 Thank you. Welcome to the fifth meeting of 2016. Everyone present is asked to switch off mobile phones and other electronic equipment as they affect the broadcasting system. Some committee members will consult tablet during the course of the meeting as we provide papers in digital format. Apologies have been received today from John Wilson and Cara Hilton. Agenda item 1 is to decide whether to consider two items in private at this morning's meeting. Item 7 is a discussion about the evidence taken as part of an inquiry of the Scottish Public Service ombudsman. Item 8 is a discussion about the evidence taken as part of our scrutiny of the draft budget 2016-17. Are members agreed? Thank you. We can move on to agenda item 2, its consideration of an affirmative statutory instrument, the draft local authority capital finance and accounting Scotland regulations 2016. I welcome John Swinney MSP, Deputy First Minister and Cabinet Secretary for Finance, Constitution and Economy and Hazel Black, head of local authority accounting at the Scottish Government's local government finance and local taxation unit, and Colin Brown, senior principal legal officer with the Scottish Government. First, we will take evidence in the instrument, and in our next agenda item, the cabinet secretary will move the motion for us to recommend that instrument is approved. Mr Swinney, do you wish to make an opening statement, please? Thank you, convener. If I could make an opening statement in relation to these regulations, a local authority's capital expenditure plans, its borrowing plans and the investment of its surplus money are all interrelated activities, all formed part of a local authority's integrated treasury management activities. In 2003, the local government and Scotland act was passed by parliament in which parliament repealed the capital expenditure consent regime and replaced it with a duty for each local authority to determine and keep under review the maximum amount that it can afford to allocate to capital expenditure. Provision was made for ministers to regulate in this respect. The 2003 act also made provision for ministers through regulation to make revised statutory provision as to how local authorities invest their money. Regulations together with statutory guidance enable local authorities to determine for themselves where surplus funds may be invested, but require their governance arrangements to be set out in policy documents approved by the authority. For both capital expenditure and investment of money, the statutory provisions require local authorities to have regard to recognised codes. Those are the SIPFA Prudential Code and the SIPFA Treasury Management Code. SIPFA is the professional accountancy body for public services. In 2014, as part of the city deal agreement, local authorities asked for a review of the legislative provision for local authority borrowing and lending. They sought greater autonomy and responsibility for decisions on borrowing and on the repayment of that borrowing. The local authority capital finance and accounting Scotland regulations 2016, which we are now bringing forward, are the result of what is undertaken with local authorities and other stakeholders. Those regulations encompass borrowing for capital expenditure and borrowing as a function of a local authority's integrated treasury management activities. The regulations adopt the same approach as for regulating local authority capital expenditure and local authority investment. It sees a local authority to be able to determine for itself the source of its borrowing, but, in taking those decisions, it must have regard to recognised codes. A local authority must also formally determine before each financial year how much external debt it can afford and consider what action to take if that limit is exceeded or is likely to be exceeded. A local authority is also to determine the period over which borrowing, recognised by an advance on the loan fund, is to be repaid to the loans fund and the amount of each repayment. The loans fund is to be administered in accordance with the regulations proper accounting practices and prudent financial management. Guidance to be issued if Parliament approves these regulations will set out what is considered prudent in terms of repayments to the loans fund. Guidance will also formally identify both the SIPFA Prudential Code and the SIPFA Treasury Management Code as recognised codes in this respect. In summary, convener, these regulations have been asked for by local authorities and will be welcomed by local authorities. Together with the guidance that we will also issue, they will complement and complete the statutory governance arrangements for local authority capital expenditure, borrowing and investments, all of which are interrelated activities. I will be happy to answer the committee's questions in this respect. Thank you, Deputy First Minister. Any questions on this instrument? No. In which case, we moved to agenda item 3, which is the formal consideration of the motion that this instrument be approved. I invite the Deputy First Minister to move motion S4M-15459, and the committee has up to 90 minutes to debate the motion with the cabinet secretary. Please note that officials may not participate in this debate. After the debate, the committee must make a decision on the motion. Do members wish to enter into debate on the motion? In which case, do members agree to motion S4M-1549? Thank you very much. I suspend briefly for a change in witnesses. Agenda item 4 is our scrutiny of the draft budget 2016-2017. I welcome once again John Swinney, Deputy First Minister and Cabinet Secretary for Finance, Constitution and Economy, Graham Owenson, head of finance, Scottish Government and Marianne Cooke, policy manager, local government, finance and local taxation unit of the Scottish Government. I welcome the opportunity to meet the committee to discuss the 2016-17 draft budget, which I presented to Parliament in December. The UK Government's continued austerity programme has reduced Scotland's public finances and put significant pressures on household finances. It is against this backdrop that the Scottish Government has taken its decisions for our budget in 2016-17. Our funding package for local government is focused on delivery of our shared priorities to deliver sustainable economic growth, protect front-line services and support the most vulnerable in our society. The proposals deliver a strong but challenging financial settlement for local government. Scotland's councils are, however, able to address these challenges from a healthy financial base. Local government funding has been protected in Scotland in recent years with additional resources provided for new