 Good morning, and welcome to the 16th meeting of the Local Governmentdestinnen and Communities Committee. Can you remind everyone present to turn off mobile phones and does meeting papers provide in digital format tablets may be used by members during the meeting? We've got apologies this morning for getting my symptoms unfortunately cannot be with us today and, as we move to the agenda item 1, which is a decision on taking business in private, the committee has invited Rheed to take agenda item 4, consideration Mae anty~~~ MAC, yn unig, gan bob nhw i g ôl aroghysur am gweithio iechydig gweith thngompwn emf Poeth gweithio iechydig gyda nhw ar gyfer gyntaf. Ond mae gennym eu gwbl o ffordd iawn dr correlatedau. Mae gen pronounr cubeau a gaciad erw거든요d teimload. Mae cwyntrest i comprendre iddo eich ffordd iawn ganogaeth cael eu gwbl o ffordd iawn. for local government and housing, focusing primarily on the housing and communities aspect of the budget. I welcome Kevin Stewart, minister for local government and housing, and I welcome Caroline Dicks, head of affordable housing, Angus McLeod, head of home energy efficiency programmes for Scotland units, Barry Stalker, spending review team leader, Scottish Government. Good morning everyone, thank you for coming along this morning. That's appreciated and I can invite the minister to make a brief opening statement. Thank you convener. The setting of the draft Scottish budget is taking place against the backdrop of tough public expenditure conditions driven by Westminster. Asterity is a choice, not a necessity in my opinion. Despite this, we have managed to secure further significant investment for housing, including for our ambitious affordable housing supply and energy efficiency programmes. Our draft budget for 2017-18 shows our commitment to delivering on these with an increase to the housing supply budget of 3 per cent and to fuel poverty and energy efficiency of 10.5 per cent. I'd like to take each of these in turn starting with how we are increasing the capital spending on housing supply. The budget document notes that the total spend on more homes will be £603.615 million, which together with the housing programmes for TMDF, which covers Glasgow and Edinburgh, which sit in the local government budget line, means that the total investment will be provisionally £699.704 million. 99 per cent of the more homes level 4, in fact £375 million of it, continues to be capital funding to be directly invested in the affordable housing supply programme chiefly for new social housing. This is a £10 million increase on the equivalent figure for 2016-17 and will enable councils and housing associations to maintain the momentum needed to increase the pace of delivery, which is what stakeholders have asked us to do. This is the most powerful way to invest in housing supply for a fairer Scotland. Turning now to improving energy efficiency, we remain committed to our ambition of eradicating fuel poverty. Latest statistics indicate that around 748,000 households were in fuel poverty in 2015. That is almost 100,000 fewer households compared to the previous year. While that is obviously very welcome news, we know that there is much more work to be done. Around half of the reduction can be attributed to the lower price of domestic fuels during that time. I am sure that we all recognise that prices fluctuate. That is why our key focus is to reduce overall energy costs for Scottish consumers by improving energy efficiency in homes where we can. Next year, we will allocate £114 million to tackle that and improve the energy efficiency of our homes, a 10.5 per cent increase on the 2016-17 baseline budget of £103 million. That investment demonstrates our long-term commitment to address the challenges of climate change and also the inequality of fuel poverty in our society. We will deliver on that through our existing and developing fuel poverty programmes, which offer a package of support to help those who are struggling to pay their energy bills and to keep themselves warm. Overall, despite the tough public expenditure conditions, we will still provide significant investment. In the circumstances, that represents a good budget outcome, meeting our commitments to building more affordable homes, improving energy efficiency and tackling fuel poverty. Thank you very much for your opening statement, minister. I will move to questions. I would like to probe a little bit more the housing supply and infrastructure in level 4, which is increasing by 2.7 per cent, which, as you indicated in your opening statement, is chiefly geared towards building more social housing. Can you say something about what is behind those figures? What considerations were arrived at in terms of the increase? To what extent does the budget contribute towards your £50,000 target? That is key to delivering the Government's target of 50,000 affordable homes, 35,000 of them for social rent. Obviously, convener, in order for us to do that, we have to rely on our partners and local authorities and housing associations to collaborate with us in terms of that delivery. I am pleased that we have managed to raise that budget this year. That is on top of the rise that there was in the previous financial year. I suppose that what I am after is what is behind the £379 million. How many homes is that designed to build at what individual cost and what assumptions are behind those figures? Obviously, in terms of the subsidy that we give to local authorities and councils, which was agreed on January last year, we have a certainty of how much is likely to be delivered when we take that into account, along with the investments that they make themselves. All of that will come out during the course of the strategic housing investment plans, which are coming in at this moment in time. Obviously, the subsidy levels after the agreement are a benchmark figure. I have said, convener, that if authorities, housing associations and councils come forward, showing that there is a need, for example, for larger homes, four and five bedrooms or homes for disabled people, we will allow them to negotiate with officials to make sure that that need is met and to increase that subsidy a wee bit to help in that regard. So, just finally, convener, do you see when the strategic housing investment plans come in that you will produce some kind of reconciliation between what they are intending to deliver, the budgeted cost and what you have allocated in the next financial year? Obviously, convener, as the strategic housing investment plans come in, I will be keeping a close eye on them. I have to admit to the committee that, during the course of the Christmas holidays, I will be my usual anorakish self, because I intend to go through all of the plans that have come in myself to make sure that they are robust and that they will help us to deliver on our targets. So, the committee can be assured that I will be scrutinising those, and I am sure that the committee in the future will be wanting a closer look at those plans themselves. I will ask for a little bit of clarity, minister, about those plans that come in from the local authorities. In the case of Glasgow, my own local authority, it has ministered the housing association grant on behalf of the Government. When those plans come in, do they come with a costing, or do they have indicative figures already of how much money they have got to play within the system? Does that sit with them for the next financial year, or would they get that at the start of next year along with the finalised revenue support grant? Convener, you are right to point out that Glasgow and Edinburgh are somewhat different in terms of the way that they are funded. TMDF, as I mentioned in my opening statement, which is the transfer of management of development funding, is the way that they are allocated the money that they need. The plans themselves are a costed convener, and again that is something that I will look at over the course of the Christmas holidays. I think that we now have the majority of the ships in. One or two authorities are still waiting on them to give us the indication of what they are going to do. Obviously, convener, the normal course of circumstances would be for local authorities to take those documents to either council or a committee of the council to agree them before they come to us. I recognise that, in some cases, that has maybe slipped a little bit, but you can be assured that I will be looking at the costings and everything else associated with the strategic housing investment plans over the course of the holidays. That is really helpful. It is always dangerous to ask a question when you do not know the answer yourself, minister, but I would ask it anyway in terms of those plans. What we are trying to get behind is that the monies that each local authority will receive—Glasgow is very different from the rest of the country, but housing associations make bids for grant subsidy. Will the monies given in each local authority area depend on the quality of those strategic housing plans in the strong case that they make, or will there be indicative figures that already exist for spending local authority areas? That is what I am trying to establish. Well, they will get indicative figures from us of what their spend is likely to be. I have not seen in depth any of the ship yet, but what I would also expect from a number of local authorities, and it was certainly the case when I was in a local authority, as well as trying to ensure that you use your allocation. You should also, in my opinion, build in a certain amount of slippage into your planning, because we know that with the best will in the world, sometimes things do not go to plan, so you have got the ability to shift on to something else if you possibly can. Beyond that, convener—this is one of the main reasons why I am going to take the overview and have a look at them all—is that I have been quite clear as I have been talking to housing conveners and others across the country. If there is an area that is unable to spend their allocations during the course of the peace, I will shift that resource to areas that can deliver. Obviously, convener, my ambition and the Government's ambition is to make sure that every single part of Scotland benefits from this very ambitious housing programme, but if that stalls in certain places, we will look to shifting resource. That is helpful. I know that Elaine Smith wants to follow up on some of that. Thanks, convener. Good morning, minister. Thanks for joining us. It is a very brief clarification at this stage that I wanted. My colleague Andy Wightman mentioned the sum of £379 million capital, and that is what we had in the spice briefing. I had thought in your opening statement, minister, that you mentioned £375 million. Could I just clarify that? Are those two different figures, or is it £379 million? It is £379.115 million for housing supply and infrastructure and £375 million for the core capital programme to deliver the £50,000 affordable houses. Okay, thanks. I think that we just needed to have that clarified. Okay, Ruth Maguire. Thanks, convener. Good morning, minister. I would like to ask about the provision of housing for disabled people and for folk with particular needs and aids and adaptations, etc. Within the £50,000 affordable homes target, have you considered whether there needs to be specific targets for the delivery of wheelchair accessible houses? Convener, I thank Mr Maguire for that question. The funding decisions around those things are based on the priorities of local authorities as outlined in their housing needs and demand assessments, their local housing strategies and also the strategic housing investment plans. Another reason why I am going to look very carefully at strategic housing investment plans housing for social rent already has to meet our accessibility standards, but funding, as I said, is also available for specialist housing, for example, helping folks with much more complex needs living independent lives in their own homes. I mentioned earlier that the grant subsidy that we provide is benchmarks. They are not flat rates. I would repeat what I said earlier about the flexibility of all of that. I have made it quite clear to local authorities and housing associations if they are going to do something that is above the norm, particularly when it comes to larger houses and housing for disabled folk. We will negotiate subsidy levels around that. I am absolutely determined to make sure that the housing needs of folk in individual areas are met while I scrutinise the strategic housing investment plans as much as I will. Beyond that, I am aware, having been around and about in recent times, that many places are already ensuring that they are bringing disabled groups in to discuss needs. I was questioned in Argyll a few months back about a development there and did some exploration afterwards to see what was happening. I have to say that I was fairly happy at the level of communication that there had been between the developer and disabled groups. Obviously, the Government has recently put