Local Government Finance (Scotland) Order 2007

– in the Scottish Parliament at 3:32 pm on 7th February 2007.

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Photo of Murray Tosh Murray Tosh Conservative 3:32 pm, 7th February 2007

The next item of business is a debate on motion S2M-5503, in the name of Tom McCabe, that the Local Government Finance (Scotland) Order 2007 be approved.

Photo of Tom McCabe Tom McCabe Labour 3:37 pm, 7th February 2007

The motion seeks approval of the Local Government Finance (Scotland) Order 2007. As members know, the main purpose of that order is to provide next year's revenue funding for Scotland's local authorities. Parliament's approval is also sought for payment of various additional sums that will be announced during the course of the year.

In my statement to Parliament on 13 December, I announced provisional figures for 2007-08. Since then, there has been only one significant adjustment—just over £2.3 million has been added as a result of the passing of the Local Electoral Administration and Registration Services (Scotland) Act 2006, which brings the confirmed total amount to be provided as core funding to local government for 2007-08 to £8.718 billion. Outwith the order, the Executive is making available about £1 billion to local government in additional revenue grants that come outwith the core funding settlement.

The order provides for the distribution and payment of £8.7 billion in revenue support for local authorities' core services in 2007-08. That money has been distributed using the usual needs-based formula, which has been in place for some time and which was agreed by the Executive and the Convention of Scottish Local Authorities. I receive an increasing number of representations about the precision with which that formula meets certain local authorities' needs, and have said to COSLA that I would like to review it in due course.

The increased funding will secure higher-quality services for people throughout Scotland. On average, councils' core grants will increase by 4.8 per cent. Over the years since 1999, we have seen substantial increases in the local government core grant. A look at next year's figures alone does not provide the whole picture, so now seems to be a good time to look back at what the Executive has provided to local government over the past eight years.

When we compare what local authorities budgeted to spend in 1999-2000 and what they are budgeting to spend in 2007-08, we find that budgeted expenditure on services has increased in several areas. In education, we see an increase of 57.2 per cent, which is helping to deliver 3,000 more teachers. In social work services, we see an increase of 80.6 per cent, which has resulted in 9,500 people receiving free personal care and more than 600,000 hours of care being delivered each year. With regard to the police, we see an increase of 47.5 per cent, which has resulted in an extra 1,366 full-time equivalent police officers on our streets.

The order also seeks approval to revise the previously approved figures for 2005-06 and 2006-07. It will provide councils with an additional £137 million to meet already-announced spending commitments that have arisen since the 2006 order was approved. That £137 million includes £30 million for community safety partnerships to tackle antisocial behaviour, £20 million of additional funding for youth justice and £15 million extra for the working with families initiative to help parents in disadvantaged areas.

I mentioned the £1 billion of revenue grants outwith the core settlement. Included in that sum is £400 million for the supporting people initiative, £107 million for community regeneration and £61 million to help to achieve strategic waste targets. It is worthy of mention that, when all funding streams and locally raised income are included, councils will have well in excess of £17 billion to spend on services next year. The average council tax payment at band D is currently £1,129. Next year, council expenditure for every man, woman and child in Scotland will be over £3,440.

In addition to core revenue funding, we will be providing a 28 per cent increase in capital charge support, amounting to over £900 million. That means that the Executive's total support, including revenue and capital, will amount to £10.6 billion next year.

Most councils are due to confirm tomorrow their council tax levels for 2007-08. Glasgow City Council has already given a commitment that it will freeze its council tax levels for the second year running. That fits entirely with what Councillor Pat Watters, the president of the Convention of Scottish Local Authorities, said to me in his letter following my statement of 13 December 2006. He said:

"I can confirm that all Leaders in Scotland are committed to delivering a downward trend on average increases across Scotland for 2007-08 and"— importantly—

"forward into the next spending review period".

I urge all councils in Scotland to maintain that downward trend in tax levels; to do all that they can to keep council tax levels as low as possible; and to ensure that, once again, Scotland's council tax settlement is considerably lower than the settlement south of the border.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

By praising the council tax freeze in Glasgow, the minister seems to be implying that the current council tax levels have been set too high. Can he explain to us by how much more they would have to come down before he could think them acceptable?

Photo of Tom McCabe Tom McCabe Labour

I am a very difficult person to please, but I am conscious of the need for local democracy. What Mr Morgan says is entirely consistent with statements that the First Minister and I have made on several occasions. We want to see downward pressure on tax levels in Scotland. I am confident that, as a result of the order, we will continue to see the downward trend that we saw last year, when we saw the lowest average council tax increase since devolution. I am confident that that figure will be beaten once again and that people in Scotland will enjoy not only relatively small rises in their council tax, but rises that compare favourably with those in other areas of the United Kingdom.

I stress once again that the extra money that we provided to local government was conditional on its fulfilling a range of commitments that will improve efficiency and service delivery. We are not in the business of handing out money for nothing and I know that local government does not expect that to be the case.

Photo of Tom McCabe Tom McCabe Labour

In conclusion, as I have explained, the order will distribute substantial additional resources for this year and next. A great deal of progress has been made. We need to protect that progress, especially from the simplistic and opportunistic ramblings of parties such as the Scottish National Party.

Local government stands on the threshold of a new era—its relationship with central Government has never been better. Local authorities have demonstrated lateral thinking around public service reform coupled with a determination to improve efficiency in the interests of the people whom they serve. We look forward to working with them in the years ahead.

I move,

That the Parliament agrees that the Local Government Finance (Scotland) Order 2007 be approved.

Photo of Derek Brownlee Derek Brownlee Conservative 3:46 pm, 7th February 2007

As the minister alluded to, the timing of today's debate is apt given the imminence of the formal setting of council tax levels throughout Scotland. I state at the outset that, if this year's council tax rise is lower than that of recent years, we will not knock it.

However, people are not daft: they know that the election will be held within weeks of their council tax bills landing. They also know that council tax has increased massively since 1997.

Photo of Tom McCabe Tom McCabe Labour

As I pointed out in my speech, today's finance settlement is not about this being an election year. Last year, we had the lowest average council tax increase since devolution in 1999. As the president of the Convention of Scottish Local Authorities said in his letter, we want that downward trend to continue over the next four years. This is about more than a single year.

Photo of Derek Brownlee Derek Brownlee Conservative

As I said, people are not daft—they know that the lower council tax increase that might be announced this year might last only for one year, as has been the case with so many such initiatives in the past.

In today's debate, I want not just to address the issues that face councils and voters this year, but to set out some of the bigger issues that will face council services in the longer and medium terms. It is true that every year, without exception, arguments take place between the Executive and councils about the amount of funding that the Executive provides and whether that funding is adequate. Although we have had fewer arguments than normal this year, by and large such arguments arise every year.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

Were there never such arguments under the Tories?

Photo of Derek Brownlee Derek Brownlee Conservative

I will not rise to the bait that Mr Rumbles has offered.