responsibilities. This is in stark contrast to the position in England in which local authorities have faced a real-terms cut in funding of 27.4 per cent over the four-year period 2011-2015. As part of the settlement that the Government puts forward, education is a priority for the Government. We remain committed to maintaining teacher numbers. We do not believe that cutting the current numbers will benefit pupils' learning. Our commitment is that local authorities should collectively maintain the pupil-teacher ratio at 13.7 and provide a place on the teacher induction scheme to every probationer who needs one. The Government will provide £88 million in the settlement to support the delivery of the commitment. Successful health and social care integration will mean that fewer people need to go to hospital to receive care, spend less time in hospital and return home more quickly. We have therefore proposed that £250 million will be provided from the health budget to integration authorities in 2016-17 for social care. £125 million of the funding is being provided to support additional spend on social care, to support the objectives of integration, including to make progress on charging thresholds and to expand capacity as a consequence of demographic change. The other £125 million is provided to help to meet a range of cost pressures faced by local authorities in the delivery of effective and high-quality health and social care in the context of reducing budgets. That includes delivery of the living wage for social care workers. As a percentage of estimated total revenue expenditure, next year's reduction in local authority budgets in Scotland, when taking into account the £250 million that will be invested in health and social care, is a reduction of less than 1 per cent of total local authority expenditure. Although I do not pretend that this is easy for any council, some of the language used to describe this change has been excessive. The establishment of the commission on local tax reform followed this committee's recommendation from 2015 on the flexibility and autonomy of local government. The resulting report is a comprehensive piece of work. We very much embrace its conclusions, which align with the Scottish Government's overall approach to taxation. We will bring forward before the end of the parliamentary term a detailed plan for reform that will embody the principles of the commission's report. I urge other parties to likewise so that the electorate is offered informed choices. In the interim, the Scottish Government considers it as important to continue to protect household incomes in what has been a challenging period for them. The final element of the package of measures therefore requires local authorities to work with us to deliver a council tax freeze in 2016-17. We are providing £70 million to enable local authorities to do so. Tough choices have been needed to fund our commitments, such as building innovation to fuel future economic growth in Scotland. In the face of the austerity environment, the lack of full fiscal and economic levers and the declining rate of receipts means that it is no longer possible for us to sustain all of our business rate measures. I have announced a number of proposed changes, including to the business rate supplement that large businesses pay and to some other reliefs. The small business bonus scheme, by far the most generous relief for small businesses anywhere in the United Kingdom, will continue in 2016-17. Legislation to make changes will be laid before Parliament later this month. I have also announced a review of the business rate system in Scotland, and more details on that review will be available shortly. I fully understand the pressures on budgets. Our funding proposal protects shared priorities and delivers practical support to intensify the pace of reform. I look forward to creating a settlement that will deliver for communities right across Scotland. The draft budget describes the local government settlement as strong but challenging. Obviously, local authority leaders have used much stronger language in describing the budget, the local government settlement. Previously, they have stated that the settlement here has fared very well when compared to local government settlements south of the border. After the draft budget, how does local government in Scotland sit with local government, compared with local government south of the border, when it comes to central government allocation? There is a substantial difference in the profile of central government support for local authority expenditure. I cited in my statement in my opening remarks to the committee that local authority grant support in England had fallen, in real terms, by 27.4 per cent over the past four years. The Scottish Government has taken an approach whereby, in each of the financial years since 2011-12, there has been an increase in the resources available to local government, with the exception of the year when we removed police and fire expenditure from local authority budgets. Obviously, there is a reduction in local authority expenditure in the forthcoming financial year, but, as I have explained to the committee in my statement, there are mitigation measures that I have put in place to try to support the delivery of local authority services given the challenging financial climate in which we have put in place. The comparison between the performance of funding support for Scottish local authorities has been significantly stronger than for local authorities south of the border, given the long-standing commitment that the Government has made to effectively support local authority public expenditure. You have stated, First Minister, that the allocation to local authorities is a 2 per cent reduction in councils' overall income, and yet we have seen councils, such as Murray, suggest that they need to raise local council tax by 18 per cent to deal with the allocation cut that they feel that they have. Do you like to comment on that 2 per cent reduction in income and the reaction that there has been from councils, such as Murray? Essentially, convener, I acknowledge that there is a 350 million pound reduction in local authority grant in aid as a consequence of the budget that I have announced. As a proportion of the total expenditure of local authorities that we estimate to be about £16 billion, that equates to about 2 per cent of our reduction. When we take into account the fact that £250 million is going to be spent through the integrated joint boards to support expenditure that is expenditure on services in which local authorities are key participants, and given the guidance that I have issued to local authorities as to what they can expect, that fund to support