forward its disability action plan. Jeane Freeman has been at the forefront of that. There are elements in that plan that emphasise the importance of housing. I want to make sure that the ships take cognisance of what we have committed to in the disability action plan and that we get that right for folks across the country. As a constituency MSP, I am aware of the difficulties that there are in accessing houses, particularly with folks with the most complex needs. We need to get that right for everyone. Thank you, convener, and I welcome that message around the flexibility where local authorities are wanting to do more. Thinking about adaptations is a thing that comes up a lot locally for me. The help to adapt pilot ended in 2016-17. Are there going to be any changes to the budget for adaptations as a result of that pilot? The adaptations budget has provided resource funding to help to register social landlords to provide housing adaptations for older and disabled tenants. Functions and budgets relating to housing adaptations for local authority tenants, owner occupiers and private tenants are part of a range of local authority functions that have been delegated under the public bodies joint working act 2014 to the new health and social care partnership. We recently had the independent adaptations working group report, which recommended that fundamental changes were made to the delivery and funding arrangements for housing adaptations. Their recommendations were piloted before being rolled out nationwide. Five demonstration sites were included. Initially, Aberdeen, Borders, Falkirk, Fife and Lochaber piloted in different approaches to test the viability of the proposals. The work that is known as adapting for change will run until the end of this financial year 2016-17. An evaluation of that adapting for change scheme is being undertaken by Craig Forth. Findings are due from them by the end of February 2017. In line with the 2016-17 investment, we will provide £10 million for registered social landlords to deliver adaptations to help older and disabled folk to live at home independently and safely. I just follow on from that minister. I appreciate that you have talked about discussing different options with different local authorities. On homeless units, for example, I am sure that you agree that it is far from ideal for people to be in homeless units for any length of time, but what I have found is that if there is not suitable adapted wheelchair accommodation, there may not be any other choice. Has any thought been given to specific adaptations in homeless units for councils? That is an answer that I do not have at my fingertips. If Ms Smith wants to give me examples and write to me about examples that she has come across where there have been difficulties, I will certainly look at that. I will also undertake to look at what provisions we have in local authorities to deal with folks who find themselves homeless with disabilities. First of all, I thank you for your comment about local authorities being about sluggish and bringing forward housing developments. The Scottish Government would be looking to step in. I think that that is very important. It is an issue that I would want to discuss with you in a private capacity in the next few weeks. On page 92 of the draft budget, you say that in 2017-18, we will help to tackle infrastructure blockages through a flexible grant and loan funding. I am just wondering what you mean by that and if you can talk us through it. Obviously, we have recently introduced the £50 million infrastructure fund to unlock housing sites across Scotland. In terms of private developers, they can access loan funding to do that. I recently announced the first loan of £7.9 million to support development at Granham in Aberdeen. I hasten to add, convener, that that is not in my constituency. Where 600 homes will be delivered as part of the first phase there with the potential of up to 4,700 homes coming forward there in subsequent phases. The idea of the infrastructure fund was to unlock sites where there were difficulties. The access to that funding, as I said, is loan funding for private developers and grant funding for the public sector developers. What impact do you think that the £50 million will have in terms of being able to lever additional housing? Is there any kind of numbers in mind that you have, both private and public? It is very difficult to judge that at this moment in time, convener, because this is a new fund. It is in its early stages. There have been a number of applications to the fund. There has been some money drawn down. One of the key things that we need to do is to make folk much more aware of the availability of the fund, which is something that we will do. It is something that I will keep an eye on and analyse. It is like everything else that is new. Sometimes it takes a little while to bed in. However, I am hopeful that we will eventually see the fund open up the opportunities to build much more. As I said, the Granum loan will initially bring 600 homes forward with a potential of 4,700. For a loan investment of £7.9 million, that is a fair what it houses. That is very significant. That is why I am interested in it. Can I check, minister, the reading that you have over the holiday period of strategic housing plans coming in, rather than me, but I am delighted that you are doing it? Should the plans also have land that could benefit from the fund that Mr Gibson was talking about, should they identify areas of land where there are barriers that could benefit from that fund, be it private loans or grants to housing associations or whatever? Would that be part of their strategic housing plans? I would expect that to be the case. The ships themselves should be pretty comprehensive. I was just checking with Miss Dicks to make sure that the ones that have come in have some of that in them. I would expect them to be pretty comprehensive in that regard. Can I clarify, as the committee has been streaming online with the BBC at the moment, that people are watching this? There will be some, minister, and you keep saying that ships could perhaps just out give it to them. Strategic housing investment plans, convener. Of course, everyone around us is new, but when you talk about ships, others may not. I keep talking about the ships coming in, and I said it the other day that somebody responded about good ships in the Alialio, which, of course, is not an acronym. Yes, indeed. If I know before we move to Alexander Stewart in a second, Alexander, that's your heads up that we're going to come to you next. Will there be an analysis of all those ships as they come in? Would that be reported on in any way, or would that just be a direct relationship between yourself, minister and local authorities? The committee might be interested to know the dynamics around that as we monitor the 50,000 target going forward. The More Home Scotland team will, of course, be analysing in-depth the strategic housing investment plans and will be having discussions with local authorities and other partners about their strategic housing investment plans and to ensure that they meet their housing need. Obviously, convener, that's a pretty comprehensive piece of work to make sure that we deliver on that target of 50,000 affordable homes over the course of this Parliament. In terms of the strategic housing investment plans themselves, in the main, I would imagine that many of them are already public documents because they will have gone to council committees or to full councils for their approval before they have been sent to my team of officials. Of course, local authority aspirations, understandably, should outstrip the budget available for affordable housing. I actually hope that it does, or else they're not really doing their jobs properly. Will that be pulled together across 32 local authorities so that we would know that, in the next five years, local authorities had all the investment that they wished that would provide not 50,000 units but perhaps 60,000 units or 70,000 units based on those strategic housing investment plans? Is that something that's pulled together at a national level, something that this committee could perhaps take an interest in going forward? I think that, in terms of delivery, first of all, convener, I've already talked about the austere times that we live in and the fact that our budgets have not fared very well from the UK Government in recent times. In order to up-delivery, it would require significant resource, and I cannot see that coming from the UK Government at this moment in time. Beyond that, too, even if there were a money tree that suddenly appeared with a large sum of money able to be plucked from it, there are capacity issues in terms of delivery, which we've also got to take cognisance of in terms of the capacity of the construction industry, for example. We've got a piece of work going on at this moment with partners, which are being led by Jim Maither, the chair of Homes for Scotland, to try and ensure that we have the capacity to deliver in terms of construction, and we have the right skillset there. However, there are also other impediments that may come into play in terms of delivery in that regard, and if you were to add to it, I think that it would be very difficult indeed. If we end up with a hard Brexit, for example, about 10 per cent—which I think is a conservative estimate—of construction workers here in Scotland at this moment in time are from Eastern Europe, we have to look closely at what can be delivered. I thank the minister for that answer. With all the health warnings, including austerity, and there is no money tree, I think that you said, minister, would you look towards, if there is an analysis done of those 32 local plans, maybe sharing some of that with the committee, so that we could decide how our post-budget scrutiny might develop going forward? I think that that is really what the appeal is, is that we can tease out how we monitor the move towards that 50,000 target and the funds available. We are open and transparent, and we can provide you with further information, but I think that folks have to understand that what we have is a £3 billion budget over the course of this Parliament to deliver those 50,000 affordable homes. It is the biggest housing programme that has been in Scotland for decades. It is much higher than the £1.7 billion in the last Parliament, but £3 billion, if you could persuade colleagues south of the border to release much more capital funding, I would make a pitch that maybe some of that should go to housing. However, £3 billion is the envelope that I am working to deliver those 50,000 affordable homes. I think that that in itself will keep me going for the next week, to say the least. However, we will share whatever information that we have with the committee. That is very helpful, and that information would be an analysis. The committee could contact 32 local authorities. We could ask our research team to try to look at 32 strategic housing plans, but what we are asking—all we are trying to persuade just now—is how we can get the most useful information from the Government to allow us to do our job. I am sure that we will reflect some of the significant increases in spending in the affordable housing budget when we come to do our budget considerations, but our responsibility goes beyond budget scrutiny. It goes to monitoring the Scottish Government's aspirations for that 50,000 target. Any analysis that we could give us did not allow us to benchmark and monitor going forward. It would be very helpful. If we could give consideration to some of that data being available, that would be very helpful. We will ensure that the committee gets a summary of the strategic housing investment plans and analysis behind that. That might be a while off, convener, but Ms Dix will be able to do that and provide the committee with that information. That is very helpful. Andy Wightman, do you want to comment on some of that? I just want to move on to the rural. If it is moving on, can we take Alexander 1st to identify who is coming in? With reference to the housing support, I would like to know your views on the additional funding that is coming for the homeless support as a result of the transfer. Are you talking about temporary accommodation, Mr Stewart? Yes, it comes under the homeless support. We will have a transfer of funding from Westminster for homeless temporary accommodation. I would not call it extra money, to be honest with you, because there are concerns that homeless services are at risk. The rents and temporary accommodation due to higher management costs generally exceeds local housing allowance rates. Therefore, the UK Government's decision to reduce funding for temporary accommodation available through the benefit system represents a significant challenge not only for the Scottish Government and local authorities, but also for the folks who find themselves in temporary accommodation. The temporary accommodation group has been working on the impact of rent capping on temporary accommodation since 2013, convener. While