Whatever their political affiliation, all members would agree that we should have a strong tier of local government that should be accountable to the public whom it serves both for the services that it provides and for the level of tax that it levies. If a council wants to tax more and spend more, that should be fair enough, if it is acceptable to local voters.

Photo of George Lyon George Lyon Liberal Democrat

How does the member explain his position, given that when they were in Government, the Tories used capping to ensure that that did not happen?

Photo of Derek Brownlee Derek Brownlee Conservative

In 1996, I was at university rather than in Government. Mr Lyon might notice that some things have changed. If he is so against capping, perhaps he will rule out ever capping the budget of any local authority in Scotland, although I am not sure that that is necessarily his position.

As I was saying, if voters want a council to spend less and to tax less, that is also fair enough. Although some members might think that councils should be reduced to being mere agents of national Government, I do not believe that that is the best future for them. Local government should be as accountable as possible to the people whom it serves.

Ideally, local government should raise more of the money that it spends. However, whatever view one takes of the council tax, the current level of council tax has reached the limit of public acceptability. I believe that people should know whether their local council's spending decisions are a result of ring fencing by the Executive, whether their area is receiving its fair share of finance from the Executive and whether their council is as efficient and effective at spending the money as they have a right to expect. However, the current system of financing—whatever else might be said about it—is far from clear. To describe it as smoke and mirrors would be a significant understatement.

Let me focus on ring fencing. In the equivalent debate last year, the Minister for Finance and Public Service Reform said to my colleague David Davidson:

"only 9 per cent of the core settlement that goes to local government is ring fenced."—[Official Report, 8 February 2006; c 23135.]

The Burt report makes for interesting reading on that issue. It says that

"The division of powers and responsibilities between local and central government is not clear cut", and it continues:

"We attempted to find out how much discretion local authorities have over how they spend the income they receive today. We were unable to obtain hard evidence."

The Society of Local Authority Chief Executives told the Burt review that, in practice, perhaps only 10 per cent of what local authorities spend is at their discretion. The report concluded that the relationship between central and local government is far from being the great relationship to which the minister alluded in his speech. It states:

"there is a corrosive argument about the relationship between central and local government ... the Scottish Parliament, the Scottish Executive and the local authorities must grasp this nettle. Unless and until they do so, the underlying problems ... will remain."

I commend the councils to which the minister referred, which have implemented efficiency schemes and kept council tax rises low. People have a right to know whether that is happening, but we need to address the bigger issue. Local government finance is complex—I seek in no way to deny that—but we need to have some form of independent oversight of the funding that the Executive provides, so that the public can make an objective assessment of what is being provided. We will not get an objective assessment of the adequacy of finance from ministers, from councils or from Opposition parties.

I hope that the amendment that I will move today, which is couched in remarkably consensual and constructive terms for this time in the political calendar, will find favour with all members who are keen to raise the standard of debate about local government finance.

I move amendment S2M-5503.1, to insert at end:

"but, in so doing, considers that the accountability of both the Scottish Executive and local authorities for their role in determining the level of the council tax, and the impact on services provided, would be strengthened by a more transparent budget process with a reduced level of 'ring fencing' of grants to local authorities by the Executive."

Photo of John Swinney John Swinney Scottish National Party 3:51 pm, 7th February 2007

Over the past two years, the debate on local government has been helpfully informed by the reports of Parliament's Finance Committee on the overall Scottish Executive budget. In its report on the 2006-07 budget, the committee highlighted the fact that local government was being asked to make efficiency savings that were a much higher proportion of its budget than those that other areas of government were being required to make. The committee expressed its concern that local authority budgets were being top-sliced in the light of expected efficiency gains, and that other services that the Executive funds were not being dealt with in that way. The committee asked the Government to use additional resources from pre-budget report consequentials to rectify the shortfall in local authority funding and to keep council tax down. The Government chose to ignore the Finance Committee and, as a consequence, council tax rose significantly last year.

In its report on the 2007-08 budget, the Finance Committee notes

"the lack of movement on" the issue of local government funding

"since last year and reiterates its 2005 recommendation that the Executive use any additional resources to rectify the problems of local government funding this year to allow councils to reinvest savings in frontline services and to exert downward pressure on council tax levels".

The Government has now acknowledged the financial position that faces local government and council tax payers this year. I welcome the minister's announcement in December of an increase in resources for local authorities. It is long overdue and is an admission by the Executive that it has short-changed local authorities. The minister must accept that the financial squeeze that he has applied to local government has played a large part in increasing the burden of council tax on council tax payers in Scotland.

Photo of Tom McCabe Tom McCabe Labour

I know that Mr Salmond is in the habit of making things up as he goes along in television studios, but I did not know that that habit is contagious. The council tax increase in Scotland last year was the lowest since 1999—that is a statistical fact. I wonder whether Mr Swinney is to some extent crying crocodile tears. I understood that the Scottish National Party had announced a compulsory freeze in council tax levels for the next two years.

Photo of John Swinney John Swinney Scottish National Party

If Mr McCabe does not believe that council tax is a significant burden on the electors of Scotland, he should reflect on the fact that the tax has increased by 60 per cent since the Government took office in 1997.

The SNP hopes that the increase in resources that the Government has announced will help to keep council tax levels down and to protect local taxpayers and services.

Photo of John Swinney John Swinney Scottish National Party

I cannot take an intervention from Mr Lyon, as I have only four minutes.

We must look at this financial settlement in the context of the Government's long-term record. When Labour came to power, local government received 36 per cent of total Scottish Office spending. By 2005-06 the figure had fallen to 31.8 per cent, despite the fact that burdens on local authorities had increased. Welcome as the recent increase in funding happens to be, the Government has loaded local authorities with more burdens but has reduced the share of the budget that they command. With the increase in burdens has come a 60 per cent increase in council tax since Labour came to power. The inevitable conclusion is that council tax payers have been punished by the Lib-Lab Executive through its underfunding of local authorities in Scotland.

We believe that council tax payers have suffered more than enough under the current Administration. For that reason, we have pledged that an SNP Administration would freeze the council tax in advance of the introduction of a local income tax. We propose to pay for the freeze by allowing local authorities to retain their efficiency savings, as the Government has allowed Government departments to do. We would continue with an efficient government programme, but we would allow local authorities to retain their contribution to efficient government in order that they could freeze council tax levels—in other words, we would enter into agreement with local authorities that they could retain their efficiency savings in return for freezing the council tax in Scotland.

The SNP has a vision of local government and central Government working together to deliver for the people of Scotland. We want councils to be partners in the delivery of high-quality public services that are democratically accountable to their communities, so a high priority of an SNP Administration would be to reduce the burgeoning quango state and to put more responsibility into the hands of locally elected members of local authorities. By that approach, we would simplify government in Scotland and make it more efficient. Into the bargain, we would start the process of rejuvenating local authorities and restoring local democratic control. Those measures would bring people closer to the local authorities and give people more say in what happens in their communities. Those aspirations are in tune with those of the people of Scotland. We look forward to taking them to the communities of Scotland.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat 3:56 pm, 7th February 2007

The SNP might want to freeze council tax for the next two years; the Liberal Democrats want to get rid of it.

