Local Government Finance Settlement 2009-10

– in the Scottish Parliament at 2:55 pm on 11th December 2008.

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Photo of Trish Godman Trish Godman Labour 2:55 pm, 11th December 2008

The next item of business is a debate on the local government finance settlement 2009-10.

Photo of Andy Kerr Andy Kerr Labour 3:11 pm, 11th December 2008

We have all grown used to the phrase "historic concordat". If Parliament had been given a fiver for every time the concordat was used as an excuse or hiding place for ministers, we could perhaps afford the Forth road bridge and all the other promises that we heard about in the fictional transport plan yesterday.

Every time ministers use the concordat as a defence in that way, Scots are let down by the SNP Government. When kinship carers are let down by the Government, ministers say that the issue is in the concordat. When probationary teachers are let down by the Government, the issue is, again, in the concordat. When a voluntary organisation that is under threat of closure is let down by the Government, the issue is—of course—in the concordat. When schoolkids have to attend an old school that requires a replacement that has not yet been built or delivered, the issue is—of course—in the concordat. Well, it is simply not good enough to hide behind the concordat. The historic concordat is a fig leaf for the Government's failure to deliver its commitments in partnership with local authorities. The concordat is a mask for the cuts that are now happening across Scotland.

Let me address some of the fantasy and mythology that were contained in the cabinet secretary's statement. He said that he is investing "record levels of funding", but those record levels of funding have been made available to him by the United Kingdom Government. However, if we take out the £70 million for funding the council tax freeze, the actual amount of money that is being invested in services is level with the amount that was invested under the previous Administration.

Photo of Alasdair Allan Alasdair Allan Scottish National Party

Will the member concede that the Scottish Government is now giving a greater proportion of its budget to local government?

Photo of Andy Kerr Andy Kerr Labour

That was an horrendous intervention that I will happily deal with. In 2002-03, local government's share of the Executive's budget was 36.66 per cent. In 2003-04, its share was 36.69 per cent. In 2004-05, its share was 35.58 per cent. Under the SNP, local government's share of the Scottish Government's budget is 33.57 per cent. If Mr Allan prefers to look at the average figures, he will find that while Labour was in power the average share of the cake for local government was 35.5 per cent. Under the SNP, the average share of the cake is 33.3 per cent. The member's intervention is false, but it allows me to ram home the message that the Scottish Government is simply playing with numbers and figures instead of addressing the real issues.

Photo of John Swinney John Swinney Scottish National Party

Can Mr Kerr tell us whether, by the time he left office, local government's share of Scottish public expenditure was higher than the 2002-03 figure that he read out?

Photo of Andy Kerr Andy Kerr Labour

I will happily reveal to Parliament that the share declined, but I am also happy to advise members that, if we take out the £70 million for the council tax freeze, the amount of real money for the delivery of services has remained the same—it has not increased, as the minister claimed—under the SNP's settlement. That is my point about the mythology, or smoke and mirrors, surrounding the settlement.

On page 4 of the statement, the minister tells us about the £100 million of capital spending that will be made available for affordable housing. We welcome the £7.5 million for site starts, the £9.1 million for land acquisition and the £1.4 million for buying unsold stock. However, that is hardly the intervention that we were all promised in the miserable six-point plan.

On page 7 of the statement, the minister says:

"we chose to increase the proportion of the Scottish Government's overall spending going to local government".

However, as we now know, that is mythology. It is untrue if, as I pointed out, we exclude the £70 million for council tax freeze that does not contribute to services out there in communities.

Let us talk about the money that has been added. The £40 million for free personal care was already committed and announced, and it will cover food preparation charges that should already have been covered. There will be no extra services as a result of that money. There was £42 million announced to meet police and fire pension commitments, but there are no extra policemen or fire personnel. Money was announced for the above-forecast increase in employers' pension contributions for teachers, but there will be no new teachers, and there are fewer teachers in our schools at the moment. The £12.2 million that was heralded in the minister's statement as being for local regeneration is a transfer of functions from Scottish Enterprise.

It is more worrying that page 10 of the minister's statement has a list of commitments on the fabric of education, class sizes, free school meals, and working in partnership with colleges to give pupils more vocational education opportunities, but there are no costings, no delivery mechanisms, and no timescales. None of the commitments on that list are agreed with local authorities, will be delivered or are funded.

The extra money that was announced in the minister's statement as being available for all the commitments wrapped up together—I have not mentioned them all—is a startling £80 million. What does the SNP value those commitments at? By its own calculations, they would cost £500 million. I therefore suggest that the cabinet secretary and his colleagues are misleading the Scottish people about the local government finance settlement.

We do not need to go far to find evidence to support that statement. Indeed, Martin Booth, the head of finance for the Convention of Scottish Local Authorities said that the settlement

"is a lower percentage increase than previous settlements since devolution."—[Official Report, Local Government and Communities Committee, 5 December 2007; c 335.]

Alasdair Allan should pay attention to this. When asked whether the settlement was below average, Mr Booth replied, "Compared with previous settlements." So I ram home the message again, not from my mouth but from Mr Booth's, that local government's share of the cake when I was in the Administration was 35.5 per cent, and it has fallen by 2 per cent under the SNP.

Photo of Andy Kerr Andy Kerr Labour

No. The cabinet secretary had his chance.

It has also been widely reported that 13 of Scotland's 32 local authorities are sinking into the red; one in three is facing financial meltdown. For the people of Edinburgh, the great local government settlement means that 22 schools are under threat, and there is a freeze on recruitment of nursery staff. The people of Aberdeen are facing the potential loss of 200 classroom assistants, which is one third of the workforce. The people of North Ayrshire are seeing sheltered housing wardens being paid off. The people of West Dunbartonshire are facing increased social work charges for the vulnerable and elderly. In Argyll and Bute, vulnerable 80 and 90-year-olds with dementia do not get the services that they deserve.

Also, as we heard today, the settlement does not do much for probationary teachers. The new General Teaching Council for Scotland statistics show that the ability of probationary primary and secondary teachers to get permanent posts has reduced dramatically. For secondary teachers, it has reduced by almost 13 per cent.

It is not right to come to the chamber and lord it with a statement that says that this is somehow the best-ever settlement and that it is delivering the Government's commitments and pledges. We know, through the pain of the Scottish people, that that is not true.

When it comes to the spending plans for 2009-10, the SNP is continuing to underfund its promises and overestimate the feasibility of efficiency savings. The historic concordat will again see service reductions, increased charges and job losses. Here is another fact for Mr Allan. Since the SNP formed the Administration, 7,100 local government posts have gone. Many of them were part-time, and 2,300 full-time equivalent posts were lost in 18 months. I suggest that that is hardly a figure that we would choose to use to applaud Mr Swinney for his achievement—a derisory budget that does not relate to what is really going on in our communities and how that is affecting people across Scotland.

The councils of North Lanarkshire, Scottish Borders, West Dunbartonshire, Dumfries and Galloway, East Dunbartonshire, Falkirk, Fife, Clackmannanshire, East Renfrewshire, the City of Edinburgh, Aberdeenshire, Aberdeen City, and Highland are all dealing with reduced budgets and reduced capability to serve their communities. Will the cabinet secretary recognise those financial pressures? Will he fund properly the commitments that he has made to the Scottish people, but which he can no longer fulfil? Will he and his colleagues refrain from blaming local government, as they did at question time today, when it suits their needs? Will the Government stop hiding behind the concordat and acknowledge the cuts that are being made now? Will it acknowledge that there is a con at the heart of the Government that is being felt by carers, pupils, teachers—especially our probationary teachers—and, worst of all, by the most vulnerable people in our communities. It is a heartless and cruel con indeed.

Photo of Derek Brownlee Derek Brownlee Conservative 3:19 pm, 11th December 2008

We appear to be having a debate every week on some aspect of local government finance. Given that I initiate half of them, I will not complain too much. It would be easy to say about debates on local government finance, "God—I hate these things." That could so easily have slipped into the Government's press release on last week's debate but, thankfully, it did not. To be fair to the Government—Mr Kerr certainly was not in a mood to be fair to the Government—it has learned from last week's debate on local government finance.

This week, there is no vote for it to lose, at least on this particular subject.

Reading the equivalent debate from last year, I was struck by the fact that much of what has driven today's announcements was agreed with COSLA last year, such as the agreement on maintaining the methodology for allocating funds to councils and the floor mechanism. The announcements that we have heard concern what the Government is doing differently as a result of front-loading capital expenditure. We have a little more detail, but we basically knew what was coming.

We welcome the announcement of an extra £40 million to fund provision of free personal care. We have been calling for that, so it would be odd if we did not welcome it. We also welcome the progress that has been made on police pensions. We are all aware that pressure on police and fire service pensions have had the potential to cause severe difficulties in terms of recruitment, so the fact that the issue has now been addressed with COSLA is acknowledged as significant progress by those of us who were concerned about the pressures that that was storing up for local government.

The cabinet secretary mentioned the guidance that he will issue to councils that have been affected by the collapse of the Icelandic banks. We will consider that carefully—I do not want to rush to a judgment on the matter because I am a little wary of the proposals that he outlined. The issue is certainly a matter of real concern to council tax payers whose local authorities have money in Icelandic banks, which they fear might not be recovered.

On the capital city supplement, I see that the historic concordat with Margo MacDonald is alive and well. I did not see any commitments on timing, but I suspect that it might be rather more to the cabinet secretary's advantage than to Ms MacDonald's. We await that with interest.

Andy Kerr mentioned the problems that are being faced in some council areas. I will not pretend that there are no issues about funding or pressures on spending in some council areas. Whatever Government is in power, and whether or not there is an historic concordat, there is always an issue about transparency and the tension between what central Government provides and what local government wants to spend. It is difficult for anyone to make an objective assessment of whether councils are being overfunded or underfunded, given the current funding mechanisms. However, some of the bleaker forecasts about what was going to happen in local government that we heard in last year's debate have yet to come to pass. That is perhaps a sign that we should not be too hysterical in our comments.

