committee in relation to free personal care.

I understand the way in which local government is financed; I am sure that most members do, too, but the public do not. People depend on us in central and local government to be mature and honest about what is happening, but that is not happening. The Executive, local government and the Opposition are fighting like ferrets in a sack while the public look on in absolute amazement and do not know who to believe—presumably they will believe whoever comes up with the lowest figure.

The minister gave us lots of facts today, but the facts are different in different areas. Facts are chiels that winna ding. I do not have a crystal ball, but I suspect that the minister's facts will be dinging in Dundee tomorrow when the council tax is discussed.

Photo of Derek Brownlee Derek Brownlee Conservative 4:02 pm, 8th February 2006

Kate Maclean made a couple of important points, which we should not lose sight of. She referred to the sweeping generalisations about local government, which those on both sides of the argument are guilty of making. We must recognise that different situations pertain from council to council. She also said that taxpayers will not know who to believe, which is absolutely true and is one of the fundamental problems that we have.

The minister said that there were additional resources for local government. I do not dispute that for one moment. He said that there had been 50 per cent additional funding since devolution. That is fine. I do not dispute the figures that he presented, but if we are to have a mature debate about local government finance, we need clarity about what the figures mean. We need to be able to talk rationally about the funding that comes from the Executive relative to its requirements on individual councils. If we do not do so, we will continue to have the unsatisfactory situation whereby the Executive says, "We're providing more than enough money" and the councils say, "No you're not." Taxpayers are left in the limbo of not knowing who to believe or who is correct.

Margo MacDonald made an interesting point about having some sort of independent commission, but, rather than having a commission look at local government finance every couple of years, there would be something to be said for having an annual independent oversight of each council, so that people could get an independent view of the burdens that were being placed on councils relative to their funding. An independent assessment could then be made of whether when council tax rises it is because the Executive is not providing adequate funding or because, as ministers will allege, councils are not delivering the efficiencies that they are expected to deliver.

Photo of Margo MacDonald Margo MacDonald Independent

I must correct Derek Brownlee slightly. I was not asking for a commission to oversee the finances of individual councils. My suggestion was that, over the next year or two years, the delivery mechanism and the size of the councils should be examined independently, because a patchwork, rather than one simple solution, might be required.

Photo of Derek Brownlee Derek Brownlee Conservative

I take Margo MacDonald's point and apologise if I misunderstood slightly where she was coming from.

There is a need for a mechanism that gets us beyond the ritual COSLA and Executive bashing, because that generates a certain amount of heat but very little light. Given the scale of council tax figures throughout Scotland, taxpayers have an absolute right to know whether their money is being wisely spent and, if it is not, whether they should hold the Executive, the councils or a combination of the two, to account.

There was an interesting debate earlier between John Swinney and the minister about the percentage of the block grant that local government gets, but to some extent that is irrelevant because it depends on the proportion of services that it is providing. It is easy to get caught up in statistics without necessarily generating any great insight into what councils are doing.

The minister talked about the interesting and detailed report from the improvement service.

Photo of Bristow Muldoon Bristow Muldoon Labour

On assessing how councils are performing and how they are delivering in local services and in best value and efficiency, does the member recognise that the best-value reports that Audit Scotland produces are a valuable tool? In the past year, those reports have identified councils that have been performing well and councils that have been performing poorly. Local people can look to such reports.

Photo of Derek Brownlee Derek Brownlee Conservative

The reports are indeed useful and make for interesting reading. What we need is an additional, on-going mechanism for every council, so that people can see beyond the aspect to which Bristow Muldoon refers.

As far as I understood it, the report from the improvement service was an extrapolation of the savings that have been made, based on a sample. When the minister talked about the savings being made by local government, rather than saying that it had delivered—or was on course to deliver—£122 million of savings, it would perhaps have been more correct, strictly speaking, to have said that if one was to extrapolate the returns that were sent into the improvement service one would come up with a figure of £122 million. We may not be entirely on the same ground. I hope that the minister does not feel that we are splitting hairs on that.

David Davidson raised the important issue of accountability and whether councils are effectively local delivery agents or independent entities in their own right. Outside the chamber, there is, to some extent, a cross-party consensus that there is an issue there. John Swinney mentioned the remarks from the leader of East Dunbartonshire Council on Monday. Equally, some interesting comments have been made by the leader of Aberdeen Council, who said that she doubted whether the minister understood the implications of the local government settlement. I am not sure which minister she was referring to, but I cannot imagine that Tom McCabe, with his background in local government, would lack an appreciation of what the settlement means. When we hear from the minister later, perhaps he will clarify at what point he would decide to cap a local authority if it was felt that it was imposing too high a level of council tax.

The fundamental issue is that council tax is too high and that the settlement will not deal with that; it is perhaps too fundamental an issue for it to deal with. The minister talked about the settlement touching the lives of people in Scotland; it may do that, but one certainty is that the settlement will touch the wallets of the people of Scotland.