as a proportion that results in a net reduction in the local authority budget of about £100 million out of £16 billion, which equates to less than 1 per cent. Some of the talk that we have heard has been frankly over the top about the impact of the settlement on local government. I do not underestimate the on-going challenges in delivering public services within a constrained financial environment, but I have to take into account a whole range of different factors in setting the budget. I have to take into account the degree of pressure that will be on household incomes. I need to take into account the extent of government grant. I have to take into account the constant necessity for us to reform the way in which we deliver public services. What I have done in relation to the financial support being offered to integrate health and social care is a very substantial investment to assist the process of reform so that services are delivered differently in the years to come than they are currently delivered. In all, the settlement that has been offered to local government is a very credible settlement. It certainly does not merit the type of description that it has had from certain voices within local authorities and it most definitely does not merit an 18 per cent increase in the council tax. Thank you. In terms of that reform, the Government during the course of this Parliament have talked of a decisive shift to prevention. Is your thinking of creating that fund for health and social care integration to help with that decisive shift to prevention? There has been some commentary over the course of the weekend from Aberdeen in particular about difficulties in dealing with some aspects of what you require for councils to access the £250 million. I understand that you have said that councils do not have to implement this on 1 April but have some leeway in that regard. Would you like to tell us your thinking round about some of those things and maybe comment on what has been said over the course of the weekend? The Government is pursuing, with our local authority partners and other public service providers, a long-term agenda that is to deliver that shift to prevention. Any analyst would recognise that a shift to prevention does not happen overnight. It takes time for that to be managed and implemented. The Government is taking steps with our partners to advance that shift to prevention. The investment of £250 million is designed to do that, because it is an investment that, as I explained earlier on, is designed to better support individuals to remain in their own homes, where we know that individuals' circumstances and their recovery, if properly supported, will be more effective and more enduring than if they are doing that in an inappropriate care setting in a hospital that does not meet all of their needs and circumstances at that time. What we are doing is investing to fuel the capacity and capability of social care to deliver that preventive agenda and to meet the needs and expectations of citizens. One of the specific dimensions of the proposition that I have put to local government has been to put in place the measures and the financial support that can ensure that social care workers are paid the living wage. If I had my preference, I would have wanted to have seen that implemented on 1 April, because I think that that is an issue that needs to be addressed. I think that there is very strong public support for that, a very strong parliamentary support for it and also strong local authority support for the proposition into the bargain. I listened carefully to what local government said to me about this and I saw no lack of willingness on the part of local government to pursue this issue, but they did present to me some pretty important operational and practical issues and issues of negotiation that would have to be taken forward to make sure that that could be implemented reliably. I accepted that argument and offered a proposition to local government that said that on the previously available funding arrangements—there was no change to the funding arrangement available—that could be implemented with effect from 1 October 2016, so care workers would be able to look forward to that proposition being effective by that time. I think that that is a reasonable compromise to recognise the issues that face local government and the very practical issues. I think that it gives us every opportunity for some of the points that were raised in the weekend news coverage, which I found a little bit strange, given that I recognised that many local authorities were planning to do that anyway and that the Government has given some more support to enable that to be the case. I would have thought that that was an approach that would have been welcomed within local government. Obviously, some of the perceived barriers there will be roundabout the roof-out versus Needer's accent case, which has been much spoken about in this committee previously. Do you think that that time frame allows local government to deal with any issues that are roundabout in implementing the living wage for social care workers who do not work directly for councils? Yes, I think that that is an adequate time. Thank you very much. George Adam, please. Thank you, convener. Good morning, Deputy First Minister. I just ask the question. Is it not the case when we are talking about the integration of health and social care that some of the language that has been used by local authorities that you mentioned earlier on is not a surprise for local authorities? This is a plan that they have been working towards for a number of years, for quite a while now, and the whole idea is that we can get to a place where, when you look at the human element in the whole system, where social care and health are integrated in such a way that the individuals that are dealing with it right at the front at the health and social care part are actually getting the service that they actually need instead of getting caught between two big, almost in certain cases conflicting institutions, whether it be health and local authorities themselves. Is it not just a case that the local authorities knew that this was going to happen and it is no big surprise to them? We have certainly been in very active negotiation with local government actually in a partnership way for the implementation of health and social care integration. The debate on this question has been going on for—I think that the debate is probably going on as long as I have been a member of this Parliament, which is from its founding days, and what I am pleased about is that we have got to the point that we have now legislated for health and social care integration at local level, and the arrangements