Local Government Finance

Speech by Alison McInnes delivered to Scottish Parliament on Thu 11th Dec 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.