It is entirely appropriate that local government is expected to make the same efficiency savings that the rest of government is expected to make, so it is bizarre to suggest that local government should not be subjected to efficiency savings.

I am happy, on behalf of the Conservatives, to welcome the council tax freeze. Anything the cabinet secretary can do to make the council tax more popular is fine by us. I note that, despite the criticism of it by some, in strictly numerical terms it has been fully funded. There is an entirely different argument to be had about what local government is expected to deliver, but I am happy to concede that the council tax freeze has been fully funded.

One of the interesting points to arise in last year's debate was made by Mr Rumbles—who is not in the chamber this afternoon—about how the existing allocation methodology impacts particularly on Aberdeenshire Council. That is a complaint that all north-east councils make, and we are not going to see any changes to that over the three-year period. However, if we were to go down the route of having a local income tax and the Government were to maintain its insistence that receipts would go to councils and Government grant would be adjusted appropriately, areas such as the north-east of Scotland and the city of Edinburgh would be most severely hit. Perhaps those who are concerned about the allocation methodology for the council tax should take a very close look at what might happen if a local income tax were to be introduced.

The bottom line is that if we are not going to challenge the method of allocating funding to councils, we can challenge the settlement only on the total amount of funding to local government. We can argue about whether it is an increasing or decreasing share of the total Government budget; I am sure that we will hear both sides of that argument. Frankly, I am unconvinced. The broader question is whether anyone is seriously suggesting that the local government budget should be significantly increased, particularly given the other constraints on public spending. We should not complain about all the alleged cuts in local government without also making it very clear that there is very limited scope for significant increases in total Government support to councils. Members should be careful about what they ask for this afternoon.

Photo of Jeremy Purvis Jeremy Purvis Liberal Democrat 3:25 pm, 11th December 2008

This afternoon, the Cabinet Secretary for Finance and Sustainable Growth made three essential arguments: first, that the levels in this settlement are better than the indicative levels that he set out in last year's local government finance settlement; secondly, that the relationship with local government is all sweetness and light; and thirdly, that the current economic climate requires a proportionate response. I want to examine all three arguments.

I was interested to compare today's published settlement with tables that the cabinet secretary published last year, particularly with regard to capital allocations. Last year, the indicative level for capital allocations in 2009-10 was £992,580,000; today, that figure is £945,000,000, a difference of £48 million. We hear week in, week out that the provision of capital expenditure to local government is being accelerated, but no credible argument has been advanced as to why there has been a net reduction in that figure. We have also learned not only that £20 million of capital consent is being withdrawn from local government to fund affordable housing but that more than £5 million of that funding has been spent on buying land that is not for immediate housing construction and £1.4 million has been used to buy unsold private housing stock. Spending money in that way neither boosts construction jobs nor affords local authorities the ability to develop capital expenditure.

That has been compounded by Sir Angus Grossart's comment to COSLA that the Scottish Futures Trust had no funding and would simply be a lobbying arm for local government to persuade central Government to provide funding. Given that and the cabinet secretary's removal of level-playing-field support for new builds, councils are rightly desperate for a clear and sensible capital investment funding stream in Scotland. We simply cannot wait for that.

Investment in schools is a good example. We know that, since the Government took office, not one new school project has gone to the first stage of gateway approval. Armed with hard hats and brass necks, SNP ministers are falling over themselves to open new schools that were commissioned, designed, funded and built under the previous Administration. Meanwhile, however, local authorities are still waiting to hear from the Scottish Government about their demands for level-playing-field support.

We have still received no clarity from the Government about whether the capital that will be swapped for revenue to fund education policies will counteract the £40 million of accelerated capital expenditure that was announced last year to build classrooms to meet the Government's promise on class sizes. Last year, £40 million was given to councils; this year, £20 million has been taken from them for the same purpose. No wonder they are confused by the messages that they have been given.

The cabinet secretary tells us that this is all part of the new relationship with local government. As we are told very regularly, it is an equal partnership; it is based on equity. However, it is a marriage without a joint bank account. If a party is wholly dependent on another party for funding, it is not an equal partner.

The relationship with local government has brought into being the single outcome agreements. Last year, John Swinney was interviewed by the Scottish Law Reporter. Thank goodness for Google that we are able to see such material, because I have to confess that I am not a regular reader of the journal.

Photo of Jeremy Purvis Jeremy Purvis Liberal Democrat

Mr McLetchie has an annual subscription.

A few months after taking office, Mr Swinney said that local authorities complain about

"a blizzard of targets and measures".

He added:

"What I'm saying to them is 'let's move to a simpler system, which is focused on outcomes—what is it we expect to deliver as a result of this injection of money?'"

A simpler system was promised but, at the time of his reassurance to local government that there would be no blizzard, an avalanche of targets was being drafted by council officers under the instruction of directors in the SNP Government. He said that there would be no blizzard, but the Scottish Parliament information centre has helpfully said in this session that there are now 3,599 targets, outcomes and indicators in the single outcome process. [Interruption.] I say to the cabinet secretary that I am talking about information from the Scottish Parliament information centre; if he is laughing at SPICe, that is regrettable. The review process has not begun, but the drafting of next year's targets, outcomes and indicators has, so we do not know how many of the 3,599 targets, outcomes and indicators will be outstanding for the next year.

On the Government's financial responsibility, a statement was given yesterday on the strategic transport projects review. Local government will be required to carry out many of the projects but, in spinning the £21 billion plan, the Government did not say that there was a variance of £8 billion in the estimates. In that context, local authorities do not have a clue about what is expected of them. Therefore, it is no surprise that the footnote on cost estimates in the document says that costings are an indicative guide only.

The cabinet secretary referred to

"the ferocity of the economic storm that has since engulfed ... Scotland" and said that the Government

"is using all the levers at its disposal".

The budget shows capital reductions for councils, and it is less than 1 per cent different from the one that was announced last year. If we are facing the ferocity of an economic storm, we require more than a 1 per cent difference in the Government's budgets.

Photo of Keith Brown Keith Brown Scottish National Party 3:32 pm, 11th December 2008

Obviously, it is hard to avoid figures in such debates. Like Derek Brownlee, I well remember last year's debate and the dire predictions about the impossibility of the council tax freeze, but it is sometimes better to start with first principles rather than figures.

For those who cannot remember, David Cairns used to be a junior minister in the United Kingdom Government but could not stand being in the same Government as Gordon Brown. In The Scotsman of 22 October last year, David Cairns was quoted as saying:

"In truth, Alex Salmond has more money than any First Minister has ever had—twice as much as Donald Dewar."

That line was repeated by Alistair Darling on 8 November 2007, Sarah Boyack on 2 February 2008, Peter Peacock on 27 February 2008, David Cairns on 19 June 2008, Yvette Cooper, and Wendy Alexander as recently as 11 November. Other Labour members have used the line so often that they give real meaning to the term "ad nauseum". I think that Andy Kerr refers to ramming things home.

Perhaps we can leave aside the fact that every Labour-Liberal Administration between 1999 and 2007 received an annual increase of around 4 per cent, which would now look like milk and honey to the Scottish Government. However, we cannot accept Labour's logic, because it ignores rising staff costs, construction industry inflation—which, until recently at least, rose well ahead of general inflation—and, of course, rising prices generally. Increases are also needed to mount new initiatives rather than simply to meet recurring spending commitments, which is the day-to-day work of people involved in governance and delivery.

Photo of Jeremy Purvis Jeremy Purvis Liberal Democrat

I wonder whether the member will be able to help us, as he is sitting next to the cabinet secretary. The information that was published last year included an indicative table with a floor of percentage increases. The core revenue grant increase was shown. Such a table has not been published this year. Does the member know why? Can he explain why, according to that indicative table, 12 councils were due to get an increase of less than 4 per cent in the settlement? That figure was the average over every year that the Liberal Democrats were in the Administration.

Photo of Keith Brown Keith Brown Scottish National Party

If Jeremy Purvis wants to ask the cabinet secretary questions, perhaps he should intervene when he is speaking.

Photo of Jeremy Purvis Jeremy Purvis Liberal Democrat

I could not do that. It was a ministerial statement.

Photo of Keith Brown Keith Brown Scottish National Party

I am sure that Jeremy Purvis will get a response in due course. He will get a chance to intervene when the cabinet secretary is summing up.

The Donald Dewar soundbite is not a credible comparison; instead, it is an exercise in deliberate misdirection. Labour and Lib Dem members who have tried to blame the Scottish Government for every local government cut—we heard a litany from Andy Kerr—or saving must explain how these two propositions can coexist. Either there is more money to go round or there is less money for local government.

They must accept that local government now has more than double the amount that it was given by the First Minister, Donald Dewar, in 1999. The figures are public and are readily available, as they are in the old budget documents. By my reckoning, about £5.5 billion was given in 1999. I remember moving Clackmannanshire Council's budget, which was £40 million. This year, it will be around £99 million.

That is not to say, of course, that the threat of cuts does not hang over councils. However, that threat comes as a result of the £1 billion that is pledged by Gordon Brown, who might egregiously boast that he is the man who saved the world but who is more like, in David Bowie's words, the man who sold the world—on a mountain of consumer debt. Further, for those who either deliver or rely on local services—not to mention the employees of Woolworths—it seems clear that Gordon Brown will soon become the man who fell to earth.

Of course, the Liberal Democrats also present a real and present danger to council services—or, at least, they would if they stood a chance of being elected to Government. Despite asking for more money for just about everything, they want to cut £800 million out of the Scottish budget. I assume that that is in addition to current savings and Labour's £1 billion cuts.

I hope that some of the Labour speakers who are still to come will be able to do what those on Labour's front bench have failed to do, which is to explain how they can suggest that the Scottish Government's roads are paved with gold at the same time as saying that local authorities are supposedly too poor to pave their roads at all.

Photo of Keith Brown Keith Brown Scottish National Party

I have already taken an intervention; if I take any more, I will not get through my speech.

Photo of Andy Kerr Andy Kerr Labour

I could explain the issue that Mr Brown is asking about.