are in their shadow year ready for implementation on 1 April. What I recognise is that, in the brain together of those services, there will undoubtedly be opportunities for us to deliver services in a more effective way that addresses some of the questions of duplication, which address some of the issues of the significant management of caseload that goes on as individuals make their journey through the care system, because I think that the point that Mr Adam is getting at this question is the correct point, which is that members of the public and particularly their families want to see individuals getting the support that they require. They are not particularly interested in who provides it as long as it is provided and it is of the recognised quality of service. What health and social care enables us to do is to more adequately address the needs of individuals and to remove the barriers and obstacles and duplication that can often exist in the provision of services. The new partnerships will be managing about £8 billion of health and social care resources between them, and we have put in an extra £250 million to drive that process of reform yet further. Within an £8 billion budget, I am absolutely certain that there is an opportunity for us to deliver care services much more effectively, much more efficiently, that can create more capacity and, most importantly, meet the needs and the interests of individuals. I would say that the collaboration that has gone on with local government in the formulation of the legislation on health and social care and on its implementation has been welcomed by the Government and has been beneficial for citizens. On shared services in general and local authority, in my time as a councillor, I heard on numerous occasions that we were going to work more intuitively as a councillor, we were going to share services, we were going to move things forward. Even now, we have a situation in which, when I am on the education committee, I have asked members of COSLA and various other councillors who were there to give them evidence. Have you looked at innovation ways that we can use back-of-house services? How can we work together in a local authority by local authority way in education or other ways? How does this budget help local government in that context? How has local government worked towards the shared services to try to make sure that they can not just make efficiencies but, like health and social care integration, deliver service in an efficient and helpful way? There are two points that I would make in relation to Mr Adam's question. The first is about innovation. In my wider responsibilities within Government, I am encouraging the formulation of what has been described as a culture of perpetual innovation in Scotland. Innovation is often viewed as the preserve of sophisticated technologies in higher education institutions. Innovation has to be the preserve of all of us and, particularly within the public services, we need to find new and different ways in which we can exercise our responsibilities and find solutions to the needs of individuals. I encourage local government to consider that. There are many good examples of that in the field of prevention, which the convener questioned me about a moment ago, where local authorities are demonstrating very good measures that tackle the issue of prevention. The second point is in relation to the wider issue around shared services, where I do not for a moment believe that we have exhausted all possible avenues for the delivery of shared services. We still have councils habitually working independently and without collaborating on particular questions and in the provision of particular services. There is an opportunity for that to be achieved and, of course, that is another device and technique that can be used to meet the budget challenges that local authorities face. I want to ask about the £250 million transfer from the NHS to the integrated joint boards. Is there going to be a mechanism in there to ensure that that money continues to be additional and that councils cannot reduce their contribution as a result of that new money coming in? What I have said is that the local authorities have, in their participation with the integrated joint boards, can essentially offset increases in the costs of their provision of health and social care services. Every year, social care costs will increase to continue the existing service that is provided. I have indicated to local authorities that they can assume that £125 million of the £250 million can be used to assist them in meeting the additional costs that arise out of providing the existing service and that, within that, there are resources to pay the living wage to social care workers. I have also said that £125 million must be allocated to provide additional support. Essentially, if a new care package requires to be provided by a local authority, it is, in my view, entirely legitimate for that to be paid for out of £125 million of the new resources going in. We all know that, on an annual basis, there will be more care packages required from one year to another. There is provision for additionality and there is provision to meet the increased costs of providing the existing care service that is provided by local authorities, but, albeit, it will be provided within the environment of the integrated joint board. Willie Coffey, please. Thank you very much, convener, and good morning Cabinet Secretary. In some of your opening remarks, he gave us some of the figures that are on the table here. I wonder if you could broadly outline for us what the funding settlement to Scotland has been over the past spending review period, just to put that in contrast with what local authority settlements have been during that period. Do you want to get an indication and an idea of what is happening in countries like Scotland, England and Wales in terms of settlements for local authorities, compared with the overall allocations that we get? Essentially, over the period from 2010 to 2020—that is over the term of the last Conservative Liberal Coalition, when the austerity programme started in 2010—to the end of this current Conservative term in office, the discretionary budget that is available to the Scottish Government will have fallen by 12.5 per cent in real terms compared with 2010-11. The real-term reduction is essentially the equivalent of £1.8 being lost from the Scottish Government's budget. I do not have to hand a directly comparable local authority funding position in Scotland over the entirety of that period, but between 2008-09 and 2015-16 local government funding in Scotland has reduced by 4.4 per cent in real terms. Those are not directly comparable to what