Photo of Tommy Sheridan Tommy Sheridan SSP 4:08 pm, 8th February 2006

At 9 o'clock tonight, channel five will show the third part of the excellent "The Godfather Trilogy". As far as local government and its Executive friends are concerned, I am sure that there is a mini-episode going on within the Labour family in Scotland. I am not sure whether it is Tom McCabe who will get the horse's head in his bed over the next couple of days, but when we read letters saying that

"The Executive is resorting to bully-boy scare tactics because it is losing the reasoned and evidenced argument about underfunding", we begin to get a flavour of the fallout. If that were some rogue letter or if it had been written by some rogue individual, we could perhaps dismiss it. However, it was penned not just by Pat Watters, leader of COSLA, but by 15 other leaders of councils across Scotland, including, I believe, a member of the minister's own family. That is a deep fallout as far as local government underfunding is concerned. That situation is unsustainable.

The Executive cannot continue to get away with public proclamations that there is more than enough money to allow for council tax rises of only 2.5 per cent when the overwhelming majority of local government leaders tell us candidly that there is not. By the way, it is not before time that they were candid, because far too many of them were too meek in previous years to admit to the tightness of their settlements from the Executive. The bubble is bursting and they are being forced to go public on the underfunding problem that is at the heart of rising council tax increases throughout Scotland.

What the Executive's response to the Finance Committee's report says about the local government settlement brings home the mythology that the Executive deploys against arguments. On efficiency savings, it says:

"No savings were imposed that should affect frontline service delivery. Indeed to be classified as an efficiency saving it is necessary to demonstrate that the quality of the service delivered has been maintained."

For Glasgow City Council to pass its budget tomorrow, its environmental protection services department will have to cut the number of workers in its pest control section from 18 workers to only six and the number in consumer protection from 10 to only five. The council is also going to withdraw nursery teachers from our nurseries completely. If that will not affect front-line service delivery, nothing will. Those are real cuts and they are the responsibility of the Executive's underfunding.

Photo of John Swinney John Swinney Scottish National Party

Is the member aware that in the Improvement Service report that the minister cited, which talks about £122 million of efficiency savings, the service concluded that many of those savings were not service improvements but traditional budget cuts of the old-fashioned type to which we are accustomed?

Photo of Tommy Sheridan Tommy Sheridan SSP

The member is correct to draw the Parliament's attention to the fact that the minister is playing the role of poacher turned gamekeeper. Not so long ago, the minister would have been wailing with justifiable concern about the tightness of settlements for the delivery of front-line services. Today, he is the gamekeeper who tells councils that they just have to get on with it, although the demands that have been made on them in the past six years mean that the available money is insufficient.

Photo of Tom McCabe Tom McCabe Labour

I remind Mr Sheridan that when I was a council leader, one difficulty that we faced was that people such as he implored people not to pay their tax.

Photo of Tommy Sheridan Tommy Sheridan SSP

In the round of the argument, that comment will go down like a lead balloon with COSLA and council leaders. They are not interested in what happened when the minister was a council leader who was prepared to support an unfair, Tory-imposed tax. They are interested in what he is doing now as a minister who, despite all his experience, is imposing a settlement that makes it impossible for local government to defend, never mind expand, service delivery. He must take responsibility for that.

The minister must also take responsibility for the fact that the local government settlement is yet another anti-Glasgow settlement. Every year that the Executive has been in power, it has increased Glasgow's settlement by less than the average increase, although we are told before every election that the city of Glasgow is a special case because the deprivation in our city makes it so. It is so much of a special case that it receives less than the average increase to meet the demands in the city, despite a ridiculous funding settlement, which distributes money on the basis of roads and other aspects. This is an anti-Glasgow distribution settlement from an anti-Glasgow Executive.

The settlement should not be supported, because it will impose cuts on front-line services. Like Pontius Pilate, the Executive wants to wash its hands of the matter and blame councillors, when its underfunding of local government is to blame.

Photo of Donald Gorrie Donald Gorrie Liberal Democrat 4:14 pm, 8th February 2006

I congratulate Kate Maclean on making the sort of speech that we are all elected to make but which few members do. I suggest that we should stop shouting at one another. Megaphone diplomacy and it-wisnae-me politics do no one any good. Whether the minister or COSLA is right, such an approach does not help. We must work together to sort things out. There must be a better mechanism by which to sort out the annual local government funding shemozzle. I do not know whether we should set up a committee to do that, but we must do things in a better way.

The issue is not party political; the problem is the system. I refer members back to when Tory ministers in a Tory Government destroyed a Tory administration in Lothian Regional Council as a result of their financial decisions. They took the advice of their civil servants, which is a disastrous thing to do. I appeal to ministers to speak to and listen to real people. There are good, bad and indifferent councillors and council officials, but they know what is happening at the front line whereas the civil servants do not. A basic idea exists that national Government is much more competent than local government, which consists of a bunch of second-raters. However, to adapt the words used about St Paul's cathedral, if you seek a monument to central Government incompetence, look about you. The worst council in Scotland would never have tolerated the total incompetence that was involved in the building of the Scottish Parliament. To say that central Government is much better than local government is wrong. I beg the minister to listen to other people.