Photo of Keith Brown Keith Brown Scottish National Party

Mr Kerr failed to do so when he had the chance; perhaps someone else can do so.

Some might argue that the Scottish Government has had this—mythical—bounty given to it but has cut the share that it passes on to local government. That argument would at least have an inherent logic, which Labour's does not. However, the problem is that the facts get in the way. Not only are local authorities getting an increase this year on last year but, last year, for the first time since devolution, local government's share of the cake increased, and it will do so again this year.

When I pointed that out last year, Andy Kerr dismissed it as being irrelevant. However, he should say that to all the Labour council leaders who, like me, argued with his Executive that the share of spending was crucially important to local government and who made challenges about it under the Tories as well as under Labour. He should also tell his good friend and close political ally, Pat Watters, who said, on April 14:

"Whatever you think of the overall amount of money available for the public sector in Scotland, local government stopped the decline of its share and marginally reversed that trend."

It is a marginal turnaround but it is a turnaround without a doubt, and one that shows the hypocrisy of an Opposition that now feigns indignation about supposed cuts, when the real cut to local government happened when it was in power.

It is also true to say that the end of ring fencing is a major gain for local government, and is something for which councils had been arguing for years. If councils decide to make cuts—as Clackmannanshire Council is doing, by cutting school crossing patrols—that is their decision. They have more money than ever before, but they have the right to make cuts. They will stand or fall by their decisions.

I warn Labour MSPs who are currently trying to convince Labour councillors to undermine the concordat at every stage—by not employing teachers or by manoeuvring within COSLA—that that behaviour is jeopardising gains that local authorities had been trying to achieve for years under Labour and Conservative Governments.

Looking ahead to 2012, I am optimistic about local government. Some councils will stand and others will fall but, for the first time that anyone can remember, they can be fairly judged on their own records. They have to get over the impact of decades of underinvestment, obviously, but there is a new sense of purpose in councils and a new and fairer balance of opinion in town halls. Most important, thanks to this and other generous financial settlements of the Scottish Government, councils have the ability to deliver first-class services on the front line that meet the expectations and aspirations of the people of Scotland.

Photo of Hugh Henry Hugh Henry Labour 3:38 pm, 11th December 2008

In his statement, the cabinet secretary said that the substantial increase in funding that he said he was providing would allow councils to sustain the essential services that they provide to communities and would enable them to improve the fabric of education. However, let us look at the reality of the situation and examine what has been happening in Renfrewshire, under the SNP-led council, which is supported by the Liberal DemocratsJeremy Purvis might want to caution his colleagues about that, as the party's increased popularity in the past four or five years is being jeopardised in Renfrewshire as a result.

What is happening in Renfrewshire? The education budget is being cut by £4.5 million. The delegated budget to every secondary and primary school is being cut. Many schools are finding it hard to afford to photocopy materials and buy paper, pens and pencils. That is the reality of the cabinet secretary's claim to be enabling councils to improve the fabric of education.

The council is closing South primary school, which had an excellent report from Her Majesty's Inspectorate of Education, to save less than £200,000 a year—yet the same council has found £312,000 to boost, over and above the normal inflationary increases for staff, the salaries of senior officers. It is closing six nursery schools—every nursery school in Renfrewshire will be closed—and it is reducing the qualified teacher input to the children in those schools. Peripatetic teachers will go into early years establishments—the children might see one every four or five weeks if they are lucky.

There have been cuts in primary school staffing in 2007-08 and 2008-09, as a result of which numbers are down by 3.2 per cent—that is the reality of the Government's claim that it is improving the fabric of education. Experienced primary and secondary teachers are being forced out of the door in early retirement, which will involve the council finding the money from other local government funds to pay for those additional costs for years to come in order to sustain a perverted and distorted view of education.

Probationary teachers were mentioned earlier today, when Alex Salmond asked pertinently why some local authorities are finding jobs for probationary teachers at the end of their probation but others are not. I urge him and the Cabinet Secretary for Education and Lifelong Learning to ask that specific question in Renfrewshire: why has the council employed none of the 172 teachers who completed their probationary year? Proportionately, Renfrewshire has one of the highest numbers of probationary teachers of any authority in Scotland at the same time as the council is getting rid of experienced teachers in primary and secondary schools. There is a suspicion that Renfrewshire Council is using probationary teachers as a means of employing teachers on the cheap to cover up the cuts that it is making elsewhere.

I will move on from education to other vital services in Renfrewshire. The council has reduced the warden services in sheltered homes, and it is increasing the charges for those services. It has closed four libraries: Gallowhill, Todholm, Elderslie and Bargarran, some of which had far higher usage than other libraries that were left open. It has closed five neighbourhood housing offices; increased the charges for swimming lessons for children; cut the park ranger services; closed the Apex community centre in Ferguslie Park; and cut the number of available hours for museum and observatory services.

At question time, we heard from Michael Russell and Richard Lochhead about the need for recycling, but Renfrewshire Council has withdrawn funding from recycling. Tragically, and worst of all, day centres for the disabled are to close in Renfrewshire.

The cabinet secretary and others talk about the funding settlement, and Alex Salmond talks regularly about local government having more money than ever before, but the reality is that, even before this year's settlement, Renfrewshire Council has been slashing services across the board. It has been reducing the quality of the services that are available to council tax payers in Renfrewshire—and that is before next year's budget cuts, which threaten to be even worse, start to become a reality.

It is no wonder that, for the first time in its history, the Educational Institute of Scotland's Renfrewshire branch passed a motion of no confidence in the present council leadership. That is the reality of this budget and last year's budget. God help people across Renfrewshire if the Government is allowed to continue on this course unchallenged.

Photo of David McLetchie David McLetchie Conservative 3:44 pm, 11th December 2008

In preparing for the debate, I looked back at the equivalent debate in December of last year. I did so with some trepidation: would I have to eat my words or cross my fingers and hope that they would pass unnoticed by my political opponents? Alternatively, would those words show a remarkable degree of prescience and highlight concerns on issues that remain on-going problems? The Presiding Officer will not be surprised to learn that the latter is the case.

First, I assured a concerned David Whitton that the SNP's local income tax would never come to pass in this session of Parliament. Admittedly, that analysis was based on a projected retreat by the Liberal Democrats in tandem with what was going on in that party down south, so I must confess that I seriously underestimated the sheer stupidity of the Scottish branch of that party. However, it is certainly the case that in the past year the good ship Local Income Tax has run on to the rocks and is now on the verge of disintegration. Last week's vote in Parliament was significant in that respect, as it reflects a significant shift in underlying public opinion on the issue, which no amount of massaging of the figures by the SNP can disguise. Local income tax has been denounced from almost every quarter and, in particular, by the Scottish business community. The onset of Labour's economic recession further undermines the case for local income tax, for the simple reason that falling projections for local income tax receipts have made Mr Swinney's financial black hole even deeper.

The First Minister tried to suggest last week that council tax receipts were equally susceptible to changes in income levels, but that is not true. Under local income tax, if a job is lost in a household, the tax receipts of a council will go down. Under council tax, if a job is lost in a household, council tax benefit may kick in to reduce the outgoings of the occupier but, crucially, from the standpoint of the council and its public services, the receipts of the council will be maintained.

Photo of David McLetchie David McLetchie Conservative

That is one good reason why it makes sense to keep council tax benefit and housing benefit outwith the Scottish block grant as part of the United Kingdom-wide welfare state and benefit system.

Last year, I also questioned the uncosted liabilities facing councils in respect of the implementation of single status agreements and related equal pay claims. It seems that progress has been made on that issue. We were told by COSLA at the recent meeting of the Local Government and Communities Committee that 26 out of 32 councils had finalised single status agreements. That is well and good, but equal pay is another story. No one is any further forward in estimating the potential liabilities in that respect. Some councils are embroiled in litigation, the outcome of which is unpredictable, and the Cabinet Secretary for Finance and Sustainable Growth refused to put any figure on it, although it was a subject on which he was sorely vexed when in opposition.

Photo of David McLetchie David McLetchie Conservative

No. Sorry.

Yet, despite no one having the remotest idea of how much it will all cost, we are blithely assured by both the cabinet secretary and COSLA that it is all accounted for. We are told that because equal pay claims are historical in origin, and therefore predate the historic concordat, the settlement of such claims—at whatever level—is not a new funding pressure to be taken into account by councils and the Government in reviewing future grant settlements. That is Alice in Wonderland accountancy. We are being asked to believe that a wholly uncosted liability is nonetheless fully provided for; that, somehow, councils will conjure up out of reserves tens if not hundreds of millions of pounds to settle claims; and, furthermore, that it will make no difference whatever to public services in those areas or to the level of future grant settlements. That remains a nonsensical and unrealistic proposition—a triumph of foolish optimism over past experience—and it is a subject to which we need to return.

Finally, there are now single outcome agreements. I predicted last year and remain convinced that they could become even more of a financial stranglehold than ring fencing and that councils will come to regret the day when they allowed their leaders in COSLA to sell out and lie down to the SNP Government in the manner in which they have. As each day passes, the historic concordat becomes more and more of an historic con and the leaders of COSLA become more and more ragged cheerleaders for the SNP Government. Indeed, they try to gag their member councils by demanding that complaints or concerns about funding levels should not be made public but instead should be reserved for their cosy private chats with Mr Swinney and his civil servants. Thankfully, however, some councillors are made of sterner stuff. We know that the class size policy has not the remotest chance of implementation.

We know from the appalling decision that was made last week that all councils are apparently committed to spending £40 million a year on providing free meals to the children of parents who can well afford to feed them themselves, and who are happy to do so. That money could otherwise be spent on employing teachers, on improving school facilities, and on buying books and teaching materials, as was highlighted by Hugh Henry in his speech, and as is evident from the complaints that are being made about the Liberal Democrat-SNP budget cuts that are being forced through by the City of Edinburgh Council. It is a perverse priority, which is little short of disgraceful.

The concordat and the commitments that it contains are going to hinder the provision of basic public services on which people rely. That will become more and more evident in the coming financial year and in years to come.