the Scottish Government is not able to fully mitigate the UK Government's programme of welfare reform, we are committed to ensuring that temporary accommodation is of a high quality and serves the needs of its residents. We are working with councils and the third sector to ensure that that happens. We are also working with Elacio to consider—I will stop there because I reckon that that is another acronym—the local authority chief housing officers association for what is a reasonable cost for temporary accommodation provision, as well as looking at how local authorities manage temporary accommodation. We have already begun a stream of work with our partners and local authorities on how best to allocate the resources and funding that will be available for temporary accommodation. We are also in discussions with COSLA to establish a fair model for fair distribution for temporary accommodation funding. We also need to rethink the role that temporary accommodation plays and see what we can do to improve our use of this resource. If Mr Stewart is able to talk to his colleagues in the UK Government to try and help us out and not reduce the funding, that would be extremely useful for the Scottish Government, for local authorities and, of course, for those folks who are in need. In responding to that minister, do you believe that the homeless services are at risk from the lack of funding that is going into local government with reference to that specific area? What I believe is that it is a challenging time for Scottish Government, for local authorities and other partners to deal with this constant cutting of the services by the UK Government. One of the things that is particularly galling, convener for myself and for my colleagues, is the fact that we are told that powers are being transferred, but we are not getting the resources that there has previously been to deal with those kinds of situations. A similar scenario happened, of course, with work budgets, the budgets to help disabled folk into work, which were devolved with an 87 per cent cut. As far as I am concerned, that is completely and utterly unacceptable. If Mr Stewart has the ear of ministers at Westminster, I would suggest that he tells them that those kinds of situations are unacceptable and that they should treat us fairly and that they should stop the slashing of social security and welfare funding to our most vulnerable people. I think that it is in relation to this, Elaine Smith. It is around this, minister. You said earlier that there was not a money tree, which I think we accept, but Shelter Scotland, while welcoming the £470 million capital commitment, said that the Government had missed an opportunity in not using its new devolved tax powers to raise extra funds and warned that cuts to local government core funding risks hitting homelessness services. So, while there was no money tree with the devolved ability to raise tax and opportunity there to have extra funding available rather than cuts to local government, so I wonder what your comment would be on that and specifically, could I ask you, there are different types of homelessness, specifically, I think that we have noticed that a rise in street sleeping, certainly in big cities, particularly Glasgow, so I wonder if you could perhaps tell us what specific plans there are to address rough sleeping, street sleeping? convener, let me deal with the last part of the question first. In terms of homelessness presentations, the questions that are asked by local authorities are have you slept rough in the last three months? Did you sleep rough last night? That is questions that are asked when people present to local authorities. In both of those cases, the percentage of folk who are replying, yes, are down, four per cent and six per cent, if I remember rightly. However, those are the folks who are presenting to local authorities. Like Ms Smith, convener, I have heard anecdotally that there seems to be a rise in rough sleeping, particularly in Glasgow. To ensure that we have the right information, I have asked Glasgow homelessness network if they will help the Government in terms of ascertaining what numbers are. They have agreed to do that. Obviously, as we move into the winter months, we will see the opening of the Glasgow winter shelter again, which will give us an indication if there has been a rise. The committee can be assured that I will continue to keep a close eye on all of that and try to get the most robust data that I possibly can. I could interrupt you on that point before you suggest the shelter comments. Last year, I think that the winter shelter stayed open for an extra month. Is that something that you would be planning for this coming year, if necessary? That is obviously a matter for partners who run the winter shelter. There was analysis done on what happened last year. I have to be honest with Ms Smith and say that I only received that analysis on Tuesday. I have not gone through that in the depth that I would like to. I will certainly do so and have a look at what the findings were from the analysis that was done about folk going through the doors last year and the support that was offered to them. A lot of that is, as the committee is well aware, services that are delivered by local authorities. What I have been doing in recent times is going around various organisations that are dealing with homeless folk and talking to homeless people themselves about their experiences to see if we are actually getting all of this right. Beyond that, the key thing for me is preventing homelessness in the first place. That is why we have put so much effort into the housing options hubs, to make sure that local authorities are exporting best practice and making sure that they are getting it right for those folks who find themselves in the tragic situation of being homeless. Prevention is the main thing. Beyond that, that has to be an area of work that is cross-cutting across Government, to make sure that we get mental health services and addiction services and other areas of work to gel in to deal with tackling homelessness. That is something that is key as far as I am concerned. That is why I have been out and about as much as I have been to get a true picture of what is going on out there. In terms of the tax situation, the Government laid out its tax plans very clearly in its manifesto in the run-up to the elections. The tax proposals that were put forward by the cabinet secretary were designed to protect low and middle-income taxpayers, but they generated extra revenue over the course of the parliamentary term by foregoing the substantial real terms cut that there would have been in the 46 per cent band. I recognise that some parties have called for an increase in the top rate. The SNP manifesto itself said that we would look at this in 2018-19 after we had ensured that an increase would not lead to reductions in tax because of richer folks moving their tax situations south of the border. It would be much easier to deal with some of those things if we had more powers to ensure that we could enforce. However, what we could have if we were to raise those rates in the top band is a number of tax exiles going and placing their affairs south of the border and taking in less tax, less income for the Government to spend on vital services if we were to do that. I am also conscious that the committee is taking a view on the money that is available in the budget under the heading of local government and communities, rather than on how that money is raised, so we might just leave that machine sitting there. It is maybe for one out with this committee. Mr Gibson, did you have a supplementary on that? Yes, it is just on the whole issue. I was just to ask the minister how UK welfare reform is impacting on demand for housing and how that is being reflected in the Scottish Government's choices in relation to this budget. I think that UK Government policy, social security policy, is having an effect in almost every aspect of life for some of our most vulnerable people. The key thing for me and all of the work that we undertake as we go forward is to increase that affordable housing supply with 35,000 homes for social rent. However, it would be fair to say that some councils and in particular some housing associations have real concerns about social security cuts and payments to them through housing benefit, because, obviously, their investment is reliant on rental funding streams often that come from housing benefit. The uncertainties that are created by constant tinkering and constant cuts have an effect on decisions that other bodies will take. That is something that we have had a fair amount of discussions with, with the likes of the Scottish Federation of Housing Associations. As it stands at this moment, that is not holding folk back from committing to and investing in the housing programme at this moment in time. However, those changes by Westminster's constant changes might lead to a situation in which folk become more pessimistic in the future, and that is why I will continue to have the discussions with the Scottish Federation of Housing Associations and other bodies, and we will continue to relate to their concerns about those changes to the Westminster Government. They themselves have lobbied pretty hard over the peace on the front, and we will help them in whatever way we possibly can. Has welfare reform influenced your decision to increase the budget to tackle fuel poverty by more than 10 per cent? Welfare reform has an impact on that, too, as well as many other factors. However, the Government has that commitment to eradicate fuel poverty. That is a scenario that will take some time. We are going to look very closely at the over 100 recommendations that came from the two groups that looked at fuel poverty, the strategic working group and the rural group. That will influence a number of streams of work going forward, which will lead to the warm homes bill. In terms of some of the findings of those groups, yes, UK Government welfare reform plays a part in some folk being unable to heat their homes to the degree that they should be. A couple of questions on rural and energy efficiency. I have been trying to find out numbers for the investment that the Scottish Government is making in rural housing, but I have not been able to find any numbers. You break down expenditure by local authority area. I wonder whether it would be possible in future to provide some analysis of the spend on rural specifically? Ms Dexas is looking for some further information. What I would say, convener, is our commitment in the rural housing fund £25 million and the £5 million islands fund that I announced recently show our commitment. Are we able to break it down by anything else? As you said, what we normally do at the end of each financial year is produce a report that gives a bit more detailed analysis about how the affordable programme has been spent. That is usually broken down by individual local authorities, so that will show exactly what every authority is delivering in terms of homes. My question is given that Scotland is split into remote, rural, rural, urban and so on. Is it possible to get a breakdown of that? We can have a look at that. That would be helpful, thank you. I definitely commit to that because that might be a little bit difficult, but we will do the best that we can for the committee. Bear in mind that houses have postcode, so it might think that it could not be too difficult, but we will leave it there. On the energy efficiency minister, you will be aware that existing homes alliance has been for some time now arguing for £190 million investment in this coming transition year and £450 million a year by the end of this Parliament to tackle fuel poverty. I am sure that you recognise those figures and if you do, have you any plans to significantly increase the investment that you are making in energy efficiency? I have met the existing homes alliance and individuals from within and I am well aware of the proposals that they have put forward. The programme for government has committed over £1.5 billion to SEAP over the next four years, which sets out a clear commitment to tackling fuel poverty and to improve energy efficiency. That is substantial public funding. SEAP itself will commence in 2018 and will have substantial annual public funding. It will be a co-ordinated programme to improve the energy efficiency of homes of buildings, not only in the residential sector but also in commercial, public and industrial sectors. Initial estimates suggest that it requires overall investment of around £10 billion, but it is important to note that that is not just Government funding but should also be from a range of public and private sources. We will continue to update that figure and that will be largely led by the Climate Change Action Plan, which will be published in early 2017. Obviously, we will outline a fair amount more in the warm homes bill, but that is not just a matter for Government. That is not just public funding that we are talking about here. We should also be cognisant that