It is clear that councils get the worst deal, although I do not know why that is so. Councils are elected and are genuinely democratically accountable but, even on the minister's figures, they receive a lower percentage of Executive expenditure than they used to receive. They do not benefit from the savings that are made. I understand that departments keep their savings, but local government savings go into the big pot. Councils are constantly got at in a way that health boards, quangos and central Government departments are not.

The minister did not mention equal pay, which is a huge rock that is about to fall on local government. That rock is trembling on the top of a cliff. There must be a proper solution to equal pay problems. It is unsatisfactory to answer that reserves could be used.

New services are consistently inadequately funded. The Government will produce nice new initiatives and expect councils to get on with things but will not give them enough money to do so. Alternatively, money will be provided for an initiative but, after three years, the Government will expect the council to keep the initiative going with its own money. I refer to the supporting people fund, for example.

Inadequate allowance is made for inflation with respect to many local government activities. I think that there will be a problem in that respect. Local government is being so squeezed that it will cut grants to voluntary organisations that are already being squeezed far too much. I think that that will be a disaster area.

Some 30 years or more ago, a distinguished Scottish judge was called on to adjudicate in a national dispute over railwaymen's pay. He said that if we will the end, we must will the means. His idea was that if people wanted a decent railway service, they would have to pay the railwaymen decent wages. If the Executive wants good local services, it must ensure that they are paid for, but it is not ensuring that. People are simply being confronted in a childish fashion.

There has been talk of capping. When I got into Westminster at my sixth attempt—or whatever attempt it was—I spent my time listening to and voting against Labour ministers who made Tory speeches on why they were cutting the budgets of perfectly competent English local authorities. If we go for capping here, I will not support it; indeed, I will oppose it to the best of my ability. Local government should be allowed to do its own thing and to make its own mistakes. It is complete rubbish to say that some guy sitting in St Andrew's House knows better than local councils do how they should spend their money.

Photo of Tommy Sheridan Tommy Sheridan SSP

I want to ask a question that I asked Andrew Arbuckle. Does the member support local authorities having control over the setting of non-domestic rates?

Photo of Donald Gorrie Donald Gorrie Liberal Democrat

I might support that, but I am not sure what my party's policy is in that respect, although that never worries me too much.

I earnestly beg the minister, even if he thinks that the councils are being stupid and difficult, to work with them. His civil servants do not clean the streets and empty the bins; the councils do. The minister and the councils have to work together and we must work together to get a better system. At the moment, our system is hellish and childish. Let us do it better.

Photo of Des McNulty Des McNulty Labour 4:20 pm, 8th February 2006

It has been useful to listen to members who have direct experience and understanding of local government. We need a bit of inside understanding and a good bit of historical perspective. I was in local government during the 1990s—one or two members who are present may have been in local government during the 1980s—when, year after year, the cash rises coming to local government were well below the level of inflation. We are not in that situation now; we are nowhere near it. The growth in expenditure across the Executive over the past five years has been substantial. That has also been the case in local government, with recent budget increases of 7 per cent, 8 per cent and even 10 per cent.

However, the period of financial growth is coming to an end—quite sharply this year and even more abruptly next year. To some extent, the test will be how the Scottish Parliament adapts to the situation and whether we can mature politically, as part of a political culture that adopts a rational and realistic stance when faced with the problem of choosing between this and that expenditure or this and that good—both of which are desirable but of which, for financial reasons, we cannot have both.

It is regrettable that, in the process of moving towards political maturity, we sometimes do not get far beyond the playground phase of adolescence, with all kinds of extreme "facts" being blurted from one corner or another simply as propaganda and without any grounding in the real facts. In recent weeks, COSLA has made some ridiculous assertions about the cost of services and the potential impact of that on the growth in council tax. Those are things that local authorities could never put to the electorate, as they know that the electorate would not accept them. They need to mature and we need to mature in these situations. There needs to be a rational debate about what we are asking local government to do and what resources it needs to do it.

That issue is not just for the Executive; it is for the Parliament. Right across the board, we need to think about what we are putting into legislation, the requirements that we are putting in place and the new institutions that we are creating. If we create a care commission and have a policy for free personal care, we need to anticipate the consequences of that and we must consider seriously and appropriately how they are to be funded.

Photo of Des McNulty Des McNulty Labour

I will not take any interventions on this, as I want to pursue the point.

We must recognise that every policy decision that we make has an opportunity cost: there are things that we cannot do because we have made that policy decision.