Photo of Nicol Stephen Nicol Stephen Liberal Democrat 3:51 pm, 11th December 2008

I wish to make a strong case for a fair deal for Aberdeen City Council, a case that is vitally important. So far, we have heard a promise of a Scotland-wide review in 2011 but no guarantee of any extra funding for the city. The financial crisis is here and now, and the Scottish Government has a vital role to play in tackling it.

The case for Aberdeen needs to be pushed harder than ever following the complete neglect of Aberdeen and the north-east of Scotland in yesterday's transport statement. There was no commitment to the Aberdeen crossrail project, to a grade-separated junction at Laurencekirk or to improvements at the Haudagain roundabout. Desperate briefing by the First Minister and his spin doctors cannot hide the fact that his Government is investing billions in the central belt, with nothing new for the north-east. With the SNP, fine words turn to dust. It cannot be trusted to deliver.

The same is true for local government funding. Some vague hint of more Government funding for Aberdeen in 2011 counts for nothing. There is no current commitment. My simple questions to the cabinet secretary are whether Aberdeen will receive more and whether he backs the campaign for a fair deal for Aberdeen. The case is overwhelming. If Aberdeen received the Scottish average per capita, it would get more than £60 million more each year from the settlement. If it received the same per capita as Dundee, it would get more than £100 million extra each year. If it received the same as Glasgow, it would receive more than £150 million extra each year. The average per capita figure is £1,648 for each Aberdeen resident; the equivalent figure for Glasgow is £2,410—that is a difference of £762 per head. Instead, Aberdeen is facing budget cuts of £25 million to £30 million next year, on top of £50 million in cuts this year. Sadly and frustratingly, I see nothing in today's local government settlement that will change that.

Capital funding has been cut by more than £2.5 million for 2009-10, compared with the indicative allocation from earlier this year. I seriously worry that that could prejudice major and vital capital projects such as the new 50m swimming pool, which is still not fully funded. It is particularly frustrating that Aberdeen, at this time of significant cuts in key services, continues to pay far more to the Scottish Government in business rates than it receives back as its share of non-domestic rates funding. Clearly, that should be addressed under the promised review of the funding formula.

Aberdeen councillors now face very tough decisions. Officials have prepared a document with more than 300 pages of cuts. Aberdeen is grappling with the challenge of turning around its inadequate child protection services, following a very critical joint inspection report. Councillors are trying to find new funding to restart school building projects, which stalled due to the collapse of an Icelandic bank. There was no mention of that crisis and no support from Mr Swinney today.

The Government has shown that it can change the local government funding settlement when a strong case for doing so is made. The cabinet secretary has announced that he will find extra money for Edinburgh but, although he devoted a section of his statement to Edinburgh, he was silent on Aberdeen. I do not begrudge the extra payments; Edinburgh is the second most poorly funded council in Scotland. However, Aberdeen is the most poorly funded council. It is at the bottom of the table, 32nd out of 32 local councils, and its financial situation remains desperate. The Government has the power to take action today to support Aberdeen with funding. It does not need to wait until 2011 to do so.

Has the SNP Government accepted the case for extra funding for Aberdeen City Council and agreed to provide such funding at some stage? If so, surely the additional resources must be made available now, in Aberdeen's hour of need. If not, why has the SNP chosen—as it did yesterday, when the announcement was made on the strategic transport projects review—to ignore the needs of Aberdeen and instead show a clear bias towards the central belt? We need change urgently.

Photo of Brian Adam Brian Adam Scottish National Party 3:56 pm, 11th December 2008

The historic concordat is about respect, not central control. It is about partnership, not diktat. That must be extremely difficult for the centralising, command-and-control Labour Party. The concordat represents a genuine attempt to have parity of esteem between central Government and local government. That is highly desirable, and it is not just a wish; it is happening in practice. We need to acknowledge that councillors have a mandate, which is important, so we must have a proper partnership arrangement. The historic concordat is the means by which such an arrangement can be delivered. It will no doubt be refined in the years to come, as we and local government become used to it.

Throughout the lifetime of the Scottish Parliament, local government finance has been based on a funding formula. There are a number of anomalies in the formula, and I endorse what Nicol Stephen said about the need to change it. It is a pity that when he was Deputy First Minister he took no steps to rectify the situation, as far as I can see from the public record. It is to my colleague John Swinney's great credit that he has committed to reviewing the formula and dealing with the matter in the next comprehensive spending review.

The formula provides for a floor on uplift, which is supposed to even out changes—Mr Purvis said that there has been no mention of the floor, but that does not mean that it is not there. I understand that it continues to operate and is set for three years.

Photo of Brian Adam Brian Adam Scottish National Party

If Mr Purvis wants more detail on the matter, he should address his question to the cabinet secretary when he winds up the debate.

The floor on uplift does not provide an adequate response to the significant changes to the formula that take place over time, because it merely reinforces the direction of travel of drivers for change. I see no reason why, as part of the review of the formula, there should not be an absolute floor—indeed, the approach could be implemented in the current year, between the publication of the draft settlement and the final settlement.

The variation between authorities is too significant. I am sure that members who represent the north-east, in particular Nicol Stephen, will be interested to know that in 1997-98 Aberdeen City Council was 23rd out of 32 authorities in the table of allocations per capita, whereas it is now in 32nd place. The council has moved from a position of getting 94 per cent of the Scottish average to getting 83 per cent of the Scottish average. During much of that time, Nicol Stephen was a member of the Administration that delivered the settlements. The slide that Aberdeen City Council has seen in its share of the cake was driven by the funding formula, which is in no way fair. The relative position of other authorities has not seen the significant change that has been seen in Aberdeen. An uplift in the funding formula floor is needed, because the mechanism is totally inadequate. Indeed, for mainland authorities, perhaps a floor and a cap are required. It is not possible to compare mainland and island authorities.

Photo of Nicol Stephen Nicol Stephen Liberal Democrat

I have a simple question for Brian Adam. Can he remember any two consecutive years over the past decade—indeed, over the past 20 or 30 years—when Aberdeen City Council had to cut funding for services by £50 million in one financial year and £25 million to £30 million in the next year?

Photo of Brian Adam Brian Adam Scottish National Party

By describing the figures in that way, the member does a great disservice to Aberdeen City Council. The council managed to deliver only £35 million of the £50 million cuts that were aggregated into the past financial year. It has therefore to find £25 million of cuts this year because £15 million of cuts were not delivered last year. One cannot add together the two sets of figures; they are the result of underachievement last year, which is very much to be regretted. I hope that the council's administration and its new officer team get to grips with the situation. It is absolutely true to say that there are serious difficulties for Aberdeen City Council and that it faces serious challenges, but the funding formula does it no great service.

If one looks at the detail of the significant changes in the recent past, one finds that the formula helped to accelerate the council's existing problems. However, we must also accept that some—if not most—of the problems lie in the city itself and with those in the successive administrations that administered it over a number of years. We need to address the situation.

Photo of Jackie Baillie Jackie Baillie Labour 4:02 pm, 11th December 2008

Is there enough money in the local government settlement—enough for local government to carry out important functions, such as education and social work, and to cope with new pressures? Those are the central questions that the cabinet secretary needs to answer. The response from many local authorities across Scotland is simple: no.

As Keith Brown knows, the Scottish Government has provided £175 million to local government over the next three years to fund its new commitments. Equally, he knows that that falls far short of the £500 million that the SNP itself costed as being required to deliver those self-same commitments.

Not all of that is necessarily the cabinet secretary's fault. I have no doubt that rising fuel prices and the chill economic wind have made matters that much harder for local authorities. Like other members, I have cast my mind back to last year's debate on the subject. When one strips away all the rhetoric about the historic concordat and the best-ever settlement, a considerably different picture emerges.

I will illustrate that by looking at SNP-led West Dunbartonshire Council. In year 1, its budget increase was 3.4 per cent, which was the lowest increase for any local authority in Scotland, although the area has significant problems with deprivation. There is also clear evidence of additional costs on education and social work if we are serious about lifting children out of poverty. The settlement was not sufficient.

In year 1, the 3.4 per cent increase meant cuts of almost £4 million in front-line services and increased charges for day care for adults with learning disabilities, home helps and community alarms—and more.

In year 2, the rise is projected to be 4.09 per cent, and the conservative estimate of the projected deficit is £6.266 million.

Photo of Jackie Baillie Jackie Baillie Labour

In a second.

When the increased cost of fuel and new policy pressures are added in, the deficit may reach £7 million or £8 million. The consequence of all that is more pressure on budgets, cuts and increased charges.

Year 3 is even worse: the rise is projected to be 2.86 per cent and the deficit is estimated to be £7.7 million. No wonder the Government does not want to publish the figures.

Photo of John Swinney John Swinney Scottish National Party

Jackie Baillie expresses concern about cuts in public expenditure. What is her attitude to the cuts in public expenditure that will come in 2010-11 as a consequence of the decisions in the pre-budget report?

Photo of Jackie Baillie Jackie Baillie Labour

I am happy to have another debate with the cabinet secretary about that, but the cuts that I mentioned are happening now, on his watch. There are people without services now as a consequence of the decisions that he is taking. I ask him which services in West Dunbartonshire should bear the brunt of the cuts that are happening now—social work or education? Will there be reductions in teacher numbers? Will our children need to supply their own jotters and textbooks? What about the commitment to reduce class sizes? I genuinely do not know the answers.

Last year, West Dunbartonshire Council considered closing primary schools, libraries, community education centres and child care centres. It considered removing free milk, abandoning breakfast clubs and reducing early interventions. In social work, it considered increasing home care charges, closing residential homes, reducing day care services and reducing its welfare rights team, which helps some of the poorest people in our society. That gives us an idea of where it is likely to look again.