private funding will come into play to ensure that we make advances in that front. I am well aware of that split, which is why I used the figure of £450 million, which is the existing homes alliance estimate for what is required by public expenditure. Do you recognise that figure and do you have any problems with that figure in terms of the targets that the existing homes alliance is setting? I recognise that that is a figure that the existing homes alliance has put forward. As I have outlined already what the Government has committed to in the programme for government, it is that £0.5 billion spend over the next four years. That was our last question, minister. I thank both you and your team for coming along to provide evidence this morning. It has been helpful as we look at our budget considerations, and with that, we will suspend briefly and prepare for the next witness. Good morning and welcome back everyone. We now move to the second evidence session of the Scottish Government's draft budget, 2017-18. The committee will now hear from the Cabinet Secretary for Finance and the Constitution on the local government aspect of the budget. I welcome Derek Mackay, the Cabinet Secretary for Finance and the Constitution. Good morning, cabinet secretary. I also welcome Jordan Nicholson, deputy director of financial scrutiny and outcomes. Douglas McLaren, head of local taxation, built it, assistant team leader of revenue, local government finance, local taxation policy and business rates units. Scottish Government, thank you all for coming along this morning. Cabinet secretary, I understand that you have an opening statement to make. Please thank you, convener. I am grateful for the opportunity to discuss local government finance, including in the draft budget. As I made clear to Parliament, despite the challenging economic and political circumstances that prevail, the draft budget will improve our public services and support our economy. Having held extensive discussions and negotiations with COSLA, I have proposed a full package of measures that I hope that all 32 local authorities can sign up to. The total funding package for local government, as set out in the draft budget, amounted to over £10.131 billion, but once various sums of money from other portfolios were added to the total settlement, as set out in the consultation circular, it amounts to almost £10.253 billion. That includes general revenue and capital grant funding, specific revenue and capital grants and the distributable non-domestic rates income. The Scottish Government guarantees the combined general revenue grant plus the estimated non-domestic rates income. I am well aware of my previous committee appearance that members of this committee had some reservations about our commitment to use the extra money raised through our council tax reforms to directly fund schools to help close the attainment gap. We have, as you know, listened to those concerns and decided that this money should be funded from central resources and we have increased funding to £120 million next year for the attainment fund. We have also maintained council share of capital funding with a £150 million increase compared to this year. In addition to the settlement total, we will transfer an additional £107 million from the NHS on top of a quarter of a billion pounds transferred this year for health and social care partnerships, which will meet the full cost of our joint aspiration to deliver the living wage for social care workers. That has been warmly welcomed by the Scottish Care and the Coalition of Care and Support Providers in Scotland. Over and above these sums and as a result of our decision to fund the attainment fund from central resources, local authorities will have £111 million more council tax income to spend on services with the option of adding a further £70 million following our decision to lift the council tax freeze. Together with the central funding and local taxation amounts to spending power rising by £240.6 million or 2.3%. It is a settlement that invests strongly in education, social care and wider local services before we even count on a further range of funding streams. Funding to support local government services will see a real terms uplift broadly comparable with the Scottish Government uplift in the 2017-18 draft budget. Turning to non-domestic rates, the draft budget outlines our proposals in the context of the 2017 revaluation of non-domestic properties by the independent assessors. The assessors have now published draft revaluations online. To maintain competitive business taxation, I am not proposing to insist on a revenue-neutral revaluation but instead propose to cut the rates poundage by 3.7% to 46.6 pence. We will expand a small business bonus scheme by raising the eligibility threshold for 100% relief to £15,000 rateable value so that it exempts 100,000 properties from rates. We will continue the large business supplement at 2.6 pence but raise the threshold to £51,000 so that 8,000 properties are excluded and fewer than 10% of properties are liable. Our non-domestic rates income has been considered by the Scottish Viscal Commission, which has considered as a reasonable the economic determinants underpinning this estimate in line with its current remit. In summary, this is a fair settlement for local government and we are committed to a partnership approach with local authorities to deliver the agreed package of measures and I am happy to answer any questions. Thank you, cabinet secretary. You might return to some of the numbers that you said in your opening statement, which were very helpful. The first thing to ask might be in relation to the statistics that you use. Can you confirm whether you have used, in comparing to the last financial year—the financial year that we are just coming towards the end of in the new financial year—whether you are using draft budget statistics from the previous financial year or actual spend from the previous financial year? No, it is more appropriate to use light for light, so we compare draft budget with draft budget. It is not appropriate to compare the end year spend with the start year spend, because it is two different figures. I think that is where some people have got their numbers wrong. That is helpful. I am looking at two tables prepared at the spice briefing for today's meeting, which do not include some of the numbers that you have outlined, some of the spend that you have outlined, cabinet secretary, where, if you look at actual spend, you would say that there is a 3.2 per cent real terms cut in local authority budgets. However, if you look at the draft budget, it would be a 1.6 per cent real terms cut. I will come back to that figure in a second, but we now appreciate why you are using draft budget with draft budget, so the proposition there is a 1.6 per cent cut. Can you tell me what those figures do not include? You listed some other spends there, which are not immediately obvious within the draft budget document, because they do not all sit in the one place, so can you tell me what is not included and what would be a notional 1.6 per cent real terms cut? There is no doubt about it that local government funding is incredibly complex, because within the draft budget document, there is a local government table, of course, and then from other portfolios, there is funding that goes to local authorities and local government services for very specific outcomes, so you have to take that into account. Then there are other matters that will support local government services and local projects, for example city deals. There is a range of other funding streams that come into play, and there are other funding streams that are delivered over the course of a year, as well as the demand-led funding streams that exist, so it is incredibly complex. That is why there are figures in the draft budget. That is why you cannot just refer to one table in local government finance. You have to look at the totality of funding streams from each portfolio to local government, and as I say, even beyond that, there are other deals such as city deals. We pull all of this together. We send a circular to local authorities to give them their financial position. Even that is supplemented by further funding streams that go over and above that. That is why, when you look at the headline figures, it is a fair and strong settlement that actually shows an increase. As well as all of that, we have the matter of council tax, where this Parliament has considered the issue of the multipliers, which generates £111 million more for local authorities. Every council keeps every penny of council tax, and by lifting the threes on council tax, it will ensure that local authorities could raise a further £70 million, but even excluding the potential to raise council tax—the 3 per cent cap that we have proposed—there is still an overall increase of spending power for local government services as a consequence of our budget decisions. If you want more detail of the accountancy of all of this, I am happy to provide it. Any of the officials can do that. However, it is incredibly complex, but when you play in all the different funding streams, it is a very fair and strong settlement to local government. That is a complex answer for what I thought was to be a straightforward question. If you look at those that are saying that there is a 1.6 per cent view terms cut to local government, what monies are not included in those numbers. From your opening statement, I wanted to clarify that that does not take account of the £250 million integration fund that would be transferred. It does not take account of the additional £107 million new integration fund monies. It does not take account of the £111 million additional multiplier effect from council tax. Potentially—and it is up to local authorities—it does not take account of a potential 3 per cent increase in council tax if they choose to and perhaps some other monies. The Scottish Government gets to a very different figure from what some local authorities are asserting. From the committee's point of view, we would rather have had all those numbers in the one place rather than looking between a budget document, a circular and other documents. Is it needlessly complex? I sometimes think that it is the job of councils to say that they have the poorest possible funding settlement and that it is the job of Governments to say that they have the best possible funding settlement and the truth lies somewhere in between. I think that what the committee would like to do would be to have all the appropriate numbers that feed into support for local government services in the one place. Is some of that needlessly complex? I think that part of the funding mechanism within the world of local government has emerged and many of us have local government experience. I think that I am one of the few members when I was in local government that was on a settlement and distribution group within COSLA because much of that is done in partnership with COSLA, the negotiating body for local government. Much of the complexity has emerged over a number of years in funding and distribution methodology, the needs-based assessment and the floor mechanism is incredibly complex. There is a difference between what is presented in the draft budget, what emerges in other funding streams, particular ring-fenced funds, further needs-based call-upon resources and then separate deals such as city deals, which surely everyone would welcome, such as Aberdeen, Glasgow, Inverness and so on. It is incredibly complex, but I can draw down to figures that ultimately show that spending power for local government services is increased. However, let me say on your key point here that it is a fair one, that if you were to design from scratch a local government funding arrangement, could you put all of the information in the one place at the same time would that be helpful? I can tell you that it would be helpful for all of us. What I think we could do is look further at how all the information is provided for future years, but a lot of this is driven by the budget timetable. Of course, the Parliament is looking at reviewing the budget process, partly in light of the new powers that we have, because we are no longer just a spending Parliament, but we are a tax and spending Parliament, so I think that it is right that we look at processes. That decision to review processes is further vindicated by the decision of the Chancellor of the Exchequer to change his budgetary timetabling, so that in future, apart from next year where there will be two budgets, there will be a spring statement and an autumn budget. That is flipping the whole budget process to the whole of the UK. That is profound implications for how we do the budget in Scotland. Everyone is well aware of my timing of this year's budget that I had to wait for the Chancellor's autumn statement. There was a consensus around that to be able to have a fully informed Scottish draft budget. I think that there is the opportunity to refine that process, but I will absolutely commit to looking with officials