I can offer to Mr Coffey, but it shows that the Scottish budget has been declining sharply and we have worked to protect local authority expenditure during that period. You mentioned a cut in your remarks of 27.4 per cent given to English local authorities in the period from 2011 to 2015. Even if you do not have the immediate figures there, are you saying that the cut to Scotland, the equivalent, is about 4 per cent compared to 27 per cent given to English local authorities? It is not directly comparable in those years, but the reduction in Scotland has been significantly lower than the reduction in the rest of the United Kingdom. You gave some figures for England there, but as I understand it, in Wales, for example, the cut proposed this year to local government is about 2 per cent, which the Welsh First Minister described as councils being relatively well protected. However, the narrative in Scotland has been hysterically the opposite of that. Your cut of around 1 per cent has been described as a disaster and so on and so forth. Would you like to comment on the contrasting approach that is taking in the two countries to what looks like fairly similar levels of funding for local authorities in both Scotland and Wales, but the different approach and narrative has been given to both? If I look at the period since 2011-12, in 2012-13 the Government's support to local government increased by 0.43 per cent. We then had 2013-14 when we removed the costs of police and fire, so there was a fall in that year, but that would be expected because we removed those costs. In 2014-15 the local government budget went up by 3.62 per cent in Scotland, and it then went up by 2.15 per cent in 2015-16. There are two points that are relevant about the local government budget in Scotland in comparison to the situation that Mr Coffey has outlined. One is that local government is starting from a relatively high base. If I look back at the settlements that I have delivered over the years to local government, the local government base has been getting stronger and stronger year by year, so it starts off from a higher base. Secondly, the scale of the reduction in the local government budget in Scotland is much smaller than some of the changes that have been applied to other public bodies within Scotland. When we take into account all relevant factors, including the injection of £250 million into integrated joint boards, the reduction for local government in terms of their overall expenditure because it is not just Government grant that supports local authority services, council taxes, other charges and other factors, the reduction is less than 1 per cent. I think that we have to see this in its proper context. Some of the language that has been used to describe the settlement has been, in my view, absolutely inappropriate in trying to explain what has happened. I appreciate that there are challenges in the local government settlement, but there are challenges in every part of the budget. The health service budget is going up, but there are challenges in the health service because of rising demand. That proper context has to be understood. Of course, John Swinney can only dish out the cake that John Swinney gets to dish out. It is not nasty, Mr John Swinney, that he is deciding to impose those cuts. You are dealing with a financial settlement being given to you by the Treasury in the UK? I am, and there are choices to be made around that, which I suspect will be the substance of some of the issues that we discussed in the chamber this afternoon in relation to stage 1 of the budget process. However, there are powers that I have where I can change the amount of income that we make. I have taken those difficult decisions in relation to business rates, to increase business rates, to ensure that we have more resources at our disposal to support non-domestic rates. I have made a choice that I want to protect household incomes, particularly for low-income households that have been under severe pressure since 2008-2009. I do not think that the evidence in front of me indicates anything other than the remain significant challenges for household incomes. Therefore, I have decided not to increase the Scottish rate of income tax, which would place that burden on low-income households in Scotland. Can I ask you about the council tax freeze, as well? Some members of the public think that a council tax freeze means that the council's budget is frozen, as well. Some do think that there is a tightness there that is being applied by the Government, which means that the council's budget is frozen, but that is not the case. I think that you have outlined again in your remarks that the councils are funded to achieve that freeze year on year. Can you clarify whether that has been the case? The Government has built into each local authority settlement since 2008-2009 £70 million to pay for the council tax freeze. That is set essentially at an assumption of inflation at 3 per cent, and I have never changed that number. The analysis that was produced by Spice some months ago indicated that a quote from that report said that it could be said that the council tax freeze over the period 2008-9 to 2013-14 was overfunded, with an estimated £164.9 million extra going to local government as a result. There were years in which inflation was lower than 3 per cent, but I maintained the £70 million going into local government to pay for the council tax freeze, and the Spice report indicates that that has been adequately and effectively funded by the Government over that period. Can I finally ask just about the proposal to local councils' cabinet secretary? You mentioned three key proposals as part of the settlement. Can you clarify again what the arrangements are in relation to the three proposals that you have made to local councils and whether they have now all agreed and signed up to that offer made by the Scottish Government? What I have set out to local authorities and I did this in a final offer letter on 27 January to the president of COSLA, which was copied to all the leaders of all local authorities in Scotland, was essentially a proposition that set out the funding available authority by authority, but it was invited to local authorities to participate in accessing £408 million of resources that would fund three things—the investment of £250 million in the integration of health and social care activities at local level, and the maintenance of the teaching population through the mechanism of the pupil-teacher ratio being maintained at a value of 13.7 across all local authorities. I stress that local government made representations to me that it did not want an authority by authority arrangement that we had for 2015-16. I have