There can be no doubt that the 4.7 per cent increase in funding for our local authorities next year, as announced by the minister, is very welcome. The £8.7 billion that has been allocated to councils is a substantial sum by any measure, despite what the SNP says. It is a necessary investment because local authorities play a crucial role in the delivery of vital local services.

I am sure that we all hope that that above-inflation increase of 4.7 per cent will enable councils to keep council tax rises to a minimum. That will not be an easy exercise. Councils such as Aberdeenshire in my area will struggle in that regard. The minister mentioned in his speech that he wants to review the funding formula and that is excellent news. When he does so, I would like him to look at Aberdeenshire's case in more detail. At first glance, the minister will see that the figures show that Aberdeenshire has done very well out of this year's settlement. It received from the Executive an increase of 5.2 per cent, which is half a percentage point above the average. The problem, however, with looking at a percentage increase alone is that it does not take into account the baseline that is used.

Back in 2000, Aberdeenshire received just 88 per cent of what it should have received had the allocation been made purely on a population count. Under the current settlement, it receives 90 per cent. Aberdeenshire's population, however, continues to grow—the economy is booming and people want to move there.

Photo of Bristow Muldoon Bristow Muldoon Labour

Is the implication of Mr Rumbles's speech about the population allocation of resources an argument that no account should be taken of deprivation?

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

I wish that the member had waited just a little longer—I was about to say that no one argues that councils should be allocated funds simply on the basis of their population, but that the distribution formula that the Executive uses to disburse the money is flawed.

I was extremely disappointed in the recent Burt review of local government finance. I asked Sir Peter Burt about the reform of the distribution formula when he appeared before the Local Government and Transport Committee a few weeks ago and he said that since only Orkney and Aberdeenshire out of 32 councils had made detailed submissions on the formula, he assumed that it must be okay. That was not an impressive response. As I said at the time, alarm bells should have been ringing when 30 councils were content with the distribution formula and two councils were not content but could do nothing about it because the other 30 councils would not take any action. I was delighted to hear the minister say today that he would look at that matter.

That was the point at which Sir Peter Burt could have fulfilled his remit by examining the issue independently, but he passed the buck and recommended simply that the Executive look at the issue in the future. I hope that the new Executive that is formed after the election on 3 May will reform the system as soon as possible.

Whatever system is chosen to distribute Executive funds to our councils, it will not please everyone. However, the rub is that there should be a floor in the funding allocation below which no council should be allowed to fall. After all, no council can be expected to finance its services with less than 95 per cent of the average funding that is received by other councils, and introducing a band of between 95 and 105 per cent for every council should provide the variability required to deal with variations in need between councils.

I am not happy with Sir Peter Burt's comments about the distribution formula. However, his comment that the council tax itself could not be reformed was illuminating, although it is a pity that he could not support a local income tax. In any case, his comment to the Local Government and Transport Committee that such a tax would be a "disincentive to work" showed where he was coming from—oh boy, did it ever. Such a man was always unlikely to favour such a proposal, which is perhaps why the First Minister chose him to chair the review. Of course, I have to point out that that is pure speculation.

There is little doubt that this is a good settlement from the Scottish Executive and we will find out tomorrow whether our councils have—as I hope—been able to hold any rises in council tax to inflation levels. However, I make the plea that the Scottish Executive that is formed after 3 May—however it is made up—should scrap the council tax, replace it with a fair local income tax and urgently consider reform of the distribution formula.

Photo of Bristow Muldoon Bristow Muldoon Labour 4:01 pm, 7th February 2007

First and foremost, the Local Government Finance (Scotland) Order 2007 that we are being asked to agree sets out a local government settlement that will continue the stable financial support for services that we have seen since the Parliament was established. The settlement contains £8.7 billion in core revenue budget support for local authorities and, as the minister indicated, other funding streams in the budget bring Executive support to £10.6 billion.

That stable financial framework has enabled local authorities to expand and improve important public services throughout Scotland. Indeed, we can all see such improvements in the communities that we represent. In West Lothian, the extra £12 million in the current settlement represents a welcome 5 per cent increase and allows the council to continue its work over recent years to increase the number of teachers and classroom assistants in our schools; to build new and improved school buildings; and to give every three and four-year-old a nursery place. As a result of all that investment in education, attainment levels in our schools are rising and more of our young people are going on to achieve in education, employment, sports and the arts.

Away from education, one can see how the stable and growing local government finance budget of recent years has benefited Scotland's older people through the introduction of better and more comprehensive services such as, for example, the installation of smart technology in thousands of homes in the communities that I represent.

Photo of Bristow Muldoon Bristow Muldoon Labour

I want to continue, if I may.

Roads and paths are being better maintained, and the level of household recycling has improved substantially. All those and other achievements that I have seen locally no doubt contributed to West Lothian Council's being recognised as 2006 UK council of the year.

I point out to Mr Brownlee that West Lothian Council has managed to stabilise council tax levels at or around the level of inflation not only in this election year, but throughout the four years of this parliamentary session.

Photo of Bristow Muldoon Bristow Muldoon Labour

No, I have only four minutes.

Of course, all those achievements would be put at risk under the nightmare scenario of an SNP-led Executive emerging from this year's elections. It was particularly rich for Mr Swinney to talk about the financial squeeze on local authorities under the current Executive. As some of my colleagues have revealed this afternoon, the SNP's spending plans for a four-year devolved Administration have an £8 billion black hole at their heart—and that is even before they take into account the cost of separating Scotland from the UK.

Under the ensuing reckless and chaotic financial regime, local government would not be spared the necessity of cuts in front-line services. For example, one of the SNP's unfunded policies is its promise to cap the ruinous local income tax. In the face of a strong Labour campaign last summer, during which we exposed the damage that the SNP policy of a local income tax would do to the Scottish economy—I point out to Mr Rumbles that the Liberals' plans would do that, too—and the hurt that working families would feel, Nicola Sturgeon promised at the SNP conference to place a cap on local income tax.

Photo of Bristow Muldoon Bristow Muldoon Labour

No. I have only 30 seconds left.

Nicola Sturgeon was not bold enough to state a figure at the conference, although The Herald reported that her spin doctors had put a figure of 3p in the pound on the pledge. Of course, the problem for the SNP is that its policy of a cap of 3p in the pound would cost £1.1 billion of local government finances. Will those SNP members who are yet to speak confirm the figure of 3p in the pound? Will they also confirm where the £1.1 billion will come from, in terms of service cuts or tax rises elsewhere?