who are very dedicated and well informed officials as to how we can try to get as much information in one place and simplify it as best we can. I say again, convener, in all seriousness and sincerity that the complexity of local government funding has come from years of process, years of deals and arrangements to ensure that we make the right decisions around how we fund local services and deliver the needs-based approach. I know that, convener, you have particular interests around issues such as poverty, attainment and needs. All of that features within the very complex mechanism that exists and how we consult with local authorities on their assessment and their negotiation. Incredibly complex, and then there is the interpretation of the figures. When you boil it down to what a local authority has to spend at the end of the day, that is a really interesting question, and then when you go further, what are the public most interested in? I think that they are most interested in what is being spent in the services in the area, and that is why you can play in a whole host of funding streams that you cannot just discount as an accountancy exercise. You say that that is new money, that is real money, that is additional money for things that matter to the population of Scotland, and in all of that, I can point to specific funds and financial arrangements that have supported those services in this budget. Cabinet Secretary, could you put it on one place for us ahead of our final reporting exercise on draft budget? Can you write to the committee and outline every single budget line where the Scottish Government asserts that additional monies are going to support local authority services, and we can consider that in detail ahead of reporting in relation to the local authority budget? Yes, I will commit to doing that, and the only one caveat that I would add is what I have explained, that there are some funding streams that still may land even after that exercise is complete. That will be more money, that is additional funding streams, not necessarily new money, but additional funding streams that go to local government services. I absolutely commit to giving you that figure, that analysis as quickly as I can in the timescales that you have set out. Then our committee can contrast that with assertions made elsewhere about levels of cuts. I will put one bit of scrutiny in the numbers that are available, and then I will feed in to my colleagues. Now, harder than more time, we have done more of an exercise around this Cabinet Secretary, but, as you have said, to the £250 million health and social care integration fund monies transferred from the health budget through to the new partnerships, and an additional £107 million on top of that. We know that some of that was to deal with wage pressures in the social care sector and making sure that the living wage was paid. I know from Glasgow that some of that money has been invested in step-down beds and care home beds to deal with matters of delayed discharge and the like. Some of that would be very real pressures that would sit on local authority social work budgets that they would have to fund from their general funding stream if the integration funds did not exist. Can you put on record what you would consider some of the financial pressures that you think those monies will ease in local authorities? Even on the health and social care transfer figure—I think that it is absolutely correct to say that that transfer has happened before from health to front-line social care—I am baselining the quarter of £8 billion in the budget, so that is £250 million, and then, of course, £107 million, which is a matter of negotiation with COSLA. I believe that it does fund the full implementation for the full year of the living wage that was negotiated last year, but that funding allows the living wage to be delivered for the full year. On an on-going basis in perpetuity, that improves the quality in the system and further resource for sustainability of service, and also supports the very specific requests that we have made to local government around carers and veterans. However, every single part of the public sector will be delivering efficiencies at this time. We are all consuming extra pressures on the public sector, so as a private sector, incidentally, I may add for example the UK apprenticeship levy, but on integrated joint boards, I think that we need to understand that this process of integration was a consensual position by the whole Parliament to bring front-line social care together with that health commitment convener. As you have described, it is no longer cost-shunting, but it is supporting the person that needs their support. It is addressing needs rather than an accountancy exercise or a confrontation between health and NHS and social workers. It is integrating our funding streams and integrating our systems to give the best possible front-line quality care as we transfer from acute to community. The right infrastructure at a local level certainly helps with delayed discharges and pressure on the NHS, and equally strengthening the community infrastructure is good for the NHS. I have a number of quotes from across the political parties in support of the integration agenda, and how bringing and pulling the money together is also the right thing to do. I will ask for you not to give those quotes. I suppose that the point that I was trying to make, cabinet secretary, is that part of the timing went for the budget as well, because I am sure that local authorities may have made a different view in relation to the cost pressures that those monies alleviate at a local authority level. Although we did give local authority representatives the opportunity to put some matters on the record in relation to that, so that is specifically why I have asked the committee to do the same. I would like to bring in Mr Gibson next, but I have a point to leave hanging, cabinet secretary. I think that the committee is becoming increasingly aware that there is a huge amount of money swirling about the local authority area. We have an education committee, I would imagine, looking at the attainment fund cash and how that spent £120 million. We have a health committee now looking at £357 million of health and social care integration funds. We have city deals out there and a variety of other spends. We are just conscious as a committee that we are not quite sure who is doing the scrutiny of a consolidated piece of work on the financial position of local authorities and the support that is provided to them. That information that you are going to provide us will be a good starting point, but I think that we have to do better as a parliament in how we follow the public pound at a local authority level. I would add to that conveners that there are audit agencies who scrutinise the spending and revenue-raising of local authorities. They are held to account for what they spend. I would add that it is not just Government grant and council tax. Local authorities also have the ability to raise resources through fees and charges as well, which would not necessarily come through Government or come to Government for Accountability, but that is where the audit agencies would be involved as councils and councillors have to get their accounts signed off. A couple of questions on local tax. First of all, you indicated that you are lifting the council tax freeze but imposing a 3 per cent cap. How do you propose to enforce that given that you do not set the rate for council tax for councils? The second question relates to non-domestic rates, where you are making a cut of £200 million in the revenue that is deriving from non-domestic rates. What economic assessments have been done as to the economic impact of that cut to the rate? Fair questions. On council tax, I propose that I am in dialogue with COSLA to see if we can arrive at a partnership deal with COSLA on our position. Yes, one of the asks that the Scottish Government has is to ensure that, if there is a council tax increase, it is not above 3 per cent. I am proposing to have a partnership deal with COSLA. Of course, Mr Wightman will be well aware that not every council is part of COSLA, so I have written to all 32 local authorities in Scotland outlining the Government's offer, which I think is a very fair offer. What I ask for in return and for completeness includes a cap of council tax increase of no more than 3 per cent, maintenance of pupil-teacher ratio and teacher numbers, arrangements around health and social care. Those are some of the key commitments that I am looking for. I am happy to share a copy of the letter that I have sent to every local authority in Scotland to the committee for your information. You will see that I am trying to reach this partnership approach. I have asked local authorities to write to me by 13 January, whether they accept the package or not. If the settlement to local government was so bad, I suspect that COSLA would have rejected it at a special leaders meeting, but they have not done that. They are considering the package that I have put to them. I welcome some of the positions that the Government has taken, but it is now for local authorities individually to make a decision on whether they support that package or not. I am not proposing sanctions or imposition or anything else other than a partnership approach with local government. However, if they do not accept the deal, I will have to revisit the position, but I hope that we will reach that arrangement through positive engagement, constructive dialogue and a partnership approach. On non-domestic rates, the assessment has come from an actual projected income and policy changes that I have made. It is important to support sustainable economic growth at this time. I have not had a revenue-neutral position on non-domestic rates, so that would have meant putting the poundage up. It would have meant increasing the poundage higher than it is in England, and that is not the choice that I have chosen to make. I have chosen to increase support for small business bonus, to change the thresholds, to be more supportive on the large business supplement, to reduce the poundage for everyone by reducing it in the terms that I have described. All of that and distributing what we will receive is how I have arrived at the non-domestic rates figure, all of which, in terms of the economic modelling, has been assessed by the Scottish Fiscal Commission, who has said that my assessment is reasonable. On the counter-tax, would you accept, then, if you propose a 3 per cent cap that this is not really local tax—this is central tax—that you are in effect setting the rate as you are with non-domestic rates? The question that I had with non-domestic rates is what assessment of the economic impact have you done, if you have done any, because there is evidence out there by academics in the past, in relationship, for example, to enterprise zones, where, if you have 100 per cent relief, for example, all that happens is that rents go up, it gets capitalised into rent payments, if you are a tenant and it gets capitalised into asset values if you are an owner. It is that kind of economic assessment of the impact of cutting non-domestic rates that I am interested in. I understand the point that is being made. First of all, on council tax, the Parliament is within its rights, as we have done, to set the multipliers in the way that we see fit. That raises, as we know, £111 million more for local services. Every penny raised through council tax will be retained by every local authority in Scotland. Is it the discretion of local authorities as to how much they raised the council tax? However, this Government was elected on a manifesto proposition to cap council tax. At 3 per cent, we went, of course, the only party that suggested a cap on council tax, and other parliamentary parties have gone into Scottish Parliament elections with a position on council tax. Therefore, the Parliament is within its rights to set out an expectation of what we want to happen. Many people said that the council tax freeze for a period of nine years was unsustainable. We are now giving local authorities a discretion to lift that. I want to do that through partnership. Some of the intelligence that I am now receiving is that very few councils would want to raise it above 3 per cent in any event, but I am holding true to the manifesto in which this Government was elected. Right now, I am in a positive dialogue with COSLA. I have also given the Scottish local government partnership the courtesy of engagement as well. I negotiate with COSLA to achieve that, but it is a matter for each local authority. On the economic modelling around non-domestic rates, I happen to believe that the support for the small business bonus, particularly, has saved many other town centres, frankly. I did an analysis of my own community, my hometown in Renfrew, to see that many town centre businesses paid no rates whatsoever or reduced rates as a consequence of that policy. I might not have report after report to tell me that it has made a difference, but