acceded to that and have moved to a national picture of maintaining the pupil-teacher ratio at 13.7. Finally, the council tax freeze on which Mr Coffey has just questioned me. I indicated to local authorities that by 9 February I invited them to indicate that they were prepared to participate in that package of funding of £408 million. I have made it clear to the local government that it is a requirement that they participate in all three elements. It is not possible for authorities to pick one or more. They must participate in all three elements. However, at a later stage in the year, if an authority does not perform effectively against each of those elements, I reserve my right to claw back some of the resources associated with that topic. For example, if a local authority signs up to protect teacher numbers but, in fact, does not do so, I reserve my right to claw back a proportion of the £88 million that is involved in the settlement in relation to teacher numbers. I have subsequently had correspondence from the leader of Murray Council, which has asked me if a local authority was to sign up to all three elements of the package and subsequently, at budget setting date, which would be within the next few weeks, they decided not, for example, to freeze the council tax. Would I just penalise them in relation to the council tax or would I withdraw their share of the £408 million, the total package of support that is available? I have taken the opportunity of that scenario to clarify to all local authorities that if an authority told me on 9 February that they were going to sign up to all three elements, but then a couple of weeks later decided to increase the council tax, I would consider that to be an act of bad faith and I would withdraw the funding in relation to the whole £408 million. I have communicated that to the leader of Murray Council and to all local authority leaders just to avoid any lack of clarity on what my intention would be. Obviously, I have now placed that on the parliamentary record, which will have some significance in the consideration of local authorities. The point that you are making is that you are funding those three elements, you are actually giving the local councils the funding to deliver on those three, so it would seem pretty strange if they accepted the funding and then did not carry out the policy. That is the point that I have made in my letter of 27 February to local authority leaders and in the subsequent letter dated the letter of 27 January to Councillor O'Neill and the letter that I have sent to the leader of Murray Council, a copy to leaders of all Scottish local authorities on 29 January. If it would help the committee, I am very happy to make a copy of that letter available to the committee for the benefit of its records. The draft budget shows that non-domestic rates income is forecast to fall by 2.8 per cent in real terms in 2016-17. Could you maybe outline the reason for that predicted fall in non-domestic rates income? Can you maybe give us an indication of how much the large business supplement and changes to relief are expected to raise too, please? Essentially, the issues that have affected the non-domestic rates pool have been twofold. When we were making our long-term predictions about the non-domestic rates, we made assumptions about the level of inflation that would be prevalent, and we generally used the office for budget responsibility estimates of likely inflation. As we all know, inflation has been significantly lower than the OBR estimates, so that has obviously affected the expectations that we could have achieved in terms of the increase in non-domestic rates receipts. The second issue is that the level of buoyancy that has been delivered has not been as high as was anticipated in the budget assessments. For example, in 2014-15, we assumed a buoyancy level of 1.55 per cent, but the actual buoyancy for 2014-15 was 0.82 per cent. Of course, there is a cumulative impact of some of those factors on the receipts for non-domestic rates. I have had to take steps to improve the strengthening of the non-domestic rates pool. That is what has transpired in relation to decisions that I have made on different elements here. The large business supplement is estimated to raise £60 million as a consequence of the decisions that I have taken. For the benefit of the committee, I should perhaps put this change into some context. What I have decided to do is to increase the large business supplement from £1.3 pence to £2.6 pence. That gets added on to the £48.4 pence, which is the core poundage that is paid to which all businesses are liable. The combination of those two factors increases business rates for companies that pay the large business supplement by 3.4 per cent for 2016-17. If I go back to recent years, in 2011-12, the comparable increase for companies paying the large business supplement was 4.6 per cent, and in 2012-13 it was 5.8 per cent. Although the increase is slightly higher than the increase would be for ordinary companies who are not paying the large business supplement, I think that, within the context of the last few years, the increase of 3.4 per cent is not even as high as the increases that have taken place in 2011-12 and 2012-13. If I could move on to small business, in my own constituency, I go out and about. The small business bonus scheme has been welcomed by almost every small business owner that I have come across in recent times, with many folks saying that it has allowed them to keep their heads above the water in tough times or has allowed them to invest. There seems to be, in certain quarters, a call for the small business bonus scheme to be abandoned. What is the Government's position on that? The Government's position is that we believe that the small business bonus scheme has been of enormous benefit in a very challenging financial climate for small businesses that are the length and breadth of the country. Indeed, we now see from the latest statistics that just short of 100,000 properties have seen their business rates either reduced or completely removed by the small business bonus scheme. For the sake of accuracy, the number at the last statistical release was 99,559. That is an increase of 3,000 since last year. That can save companies up to £3,200 more than equivalent businesses south of the border. That shows a real competitive advantage for small companies in Scotland. I think that the Government has made clear our belief that this is a really fundamental element of the architecture of financial support to the business community within Scotland. If we are fortunate to be re-elected in May, we will maintain that scheme in the years to come. Since the introduction of the small business bonus