The Executive has made some very positive choices in increasing health funding. The consequence of those positive choices is that other areas of the budget have, in relative terms, had to decline. I will stand up and defend the argument that health services should have more money, although I have queries about some of the ways in which the money for health services is spent—I do not feel comfortable about the general practitioner contract, for example—and I recognise that, as a consequence of an increase in health expenditure, local government expenditure has, relatively speaking, declined. In absolute terms, local government expenditure has significantly increased, but it has done so on the back of additional burdens that we have put on to local government. We have to accept that.

When people make proposals to us about other things that we might do—another regulatory mechanism, for example—although we might think that those things sound nice, we should think about what they will cost. We should think about the other things that could be done for the money, whether by central Government or by local government. Both central and local government have to accept that reality. The rhetoric disguises the real choice and undervalues the electors who want to know on what basis we make the choices that we do.

I have considerable sympathy with many of the points that Kate Maclean made. We are talking about the general situation of local government and assuming that all local government is the same, but local authorities are in different financial situations. Different demands are made on them because of the nature and social profile of the people whom they represent. They have different levels of resource. I agree that authorities such as those in Dundee, Glasgow and West Dunbartonshire have suffered for the past 11 years because we have never changed the distribution mechanism to recognise the realities of those urban authorities that deserve our consideration because they have high levels of deprivation.

I put it to the minister that we have to change the distribution framework to make it abundantly fairer. However, we must all be more grown up in our financial decision making.

Members have not mentioned the burden of the Finance Committee's report. We are not saying that ministers should not impose efficiency savings on local government; we are asking the minister to be fair across the whole range of government, including central Government. We want the minister to be as tough with his colleagues in the Cabinet as he is with local government. Fairness, consistency and transparency are required if we are to move forward. We know that the financial situation will be tighter next year; I hope that we will have a better debate and a better outcome.

Photo of Jim Mather Jim Mather Scottish National Party 4:26 pm, 8th February 2006

I am keen to compare and contrast our existing model with a better alternative. The existing model has contention built into it, with conflicting messages coming from COSLA and the Government every year. Built into the model is an efficient government initiative with no baseline, no clarity and no claim that we can believe will stand audit.

On top of that are the escalating council tax rises, which are ahead of inflation and on an already high base of charges, and service cuts. As many members have said today, council tax payers are losing out twice. The only solace is the four-yearly pre-election splurge of cash to create an impression of sound financial management. That is not good enough. There is a better alternative and, although it will certainly be available when the empowered vision described by Fiona Hyslop comes to pass, it is also available to a large extent now. If the Government were to get together with local government and set a single worthy aim with a plain-English explanation of the top priority for economic growth—maximising the number of working-age people who are in work locally and nationally, for example—we would then have a basis for moving forward.

That would be especially true if all the stakeholders consistently bought into that and if a process of perpetual improvement were put in place—not just a sudden move towards efficient government. I believe that that would give us something very much better—perhaps something along the lines that Margo MacDonald is looking for—such as an independent review guaranteeing the adherence of the process to the principles agreed here, perhaps with local government input. Such a process would be much more straightforward because it would be a matter of fact whether the Government was moving consistently towards an objective that would widen the tax base over time.

At the moment we have something akin to the Keystone Kops version of national financial management. There is a lot of action, interaction and regular, choreographed knockabout, but there are no high-level goals and no achievement of such goals. Not only is the system flawed, it is badly managed. Nowhere is that more clearly shown than in the recent work of the Finance Committee in identifying a non-equitable share of the efficiency savings, underprovision for inflation and incomplete calculations on constantly oscillating and shifting sands that make it difficult to map the audit trail, let alone the future.

The net effect is a gap of £85 million. That is the unanimous view of the Finance Committee. That gap in turn has an impact on people. Retired people are being hit with a triple whammy of service erosion at a time in their lives when they need services most, inflation-induced erosion of their savings and above-inflation council tax rises. Working people and especially the third of working people in Scotland who earn less than £6.50 an hour are seeing their disposable income squeezed. That has a knock-on effect on the businesses of Scotland, which are under pressure because customers have less money in their pockets and because they have higher costs and they are experiencing a reduction in turnover.

The potential for a future in which we have a long-term council tax freeze is within our grasp. It is also possible for us to move towards a fairer system based on ability to pay. It is possible for the incomes of many more people to grow ahead of inflation and for there to be much less pressure on our pensioners. Those objectives are well worth going for and that is why I support the amendment in John Swinney's name.

Photo of Sylvia Jackson Sylvia Jackson Labour 4:31 pm, 8th February 2006

Like Michael McMahon, I have served on the Local Government Committee, now the Local Government and Transport Committee, since 1999. Over the years, we have had considerable discussion about local government finance generally as well as about the budget process, so I could see where Michael McMahon was coming from when he put a question to the minister during a discussion about the 2006-07 budget settlement. He said:

"Even in our report last year, we had to say that one of our biggest problems was that the Executive had no central record of the grants that it has given to local authorities. We often do not have the raw data to hand that would allow us to make the assumptions that could lead us to reach agreement on what can be saved or spent, how and where it is spent and what outcomes can be achieved. Are we any closer to getting to that baseline?"