The Local Government Finance (Scotland) Order 2007 allows a continuation of the stable financial framework for local government services, which will result in continuing improvements in local services. If the SNP were to achieve the results in the elections that Mr Salmond regularly predicts, the result would be financial chaos for Scotland's councils and a reversal of the progress that has been made in Scotland's schools over the past eight years. I support the order.

Photo of Brian Adam Brian Adam Scottish National Party 4:06 pm, 7th February 2007

I am happy to confirm to Bristow Muldoon that the maximum for any local income tax under the SNP will be 3p in the pound. I am delighted to see that Bristow Muldoon is capable of recycling the lies that were perpetrated in the briefing that he has clearly had from his party researchers, albeit that it kind of missed the mark.

I was delighted to hear Tom McCabe say that this is the start of a new era. I think that the new era will be the replacement of the Labour Party in the Executive and the replacement of many redundant Labour councils under the new voting system that will be used in May. Yes, there will be a new era following the clearout of Labour dead wood and the removal of its dead hand from local government finance.

Seven of the top 10 high-spending councils are Labour run, two are Lib Dem or Lib Dem and Tory run, and one is led by an independent group. That situation proves the track record of the current Executive parties in local government for delivering high council tax charges, in spite of the very generous arrangements that appear to exist for many of those councils. Many of them get a large share of the aggregate external finance, with the possible exception of the city that I represent, which gets the second-lowest AEF and has also set high charges; I would say that irrespective of whether Labour or the Liberal Democrats and Tories were running the council.

My colleague Mr Swinney referred to the 60 per cent rise in council tax across Scotland since Labour came to power. In Aberdeen, the rise is 87 per cent.

Photo of Brian Adam Brian Adam Scottish National Party

Let me first finish my point.

Although Mr McCabe proudly told the chamber that we will get a 47 per cent rise in education funding and a 57 per cent rise in social work funding—or the other way round—that is a long, long way below the 87 per cent rise in council tax levels in Aberdeen.

Photo of George Lyon George Lyon Liberal Democrat

I am sure that the member recognises that, since the Liberal-Labour Administration came to power, council tax rises in Scotland have been only 33 per cent over the period.

Photo of Brian Adam Brian Adam Scottish National Party

That is way ahead of inflation. In Aberdeen, council tax rises are way ahead of 33 per cent.

We desperately need a review of the council tax funding formula. I welcome Mr McCabe's announcement today that that is the Executive's intention. However, the funding formula must be clear and transparent.

As Mr Muldoon rightly said, we need to address deprivation, but in so doing we must not throw money at the problem without also having in place outcome measures. Measures of deprivation are built into a series of financial formula, but there is no proper monitoring of outcomes and no measurement of whether spending is delivering any kind of success. That is not happening with the current formula.

Photo of Brian Adam Brian Adam Scottish National Party


We need to review not just the local government funding formula and allocations to individual councils, but the way in which the money is levied on the people. The method has to be fair and it has to be seen to be fair. The fair way is a local income tax—I am almost at one with Mr Rumbles on that. It is clear that the people who can afford to pay will pay and the people who cannot afford to pay will not have to pay.

Labour apologists such as Bristow Muldoon are producing scare stories. It is the height of nonsense to suggest that somehow the current stability—as if there is something to be proud of, when Scotland's economy is in steady decline—will be under threat. I hope and believe that the position that Labour holds in Scotland is under threat. The only people who should be worried about that are the Labour politicians who have failed to deliver in our councils and in the Parliament. The general population will be much better off, because we will have a growing economy and sensible funding arrangements through a local income tax, which I look forward to delivering as part of a Scottish National Party team in the next session of the Parliament.

Photo of Margo MacDonald Margo MacDonald Independent 4:11 pm, 7th February 2007

I will inject an element of sweetness and light into the contretemps between the two putative Executives in the next session of the Parliament. I think that the current Minister for Finance and Public Service Reform is doing a wonderful job and I thank him for the £350,000 that he has given to Edinburgh to help with this year's festival. We are so grateful.

I have talked to the minister about special funding in recognition of the part that Edinburgh plays as capital of Scotland in providing services and facilities that benefit all of Scotland—I use the term "capital city status". I had thought that in a meeting between the First Minister and the new leader of City of Edinburgh Council, Ewan Aitken, an agreement had been reached—or at least that a way forward had been identified. However, I was shocked when the Deputy Minister for Finance, Public Service Reform and Parliamentary Business told me in answer to a question I asked him the week before last that the cities growth fund should suffice. I have spoken to Mr Aitken about that and he agrees that that will not suffice. Where is the Executive in its plans for the granting of special funding status to Edinburgh on account of its capital city status?

Photo of Sylvia Jackson Sylvia Jackson Labour 4:13 pm, 7th February 2007

I welcome the Local Government Finance (Scotland) Order 2007, which provides a stable financial settlement, as a member said. As another member said, local authorities play a crucial role in providing our services.

I am pleased that the Conservatives have changed tack somewhat. It appears from a recent press release that the Conservatives are now supporting local government, although we did not quite get that impression in the past. Perhaps the Conservatives will say something about that.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

The member said that there is a stable financial settlement. How does she define stability? Does it mean that no council should have to make cuts?

Photo of Sylvia Jackson Sylvia Jackson Labour

As far as I know, there have been no staff cuts in Stirling Council. I will talk about what has been happening in Stirling, so I will elaborate on the member's question.

I am pleased that extra moneys have been found. I looked back at the speech that I gave in the debate on the Local Government Finance (Scotland) Order 2006, which took place almost exactly a year ago. In that debate, Michael McMahon and I talked about the increasing need for transparency in the figures that the Scottish Executive and COSLA produce, so that, for example, we have the same baseline figures. However, we noted that a better liaison or rapport was developing between the two bodies. That rapport has improved a lot in the past year; I hope that that will continue.

I turn to Alasdair Morgan's question. The minister said that higher-quality services will be delivered. In the Stirling Council area, in education, we have five new or refurbished secondary schools, one of which, in Raploch, involves the first urban regeneration company, which is not only building a school, but regenerating the area through housing development. On health, a new hospital is being built. We have the best value measures, which will be delivered sooner than expected. We have examples of joint working between the health board and the council's education department. In Buchlyvie, we have the first combined health centre and school in Scotland. I could go on to talk about the first phase of the regeneration of Cultenhove and Cornton, which is working.

As Bristow Muldoon said, all those measures could be put at risk simply by wanting, as the Scottish National Party does, to move towards a separate Scotland.

Photo of Sylvia Jackson Sylvia Jackson Labour

The member may laugh, but we keep asking the SNP about its costings and finding that its policies are still uncosted. The SNP cannot present an alternative Government on an uncosted basis. Even if we take all the oil revenues into account, we would still have a £6 billion shortfall. The SNP must address that. Further, the SNP talks about a local income tax rather than a property tax. I realise that several members have said how much they do not agree with the outcome of the independent Burt review, but it stated that local income tax would have to be set at 6.5p in the pound to maintain Labour's current level of investment in public services. The SNP claims that it would cap a local income tax at 3p in the pound, but from where would it get the £1.1 billion that would be required to fill the gap? Do not tell me that that will come through efficiency savings, because those can go only so far.