I know that it has made a difference from my engagement with the business community, my engagement with local businesses and what I see is that I am sure that it has made an impact on the sustainability of town and village centres across this land. What evidence have I got of that? Andy Willock of the Federation of Small Business said that, by giving full rates relief to 100,000 Scottish firms, the Scottish Government has lifted the prospects of smaller businesses facing a tough 2017 or Liz Cameron, the chief executive of the Scottish Chambers of Commerce, very much welcomed Scottish Government's decision to match the business rates poundage to that south of the border and she goes on welcoming other elements to the business rate package. Clearly folk in the business community recognise that it is the right thing to do, but I have targeted our support to small businesses and medium-sized businesses, while reducing the poundage for all businesses, but targeting support there. I think that that has supported the small businesses across Scotland. That is why it has been so warmly welcomed by rate payers across the country. To clarify, you have no evidence of that. You talk about anecdotally speaking to businesses in your constituency to bear with me, but if I were a landlord in Renfrew and I was seeing business costs go down, I would just be jacking up the rent. I am talking about the economic impact in the medium and long term. I would throw back at you what you are using as anecdotal evidence to challenge my evidence. I am not putting forward any evidence that I am asking you. Mr Wightman, just let the cabinet secretary respond and I will take you back in after that. You were trying to make the point that if I reduced business rates, all that happens is that land owners and property owners might put up rents. I am sure that that happens in some cases, but I do not think that it is universal. Overall, the benefit of our non-domestic rates regime is one that will support sustainable economic growth. It has been a lifeline to town centres and villages across the country. I could also add that I proposed to increase rural rates relief from 50 per cent to 100 per cent just for completeness, but on small business bonus, I think that it has made a major impact. If there is any evidence that it has, I would like to see such evidence. I believe that it has. I am not alone in that. The federation of small business did carry out a survey, and it showed that it was a popular and effective policy in supporting small businesses. The first question that Andy Wightman asked about non-domestic rates was almost word for word. I was going to ask, although the figure of £200 million should be £162.7 million, but is it not the case that Colin Borland of the federation of small businesses said in 2011, but without the small business bonus scheme, one in six small businesses in Scotland would have went to the wall? I am familiar with that quote, and I believe it. Let's face it, there have been quite turbulent economic times between the crash and other pressures, and I think that town centres have had particular pressures as well. That is why the Government endorsed the town centre first principle and has supported small businesses and targeted a release to small and medium-sized enterprises. I think that all members should reflect on that comment. It is an overall approach to taxation that we are trying to be more progressive, and I think that this approach fits within that. I have no doubt that the small business bonus scheme helps small businesses to survive and thrive and, hopefully, become bigger businesses employing more people and contributing to our overall prosperity. I want to ask specifically about the local government core budget. One of the frustrations that the committee has is the fact that we have seen the impact on the core budget of your statement, but we do not have a breakdown by local authority of all the additional monies that have been talked about by the convener and others. However, if we look, for example, in terms of the core budget with the additional council tax through the increase in the bandings, if we look, for example, at my own North Ayrshire authority, the core budget will be down 3.863 million. Elaine Smith's North Lanarkshire will be down 14.401 million. However, East Lothian will be up 1.413 million. East Renfisher will be up 495,000, Stirling 699,000. That is obvious because they are more prosperous authorities in North Ayrshire or North Lanarkshire. When those new figures come in in terms of the additional monies that are coming in for health and social care integration, will that be evened out to ensure that the poorer local authorities gain additional revenue to be able to compensate for those reductions in their core funding? I think that it is a very fair point that if you looked at just council tax in isolation, what other parties in Parliament asked me to do was not to redistribute at a local level, not to do that. Every council keeps every penny of council tax. However, we still deliver the attainment fund. What is more, we increase the attainment fund, which is absolutely delivered on the basis of need. The core grant to local authorities is all distributed largely on the basis of need—the methodology that is in existence between the Scottish Government and COSLA. What is more, there is the floor mechanism as well. You can see people's eyes glaze over when you talk about all those mechanisms, but it is complex, as I have described. However, the floor ensures that, in the range of adjustments to local authorities, there is support so that there is a bit of convergence around the change in what a local authority may receive. I am looking at charts right now. As soon as I am in a position to do that, as you have requested to convener for the committee, I will share that information with you. What it will represent is that when you take together the funding streams, the change to the multipliers and the ability to raise the council tax by up to 3 per cent and what we are doing around integrated joint boards, it will show you the increase for authorities across Scotland. If you look at just core settlement, that totally ignores a range of other funding streams. What is communities most interested in? It is the totality of the package to their community. What are you investing in schools? What are you investing in health and social care partnerships? What is the range of resource going to a local authority? On that, that is where I can reach the figure of £240 million, a 2.3 per cent increase and, what is more, there are further funding streams on top of that that support local services. As I say, I will give you all this detail. What you will see is what I have said in my opening statement that the settlement for local government services is broadly in line with the equivalent increase to the Scottish Government's settlement, which I think helps to inform the debate in which some people have made some rather misleading remarks. The frustration is that we have the total figure, but we do not have the local authority breakdown figure, and that is something that we are keen to have. I would take issue with everything that is being based on needs. If you look at aggregate external finance from 1997, when Tony Blair came to power, the local authority was the biggest increase in resource, and all that time per capita has been East Rainfisher, in terms of percentage increases, and one of the lowest has been Glasgow. I think that that formula has to be looked at. On another issue, I was delighted to see 149.614 million increase in capital funding, about 24 per cent increase, which is very warmly welcome. I am just wondering how that will be dispersed again. Are we going to get more information on that in the specifics of that? Mr Gibson is right that one of the main drivers in distribution for the core grant settlement is population, and that is right. I know Mr Gibson's experience from the local government world as well as finance that he understands this. Population is a main issue, but when it came to re-addressing the council tax and attainment fund issue, the £120 million is absolutely distributed on the basis of need. I am recipients of free-skill meals, and I think that that is the right thing to do, because that is actually delivering that funding on the basis of need. For the first time, I have been able to look at council tax and government support in the round. The reason I do that is to help to address that point. You cannot just ignore an element of local government financing when you are delivering resources on the basis of need. That is why I keep focusing on the totality of the package, because I know that a number of members are very keen to ensure that resources are allocated on the basis of need. Specifically on capital, there is a substantial increase in capital, and there is a further re-profiling of capital monies to go back to local government to the tune of £150 million. That can happen over the next two years for the rest of the spending review period, but for this year, that increase is not even the re-profiling of that amount. The capital allocations are in the circular, and I can give the detail to you unless you want further explanation on how the capital settlements are generated from my officials. That would be helpful, but I think that what we are really looking for is when will we have the actual council by council breakdown of all these additional figures. I am sure that it is looking to be mid-January, but I just wonder if we can get a specific date on that, because I think that that would be very helpful to all members of the committee and the Parliament. I can give you the circular on resource and capital now. I can give you that now. I can give you the capital settlement now, because that is out for consultation with every local authority in the land. However, my point was going back to the convener's original point, that if you want the totality of resource, that requires further work because of the timetabling, but I can absolutely give you the capital settlements now. Hold on just a second. I have got some information on capital, but not the increase. Bizarrely what we have in the actual budget document is what the capital was in the draft budget last time, and what we have here is the local authority capital for 1718, but not the local authority capital for 1617. Bizarrely we cannot look at 1617, 1718 and 1718 to see what the increases have been in our areas, and yet in the core funding it is almost the opposite. We have got the core funding, but we have no got the detail increase. It seems to me a bizarre way of doing it, and I think that what we really want is both what the draft was in 1617 and what is 1718 for capital and revenue across the board. Convener, I have that information for you by the end of the day. Thank you. Okay, that is helpful. Briefly, in relation to the capital moneys, we do not want to assume, but we are thinking that a huge amount of that might be in terms of the bricks and mortar delivery of our commitment to increasing the nursery estate within Scotland. Would that be right? Before we even engage in that particular exercise, the capital increases largely at the discretion of local authorities. There will absolutely be an escalation of resources to deliver our childcare plans. That begins this year with a £60 million investment around piloting and the current arrangements. No, it is not the case that the current capital grant is conditioned on childcare expansion, but absolutely there will have to be childcare expansion years to come. So the capital provision is £210 million? Where did the £60 million come from? The £60 million is the childcare investment for the draft budget. No, it is not capital. We are not mixing this up. £60 million is what is allocated for childcare, just to be clear, convener. That is the beginning of that in terms of training and support, but there is nothing specifically conditioned in the capital grant as the point that I am making for the next year's financial year around the increase to local authorities. So the £60 million, which is earmarked in terms of childcare, is resource. It is not to put the speed in the ground and say, build an extension to this childcare facility, let us plan ahead for the Scottish Government's commitment. It is about staffing and resourcing and that revenue stream. The £60 million is from the education portfolio to begin the process of expanding childcare. It is not the capital resource that you have referred to. The capital resource is local government's share of capital. That is the increase that Mr Gibson is speaking about, and it is not conditioned on the expansion of childcare. Thanks for joining us, cabinet secretary. I would be fair to say that a lot of this is complicated. We have had council leader after council leader talking about cuts, specifically if we just take heads and butter, which is Labour-led with the SNP. The leader is saying that it is the worst revenue settlement from the Scottish Government since the onset of devolution. Those are the kinds