One of the officials accompanying the minister said that finance circulars are now being issued periodically and sent to local authorities. That was some good news.

Michael McMahon then asked:

"Does COSLA agree with the figures?"—[Official Report, Local Government and Transport Committee, 1 November 2005; c 2994.]

He was told that it does. I think that members will see that it has been an on-going problem to get raw data and baseline figures from all sides—COSLA, the Executive, local authorities and Scottish Parliament committees, whether the Local Government and Transport Committee or the Finance Committee.

We need to determine whether gaps and shortfalls really exist. Mark Ballard talked about the gap that results from new burdens being placed on councils. In a very good speech, Des McNulty spoke about the "ridiculous assertions" that COSLA had been making. He demanded that we all mature and grow up when it comes to making financial decisions and he called for greater transparency throughout the system.

Opposition parties take issue with the means of funding local government from the political vantage point of no responsibility for the consequences of their proposals—in some cases, from a position of irresponsibility. The Executive has a difficult task to ensure that Scotland has sustainable levels of service provision at local and national levels.

The Tory party's attempt to address the issue resulted in the poll tax and a burden that caused that party's ultimate demise at the ballot box. In fact, in 1992, the community charge was set at £412 and, without allowing for inflation, it was still a greater financial burden than that posed for a three-person adult household in my constituency today.

David Davidson said that we should be thinking about the role and responsibility of local authorities. I know what his response would be to that: very little. If we did as he wished, we would be back to the position of starving our local authorities of cash, as Des McNulty highlighted was the case in the early 1990s.

SNP members and fellow travellers often offer different solutions depending on their audience, but they have also failed to convince anyone that they have an alternative to a fairly robust means of collection and distribution of funding to meet local needs.

Photo of Sylvia Jackson Sylvia Jackson Labour

No, I must go on.

The minister acknowledged that there will be some tough decisions for councils under the current system but, in the medium to long term, the council tax can be adjusted to make it more efficient and fairer to everyone. We pointed out in the committee that the Executive could look at how to improve council tax benefit take-up, which is a genuine issue that was mentioned previously.

As I said earlier, it would be useful if some consensus were reached on the scale of the financial challenges that face local government as there seems to be such a large discrepancy in the assessments.

Photo of Sylvia Jackson Sylvia Jackson Labour

I am sorry, but I must make some progress. I have a lot to say.

We need a positive climate in which everyone can find practical solutions that address problems of local government finance. A number of speakers mentioned equal pay and single status agreements. Such on-going issues must be discussed and I was pleased to hear the minister reaffirm his commitment to having an on-going dialogue about the 2007-08 settlement.

Many local authorities have adopted certain sensible Executive proposals such as management efficiency saving. For example, in my constituency, Stirling Council has introduced a call centre to streamline inquiries and has piloted several measures including e-procurement to save money when sourcing goods from suppliers. Best-value regimes are a feature of local government audit and such audits will continue to be carried out to find financial savings from service delivery, especially in smaller authorities, such as Stirling Council, to which economies of scale are not available.

I know that Stirling Council has met some of the Executive's current targets. Indeed, at 96.4 per cent, its council tax collection rate is above the Scottish average. Capital budgets have been enhanced both by the freedom that has stemmed from prudential borrowing and by specific Executive funding that acknowledges the growth of Scotland's cities, including Stirling.

However, support for local authorities has to be seen to be equitable and it does not make sense to apply different standards to other Executive-funded bodies. For example, the massive 170 per cent increase in gas costs and 95 per cent increase in electricity costs that Stirling Council faces as a result of a new tender would be fully funded in any health board budget.

Most local authorities are extremely diligent in scrutinising and managing these large budgets and their priority will be funding and delivering much-needed front-line services that are decided locally. In any case, their competence will ultimately be decided in local government elections. I ask only that the minister and Executive spokespersons continue this meaningful dialogue with local government colleagues to meet Labour Party aspirations for the delivery of first-class services to our communities.

Photo of John Swinburne John Swinburne SSCUP

On a point of order, Presiding Officer. As a member who regularly attends the chamber, I feel that I have been shut out of the debate. There is a little flashing light in front of each member. Would it not be possible for the Presiding Officer to put out that light if a member is not going to be called? If that had happened, I could have intervened at least half a dozen times and got my point across.

I am very angry. There are about 1 million pensioners in the country, and I have not had the chance to praise Tom McCabe for what he is trying to do—

Photo of Trish Godman Trish Godman Labour

I think that you have made your point of order, Mr Swinney.

Photo of John Swinburne John Swinburne SSCUP

What the minister said about capping council tax increases was like a breath of fresh air.

Photo of Trish Godman Trish Godman Labour

That is not a point of order, Mr Swinney—[ Interruption. ] I am sorry; I meant Mr Swinburne.