Let us keep the stable financial settlement that we have had in the past few years rather than move to the uncosted policies of the SNP and other parties, which would be disastrous. Let us pass the order today.

Photo of Maureen Watt Maureen Watt Scottish National Party 4:18 pm, 7th February 2007

Members who were elected in 1999 may recall that one of the Parliament's first debates was on the report of the commission that was set up to examine the relationship between the new Scottish Parliament and local government, which was greeted with much support from throughout the parties. The McIntosh report stressed the importance of parity of esteem for the new Parliament and local authorities and the importance of engaging the electorate through subsidiarity and local decision making. It is to the shame of the Liberal-Labour Government that the optimism of the new beginning and the new optimism for local government have vanished. Instead, the Government has reduced local authorities to bodies that do its bidding.

The room for manoeuvre for local authorities to do anything innovative and new has disappeared as their budgets have been reduced. Local government is charged with delivering the services that matter most to citizens and which impact most on their daily lives, including education, social work and environmental services. No local authority argues with the contention that not enough money follows new legislation, which is demonstrated most graphically by the free personal care policy, although the same applies to other matters. According to a report by Professor Arthur Midwinter, Aberdeen City Council's grant-aided expenditure for children's services is £10 million per annum, which is 113 per cent less than the amount that is spent.

It is likely that £8 million will be slashed from Aberdeen City Council's social work budget in 2007-08, and that will lead to cuts in services for the most vulnerable people in society. Because of cuts in its funding, the voluntary sector is under pressure too. Many groups will have to dip into whatever reserves they have. That situation is unsustainable.

As Mike Rumbles said, Aberdeenshire Council has the fourth-lowest AEF per head of population—its figure is more than 10 per cent lower than the Scottish average. I am glad that Mr McCabe wants a review of the needs-based assessment of grant, and I am sure that that will be welcome in Aberdeen and Aberdeenshire. However, it will come too late for the disabled in Aberdeenshire, because the council, looking for cuts, is forcing people to choose between concessionary taxi charges or exemption from parking restrictions.

Photo of Tom McCabe Tom McCabe Labour

It goes without saying that I do not recognise the assertions that the member makes. She knows about today's order; perhaps she will inform us how much additional money she would allocate to local government.

Photo of Maureen Watt Maureen Watt Scottish National Party

I will leave that question for Mr Swinney. He is the finance man and he has all the figures to hand.

Council tax payers have been hammered by this Lib-Lab Government since it came to power; the increase announced today is an admission of that. It is time for a new era, as the minister said. It is a time for partnership between local government and this Parliament, rather than a time for the councils to do what the Executive tells them to do. COSLA has been silenced and councillors have had their heads down. No councillor finds the work satisfying any more.

The new era, minister, will come with an SNP Government and many more SNP-led councils. It will not come with this Labour Government.

Photo of Mr Andrew Arbuckle Mr Andrew Arbuckle Liberal Democrat 4:22 pm, 7th February 2007

As an MSP and as a councillor, I have my head up. I do not recognise anything in local authorities that is as downbeat as Maureen Watt's view.

I welcome the generous settlement for councils, although I admit that councils still face challenges. The minister is right to say that record levels of funding have gone into local government in the past six years. That increase in funding is very welcome. However, challenges remain for councils. We should have a little look at the challenges, because we have not yet done so today.

The implementation of single status has dragged on. The original intention was that it should be cost neutral, but—especially in the early years of the settlement—it has added substantially to council expenditure. With hindsight, it might have been better to implement single status in another way.

Councils are at the forefront of meeting the challenges caused by big demographic changes. Reducing school rolls are one problem. At the other end of the age spectrum, social work services face increasing demands. As policies aimed at social inclusion have been brought to fruition, added demands have been placed on council services. Sadly, those services have to deal with more and more cases of youngsters who are born to parents with serious drug habits. The minister was right to highlight the additional cash that is specifically for social work services.

While the delivery of Scottish Executive priorities is putting pressure on local authorities, they are responding to the Executive's demands to make budget savings through efficiency savings. In a drive to get costs down, many local authorities are now involved in partnership working with other local authorities or public bodies. That causes pain, but it is the same type of pain that businesses face in the competitive world. The business cliché—that financial pressure helps to produce innovative solutions—is appropriate. I know of many people who work in local government who would like to be freed from the management shackles that were appropriate only in previous years.

The setting of council tax levels is forthcoming, and there are proposals that could lead to different structures in some local services. There is a question over whether some inherited parts of councils' work are still appropriate and needed in the first decade of the 21st century.

In my council area, Fife, the financial controls are tight and the council tax collection rates are in the top bracket. Fife Council has been praised for its financial control. However, there are still areas for improvement. With a tightening economic situation looming on the horizon, the council tax-setting exercise that is presently being carried out could provide long-term benefits—especially if it introduces better and tighter management.

There have been a number of references to local democracy. We should ensure that they are not just words and that we allow local democracy to be a reality. No one has mentioned the fact that many councillors in local authority administrations who are setting the council tax for the forthcoming year will be over the horizon with their settlement packages within a matter of weeks. That concerns me. For example, I believe that only eight of the 30-odd Labour councillors who currently form the administration in Fife will put their names in the frame in May, with no guarantee that any of them will get back in.

Mike Rumbles mentioned council tax. Much of the pressure in the debate has been on the central Government funding of local authorities, but little has been said about the inadequacies of the council tax system. We must remember that it was produced by the Tories in an almighty post-poll tax haste when Derek Brownlee was still at university and did not realise what the Tory Government's capping of local government spending meant.

The introduction of a local income tax—a nice, friendly Liberal Democrat local income tax, not the nasty one that the SNP would introduce—would remove many of the present system's problems, which are fuelled by the council tax.

Photo of John Swinburne John Swinburne SSCUP 4:26 pm, 7th February 2007

Bristow Muldoon was the first person in the debate to mention pensioners. Yesterday, I spoke with a pensioner who was in full-time employment three years ago, when he paid 3 per cent of his income in council tax. Three years into retirement, he pays 22 per cent of his pension income in council tax. It is an abomination that, in 2007, we are squeezing pensioners to such an extent with an unfair tax that applies to only 42 per cent of the electorate in Scotland. Householders pay tax, but it is people, not houses, that use council facilities. The other 58 per cent of the electorate, who are not tenants or homeowners, do not pay council tax and are not interested in pensioners, who are being squeezed—or in disabled people, who are finding it difficult. As long as they are not being squeezed to pay their share, their attitude is "I'm all right, Jack." That is not good enough for the 21 st century and it must change.