of comments that we are hearing around the budget. If we look at the figures, we have the spice figure of the £327 million cut, but that would seem to be the real terms. You are saying that it is not comparing like with like because you are comparing the draft budget with the draft budget. If we compare the draft budget with the draft budget, we are looking at a 1.6 per cent cut from the figures that we have here. If I could try to drill down a wee bit into that, your figures, cabinet secretary, talk about £267 million as a potential increase in the total spending power, but that includes the revenue from local taxation. If the 3 per cent were not to be used, how would that figure be adjusted, or is that something that you are going to try to come back to us with? I can give the top-level figures. What I will do to be helpful is to reference the very local authority that you have mentioned. I think that that helps to explain the position. At the top level, if every local authority raises council tax by 3 per cent, that should generate around £70 million. Bear in mind what I have said about the £240 million increase for local government services. That explains that it is still an increase because the multiplier issue happens. Anyway, that is £111 million. There is the figure within the top level of the totality of local government services. Elaine Smith is right to pick on some of the evidence that has been received by local authorities and compare that with what I am proposing in the draft budget. That is a very fair point. The council that has been name-checked is the City of Edinburgh Council. If I look across the support that will go to the City of Edinburgh Council and the multiplier increase and the council tax increase of 3 per cent, it will have an increase of £18.5 million as a consequence of all of these decisions. That is an increase of 2.36 per cent. I say the word again, an increase of £18.5 million. That is totality of resource. That is the additional council tax income as well. That is the multipliers and the support to the integrated joint boards, which I have expressed why that matters and why I see that as local government services because it is supporting that. I can give you the breakdown within that that shows you each element. I make the point that there is a total figure of a £240 million increase. I say again that there are still further resources on top of that, but when I can break it down to every authority by authority that I have said I will share with you, it will show the reality of the financial settlement for local government services as I have described since the budget. I think that that would obviously be very helpful, but I want to come on to the integration fund that you mentioned, but can we say that it is a funding increase when it is based on a 3 per cent possibility? It would be a tax increase, clearly not a central government tax increase, which you have chosen not to do, but a tax increase at local level. You are calling it a funding increase, but it would be a local tax increase. I have explained how that increase gets to that figure, but I tell you what we will do for the purpose of this dialogue for Elaine Smith. What I suggest you do is that, even if you discount the £70 million that could be raised from the 3 per cent, it is still the position that the total package to local government services is increased. That leads me very nicely into the next question that I had, which is on the integration fund, which I think was explored earlier. Much of that is to meet the commitment to the living wage for care sector workers. Clearly, that is an increase to its financial transfer, if you like, to local government. However, the point that was made is that, if it is going to be counted in local government, it should also then be counted in health. I think that that is where a lot of the confusion around that has come from. The position is that the transfer that exists from health to social care is the same as in previous years. There is no double counting in that. It is certainly part of local government services as we have described, and I think that the point has been acknowledged. It features within the draft budget, certainly within the health portfolio, but it is in the local government section, as other sources of support, with the explanation in the chapter. That is explaining the narrative of the position that we have just discussed at the committee. Elaine Smith has also fairly made the point that it is legitimate to describe those services, because that is what it is doing. I take some pride from the fact that we are delivering the living wage in social care. It is long overdue and I have been able to ensure that it will be delivered year on year. It is a very important step, but it does not just deliver that. There is also extra resource for sustainability of services, as well as the other discretionary elements around the charging policy. I said earlier that there was pressure on all our public services and there are, but that represents the direction of travel that I thought there was political consensus on. We need to transfer more from acute to community, and we also need to support local infrastructure to ensure that we are taking the right preventative approach to ensure that there is quality care. It also properly rewards those in the sector that deserve that to be paid to the living wage. I certainly do not argue with the minister on that, and I would agree about the living wages, I am sure that he will appreciate it. However, it has added to what has been a complicated process when people like Fraser of Allander Institute are saying that the Government often double counts the spending in local services. Clearly, that is not right, but it has to be one or the other, and I think that is where some of that confusion has come in. Unless the cabinet secretary wants to add to that, I want to move on to talking about the council tax and combined ETH and the attainment fund. Those are the three issues that you mentioned earlier, cabinet secretary. On the attainment fund and the council tax banding issue, the committee, as you pointed out, did spend some time on that, and there were concerns raised about it. Clearly, the decision was, for whatever reason, that the council tax band, the additional money raised £111 million, I believe, from the band ETH. That could not be taken from local authorities, and therefore there would have to be a different way of working out. At the time when the committee was considering all of that, it was thought that what might happen would be that the Government would reduce the grant to give funding back to cover that. Has that happened, or is that extra money from central Government? The attainment fund is extra money from central Government funded through our central resources. On the council tax banding, you are right that we had that discussion and this Government has listened. It has listened to COSLA. It has listened to this committee. It has listened to Parliament, and I think that that is a good thing that the Government is willing to listen to other people and change our position, but not compromising our principle. The principle was that we wanted to give the resource to schools to tackle attainment education, which is the Government's number one priority. We have held true to that and increased the amount for the forthcoming financial year around the attainment fund, and we are funding it centrally. Just to go back to the other point, because it is just for completeness that I know that the health secretary has confirmed this as well, that there is no double counting because the position on health and social care and the IGBs does not change the aggregate position in terms of our Dell position for our budget. I think that it is important to set out the context of local government services. You cut me off, as you were right earlier on when I was going to give you a quote, but it is a really important quote when you look at the nature of that integration between health and social care. For a generation, the elephant in the room in discussions about integrated care has been the artificial distinction between healthcare and social care, including those who have sought to defend the distinction and have sounded increasingly absurd and out of touch. It often takes a crisis to force an issue if not now when. That was in 2011 by Stephen Dorell MP, who was the chairman of the Commons Health Select Committee and Health Secretary. The point that I am making is that local government finance is complex and the integration is equally complex, but it is the right thing to do to ensure that the resources are in place to support people so that they get the right care in the right place at the right time. That is what we are doing through our budgeting, which affects local government services and, of course, the wider NHS. We have raised, through the multiplier, to ensure that every local authority now has that extra resource, which I think will be well received. There is not much argument over the principles around that, but it is complex when people such as Fraser of Allander Institute are getting it wrong and saying that it is double counting and you are clearly saying that it is not. However, could I just move on to my final question? It might be worthwhile, Cabinet Secretary, to just give a time check on how much time we have got left for evidence this morning. I am very keen to take questions from Alexander Stewart and Ruth Maguire and, before we finish, we are in a little bit quarter past 12, so if you can make this. Thank you, convener. Very briefly, then, Cabinet Secretary, you are responsible for the whole budget, where the local government committee, so could I just put it to you that there are concerns that local authorities are facing greater cuts in other areas of the public sector? How would you respond to that? I think that I was able to outline in the figures that I have given and the statement that I have given that the increase for local government services is broadly in line with the increase of the Scottish Government's budget. As I say, you can see more of the detail of that, but that is absolutely position, so that accusation is without foundation. Two very patient members of the committee, Alexander Stewart, to be followed by Ruth Maguire. Thank you very much, convener. Cabinet Secretary, you talked about initially the attainment fund. I think that at the last time you gave evidence, I was one of the members of the committee who suggested that you were going to be plundering the funds from councils to pay for the attainment gap. You have explained this morning about how that is now not the case, that you have listened, and I very much welcome that U-turn situation, because I believe that that is the right way forward as we progress. You have talked today about new, real and additional funding. You have also touched on fair settlement, but you have also put in the mix the complexities of the financial settlement and how complicated it can be. It can be perceived sometimes as misleading when we have reports coming out from other organisations suggesting that there is double counting taking place. You have indicated that that is not necessarily the case, but to a lay person or someone trying to go through all this process, it is very complicated and it is very difficult to try and understand exactly where the funds are going. However, as some of my colleagues have said this morning, local governments across Scotland perceive and see what is happening to them over the next few months and years that they are going to have to deal with massive cuts across their council areas. You have responded this morning to say that that is not necessarily the case, that you are giving more funds and that you are giving additional money, but there is still the imbalance that local authorities are dealing with their budget process at present as we move to the festive season and they will be setting their budgets in February. All of them that I have spoken to across my region tell me that they are facing massive cuts to services and to facilities that they are going to be dealing with for their clients and for their service users. We are moving to work this festive season rapidly. Do you have a question wrapped up within that? Yes, in all of that, convener. The cabinet secretary today has answered many questions that I had in my own initially, but I still have the question that we are facing a very difficult financial situation across the third stage of local authorities. None of them, as I said, I have spoken to and perceived that they are going to be receiving additional resources. What they are dealing with is that they are removing services and they are having to streamline and salami slice as they have done in years gone past. Can I ask Mr Stewart for one council that he has spoken to? I have spoken to a number across my region. Can I have anyone in your region? In Midscote and Fife, I covered the clackman inside of things, the sterling side of things, the person converse side of things, which is my own local authority. I