Mr Swinburne, I cannot put out your light. In fact, I cannot even switch off your microphone, which worries me quite a bit.

Photo of Bill Aitken Bill Aitken Conservative 4:38 pm, 8th February 2006

Presiding Officer, you will forgive me if I view this afternoon's proceedings with a mixture of schadenfreude and slight nostalgia. I remember the days when there was a Conservative Government and I was on Glasgow City Council. Every year at this time, the local government settlement would be announced, and at Glasgow city chambers, the Government would be excoriated; my colleagues and I would find ourselves vilified; and a very unpleasant afternoon would be enjoyed by all. As Tommy Sheridan was correct to point out, if a Conservative Government had introduced this particular settlement while some members on the Executive party benches had still been in local government, they would have been squealing like stuck pigs.

In a speech that was refreshing in its lack of hypocrisy—and, indeed, that many might have viewed as courageous—Kate Maclean wanted to know which side the people actually believe. I do not think that they believe either party in this unedifying squabble. Indeed, the minister's request for an adult and mature discussion of these matters flies in the face of some of the language that he used.

Not all that the minister said is incorrect. For example, he is right to point out to local government that it needs to examine some aspects of its methodology and find out whether it can make any savings. After all, cuts are necessary. Surely it is the epitome of hypocrisy that that is coming from a minister who, along with his Executive colleagues, has presided over a massive expansion of government, to the extent that government is the only growth industry in Scotland. There are more spin doctors and more special advisers, and there is more expenditure on the most bizarre of topics. Can he be surprised when local councils do not listen to him? That is basically what the problem is.

There were a number of interesting contributions to the debate, one of which came from Des McNulty, who has unfortunately left the chamber. His comments had credibility; he condemned the Executive for lacking focus and pointed out that there was inconsistency. I say to Tom McCabe that, when Bristow Muldoon—a member whose support for the Executive usually borders on the sycophantic—describes the minister's contributions as unhelpful, that must be the most severe of condemnations ever to be heard in this chamber.

What should local government be doing? As I said, the minister is to an extent right that one of the most important things that councils should be doing is looking to maximise the amount of tax that they collect. In England, the collection rate is 96.4 per cent. In Scotland, it is 91.7 per cent. That is a disgraceful record and, bearing it in mind that the method of taxation is related to property, there is no excuse whatsoever for not upping those collection rates. We still have local government expenditure that is quite wrong. We still have money being spent on a way-out, nuclear-free-zones approach to life, on so-called equality issues and on other initiatives that do no good for local taxpayers or for the local authorities themselves.

Photo of John Swinney John Swinney Scottish National Party

I do not want in any way to distract Mr Aitken from his attack on nuclear-free zones, but I would like to return to his point on council tax collection. Although the average Scottish local authority position in relation to council tax collection may be lamentable, does he accept that some local authorities are extremely successful at collecting council tax? Indeed, Angus Council, part of whose area I have the pleasure of representing, has a collection rate of more than 98 per cent. Is that not a vindication of years of SNP stewardship of Angus Council?

Photo of Bill Aitken Bill Aitken Conservative

I feel bound to comment that the officials of Angus Council are entitled to sincere congratulations all round on having overcome the disadvantage of the SNP administration and having managed to achieve such a satisfactory result.

Councils must look at how they do things, because things that worked perfectly satisfactorily in the 1970s and 1980s are perhaps not apposite today. To that extent, the minister was correct in what he said.

Photo of Jeremy Purvis Jeremy Purvis Liberal Democrat

On the theme of cutting back, will Mr Aitken condemn the Conservative councillors in the Borders who propose to cut 10 secondary school teachers and 10 classroom assistants in my constituency—and that is with a £6.6 million underspend?

Photo of Bill Aitken Bill Aitken Conservative

Once again, that is a piece of special pleading, but I am absolutely certain that the Conservative administration of Scottish Borders Council will have acted for the best, in the best interests of the taxpayers and of the overall governance of that local authority. I am confident of that.

The more I think about it, the more I go back to the old days, and listening to some of the contributions from Labour and Liberal members has reminded me of the mid-1990s. Basically, what they are saying is, "Come back, Michael Forsyth. All is forgiven."

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party 4:44 pm, 8th February 2006

Bill Aitken might be going just a bit too far, but this has been a good debate and there have been some good and thoughtful contributions.

I will deal briefly with the contributions from Liberal members, some of whom have been very edgy about being associated with the main Government party. That phenomenon has been around for some time—so much so that, during our most recent debate on the budget, the member for North East Fife, whom I had expected to see here today, was prompted to deny that his party was associated with the 55 per cent council tax rise that we have had since Labour came to power in 1997.

He stated that the council tax

"has increased by 55 per cent since 1997 ... Since the present Administration in Scotland came to power in 1999, the council tax has increased by only 28 per cent. ... I do not deny that the increase has been greater than inflation ... It is important to get those facts right and on the record."—[Official Report, 26 January 2006; c 22832.]