As the cabinet secretary pointed out, there is now a different relationship with local government. There is the historic concordat. However, it translates as, "The SNP won't tell you what to do, but the cuts and the consequences are all yours, local government." I turn briefly to Argyll and Bute Council, which will also have a deficit—it will perhaps not be of the magnitude of its neighbour's deficit, but it will not be far off. Again, the consequences will be cuts to services and increased charges. However, the situation in Argyll and Bute is serious now—not next April, but today. Older people in their 80s and 90s—some suffering from dementia and a number living alone—are being denied a service by the council.

The official line is that care is being prioritised. "We have a framework," social work tells me, but the framework is not about prioritisation. It is purely and simply about rationing. Employees tell me that there is a moratorium and there are budget restrictions. They say, "Don't worry. It's belt-tightening." However, it does not matter how it is described. The outcome is that old and vulnerable people are being left without appropriate care. That cannot be right.

The cuts are real. They are happening to real people. Yesterday, the response to that from the Tories, in the shape of Derek Brownlee, was to stick up for their new pals, the tartan Tories. Perhaps when Derek Brownlee was riding to the defence of John Swinney in the Daily Mail, of all places, he should have stopped to think for a moment about the people who are affected.

Many moons ago, I used to work in local government, and I still have many colleagues there. They tell me that things are serious, and I believe them. My concern is not just about the cuts that will be required as a consequence of the settlement. Councils are also reporting that they are losing income. Examples include a reduction in planning fees due to the current economic climate, and a reduction in capital receipts, which is leading to a restricted capital investment programme.

What we need is for the Scottish Government to stop blaming everyone else and deal with the challenges. I have considerable respect for John Swinney, but simply trotting out the old mantra of "It wisnae me" will not do. The cuts are happening now. At the very least, the cabinet secretary must reassess and reprioritise the requirements that are being placed on local government, or his historic concordat will deserve to be consigned to the dustbin of history.

Photo of John Wilson John Wilson Scottish National Party 4:08 pm, 11th December 2008

In debating the local government settlement for 2009-10, it is important to recognise the contribution of the Cabinet Secretary for Finance and Sustainable Growth in accelerating key priorities for the Scottish people. Other members have already stated, but it is worth reiterating, that the Scottish Government deserves credit for creating a degree of sustainability for local government budgets. The concordat between COSLA and the Administration has enhanced their relationship, with a commitment that the Scottish Government will not undertake structural reform of local government between 2007 and 2011.

Council tax rates were frozen in all councils in 2008-09 and funding of £70 million has been included in the budget allocation for 2009-10. At a recent local area partnership meeting, a key finance officer at North Lanarkshire Council stated that the moneys are there for council tax to be maintained at current levels.

Anyone with even a scant knowledge of the matter knows that there has been a continuing problem in respect of local authorities' levering in capital receipts. The shortfall in capital receipts is a problem for local government that is not unusual, especially given the current recessionary pressures in the marketplace.

Key questions from the local authority perspective are whether there will be a continued council tax freeze, whether increasing cost pressures are reflected in the financial settlement, and whether funding is available for growth. The council tax freeze ensured that councils throughout Scotland maintained prudent financial management, using the additional resources made available by this Government.

My local authority's base budget showed that the authority achieved efficiency savings of £10 million in 2008-09. Thanks to the Scottish Government, local authorities are retaining such savings—unlike under previous budget settlements, when efficiency savings were clawed back. That enables authorities to make further investment in key strategic priorities and increased service provision, as they deem necessary.

As was stated at a recent evidence session with the Local Government and Communities Committee, there is an on-going debate about whether there is enough money. The arguments are recycled throughout the year, especially when local authority budgets are being set, before the new financial year.

I have been advised that the Labour Party's national executive committee in Scotland has instructed its leadership in COSLA to force a vote tomorrow and call for a substantial renegotiation of the concordat. Evidence was presented to the Local Government and Communities Committee that either party to the concordat could go to the other at any time for detailed discussion of issues that might arise under the concordat's terms.

As other members have said, there has been much discussion of the resource allocations. It is worth restating that local government expenditure will rise in cash terms by 5.1 per cent in 2009-10.

On ensuring that proper risk management procedures are in place, COSLA and local authorities need to provide much more clarity. Indeed, I could argue that budgets that are already in place should be prioritised; authorities should take account of best practice that has already been established. Some local authorities need to start learning lessons from previous financial decisions. Their exposure to the Icelandic banks is the latest example, but the Bank of Credit and Commerce International scandal in 1989 also shows that the public pound needs to be protected. I am heartened by the cabinet secretary's comments about statutory guidance on that. There were repeated warnings by ratings agencies; as far back as February 2008, Fitch Ratings warned against investment in financial institutions such as the Icelandic banks.

The argument made by many local authorities seems to be more about potential sources of more funding than about better harnessing existing resources.

Hugh Henry raised the issue of senior staff pay levels—I am sorry that he is not in the chamber at present. David McLetchie raised the spectre of equal pay. The equal pay issue has been hanging over local authorities since 1999. Many local authorities have reached settlements on single status agreements, but such agreements bring additional financial burdens. Pressures around pay are not new financial pressures for local authorities. However, as David McLetchie said, once an equal pay settlement is reached, it may be a burden the local authority that has to be revisited.

I want to provide some context to the debate. The planned spend for the affordable housing investment programme for 2009-10 is £500.8 million. That means that the Government is taking account of the reality outside the chamber; the figure represents real money for the real economy.

I welcome the fact that COSLA and the Government continue to work together to ensure that the delivery of services is maintained and enhanced in line with the Government's policy objectives, which were agreed with COSLA. I trust that individual local authorities will welcome the proposed settlement.

I commend the cabinet secretary for his statement on the settlement, which will deliver the best possible way forward for Scotland.

Photo of Sarah Boyack Sarah Boyack Labour 4:14 pm, 11th December 2008

This time last year we in the Labour Party warned of the impact of the tight financial settlement offered by the SNP Government. We warned that the money did not add up, but SNP ministers told us that there was sufficient cash for services. We were roundly criticised for scaremongering. I have raised issues relating to Edinburgh's housing crisis before. In the past year, the problem has got worse—we are nowhere near to being able to achieve 1,300 affordable housing starts every year for the next decade. Today, the city's housing leader said:

"we are faced with a crippling shortage should investment remain unchanged."

Today, Keith Brown reminded us that last year some members indulged in dire warnings. I invite him to speak to the many staff who have been sacked from voluntary sector projects across the city—people helping some of our most vulnerable citizens with employment, housing and homelessness. Those jobs have gone because of the cuts.

Photo of Sarah Boyack Sarah Boyack Labour

No.

On flooding, we have developing problems. SNP ministers promised us that there would be no problem with flooding schemes, which were fully funded and under the wire. However, the council has told me that the second scheme—the Water of Leith scheme—is no longer fully funded and that in later years the necessary cash will not be there.

I will concentrate on Edinburgh's education services, because the financial settlement has had a deeply damaging impact on our schools. As one parent suggested to me yesterday, we are looking at a "hugely deteriorating education system". There are big problems with lack of investment in school buildings and cuts in school budgets. For the older schools in the replacement queue, there is a double hit, as they are the most expensive schools to maintain, and the money must come from individual school budgets.

When Labour was in power in the Scottish Parliament and the City of Edinburgh Council, we built or commissioned 34 new schools. It was not about the numbers, which I merely put on the record, but about the need to modernise old school buildings that had been neglected during the Tory years. In my constituency alone, the new St Thomas of Aquin's school was opened five years ago and Broughton and Tynecastle high schools are under construction; all that has happened since I was elected. As Jeremy Purvis predicted, SNP ministers are no doubt queuing up to open the new high schools. The difference in the morale of teaching staff and students in the new schools across the city is palpable—they know that they are important and believe that we know that they need the best and most modern teaching facilities.

However, since May 2007 the building programme has juddered to a halt. From a meeting between parents and councillors in the city last night, I understand that the SNP-Lib Dem council is proposing to rank schools in order of priority. The problem is not simply the order in which schools are ranked—even the top school on the list, Portobello high school, is £8 million short. The kids in my area will not get a new school even if they have only just started at primary school—there is a huge long-term problem. In practice, that means that schools such as the Victorian Boroughmuir high school are years away from the urgent action that is needed now. Last week, Boroughmuir high school's HMIE report praised standards of teaching but urged action on the inadequate state of the building. When I visited the school just a couple of weeks ago, I could see where water was coming in through the roof, the draughty classrooms and how difficult it is for teachers to keep up standards against that backdrop. The issue cannot be left to drift.

This week, parents from the 28 parent councils in schools in Edinburgh got together to present a dossier to the city council's education leader. They do not want to be caught up in the politics of the situation. Before the election, Labour promised them that it would build the schools that were on the list. The SNP promised them that it would match our plans brick by brick—what a hollow promise that must now seem. The lack of a funding mechanism is entirely the fault of the SNP Government. The Scottish Futures Trust is nowhere to be seen—there is no answer to the parents who want their schools now.

The problem is not limited to buildings—it is worse than that, as the impact of efficiency savings must also be taken into account. At First Minister's question time today, Malcolm Chisholm asked a perfectly reasonable question, but he did not get an answer.

John Swinney has said:

"What might be described as crude cuts in services can in no way pass the test for efficiency savings."—[Official Report, 20 November 2008; c 12632.]

Parents from five primary schools and the one high school in my constituency have written to me with evidence of what is happening. There has been an increase in their energy bills that was not budgeted for, so they are now in overspend. They have also had to deal with lengthy staff absences. What happened to the SNP manifesto promise of renewables in every school? That would have provided them with greener heat and power and a reduction in their fuel bills. Boroughmuir, Balgreen, Abbeyhill, Flora Stevenson and Roseburn have all experienced a loss of teaching cover. Members of senior management have had to step into day-to-day teaching to cover for posts.

Schools have also suffered from cuts in additional support staff such as classroom assistants as well as from reductions in material supplies, neglect of repairs and improvements and reductions in extracurricular activities such as sports. The cuts are having a material impact on the quality of learning. That is happening as a result of this year's cuts. I am not talking about theoretical cuts; I am talking about what has happened this year in Edinburgh. Next year, the SNP-Lib Dem council proposes a 2 per cent efficiency cut.