sat at a budget meeting preparation last week when they were talking about that. I think that you have good value for money evenly. You have waited, Mr Stewart. That is three local authorities that have mentioned, cabinet secretary. If I can just do one, I can do more, if you like. So we will just do Fife then, shall we? So in the Fife area, in terms of the question that I have been asked, again, I have outlined in the position that I have outlined around council tax multipliers and IGBs. I have been very clear on local government services. The increase is £15.5 million, £15.6 million. That is an increase of 2.4 per cent. I can do the same for any other local authority. I know that you are short of time, convener. I am happy to stay as long as it is required. Mr Stewart made a comment that it is an interpretation of some of this. Well, there is the facts and you will have more detail coming your way. I suppose that I could quote the BBC that says, I think online yesterday, that the Government was telling the truth—so were councils—but the Government was telling the truth. Who would have thought that the BBC, especially after last week, might have said that, but you will see the information. I am sure that you can forgive me, but I want to redress something that Mr Stewart said. At one point, I was going to plund our local government. At no point was the Scottish Government going to do that. I made it perfectly clear in proposing to change the multipliers that every council would keep every penny of council tax at the local level, but I said on the basis of need that there would be an element of redistribution within the local government settlement. People objected to that. We are not doing that, but we were never taking a single penny away from a local authority from their council tax. However, what we are now doing, as every member fully understands, is delivering the attainment fund at an increased level from central resources. You rightly mentioned that both the public and private sector are operating in quite challenging times. When we did our pre-budget scrutiny, the Accounts Commission were keen to stress the importance of long-term planning for local government. I would be interested to hear your reflections on how the impact of one-year funding rounds has on local government's ability to plan ahead and effectively manage reserves, and whether the Scottish Government takes into account the respective reserve levels of local authorities when setting budgets? On the question of reserves, no, we generally do not take reserves into account. That is a matter for the local authority to determine what is the optimal level for them, so it would not take that into account in the finance settlement that they would receive. As I said, there are other factors around need and population and all the other indicators that drive those figures. You do not take reserves into account. However, it is valid for politicians to look at local authorities' reserves and make judgments or comments around them, but that is not something that the Scottish Government would generally do. On the timetable of local government settlements, I would say the same of the third sector as well, and of the business community around tax propositions. I think that people would prefer certainty if that could be given, but I am sure that all members appreciate that this year I was wrestling with deep economic turbulence, a chancellor who said that he was about to reset fiscal policy. I cannot remember if that was a chancellor—no, it was a new chancellor, not the one before him, George Osborne, of course, who was no longer the chancellor. There was such economic turbulence and the autumn statement was to be a major fiscal event. For all those reasons, it was possible that the UK Government were going to reopen our settlement and the economic drivers were changing. All of that led to a view that a one-year budget was the most sensible thing to do in the circumstances, and that is what I have done. Would I prefer to set out a three-year spending review, of course? Would that be welcomed by local government, the third sector and business? Of course it would, but I want an accurate, credible budget, as opposed to one that is either uninformed or subject to so many variables that would change drastically. That would not give the certainty that people seek. I will, through the budget review group that is under way within Parliament, look at the processes of how we do the budget to ensure that we can move as quickly as possible, but it is as well informed as it possibly can be, and it gives longer-term certainty. It is a fair point, but I hope that it is equally understood why I have had to make the decisions that I have. My final point is that this Government has proposed a draft budget to the tune of some £37 billion, £38 billion within three weeks of the chancellor's autumn statement, and a local government settlement within hours of presenting the draft budget to Parliament. Why? Because Parliament gets to see it first, and then other elements come as soon as they possibly can thereafter. That is why we then go into consultation and engagement. I have to commend the work of the civil service and my officials who have worked incredibly hard to deliver on what has been required of them by ministers to ensure that we can present those figures as quickly as possible, so that we can give people greater certainty. To the wider timetable question, I will continue to look at that and see what longer-term financial outputs I can possibly pursue. A couple of very brief supplementaries, because the time is almost up. I will take Kenneth Gibson first. Thanks very much. You want to think that you came out of the accounts commission on what last week was that local authorities should do medium to long-term planning, and the expert is concerned that, of the 32 local authorities, Glasgow, for example, being one, was not carrying out medium to long-term planning, which meant that they were not able to optimise services. Is that a concern to you? I will go back to what I asked earlier. In terms of the figures, will we also get the figures for each local authority in terms of how much 3 per cent could possibly raise for each local authority? Yes, I can provide those figures. The total figure, and I have outlined the methodology so Glasgow, since it has been mentioned, is an increase of £27.7 million, and that is an increase of just over 2 per cent, again just for completeness. On longer-term planning, we of course all take advice from the audit bodies and other experts. We do in terms of longer-term planning. I am sure that local elected politicians will be thinking frankly about the council elections at the moment, but there is a real need to look at the long-term planning within local government. Again, this is a subject that Mr Gibson and I have often discussed. There is still more room, frankly, for efficiency and shared services and procurement in a direction of travel with local government that can do even more with the resources that they have, but we should do that in partnership and we should do that right across the public sector as well. Cabinet Secretary, I understand that, after the original allocation figures had been given to councils, they had to be contacted again for a revision of those allocation figures, because some were wrong. In some ways—I will give you one example here, which was Edinburgh City Council, originally allocated £6.994 million, being put down to £6.991.5 million, and I appreciate other councils with revised upwards. Is she just to ask you about that and perhaps some explanation of how that happened and how the council reacted to that? This is a matter of process. This is the point of the local government circular, the settlement letter goes, the settlement of the circular goes to the local authority, and the councillor is engaged with it as well. Local authorities check, there are engagements here, any of the factors are determined, it is right. There has been adjustments before, there are adjustments again this year. That is the point of the consultation, that is what the exercise is meant to do. The adjustment was made in a further circular the next day, so the first circular went out one day. Immediate engagement from councillor, officials, councils engage through COSLA, officials meet, engage, address it, and the new circular is re-issued and councils engage with that. There is further joint work between our officials and you arrive finally at the position on the order that comes to Parliament about what is actually released to local government. This is a matter of process, it is technical adjustments, it has always been the case, there have been adjustments in the past and there was an adjustment this year, but because of the timetabling issue, I suppose it has happened much more quickly than ordinarily would have been the case. Will the councillors be perfectly cool with that process? No, I think that when the councillors look at their settlement, they will say, how have you arrived at those figures or what are the drivers behind it? Once you understand that, they come back through COSLA to officials, we engage, we adjust and re-issue it. My understanding at the moment is that COSLA are content with the current circular adjustments made in proposition in terms of those technical arrangements. What is still a matter for debate, discussion and agreement is whether individual local authorities accept my offer or not. That is by 13 January, but I think that that is important to clarify, if you do not mind. I agree that it is important to clarify and I am delighted to have been given the opportunity to clarify it. You mentioned Glasgow City Council in reply to a question from Kenneth Gibson, which has been very helpful for the committee. Of course, as a Glasgow member to the Scottish Parliament, the funding position of Glasgow City Council of particular interest to myself. Councillor McAfee, the leader of the administration for Glasgow City Council, gave evidence to this committee in relation to budget scrutiny. Before hand, he said publicly in relation to cuts. He gave evidence to the committee that he spoke about cuts. After your budget cabinet secretary, he spoke about cuts. After he knew the numbers that you have used today, cabinet secretary, what you have said today is that there is a £27.7 million cash increase for Glasgow City Council and a 2 per cent increase in support. That is very different from what the leader of the council has said, which means that we have almost came full circle in terms of local authorities seeking to make the financial position almost as a bargaining ship with national government look as under pressure or as dire as possible. Governments, for pretty obvious reasons, are trying to make the positional look as generous as possible. Sometimes the truth lies somewhere in between, but I listened carefully to the figures that you gave there, which was helpful, given the fact that Councillor McAfee gave evidence into this budget process and the committee will look at that. I just want to point out that you have heard me explain the methodology. It is increasing resource and capital, the multiplier, the council tax issue, the potential to increase council tax by 3 per cent and the funds for the IGB, the integrated arrangements. That is what gets you to the local government services figure that I have described for Glasgow City. However, I could add to that figure and add in City Deal and other funding streams, so that is not even the total final position for that area. There is more in the total resources that go to that area. That is why I think that we have to look at local government services in the round. I know that politics is going to be played out in local government finance, especially as you enter local government elections, but those are the facts, those are the figures, and I am happy to share it all with you, convener. The reason for illustrating that, cabinet secretary, is that we would like to share it with us long before the 11th of January, which is when this committee has to sign off on our budget report back to the finance committee. Members will want the opportunity to look in detail at the numbers that you provide, cabinet secretary. I think that a breakdown, rather than just the headline figures, would be very helpful in relation to that. However, it is just an appeal again that, in future budget processes, it would be helpful if, whether it was spice, our researchers or members did not have to thumb between various documents and circulars to get the actual position as purported by the Scottish Government, and there must be a better way of doing that in the future. I will leave that hanging, cabinet secretary, to the time that is upon us. Do you have any final remarks that you want to make before we move to the next part of our evidence session? I have no further remarks if there are no further questions. Thank you very much, cabinet secretary, and your team for coming along this morning. We now move to agenda item 3, which is in private, so we now move into private session.