Let us get all the facts on the record. Let us be as fair as we can be to the Liberals by ignoring the council tax increase of 1999-2000 and using that as the base year. Since then, excluding the coming year's bumper feast, band D council tax has gone up by 28.9 per cent, which a Liberal calls 28 per cent. Inflation over the same period has gone up by 8.3 per cent, so council tax has gone up by three and a half times the rate of inflation during the period of Liberal Democrat responsibility. That is not something that we hear them say often—if at all. I am not surprised that Mr Smith did not deny that council tax increases had been "greater than inflation". It would have been more accurate to say that council tax increases and inflation are so far apart from each other that we could hardly plot them on the same piece of graph paper.

The Liberal leader of Aberdeen City Council, Kate Dean, pointed out in a recent "Newsnight Scotland" interview the effect that gearing has on council tax rises. As only 20 per cent of council revenue comes from council tax, any small miscalculation in the rate of inflation or mismatch in revenue funding causes a fivefold increase in the rate of council tax.

In response to Sylvia Jackson, I point out that the benefit of an income-tax-based solution is that its revenue is automatically linked to rising incomes, so its rate hardly every needs to be adjusted as the economy moves along.

Mr Arbuckle said that the settlement was "challenging". That is not a very helpful code word for a partnership colleague of the Executive to use. He wisely spent most of his time talking about the problems of the financial settlement for 2007-08. We heard other back benchers from Executive parties tell us how glad they are that that settlement will be revisited. Given that elections take place in May 2007, we can be sure that next year's settlement will be looked at, not because of any issue of principle, but for reasons of electoral expediency.

Photo of Jeremy Purvis Jeremy Purvis Liberal Democrat

The SNP amendment states that local government should retain £93.2 million, but does not stress that that money would be used only to keep council tax as it was last week. Nevertheless, how does the member propose that that money would be distributed to councils? If it were distributed through the COSLA mechanism, that would not necessarily direct it to those councils that will propose a high rate of council tax tomorrow. How would the money be distributed to local authorities in a way that would not penalise an area such as the Borders?

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

I do not think that there is currently any mechanism other than GAE. The point that the member makes about efficiencies and the fact that not all councils start from the same base point is one that I am about to address.

Ministers have made great play of the efficiency savings that councils should make—and we all agree that they should make those savings—but are they all equally inefficient to start with? The Executive does not recognise that problem. Kate Maclean made a valuable contribution on that point.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

I will not give way again on that point. It is a deception to pretend that the 2.5 per cent target for council tax rises can be met through efficiencies. Consider what the chief executive of Fife Council said this week:

"There are increasing demands falling on the council, but we only have a fixed amount of money to spend. We therefore have to prioritise the services that we offer our residents."

He did not say, "We will continue to deliver all our services, but more efficiently." Nor did he say, "We will look at services that we currently do not deliver and prioritise the new ones." He was talking about making hard decisions as to which existing services or service elements the council would stop delivering. He talked not about delay or about making services more efficient, but about cutting them.

There is a strong case for any organisation looking at its activities and asking whether it really wants to continue delivering them. A rational look is one thing. However, simply closing a library, replacing nursery teachers with cheaper alternatives—which Dumfries and Galloway Council and other councils are considering—making some of the choices that Fiona Hyslop talked about or making the cuts in consumer protection or pest control that Tommy Sheridan mentioned is a totally different matter. That is certainly not being efficient. Cuts were not efficient when Mrs Thatcher made them in the 1980s and 1990s, and they are no more efficient now.

The minister said that the Executive's settlement makes perfect sense. Anyone who pays the council tax will have difficulty in seeing the perfect sense in the increased bills that they will receive. Anyone who uses a council service that will not be there next year will find it difficult to see the perfect sense of the Executive's settlement. The settlement is not perfect sense; it is the latest in a sorry saga of council tax payers each year paying more and more for less and less at a rate greater than inflation. The saving grace for this settlement is that next year's may be even worse.

Photo of George Lyon George Lyon Liberal Democrat 4:51 pm, 8th February 2006

The debates and discussions on the settlement have been rehearsed on many occasions since November 2005. At the debate on local government finance in the chamber on 12 January we heard a great deal about the reported funding gap for local government in 2006-07. I do not criticise councils for seeking to secure as much funding as they can to deliver the best possible services for those who live and work in their areas. However, our job, as Scotland's devolved Government, is to balance those needs and aspirations against all the pressures on us—transport, health, the environment and the economy. We have to assess and prioritise how best to allocate our finite resources across all competing needs.

That is what we did in last year's spending review. It is now suggested that we did not make enough available to local government for 2006-07, but that is not the case. For a start, the resources available to Scottish local authorities are now at a record level. I do not think that anyone would dispute that. In 2005-06, the increase in revenue support for core services was £419 million, which was an increase of 5.5 per cent. For 2006-07, on a like-for-like basis, the actual increase over the figure in the 2005 finance order is £315 million, which is 3.9 per cent. I cannot accept Mr Ballard's claim that that is a cut in real terms.