We need solutions and action from the Government now. Parents are calling for the Scottish Government to ensure that all the schools on the list get investment now—either as new schools or as refurbished schools. The settlement that we have heard about this afternoon cannot be the last word. The SNP must act now and consider what is happening outside the Parliament.

Photo of Mary Mulligan Mary Mulligan Labour 4:20 pm, 11th December 2008

All members, not just those who are former councillors, such as Keith Brown and me, recognise the importance of council services to our communities. Proper investment is essential if we are to have the services that people deserve. I thought that it was only the Conservatives—whose benches are now empty—who think that there is virtue in starving local authorities of funding, but the SNP clearly believes that it can get away with reducing local government funding and investment in services as long as it dresses it up as a council tax freeze.

When Mr Swinney was asked at the Local Government and Communities Committee meeting whether, given the pressures that local authorities are under, it is right to continue the council tax freeze, he seemed almost pleased to say that it is. He went on to say that there are pressures on households and businesses, too. I accept that that is true, but the question for the minister is whether the burdens should be spread across all local taxpayers—and that those who can afford it pay a little more—or whether, as COSLA has said, we should increase fees and charges. Among the measures being considering are increased home-care charges in Fife, charging for day-care services for people with learning disabilities in Aberdeen and removing concessionary train travel for older people in West Lothian. Are those really the actions that Mr Swinney wants local authorities to consider to save his much vaunted council tax freeze?

Local authorities tell us that they are under additional pressures because of inflation, businesses deferring non-domestic rates and reduced income from things such as planning fees. It is possible to say that those pressures were not predicted, certainly not to the current extent, but others were known about and continue to put a financial burden on local authorities.

The single status agreements have been mentioned. COSLA tells us that agreements have been or are close to being implemented by 26 local authorities, but as I am perhaps more cynical than David McLetchie I must ask how close they are to being implemented. And what about the employees in the other local authorities?

I share David McLetchie's concern about equal pay. At the Local Government and Communities Committee meeting, I was concerned by the apparent confusion in COSLA about the difference between single status agreements and equal pay claims. Unfortunately, that confusion means that I am not as convinced as I might be that the single status issues are nearing resolution. More seriously, I have grave concerns that equal pay claims that may still be resolved in the courts will put tremendous pressure on local authorities. The Scottish Government appears to be taking a laid-back approach to the issue. I fear for local authorities and doubt their ability to take on that burden without Scottish Government support.

Today, and when he came to the Local Government and Communities Committee, the cabinet secretary has tried to say that everything in the garden is rosy and that local government finance is adequate, but we have heard throughout the debate that that is not the case. We have been given examples by Sarah Boyack, Jackie Baillie, Hugh Henry and other members, but one of the most worrying is the one from Aberdeen that Nicol Stephen described.

Photo of Keith Brown Keith Brown Scottish National Party

If Mary Mulligan believes that the local government settlement is inadequate, how would she expect it to be made adequate, given the 3 per cent savings that her party supports for public authorities and the £1 billion of cuts coming from Gordon Brown?

Photo of Mary Mulligan Mary Mulligan Labour

The bottom line is that the cabinet secretary announced proposals today that offer local authorities an increase of only £80 million while recognising there are commitments for £500 million. That is what is dishonest in today's debate.

In Aberdeen, as Nicol Stephen described, there will be cuts that involve school closures, reductions in teaching staff, the closing of swimming pools and a funding reduction of £3.7 million for the voluntary sector, which delivers to the most vulnerable in the community. Is that really what we are to accept?

I wish I had more time to mention housing finance. The cabinet secretary mentioned in his statement the First Minister's announcement about bringing forward £100 million for housing, but targets for how many houses that investment will provide are absent. Of the £30 million that is to be spent this year, only £18 million has been announced. That figure does not even take up the £20 million that has been clawed back from local authorities this year. Maybe the cabinet secretary should have left the money with local authorities such as the City of Edinburgh Council. One of its members, Councillor Paul Edie, said today:

"We know what to do, we know how to do it, and now all we need is the money".

What happened to the much vaunted new relationship with local authorities? Did the cabinet secretary not trust them to deliver?

I am disappointed that the cabinet secretary appears so complacent about the financial pressures that local authorities are under. One or two pressures may have been manageable, but we have heard today that there are many. He cannot continue to hide behind the historic concordat and let local authorities take the blame for unpopular budget cuts. He has offered local authorities £70 million to deliver his council tax freeze. While some would say that that is central control, it is more worrying that it does not deliver any more services. Local authorities and council tax payers will be disappointed by today's announcements.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

We now move to the winding-up speeches, which will be of six minutes.

Photo of Alison McInnes Alison McInnes Liberal Democrat 4:26 pm, 11th December 2008

There is no doubt that local government provides some of the most important and valued services in our communities. Everyone expects a great deal from their local council, even when it does not get a great deal from the Government, which supplies the majority of councils' funds.

Since the council tax freeze last year, councils have been even more reliant on central Government grants. The concordat that the Government hailed last year as a new deal for local government has not lived up to expectations. The concordat and its companion, the single outcome agreement, have not led to a new dawn for councils. As Jeremy Purvis said, councils collectively find themselves tied in to 3,599 outcomes and indicators, they have less and less autonomy, but they take the flak for the lack of investment in local services.

Brian Adam said that the concordat is about respect. Well, I do not see evidence of a Government that respects local government; I see a Government that shrugs off concerns at every turn with nothing more than an offhand assurance that it gave councils the resources and that it is up to them what they do. As Mr McLetchie said, that is a cruel distortion of reality.

So what does the settlement that has been announced today do to help councils respond to the economic downturn? What does it mean for teachers and pupils who are waiting for new school buildings? What does it do to help young couples who are struggling to find a home? Well, the truth is that it will do less than we had hoped. As Jeremy Purvis pointed out, a 1 per cent change is not enough. Councils have been hit with rising energy costs, lower than expected income and extra responsibilities, which means that front-line services are being squeezed.

Councils are crying out for support for capital investment in schools, as we have heard. The muddle that is the Scottish Futures Trust means that they will have another year of delay and uncertainty and that communities will not see much-needed new schools. Audit Scotland told us earlier this year that the investment required for the school estate is in the order of £5 billion, excluding maintenance and repair. Local councils cannot fund all that out of their capital allocations. There must be level-playing-field support from the Government.

The Government has made much of its funding package to accelerate the building of affordable housing, but the money has been clawed back from all local councils, although not all councils will be able to draw on the central fund. That is unfair. Like Sarah Boyack, I am concerned that some local authorities—for example, Aberdeen City Council, Aberdeenshire Council and the City of Edinburgh Council—have been informed that they will not be eligible for funding, even though they contributed to the money from COSLA. I understand that the Government has decided not to fund housing in those authorities because it claims that funding for affordable housing this year had not been dramatically cut while other councils had their cash reduced, but that claim does not hold water—data from SPICe show that Aberdeenshire Council, for example, received a massive cut for affordable housing in 2008-09 but is still not eligible for accelerated funding this year.

Why are ministers denying funding for housing in some of the country's areas of most pressing need? Edinburgh has the most acute housing shortage in the country, yet City of Edinburgh Council has been given only the weak assurance that it will be considered for the next tranche of front-loaded investment. Investment is needed now to safeguard jobs. Housing associations and councils should be invited to bid for a share of the money now to drive forward their affordable homes programmes. Councils in such areas have well-developed plans for affordable housing that could be implemented quickly. Why are they being cut out? Will the minister give an explanation in his summing up?

As Nicol Stephen outlined, the current distribution formula contains too many anomalies that hurt north-east councils. As has been pointed out, Aberdeen City Council receives 80 per cent of the Scottish average per head of population. For me, that variance is far too great. Aberdeen City Council and Aberdeenshire Council do not seek to do better than other areas—some of which, admittedly, have many more problems of deprivation and need—but simply aim to receive a fairer share of the public funds that are available nationally.

Simply asserting that the Government has provided a good settlement is not sufficient. Many speakers this afternoon—including Jackie Baillie, Nicol Stephen and Hugh Henry—and the evidence contradict that assertion. Councils are struggling to meet the needs of their communities. I hope that, when they reflect on the points that have been made in this afternoon's debate as they finalise the budget, ministers will respond in a way that ensures that all our councils are equipped to deal with the very real pressures that they face.

Photo of Derek Brownlee Derek Brownlee Conservative 4:31 pm, 11th December 2008

If yesterday's debate was a canter around Scotland's roads, today's debate seems to have been an eagle's eye view of the records of various Scottish councils. I am not sure how much further forward we are after this afternoon's debate, but some important issues have been touched upon.

Some members mentioned cuts that have been implemented by councils. It is right to make the distinction between changes that are unmistakably cuts in services and changes that are efficiency savings. Reductions in staff numbers that have a direct impact on service provision cannot be described as anything other than cuts, but it is for local authorities to justify the decisions they make in local circumstances. It struck me that, given some of their speeches today, many members might be rather more comfortable if they went back to council chambers, where they might be able to influence some of those decisions rather more directly and speedily.

We have heard a great number of complaints. Sarah Boyack highlighted the situation of Edinburgh's schools, although that is not a subject to which the Labour Party has come recently. She seemed rather confused about whether to blame the Lib Dem-SNP council. At one point, she seemed to blame the previous Conservative Government—perhaps that is a case of the old ones being the best—but the previous Conservative Government, according to Brian Adam, did a better job for Aberdeen than the previous Labour-Lib Dem coalition. We can perhaps take it that, in the north-east at least, in retrospect, the previous Conservative Government is viewed in a much brighter light than Sarah Boyack suggested.

We heard a lot of discussion about the north-east, but I noticed that no SNP or Liberal Democrat member from the north-east mentioned the impact that a local income tax would have on the resources that are available to councils there. We heard plenty of demands for additional funding now, but not a peep about the significant cuts in local government funding that would result from the introduction of local income tax.