Andrew Arbuckle was the first to mention uncollected council tax. The last figure that I heard quoted for uncollected council tax was 7 per cent, which is absolutely crazy. Income tax collection rates are 100 per cent. It is not possible to escape it, and it costs 1.4 per cent of the amount collected to collect it. Council tax costs 2.8 per cent to collect. If we add that to the 7 per cent that is never collected, practically 10 per cent goes uncollected.

Photo of Mr Andrew Arbuckle Mr Andrew Arbuckle Liberal Democrat

One of the reasons council tax collection rates are not 100 per cent is that people inconveniently die during the year.

Photo of John Swinburne John Swinburne SSCUP

That is an interesting observation, but it is of little interest to the honest pensioners who do not contribute to the 7 per cent of uncollected council tax. By and large, my generation pays its dues and does not contribute to the uncollected tax.

The council tax is supposedly fair but, no matter how politicians squeeze it or talk about it, it will have to be replaced with an equitable and fair tax. The Government increases pensions by 2.5 per cent or whatever and is then pleased that council tax goes up by only 3 per cent and that the fuel that pensioners burn goes up by only 28 per cent. What kind of society are we living in?

It is time we all got our act together and did something positive by getting rid of the council tax once and for all. I do not care what it is replaced with, because it cannot be as bad as what we suffer now.

Photo of Paul Martin Paul Martin Labour 4:29 pm, 7th February 2007

I will touch on what might be Andrew Arbuckle's new Liberal Democrat slogan: the friendly tax. From my involvement in local government from 1993 to the Scottish parliamentary elections in 1999, I know that there is no friendly tax. I am sure that I do not have to lecture Andrew Arbuckle on that. I wonder whether he really will include such a slogan—I think people would see through it. We will always face challenges in respect of what element of their earnings people see for each pound they contribute. That is an important aspect of the debate.

Maureen Watt raised a point about the McIntosh commission's reference to involving the local electorate. It is clear from the evidence that we received on Tommy Sheridan's local taxation proposal that, with any local income tax, the involvement of the local electorate will be kept to the bare minimum. They will not be able to influence the council budget as they can at the moment. There will be no consultation documents with a local income tax. At the moment, we can influence the local government budget.

A number of successful businessmen would welcome a local income tax—their returns to HM Revenue and Customs are perhaps more creative than they should be sometimes. The buoyancy of the market is related to that.

Photo of Paul Martin Paul Martin Labour

I am sorry. I would love to bring Mike Rumbles in, but I do not have time.

Referring to the point that Brian Adam, his fellow Aberdeen member, made, Mike Rumbles should be honest: he does not welcome the deprivation factors that are taken into consideration.

Photo of Paul Martin Paul Martin Labour

I am sorry. I will continue for the moment, but I will give way shortly as I mentioned Mike Rumbles. He should be honest about it. I am honest about the fact that I want to include deprivation factors. I am honest about that to the electorate I represent, but neither Mike Rumbles nor Brian Adam welcome the inclusion of deprivation factors.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

A number of factors, including deprivation, must of course be included. I am saying that there should be a floor and that no council should have less than 95 per cent of the average.

Photo of Paul Martin Paul Martin Labour

I look forward to Mike Rumbles making the case for Glasgow in that respect.

Photo of Paul Martin Paul Martin Labour

I had not heard Mike Rumbles make that commitment before, but I would welcome his contribution in future.

In his speech and in his amendment, Derek Brownlee referred to ring fencing. I do not know whether he was at university or in school in 1993, when I was elected in Glasgow in a by-election, but I wish we could ring fence some funding for Glasgow City Council. We had no funding to ring fence during the Michael Forsyth years. We defended services that are in place today. A Labour local council fought hard to represent local people. There are services that exist in Glasgow today because Labour councillors made the case for their local communities. We did not talk about an inflationary increase or even an election-year less-than-inflation increase; we had an increase of 15 per cent in Glasgow—an inflation-busting increase that featured in the headlines of the Evening Times in 1993. That was the sort of challenge that the Minister for Finance and Public Service Reform might have faced when he was a council leader, when rises went well above inflation.

Sometimes, there is a case to be made for ring fencing. Derek Brownlee would be the first person to complain if we were not receiving free personal care through our local authorities or if class sizes were above the levels that they should be. Sometimes, we have to make the case to local government that we expect the funding that is provided by the Scottish Parliament to be used in the best possible manner, and we should make no apologies for that.

We should of course allow for some local flexibility, and that is the point that I will finish on. There have been record levels of co-operation between the Executive and local government. The same elements of concern have not been raised by local government for the past three years, as they might have been before. I welcome that stability, and I hope that we can build on it, that we can get the best possible value from the investment that has been made in local communities and that we can get on with the job of delivering services locally, while being less concerned about the academic arguments over the local government settlement and the local income tax. There will always be challenges, but let us make the most of the record investment that has been made.

Photo of David Davidson David Davidson Conservative 4:35 pm, 7th February 2007

It is easy for us to say that the order is an election bribe—it is all about timing, as they say. Derek Brownlee was not wrong when he said that people are not daft. The Executive can spin the numbers as much as it likes, but the money comes from the public, so it is giving them back their money.

We need to put things in perspective. Others have considered the time that has passed since the Parliament was established and since Labour came to power in 1997. It is all very well to talk about the 80 per cent increase in social work budgets, but it has not kept up with inflation or with a lot of the other numbers. It is selective, because a lot of councils, not just those in the north-east of Scotland, have problems in their social work budget. That is due in part to additional burdens such as free personal care. We welcomed that—we have no arguments with it—but it has to be funded fairly throughout the country.

I congratulate the minister on his announcement of a review of the funding formula, which is long overdue, although when he will have it is another story. It is still just an election pledge. It would have been nice to see the independent work on it start now, but if it is going to be in the manifesto, that is even better. However, the manifesto had better be several pages long to justify where he might be going with it.

The minister said that councils must make a commitment to efficiency savings, but even though he is a man full of targets we have not heard what he expects from councils. What is the negotiation point and what figures is he looking for? He talked about a downward trend in council tax, but he would not be drawn on what he expects that to mean over time. It is easy to talk about it. He has put his money up front. Will he give us an answer?

Photo of Tom McCabe Tom McCabe Labour

I say again what I said before: we asked councils to exert downward pressure last year. They did so and produced the lowest increase in council tax since devolution. I predict confidently that they will exceed their performance last year and go considerably lower than the average for last year when they make their announcements tomorrow.

Photo of David Davidson David Davidson Conservative

I seem to remember the First Minister making a commitment about what the levels would be last year—and all of a sudden it went terribly quiet.

It was interesting to hear Mike Rumbles and other Liberal Democrats talk about their nice style of local income tax. I presume that it will be in Mike Rumbles's literature, as well as everyone else's, that as well as the 6.5 per cent increase in local income tax, there will be a 1 per cent property tax. He accuses the Burt commission of getting something wrong.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

Will he take an intervention, given that he mentioned me?