scheme, about £1 billion has been invested in small businesses through the small business bonus scheme. It has been a very significant contribution. Given the challenges that all members will face in their constituencies, the challenges of the sustainability of town centres and the wider challenges for the business community have been strong support that has been welcomed by members of the public and the business community. The Government believes that that is £1 billion well invested. Can I ask you about any local authorities that plan to use the localised relief under the community empowerment act? Are you aware of any authorities that have made moves in that front? It is quite early for that to materialise. The provisions would have had royal assent just within the past six months. The power came into effect on 1 October, so it is quite early for us to see the steps that authorities might be taking. What I have tried to do is to do two things on non-domestic rates for local authorities. One, to give absolute certainty to local authorities about the financial support that they can rely on from non-domestic rates. Three, reliability from the financial support that is available to local authorities from non-domestic rates. Secondly, we have a situation where the non-domestic rates raised in every local authority area goes directly to that local authority. In your own city convener, all of the business rates raised in the city of Aberdeen flow directly to the city of Aberdeen council. I think that that is as it should be. Thirdly, I have given local authorities the opportunity—where they see fit—to use their resources to reduce business rates if they believe that that would be beneficial to the local economy. Of course, I encourage local authorities to consider the use of those powers. Finally, I would point out that those powers have come into effect in Scotland significantly earlier than they have come into effect south of the border. We do not expect those powers to come into effect in the rest of the United Kingdom until 2020, but they came into effect in Scotland in October 2015. I think that it may even have been the 31st of October. I think that I would better check mine. I think that I will correct the record on that. Not so long ago that that came into being. We may see some changes in forthcoming local authority budgets. The options should be available to local authorities to do that. We will watch that with interest. Obviously, as part of our budget scrutiny this year, the committee has focused on city deals and local government pension funds and their use in investing in infrastructure projects. Apart from the fact that Aberdeen has now received its city deal information, do you have anything to update us on in terms of city deal allocations or local government pension funds investing in infrastructure projects? Obviously, I welcome the fact that we have managed to reach agreement with the City of Aberdeen Council on the city deal and with the United Kingdom Government. That was of course announced last week by the Prime Minister and jointly signed by the Secretary of State for Scotland and Keith Brown and the leaders of Aberdeen City and Aberdeenshire councils and supported by Sir Ian Wood, who has made a huge contribution to this discussion and with whom I will be meeting later on today. The Aberdeen deal is in place and we look forward to implementing that. It is supported by a wide range of Scottish Government expenditure in the north-east of Scotland in relation particularly to Aberdeen western peripheral route and of course the other examples of investment that the Scottish Government set out in relation to improving journey times and capacity on key links between Aberdeen and the central belt and the rail services, the improvement of the Lawrence Kirk junction and the expansion of the digital connectivity services that we plan and the expansion of housing services. I think that there is a very strong and infatid deal for the north-east of Scotland in that respect. There are further discussions being taken forward just now in relation to the city deal in Inverness and that is I would think the next most advanced proposition and there are other discussions that are under way in relation to other propositions and of course the Government will keep the committee and Parliament updated on those questions. In relation to the investment by pension funds we are seeing increased interest and energy being put behind the whole concept of pension fund investment in infrastructure and we are actively involved in discussions to enable that to be taken forward by different local authorities. Obviously you can't appear in front of this committee without me asking you about the funding formula in terms of the allocation of funds to local authorities. Has there been any moves from COSLA in recent times to change that funding formula? Nothing, convener, other than the routine updating of indicators that will be undertaken jointly between the Government and COSLA through the settlement and distribution group, which essentially looks at updated and changed factors but no fundamental reform of the distribution formula arrangements. You've gone on record before Deputy First Minister saying that you were more than willing to review the funding formula if COSLA approached you and asked you to do so. Is that still the case? That remains my position, convener. Thank you. Can I ask you if the Scottish local government partnership has approached you in terms of changing the funding formula at all? I saw a letter last night that I received from the Scottish local government partnership, which I haven't had the opportunity to consider all its details. I'm not familiar with all its contents, although it's just been put in front of me. I think that the details of this do not relate to reviewing the funding formula. I'm unaware of having received representations to do so, but I think that, in the interests of absolute accuracy, I better just check all correspondence in that respect and reply to the committee in writing. I'm not aware of any call for a review of the distribution mechanism. It would be grateful to receive that in writing. Willie Coffey, please. Just on that issue about the funding formula, cabinet secretary, I understand that one of the main ingredients in this mysterious funding formula is population size within the authorities. If you look at the data and the revenue allocations to the authorities on a per head basis, you will see a completely different picture. For example, on a per head basis, Glasgow City's allocation is 113 per cent of the Scottish average, and my own authority stairs is slightly increased to two. While authorities wait with bated breath about the allocation