Local Government Finance

Speech by Alison McInnes delivered to Chamber, Scottish Parliament on Wed 10th Feb 2010

Councils deliver valued services to our communities, week in and week out. However, as we have heard during the debate, all councils face significant pressures this year and next. The total allocation declines in real terms for 11 local authorities this year. We have heard about cuts to valued services and a significant reduction in workforces. Of course, the loss of a great deal of experience and knowledge goes with that.

The recession has meant a reduction of income for councils and added pressure on social services. Additional unplanned expenditure in dealing with the exceptional winter weather and its aftermath has compounded the difficulties that councils face this year. The £5 million that Mr Swinney announced this afternoon is welcome, but I would be interested to know whether it will be distributed in proportion to the road mileage that each council is responsible for.

This time last year, the cabinet secretary assured me that he would initiate a review of the distribution methodology. I had high hopes that we would see a fairer and more transparent settlement this year. Sadly, that is not so, and I am utterly disappointed that the cabinet secretary did not grasp the opportunity to secure a modernised and transparent grant allocation process; instead, he has allowed the status quo to prevail. The fact that we have always done something in a particular way is not a sufficient reason to keep doing it, particularly if it is patently unfair.

Several councils felt let down by the cabinet secretary's refusal to modernise an outdated allocation system. I have long argued-and will continue to argue-that the indicators that are used to calculate council funding are no longer fit for purpose and must be reviewed. New criteria should target the main areas of spending needs in councils and use indicators that are intuitively, as well as statistically and logically, valid. For example, they could take into account population, deprivation, the number of people over 85, the number of school pupils, sparsity and road length. I welcome Malcolm Chisholm's conversion to the cause.

As we know, Mr Swinney chose to accept without question COSLA's view that everything is hunky-dory, then he rubbed salt into the wound by refusing to recalculate the distribution of previously ring-fenced funding. It is absurd to agree on the one hand that the preferred option for distributing any new funding should be the agreed distribution formula, while saying on the other hand that the preferred system should not be used in the future to allocate previously ring-fenced moneys more fairly.

What is to be done, therefore, to help councils such as Aberdeen City Council, which face the kind of problems that Nicol Stephen outlined? The gap between the best-funded council and the poorest-funded one is far too great, given that they all have statutory services to deliver. Setting aside the special case of island councils, the range goes from 123 per cent down to 84 per cent. Does the cabinet secretary agree with his colleague Brian Adam that such a difference between the lowest and highest rate support grants for mainland authorities is distinctly anomalous? I think that that is putting it very politely.

I support Nicol Stephen's calls for a safety net for the poorest-funded councils. The Government must introduce a funding floor below which no council should fall-for example, a funding level of 90 per cent of the Scottish average per head of population. There used to be only a couple of councils in that category, but Aberdeen City, Aberdeenshire, East Dunbartonshire, East Lothian, the City of Edinburgh and Perth and Kinross councils all now receive less than 90 per cent of the Scottish average. I urge the Government to look at the matter again.

Across Scotland, the council tax freeze seriously hinders the financial autonomy of local authorities. It deprives them of almost all discretion to raise local revenue for services in their area. Equally, decision making is constrained by pressures to deliver uncosted and unrealistic SNP manifesto commitments. That is not valuing but devaluing local government. Mr Swinney said that local government works in partnership with his Government; I wonder whether instead it works under pressure from his Government.

I will not block the order today as councils need certainty of funding, but I am deeply disappointed.