Photo of David Davidson David Davidson Conservative

Speaking from a sedentary position is rude. That is fine.

Brian Adam talked in quite an excited manner about the SNP. Unfortunately, he is not here to respond.

Photo of David Davidson David Davidson Conservative

I beg his pardon; he has moved seats.

It was interesting that Brian Adam and Maureen Watt talked about the review of the funding formula, which we all agree is necessary. I say in response to Paul Martin's comment about deprivation, yes, good work on deprivation was done in each council ward in Scotland a few years back—about 2000—but it was not converted into the funding formula and allocations. We should consider that carefully.

John Swinburne talked about pensioner poverty. He will therefore be supportive of the Conservative policy to reduce council tax for the over-65s by 50 per cent. Unfortunately, because of European rules, we cannot reduce it for people aged over 60, but it is a start. We acknowledge the problem.

Margo MacDonald made a lovely comment about £350,000 and thanked the minister for the funding for the festival. What does she think about the fact that, unless the tramway system is under control, Princes Street will be dug up during the festival to put the trams in? She needs to look into that. Special funding for the cities could be part of the review of the local government settlement that the minister is talking about. I am quite happy to acknowledge that, in what Margo MacDonald says, there are economic issues that affect the whole of Scotland.

Obviously, we are in a pre-election period, but there is a lot of uniformity in what is being said about the level of council tax rises, as opposed to the system of the council tax. There has been uniformity on the need for a review so that we can get fairer funding across Scotland, to give councils stability.

I do not see the stability that Sylvia Jackson and Bristow Muldoon talked about and I know that the public have had problems when they have tried to access public services that are delivered through local government. If free personal care for the elderly is a national scheme, how come every council seems to have its own way of dealing with it? I do not argue with that, of course, as I would like more accountability for local authorities; I think that the minister should let go sometimes, and let local authorities become accountable. As Derek Brownlee rightly said, we need to improve the democratic accountability of local authorities. I am pleased to support his amendment.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party 4:41 pm, 7th February 2007

Twice—once in his speech and once in an intervention—the minister said that last year saw the lowest average council tax rise since devolution. No wonder, given the size of the council tax rises that we have had in recent years. It would not be difficult to deliver a lower rise than all the rises we have had since 1999—and, indeed, since 1997.

Today, we have seen the Executive indulge in its typical playing with statistics. It has for some time been trotting out the line that the rises in England have been higher than the rises in Scotland—as if that is a good thing. Should people be impressed by the assertion that, although they are being asked to pay a big rise, it is okay because someone who lives in Carlisle is having to pay a higher percentage rise? I am afraid that that does not wash. The perception of the man in the street is that, regardless of what the rates are in England—or in Timbuktu, for that matter—they are too high in Scotland.

Photo of Bristow Muldoon Bristow Muldoon Labour

Can Mr Morgan answer the question that Maureen Watt could not answer? If the amount of Government expenditure that goes to local authorities is not high enough—which is the implication of his claim about council tax—how much more central Government support would the SNP give local government?

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

I think that Mr Swinney dealt with that point in his speech. He said that we would allow local authorities to retain the efficiency savings that they make under the minister's scheme. The minister is always forthright about how effective that scheme is and how much is being saved through efficiency savings. It is only fair that local authorities should be able to retain that money.

Photo of Tom McCabe Tom McCabe Labour

The member cannot have it both ways. Mr Swinney said that the SNP would let local authorities keep the efficiency savings as a replacement for the money that would be lost if council tax were frozen. That is not an increase in resources to local government.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

I am quite happy that the statistics that we keep producing for the Labour Party add up—unlike some of the Labour Party's spending commitments. For example, where is the cash to pay for the Edinburgh airport rail link, which will cost £650 million, the Edinburgh trams, which will cost £550 million, the council tax recycling pledge, which will cost £200 million and all the other promises on the list, which goes on for a considerable time? It is not the SNP that plays around with figures; it is the Labour Party, which, apparently, never has to account for what it is going to do.

Mike Rumbles made a valid point about the funding formula. Regardless of the local tax method that we favour, no one suggests that local government should be entirely centrally funded. At one stage, I thought Mr Rumbles was about to suggest that extra support should be given only to local authorities whose names begin with an "A", which would have pleased him and his ministerial colleague, as well as my colleague, Brian Adam, but I think his suggestion of a 95 per cent to 105 per cent band around the average, outside of which no one should fall, is worthy of examination. As the minister said, this is not an issue that anybody is ever going to be happy with but, clearly, the current formula is running into problems.

I was surprised that the Liberal minister seemed pleased to claim in an intervention that council tax has gone up by only 33 per cent since devolution. We are meant to be glad about that, so let it be recorded that, according to the Liberal Democrats, a 33 per cent increase is to be welcomed when inflation, pensions and fixed incomes are going up by far less. It is a pity for them that a lot of people in Scotland will not agree with that thesis.

In an interesting speech, Paul Martin suggested that local income tax is not to be welcomed because, he alleged, it gives the public no influence over council budgets. It struck me that there is an interesting analogy with this Parliament. Surely the current devolution settlement gives the Scottish public no influence over the size of the Scottish budget. We just spend whatever we get handed down from Westminster. Mr Martin might like to reflect on whether he would like to carry the increased responsibility that he wants his local electors to have on to the Scottish electors, who could perhaps vote for the Scottish Parliament with total revenue-raising powers.

We are told that the budget is stable. I am sure that members could come up with many examples of local stability. For example, Dumfries and Galloway Council announced last week that 15 teaching vacancies are not to be filled. That is certainly stable—the jobs will stay empty. Local roads everywhere seem to be full of the same holes as were there last year. That is certainly a type of stability. There have been significant cuts in many areas, especially those that are non-statutory or seen as less sensitive.

The problem for the minister is that, no matter how he may dress up the Government's stewardship of the finances, no matter how many very large numbers he reads out—that is mostly what his speech consisted of—and no matter how wonderful he says everything is for local authorities, most people will judge the Executive's performance on council tax. Frankly, the precise increases throughout Scotland this year do not really matter; people are conscious of the size of the tax in relation to their income, particularly if they are on incomes that are fixed or go up very slowly. They will remember another percentage: the 60 per cent increase since 1997 and even more prior to that when the Conservatives were in power.

A Government that is formed of parties that refuse to address a problem will be judged on that failure, whatever else it does. No one claims that reforming local government taxation is easy. Whether it be tinkering with council tax bands—that seems to be what the Labour party might do eventually—or introducing a local income tax, which we will do within two years of coming to power, any reform inevitably means change to some people but not others.

I believe that when the electorate makes a reasoned judgment, it will decide that it wants to give credit to the parties that wish to address the problem rather than to those that simply tinker at the edges or bury their heads and do not face the challenge that Paul Martin talked about.