Photo of Keith Brown Keith Brown Scottish National Party

I thank Derek Brownlee for taking the intervention that David McLetchie refused to take. David McLetchie said that the council tax is not susceptible to changes in the economic environment. One way to make that happen would be through a revaluation. When would Derek Brownlee have a council tax revaluation?

Photo of Derek Brownlee Derek Brownlee Conservative

If Mr Brown had been paying attention last week, he would have heard me explain then that a revaluation can be conducted on a revenue-neutral basis. A revaluation does not need to lead to increases in bills. If SNP members can think of revaluations only as leading to increases in bills, perhaps they are a dangerous group to be in charge of the council tax or any other form of local taxation.

Some other interesting remarks have been made. Jackie Baillie made some uncharacteristically uncharitable remarks about me. I was heartened to hear that she reads the Daily Mail—which I presume is a recent development. I can only assume that her contributions will improve in direct proportion to the frequency with which she reads that newspaper. It can only improve some of the contributions that we have heard from her recently.

Jackie Baillie raised an interesting issue about West Dunbartonshire. Effectively, she said that West Dunbartonshire Council has insufficient funds to provide education. I will not argue whether that is right or wrong—that is for those who are closer to West Dunbartonshire Council than I am—but it takes us back to an interesting area in which West Dunbartonshire has had a direct impact in education in recent years; its literacy programme has demonstrated that educational attainment is not directly linked to funding, and that significant improvements in literacy can be delivered without significant funding increases. I see that Ms Baillie wishes to intervene.

Photo of Jackie Baillie Jackie Baillie Labour

She does indeed.

One of the cuts that West Dunbartonshire Council considered last time round—and I understand that it might well consider it again this time round—was to the early intervention programme. It does cost money to resource; that was the problem for the council.

Photo of Derek Brownlee Derek Brownlee Conservative

Yes it does cost money, but in terms of its cost-effectiveness it is a very cheap programme. Perhaps we will read about it in tomorrow's Daily Mail ; I will look at it with some interest.

We moved from the north-east to Renfrewshire with Hugh Henry, who painted a bleak picture of the situation there. Again I make no comment about whether that picture was accurate. Not many members have talked about their local council's record. Perhaps that is not surprising. It was terrifying to hear Mary Mulligan say that she is more cynical than David McLetchie—a fact with which I was not familiar—but it was even more terrifying to hear her quote a Liberal Democrat councillor in Edinburgh saying,

"We know what to do".

I gently suggest that that is rather unlikely, given the Liberal Democrats' recent record on the City of Edinburgh Council.

Photo of Derek Brownlee Derek Brownlee Conservative

Yes. I am coming to Mr Purvis. He complained about the Government buying land and about the existing housing stock, saying that that would not boost the number of construction jobs. I wonder whether it is possible to build affordable housing on land that we do not own, and whether a company that has unsold stock will be able to retain jobs if it is not able to sell it.

Photo of Jeremy Purvis Jeremy Purvis Liberal Democrat

If Mr Brownlee heard me correctly, I was talking about buying land when there are no immediate plans to build on it. That is land-banking for the future. Buying already constructed stock does not generate new employment or sustain local economic generation.

Photo of Derek Brownlee Derek Brownlee Conservative

It certainly does sustain local employment—by giving the companies a cash flow, which is critical at this time.

Photo of Derek Brownlee Derek Brownlee Conservative

Precisely. If the stock is unsold, the funds have not gone into the company, so giving companies cash that they would not otherwise have is bound to help. The suggestion that buying already constructed stock would have no impact is nonsensical. Mr Purvis also mentioned equity. After his intervention, I can only assume that the card is in the post.

In relation to the overall settlement, we have heard a lot of complaints about cuts and inadequate funding, but we have not heard by how much funding should be increased to sort out the problems. I think it was Sarah Boyack who mentioned that the SNP had costed all the concordat pledges at £500 million, but I remember Labour members telling us that the SNP is unable to add up, so I assume that that figure is also nonsense.

Photo of David Whitton David Whitton Labour 4:38 pm, 11th December 2008

Last night, I attended a Christmas show by the pupils of Oxgang primary school in Kirkintilloch. It was an excellent production, but as I watched I could not help thinking of Mr Swinney, the Cabinet Secretary for Finance and Sustainable Growth.

Photo of John Swinney John Swinney Scottish National Party

This had better be carefully worded.

Photo of David Whitton David Whitton Labour

The reason? Wait for it. The title of the show was "Ebenezer Scrooge", the story of a man with lots of money who refuses to share it with the poor and needy.

As Mr Swinney knows, Oxgang school is in the East Dunbartonshire Council area—a part of the world that he knows well. Indeed, he attended a fundraising dinner in the area not that long ago. Also attending that dinner were the SNP members of the council. I hope that they took the opportunity to point out to the cabinet secretary the severe financial problems that East Dunbartonshire is facing as it tries to produce its budget for next year. They should know, because they are part of the all-party budget team.

East Dunbartonshire Council, like all other councils in Scotland, is facing up to having to make real cuts to services. At present, it is wrestling with how to save approximately £8 million, which will not be easy. I am sure that the cabinet secretary's SNP colleagues will have told him that the plan for reducing class sizes in primary 1 to primary 3 in my constituency will cost approximately £4 million.

I do not have a figure for the free school meals pledge, but I can tell Mr Swinney that none of the head teachers I have spoken to think that it will be a good use of scarce resources. Mr McLetchie made the same point. They tell me that the children who need free school meals already get them and that they would rather see the money spent on maintaining breakfast clubs, so that children can have a good start to the day rather than turn up to start their lessons hungry, but breakfast clubs may have to go—that is one of the choices that are being wrestled with at the moment.

As we heard from Andy Kerr and others, as a result of Mr Swinney's decisions last year, some councils cut funding for clothing grants for low-income families, the budget for education maintenance allowance, help for pupils with additional support needs and in-home care for children with disabilities. In effect, decisions that were made by John Swinney and his Cabinet colleagues have taken the clothes from the backs of poor Scottish children and money from their pockets. No doubt the SNP will accuse me of being negative, but to quote one of the First Minister's favourite phrases, facts are chiels that winna ding.

So, it is no wonder that Mr Swinney came to mind as I watched "Ebenezer Scrooge" last night. As he knows the effects that his cuts to local government have had, one might have thought that he would reconsider his council tax freeze policy. That would be in order. But not a bit of it. When I asked Mr Swinney, during the Finance Committee's meeting in Ayr, whether he intended to continue with his zero council tax increase, he replied that that was the intention. He has kept to his word with his statement today. It is clear that he does not listen when he attends those regular cosy meetings that he and his colleagues have with COSLA. As I understand it, they have been telling him for some time about the funding pressures that they face. So much for the respect that Brian Adam talked about.

Photo of David Whitton David Whitton Labour

No, I will not.

In evidence to the Local Government and Communities Committee on 29 October, COSLA representatives highlighted the difficulties that they face. They described them as the "exceptional pressures" that exist over and above the settlement that they reached with Mr Swinney. Included in those "exceptional pressures" are a rate of inflation that is much higher than expected and rising energy costs. To those we could add others from anecdotal evidence gathered from council colleagues around the country. They would include increased pension costs due to a fall in investment income, demands for higher pay due to current economic conditions and a reduction in business rates due to companies asking for rates holidays or firms going out of business.

One major firm that is involved in waste disposal has told me that much of the recycled materials that it currently collects from councils has little, if any, value and that, instead of generating income, waste collection is starting to cost money, which could lead to councils deciding not to recycle until prices go back up.

Mr Swinney is aware of the problems that our councils face. COSLA representatives told the Local Government and Communities Committee:

"We have trailed the funding pressures over a number of meetings ... everyone has experienced difficulties in the current financial year, and ... they will do so over the next couple of financial years ... we will need to sit down and discuss whether the money that is specifically earmarked to assist freezing the council tax will be enough."—[Official Report, Local Government and Communities Committee, 29 October 2008; c 1280-81.]

They were also asked about the impact of the need to achieve efficiency savings—for the three-year period from this year to 2011, councils are required to find efficiency savings totalling £524 million. They stated that there is a general view that those savings will be much more difficult to achieve as time goes on. However, that view is not shared by everyone, as we have heard.

In the Daily Mail—much quoted by Jackie Baillie—of 17 November, the Scottish Tory finance spokesman, Derek Brownlee, is quoted as saying:

"The councils enjoyed the benefit of a good economy for a long time so they cannot simply come running to the Executive looking for extra money when times are not so good. I don't think there is a single council that could honestly say that it could not get rid of waste and inefficiency."

I suggest that Mr Brownlee—who is shaking his head—clearly did not listen to what my colleagues said earlier. He should pick up the phone to Conservative Councillor Billy Hendry, the deputy leader of East Dunbartonshire Council, to see whether he agrees with that view.

In the same article, Professor Irvine Lapsley, director of the Institute of Public Sector Accounting Research at the University of Edinburgh, said that councils are struggling because the cash that was given to them by the Government was agreed before the rate of inflation spiralled, and observed:

"It is going to be an interesting fiscal and political challenge for the executive as to whether they now give the councils extra funding and break the terms of their own agreement."

We now know that Mr Swinney has said "Bah, humbug!" to that idea. Not only that; he is still intent on trying to impose further burdens on local government through the introduction of a local income tax. If Mr Swinney gets his way—after last week's vote, that is not guaranteed—at a time when they must find further efficiency savings, councils will face the cost of the introduction of a new tax regime and, as we know, a local tax rate of 3p will not collect the same amount as the current council tax and a further black hole in local government finances will appear.

Photo of Keith Brown Keith Brown Scottish National Party

Earlier, Mr Whitton took Brian Adam to task for not respecting COSLA's decisions. Does Mr Whitton respect its decision to vote for a local income tax?

Photo of David Whitton David Whitton Labour

That was a good diversionary tactic, but it will not work.

Photo of David Whitton David Whitton Labour

The answer is very simple: as I understand it, half of the COSLA members were not present. If they had been, the vote would have gone the other way.

