Local Government Finance

Speech by Alison McInnes delivered to The Scottish Parliament on Thu 7th Feb 2008

Councils and their communities and partners are always anxious at this time of year as they await the outcome of funding decisions that will directly affect the provision of much-valued local services. That is not a sensible way of going about things. Local councils ought to be able to determine what they need to maintain and develop local services. That is why Liberal Democrats support the replacement of the discredited council tax with a system of fair local income tax.

At first glance, this year's local government settlement might seem to be an improvement, because it provides for the much-heralded council tax freeze-but at what cost? It will be cold comfort six or nine months down the line, when councils will be struggling to cope with the demands that are made of them. Councils will be pulled in two opposing directions. On one hand, they will have to make adequate provision for demand-led local services, such as home care and special educational needs; on the other, they will have to deliver SNP election pledges that we know were uncosted and unrealistic.

Accepting funding for a council tax freeze this year will make councils ever more dependent on central Government largesse in following years, because they will have raised an even smaller percentage of their total budget directly from their electorate. Any council tax freeze must be fully funded from central Government, and it must not impact on the other budgets for local government services this year or in future years.

The funding package that is on offer is conditional on local authorities' agreement to all elements of the concordat. If they do not agree to everything, they will receive a reduced block grant. Is that new respect for local government?

The budget is opaque, because many budget headings have been rolled up. Perhaps that has been done to hide the fact that there is not enough money to deliver all the things that citizens expect from local government.

I am not a great fan of ring fencing, but the unseemly haste to do away with it, the lack of real dialogue with local authorities and their partners-especially those in the third sector-and the fact that local outcome agreements have not yet been negotiated are causes for concern. More than 40 specific grants have disappeared. The removal of ring fencing might make council budgeting more flexible, but by its nature it will put at risk successful initiatives. Many local community groups have expressed concern to me that budget cuts are looming. We might not find out for some time, but we know that when they happen this Government will refuse to admit the part that it has played.

I have two specific concerns. First, the settlement has no provision for revenue support or level playing field support to continue the school building programme. What a let down that is for the young people, parents and teachers in my home town of Ellon, which, incidentally, is in Mr Salmond's constituency. Plans for a new academy have been knocked back.

Councils cannot possibly be expected to take the strain alone when it comes to investing in capital expenditure for schools: they must have support from the Scottish Government. The Scottish National Party must accept that its futures trust model is impractical and possibly illegal, and will almost certainly never take off. The previous Administration got on and built new schools. Unfortunately, confusion and delay are the hallmarks of the Government's approach. What provision is there for new schools in the budget? None whatsoever.

Secondly, the hand dealt to regional transport partnerships is particularly poor. The decision to end direct capital funding to RTPs is deeply regrettable. It will, without a doubt, prejudice their ability to deliver quickly and effectively on already agreed objectives.

At a recent Transport, Infrastructure and Climate Change Committee meeting, the cabinet secretary said: "The strongest and clearest lesson that I have learned about any major transport or other infrastructure project in the brief time that I have been in government is that governance arrangements have to be crystal clear before a project gets under way. If a project gets under way with any uncertainty as to its direction or where the responsibility or power lies, it will be a difficult project."-[Official Report, Transport, Infrastructure and Climate Change Committee, 15 January 2008; c 361.]

That makes his decision on regional transport capital grants all the more contrary.

I could not speak in a debate on local government finance without referring to Aberdeen City Council and Aberdeenshire Council's fair share campaign. Those councils have historically had a poor share of the overall budget. The previous Administration had started, albeit slowly, to turn that around, and the councils were edging towards receiving a fairer share of the Scottish budget. This year, that has been reversed and Aberdeen and Aberdeenshire have received the worst settlement that they have ever had: respectively 85 per cent and 88 per cent of the Scottish average. That is grossly unfair. I ask Mr Swinney to explain how that has come about and to examine the distribution elements within GAE to bring about a fairer settlement.