Today, we are confirming a further sum of just over £140 million to meet spending pressures and new burdens that have arisen since the 2005 order was approved. Only £8 million pounds of that £140 million is ring fenced. Taken together, that means that councils will have more than £450 million over the figures that were approved this time last year. The settlement is taut, but realistic.

Councils also have an extra £122 million in efficiency savings for 2005-06 to redeploy, and there is more to come in 2006-07. Ninety-six per cent of those efficiency savings are cash-releasing, not time-releasing savings. The report on improving local government service excluded savings that were not efficiencies; all the savings in it are genuine efficiencies. The report also identified some savings that local government had not counted, although I am sure that those savings will be counted once further work has been done on the issue.

Mr Swinney also criticised us, saying that we should concentrate more on cash-releasing savings for local government. As Mr Swinney will be aware, it is only cash-releasing savings that we have asked local government to make, not time-releasing savings. Against that background, the evidence for funding gaps is difficult to sustain.

Photo of Mark Ballard Mark Ballard Green

Will the minister explain once and for all why the rate that the Executive still uses to calculate the increase of £184.5 million that will be required by local authorities to meet inflationary pressure is not the same as the rate that is used in the draft budget, which gives rise to the funding gap that the Finance Committee has repeatedly identified?

Photo of George Lyon George Lyon Liberal Democrat

As Mr Ballard will be aware, Mr McCabe set out the reason for that. When we conducted the spending review, we set the inflation figure at 2.2 per cent. The Finance Committee used an alternative inflation figure. Indeed, in his speech, Mr Morgan seemed to accept our lower figure, as he stated that since 1999-2000, the total inflation figure has been 8.3 per cent. Mr Morgan must now accept our figure.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

If Mr Lyon looks at the figures, he will notice that regardless of which year one starts from, the increase in council tax is always many times the rate of inflation.

Photo of George Lyon George Lyon Liberal Democrat

The point that I was making was that the member now accepts—indeed, endorses—our figure on inflation.

I turn to specific points that have been made in the debate.

Photo of George Lyon George Lyon Liberal Democrat

I want to make progress because time is moving on.

I begin with Mr Davidson's amendment. It is nonsense to suggest that there is a lack of democratic accountability at local government level. Only around 9 per cent of the total revenue support that we provide for core services is ring fenced and 65 per cent of that figure is for funding the police service. The Conservative party's argument that there is no accountability on spending is completely false. Given that 91 per cent of the funding is unhypothecated, it is up to individual authorities to decide on their spending priorities and to justify those decisions to their electorate.

Mr Swinney's amendment calls for more funding. To be fair to Mr Swinney, he has been consistent in making that call. However, I would argue that the AEF figure that we announced today, which will result in a £315 million increase in funding for 2006-07, together with the additional sum of more than £140 million that we have confirmed will be provided, means that local government will benefit from more than £450 million of extra resources in comparison with last year's settlement. That is a much bigger increase than Mr Swinney suggests and it underlines the Executive's commitment to local government and to improving public services for the people who live and work in Scotland.

The Local Government Finance (Scotland) Order 2006 asks Parliament to confirm the revenue support that will be provided to each council for the coming year. I remind members of the significant resources that we have confirmed that we will make available to local government, which will help to make a significant difference to the lives of the people of Scotland.

Photo of George Lyon George Lyon Liberal Democrat

I am reaching my final point.

Compared with the revenue support for core services that was provided in the 2005 order, the increase for 2006-07 of £315 million that we have announced today represents a like-for-like increase of 3.9 per cent. We have provided a further increase of more than £140 million to meet the spending pressures that have arisen since the 2005 order was approved. On top of that, we will provide another £1.1 billion to councils in specific revenue grants, which will support new and refurbished schools, criminal social work initiatives and the achievement of strategic waste targets. We will provide an additional £0.7 billion in direct support for councils' investment in infrastructure. The total support that we will provide to Scottish councils will amount to around £10.1 billion in 2006-07.

We have never denied that local government will encounter challenges in meeting its aspirations, and the pressures that it faces, with the available resources. However, that is a challenge that we and, more important, taxpayers across Scotland, rightly expect it to face up to.

We believe that there is much that local authorities can do to help themselves. They can deliver greater efficiencies and build on the excellent start that they have made in 2005-06, which has confounded the critics who said that our efficiency targets were unrealistic. In examining critically their levels of reserves, they should not shirk hard decisions to reprioritise the usable resources that they hold, whenever that is possible. As Mr Aitken mentioned, they should also maximise their income-generating streams—through improved council tax collection, for example. We will continue to work with local government authorities to help them deliver on that challenge and reform how public services are delivered.

The level of resources announced today will allow councils to maintain and improve the standard of services that they provide. We look to them to play their part in delivering a fair deal for taxpayers across Scotland.

I commend the order to the Parliament.