What of Mr Swinney's other big idea—helping local government pay for infrastructure through the Scottish Futures Trust? It has even been derided by a member of the First Minister's council of economic advisers, Professor John Kay. When he came up with the plan, Mr Swinney said that the Scottish Futures Trust would be so attractive that no one would want to use any other option, but yesterday, when the SNP made its biggest announcement—on the new Forth crossing—this attractive funding option was nowhere to be seen.

When COSLA was asked about SFT, its representatives replied:

"We are not 100 per cent clear about the ultimate direction that the SFT will take and the real-terms effect on additional capital expenditure to enable local authorities and other public sector agencies to deliver projects ... something needs to happen soon. A number of councils are holding back capital investment. ... Many local authorities ... want to know the detail as quickly as possible and what it will mean to them in real money."—[Official Report, Local Government and Communities Committee, 29 October 2008; c 1304.]

Exactly. If the SNP cannot get the details right for the new Forth bridge—the Administration's flagship project—surely it is time for it to do the right thing for a change and dump the idea. Cutting out the SFT quango would save about £70 million on its own.

I am sorry that more SNP members have not been in the chamber for this debate. They are clearly shamefaced about what is happening in local government in Scotland and do not want to hear the truth. To enlighten Keith Brown, who claimed that councils were squeezed under Labour, I point out that local government finance rose by an average of 3.5 per cent in real terms between 1999 and 2007, the longest sustained period of growth since the war. Growth under the SNP has been 1 per cent. I suggest that Mr Brown does the maths.

As for the cabinet secretary accusing Jackie Baillie of double standards, he should look in the mirror. He complains about Scotland taking a share of national funding cuts to deal with a global financial crisis but, like Nero fiddling while Rome burns, ignores what is happening as a result of his own actions. My colleagues' telling contributions to the debate have detailed the real effects of this concordat.

The story of "Ebenezer Scrooge" had a happy ending: he realised the error of his ways and started to share his wealth with the poor and needy. There is still time for Mr Swinney to see the light, but I somehow doubt that he will do the right thing.

Photo of John Swinney John Swinney Scottish National Party 4:47 pm, 11th December 2008

I hope that, after that dismal contribution to the debate, Mr Whitton watches some cheery television programmes over the Christmas holidays.

I will respond to some of the points that have been raised. Mr Purvis asked why the floor tables have not been published. As he knows, the floor for the local government settlement was set as part of the three-year settlement at 3.4 per cent last year and at 3 per cent this year. The information will be contained in the circular to local government.

Mr Purvis also asked about the difference in the capital figures for last year and this year. I covered the issue at some length in my opening speech but, in the interests of clarity, I repeat that the reason why the indicative capital allocation levels last year and this year are different—

Photo of John Swinney John Swinney Scottish National Party

Yes, they are. I am quite happy to confirm that.

There are three reasons for that. First, there has been a change to the local government capital expenditure to make funding for affordable housing available. Local authorities will be fully compensated for that in 2010-11, so the change is only in this financial year. Secondly, following discussions with local authorities, we have agreed to provide £20 million of revenue rather than £20 million of capital to support existing school investment programmes; I would have thought that Parliament would welcome that move. Finally, we have agreed to transfer £6.9 million from police budgets to the Scottish Police Services Authority to cover areas that are funded through the authority and not through the police grant.

I point out to Mr Purvis, who is muttering on the front bench, that the police grant remains ring fenced, of course. That is the local authorities' preference, because ring fencing it makes sense.

Mr Brownlee said that he was wary of the guidance that I propose to issue on local authority funds, about which there is uncertainty because of the difficulties experienced by the Icelandic banks. The guidance is to ensure that the affected local authorities do not have to provide in full for the possible loss of that money during this financial year. That will avoid any financial strains on services or the council tax. I would have thought that such an approach would be welcomed in the chamber, because local authorities have, I understand, welcomed it in their discussions with my officials.

Jackie Baillie raised the issue of financial support for free personal care and services for older and vulnerable people. It was difficult to identify the most churlish point in her speech, but what she said about that was at the high end of the churlish. She was a member of a Government that introduced free personal care for the elderly but did not properly fund it. The SNP Administration has put more money into free personal care to meet individuals' needs.

Photo of Jackie Baillie Jackie Baillie Labour

Free personal care was not only fully funded—additional money was made available for it. Argyll and Bute Council is denying services to an 83-year-old woman and a 90-year-old lady who have dementia and live alone; an 89-year-old woman; an 80-year-old woman; a 93-year gentlemen—

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

I think that we get the picture, Ms Baillie.

Photo of Jackie Baillie Jackie Baillie Labour

Those people are not getting services from Argyll and Bute Council as a result of budget cuts. What does the cabinet secretary have to say to that council?

Photo of John Swinney John Swinney Scottish National Party

They will have a better chance once the £40 million that I have allocated goes into the budgets of local authorities throughout Scotland. That is what a Labour Administration failed to deliver when it was in office.

While listening to Nicol Stephen's speech, I found it hard to think that he had at any time in the past decade been anywhere near Government office. As my colleague Brian Adam pointed out, during Nicol Stephen's period in office, no attempt was made to tackle Aberdeen City Council's financial situation or the supposed disparities in the funding formulas. No attempt was made to take into account the factors that Nicol Stephen described today. I have given a commitment to review local government distribution formulas to tackle issues that he is concerned about.

Mr Stephen said that the Government was not engaged in any way in supporting Aberdeen City Council through the difficult decisions that it must make on its financial performance. I remind him gently that Aberdeen City Council is not wrestling with a problem that has suddenly emerged in this financial year as a result of the financial settlement that I put in place. It is wrestling with living beyond its means year on year and not properly supporting and planning its public expenditure. I remind Nicol Stephen who ran that council for the majority of those years.

Photo of Margo MacDonald Margo MacDonald Independent

I gently remind the minister that, similarly, the City of Edinburgh Council's problems have not been accumulated only over the past couple of years. Perhaps they are down to underfunding in previous years. I am grateful that he has concluded an agreement with that council, but given the additional pressures that have existed since the onset of the current economic crisis, will he give an assurance that he will be flexible with it when it explains that it cannot build the houses that are urgently needed?

Photo of John Swinney John Swinney Scottish National Party

As I said in my statement, and as Margo MacDonald knows, I will conclude my discussions with the City of Edinburgh Council on the capital city supplement, which is an outstanding issue from last year's budget process, and reach conclusions before the local government finance order is brought before Parliament. I have studied the council's submission and am acutely aware of the additional burdens that the capital city carries. Obviously, that will influence my decision.

Aberdeen City Council is receiving, in this settlement, a 5.84 per cent increase in its budget, with the Scottish average being 5.05 per cent. I would have thought that even the Liberal Democrats would welcome that on a day such as this.

Photo of Nicol Stephen Nicol Stephen Liberal Democrat

Does the cabinet secretary accept that problems on this scale have never occurred until now? As this happened on his watch, does he accept that he could take action—just as he is taking action to support increased funding for the City of Edinburgh Council—and that we are now waiting to see whether he guarantees that the review of local government funding will provide Aberdeen with additional resources? Until today, no such guarantee has been given, and the situation is urgent.

Photo of John Swinney John Swinney Scottish National Party

I will make two points. First, the Government has initiated a review of local government finance to address those questions. That was our promise and it is what we are delivering, as it was not delivered by the previous Administration. Secondly, if Nicol Stephen were in contact in any way with the local authority in the city that he represents, he would know that the Government is engaged in discussion with Aberdeen City Council about finding ways of supporting the council as it wrestles with some difficult decisions, including those around the capitalisation of certain commitments. I would have thought that he would welcome that contribution from the Government.

At the heart of the Labour Party's criticism of the Government's budget today has been the idea, as advanced by Mr Kerr, that the Government has somehow not delivered to local authorities the scale of resources that should have been delivered. Hugh Henry, Jackie Baillie, Mary Mulligan and Sarah Boyack all criticised the Government in that respect. However, I can say to them that, since this Government came to power, the share of the Scottish block of expenditure that goes to local authorities has increased, and that, under the previous Administration, it was going down.

Photo of Andy Kerr Andy Kerr Labour

The member fails to recognise that the average share under the previous Administration was 35.5 per cent and that the average share under this Administration is 2 per cent less than that.

Photo of John Swinney John Swinney Scottish National Party

That brings me to my second point—I love the way that Mr Kerr walks into the trap every time.

Under Mr Kerr's period in office as a minister, the Scottish Government's budget increased by 10.9 per cent, 8.4 per cent, 8.5 per cent, 8.9 per cent and 5.8 per cent. No wonder more resources were available to be distributed. When this Government came to office, the increases in our budget were not 10.9 per cent, but 4.7 per cent and 4.6 per cent.

Photo of John Swinney John Swinney Scottish National Party

Mr Kerr is waving around bits of paper and saying, "It's the share." Let us talk about the share. When Mr Kerr left office, the share of the Scottish budget that went to local authorities was 33.3 per cent, and that figure has increased under this SNP Administration.

We have heard lots of whingeing from the Labour benches about budget cuts here, there and everywhere, but not a whimper about what will happen when Alistair Darling takes £500 million out of the budget. Today, we heard contributions from a bunch of people demonstrating the highest possible level of double standards and hypocrisy.

Now that the Labour Party has suddenly worked itself up into a fit of worrying about public expenditure, perhaps it will join me in making the most vigorous possible representations to the United Kingdom Government that we should not be seeing budget cuts of £500 million over two years.

Photo of Andy Kerr Andy Kerr Labour

It is to pay for saving the banks.

Photo of John Swinney John Swinney Scottish National Party

Mr Kerr mutters that the money was spent to save the banks. I thought that it was all to save the world.

This Government will put forward, in constructive dialogue with our local authorities, a local government finance settlement that meets the needs of the people of Scotland. We cannot invent money in a fixed financial settlement. The Labour Party has argued in the past two weeks for more money in health and more money in local government, but it has not advanced an alternative budget proposition to the Finance Committee. Once again, it has failed the test of opposition.