Labour and the Liberal Democrats stand condemned by their own inaction in government, when they have had a chance to address the problem. Their chances are running out, and they will have no more chances to do anything after 3 May—when they will make way for a party that is prepared to tackle the issue.

Photo of George Lyon George Lyon Liberal Democrat 4:48 pm, 7th February 2007

As always, we have had an interesting and sometimes constructive debate, and a number of points have been raised during the past hour and a half.

Let me deal first with the Conservative amendment, which calls for a reduction in the ring fencing of grants to local authorities. As others have pointed out, only 9.9 per cent of the 2007-08 core local finance settlement will be ring fenced. The proportion has remained more or less constant since devolution, and the ring-fenced amounts are provided for a particular purpose.

Photo of Derek Brownlee Derek Brownlee Conservative

Will the minister address the point that I raised in my speech? The Burt report said that it had found that only about 10 per cent of local authority spending was in any way discretionary.

Photo of George Lyon George Lyon Liberal Democrat

As I said, 9.9 per cent of the local government finance settlement for this year is ring fenced. The rest is not ring fenced and is left for local authorities to decide their priorities. Within that 9.9 per cent, 97.2 per cent of the ring-fenced sums are for police or education-related grants. The charge of too much ring fencing does not add up and it does not stand up to scrutiny.

Mr Brownlee said that the Conservatives wanted a strong tier of local government and that they wanted local authorities to raise and set their own taxes without the fear of central interference. I will quote Mr Brownlee: people are no daft. They remember exactly what the Tories' position was on local government setting and raising its own taxes. He made excuses about university. The university course that he took seems not to have taught him recent Scottish political history, but the general population has not forgotten recent Scottish political history.

I will respond to a couple of points that Mr Swinney made. He claimed that a financial squeeze was being visited on local government and that once his party came to power, it would restore local democratic control. Of course, he also said that the answer was a freeze on council tax and that if the SNP introduced a local income tax within two years of coming to power, the tax would be capped nationally—which would strip away local control. Such statements do not add up. Local populations and the people of Scotland will see clearly that the SNP cannot have it both ways and that the sums do not add up.

Photo of John Swinney John Swinney Scottish National Party

Will Mr Lyon acknowledge—I suspect that he cannot, because of his delight at the 33 per cent increase in council tax for which he has been responsible—that the public might be attracted by a commitment to freeze the council tax and relieve them of the terrible burden that his Administration has placed on them?

Photo of George Lyon George Lyon Liberal Democrat

When the question was put to Mr Morgan, he gave the game away, because he could not tell us what the SNP would put in place to fund services once the freeze was introduced. The reality of the SNP's budget and promises would be service cuts, because the SNP cannot tell us how much it would promise to local government.

Photo of John Swinney John Swinney Scottish National Party

I am grateful to Mr Lyon for giving way, because I am happy to confirm to him that—as we have said publicly numerous times—to ensure the council tax freeze, we would allow local authorities to retain their efficiency savings and, depending on the increase that was likely for councils, we would supplement the revenue to local authorities by up to £56 million.

Photo of George Lyon George Lyon Liberal Democrat

Comparing £56 million with the settlement that has been announced today says it all. The SNP is looking at cuts to services or its sums do not add up.

I will move on to the points that Mr Muldoon made. He identified that, as a result of the Executive's generosity in the past seven years and of the record increase in central financing to local government, we have better services for the elderly, more teachers, extra classroom assistants and higher recycling rates. However, I was a little concerned that he spoiled his speech when he criticised local income tax and said that he thought that it might cause damage. As he is probably aware, there were two or three interesting observations in the Burt committee's report, one of which was the recommendation that the council tax should not be retained in its current form—the committee gave reasons for that.

Margo MacDonald was concerned about the need for extra funding for the City of Edinburgh Council to recognise Edinburgh's capital city status. On hearing Mrs MacDonald's speech, I wondered whether she and Mr McCabe had engaged in private discussions about possible— dare I say it—sweetheart deals for Edinburgh. Surely not. I am sorry to disappoint her by reiterating what I said in my previous answer to her. The cities growth fund exists to help the likes of the City of Edinburgh Council to fund and continue to meet the obligations of the capital city.

Andrew Arbuckle welcomed the settlement and talked about it helping to deliver extra services. Like many members of other parties, he highlighted the concern that exists throughout the country about the fairness of the current needs-based formula. I know about those concerns from conversations with Orkney Islands Council, Argyll and Bute Council, Dundee City Council, Aberdeen City Council and many other councils. Members in general have welcomed the minister's announcement that he wishes to engage in a review of the needs-based formula. Support exists throughout the country for such work; it will be welcomed beyond the chamber.

The order provides for the distribution of £8.718 billion, which represents a year-on-year increase of 4.8 per cent. That figure is well above the current rate of inflation. The order continues the trend for year-on-year real-terms increases in grants to councils. It also provides an additional £137.1 million for the 2006-07 financial year as a result of redetermination. [Interruption.]

Photo of Trish Godman Trish Godman Labour

I am sorry to interrupt, but would you be quiet, please? Minister. [ Laughter. ]

Photo of Trish Godman Trish Godman Labour

You know who I am talking about. Minister, please continue.

Photo of George Lyon George Lyon Liberal Democrat

The distribution formula that has been agreed with COSLA ensures that every council will benefit from increases of 4.8 per cent next year. Several members have highlighted that there is concern about the distribution formula.

Photo of Jamie McGrigor Jamie McGrigor Conservative

Will there be enough money for Argyll and Bute Council to deliver free personal care for the elderly?

Photo of George Lyon George Lyon Liberal Democrat

If he had looked at Argyll and Bute Council's budget for this year, Mr McGrigor would know that under the elderly care budget heading, that council has spent approximately £6 million below the GAE figure. Therefore, we know exactly why care for the elderly is not being delivered in Argyll and Bute and why there is a waiting list there.

Local government is committed to driving down council tax increases next year and for a further three years. The 2006-07 average council tax increase of 3.2 per cent was the lowest since devolution. Council tax levels have increased by 33 per cent since devolution, but that is considerably less than the 57.9 per cent increase in Executive funding.

The increased funding that is provided by the order should help to deliver better education for school pupils, better services for older people, stronger and safer communities and more support for children and their families. We are also continuing to give local authorities the power to decide for themselves how much to invest in local infrastructure.

The motion asks Parliament to approve the order, and thus the revenue support grant for each council for the coming year. The order revises the figures that were previously agreed for this year and last year. It will enable councils to set sensible budgets and exert downward pressure on their council tax figures when most of them set those figures tomorrow.

The increased allocations in the order will enable councils to increase service expenditure on key services or keep council tax increases to a minimum. That is a decision for them to take. All that I ask is that whatever decision they reach, they will ensure that there will be high standards of service and a fair deal for council tax payers. I am sure that all members support that request. I ask members to agree to the motion and to approve the order, which should help to deliver those aims. I commend the order to Parliament.