that they get, if you're looking at those allocations on a per head basis, it's a different story to tell. Is that within the thinking of COSLA to, at some point in the future, have some kind of higher or closer regard to the population element of the local authorities in terms of the settlements that they should get? The funding formula is a combination of certainly population factors, and the population issues bear very heavily on the distribution formula. However, there are a range of other indicators that are borne in mind that do not relate to the population and take into account some of the differences in the nature and the character of local authority areas and the special circumstances to which we have to address. Clearly, as Mr Coffey is absolutely right, there is a very significant range in the per capita funding that is received by local authorities. The Scottish average is £1,776. Glasgow City, for example, is £2,222. Mr Coffey's area in East Ayrshire is £1,872, so there will be a range. That will reflect the intensity of population and it will reflect the nature and the challenges of individual localities as affected by a range of different issues. At the moment, there is no imperative in the Convention of Scottish Local Authorities to change the formula? No, I would have to say that I have heard clearly from the local government that there has not been much of an appetite to revise the funding formula. Indeed, at particular times, I have been expressly asked not to do so. I thank you very much for that. Finally, on the funding formula, I take it that the Government's position is to keep the funding floor in place. It is, yes. Cabinet Secretary, Deputy First Minister, I thank you for your evidence to the committee today. I understand that you are off to the finance committee now. I suspend briefly for a change in witnesses. Our next agenda item number five is to consider the following negative statutory instrument, that is the local government pension scheme Scotland amendment number two, regulations 2015, SSI 2015-448. Members will see from the clerk's note that this instrument makes a number of updates to existing regulations enabling payment of survivor benefits to survivors of same-sex marriages and provision for new-shared parental leave. The Delegated Powers and Law Reform Committee has drawn the Parliament's attention to a technical issue concerning a definition that the Scottish Government has undertaken to resolve. Do members have any comments? Is the committee content to agree that it has no recommendations to make to Parliament in relation to this instrument? Are members agreed? Thank you very much. We now move on to agenda item six, where we will be taking evidence from the Scottish Public Service Ombudsman as part of our annual inquiry. I welcome Jim Martin, Scottish Public Service Ombudsman, Nicky McLean, director of the Scottish Public Service Ombudsman, Paul McFadden, head of complaint standards at the Scottish Public Service Ombudsman and Emma Gray, head of policy and communications at the SPSO. Would you like to make an opening statement, Mr Martin, please? No, convener. I think that you have a busy enough agenda without me going on as well, so I would be perfectly happy to expand on any of the materials that we have sent to you and to take any questions that the committee may have. Okay, thank you very much. I actually have the pleasure of being able to speak to Mr McFadden and Ms McLean at yesterday's meeting of the Welfare Reform Committee. First of all, could you maybe give us an indication of how the added responsibilities that you are about to undertake from 1 April is regarding the appeals process for the Scottish Welfare Fund, how that will affect the service that you provide, Mr Martin? Happy to, convener. The Scottish Welfare Fund provision has been funded by the Scottish Government and I'm happy with the funding of that and I'm happy with the resourcing of that. I'll ask Paul McFadden perhaps to tell the committee a little bit about the practicalities of the implementation from 1 April, Paul. Yes, thank you. As the committee are aware, this does bring a slightly different role for the Ombudsman in terms that will have a role to direct local authorities in terms of decisions that are made in terms of the welfare fund. A lot of our preparations have been around taking into account how we will adapt our process to take account of that different role. Also in terms of the timescale, clearly the circumstances that people are applying for the fund find themselves in mean it quick and robust decisions are absolutely crucial. So we are having to design our process to cater for that and make sure that we get responses out quickly within one day or 21 days in the case of community care grants. From the very early stages that this was proposed, I think, the uncertainty around what the numbers may be has been something that has been a bit of a concern for us and a bit of a hindrance in terms of planning. In the first years of the welfare fund and the current scheme, the review numbers were particularly low compared to the previous scheme that existed at IRS, where it was up to 6,000 for Scotland. We are looking at quite a significant increase on tier 2 reviews at local authority level over the past few years. We are estimating that that is now going to be in the region of 1,000, maybe 1,200, but there is a big unknown there, so that is something that we are having to plan for. We have in place a team, and we have recruited a team that will start shortly. We are preparing a detailed training programme for them. I think that most importantly throughout all of this process has been on engagement with both the third sector advocacy and support agencies and local authorities. We have set up sounding boards for each of those groups, and they have been a great help and support as we have developed this, as we have prepared ourselves for taking on the road from 1 April. I take it that you have done everything possible to simplify the design and the operation of the complaint handling system, because, obviously, those complaints have to be dealt with quite quickly because folk are in crisis. Absolutely. The simplicity of access and the speed of our decisions are absolutely the forefront of everything that we are doing. I think that, within that crisis grant, clearly those who are applying in crisis situations will always be prioritised over anything else that comes into our office. We are looking to request information from local authorities within 24 hours. Once we have received all the information, we will make our decision within one day on crisis grants. Yes, absolutely. Cameron Buchanan, please. Last year, you raised evidence about the complaints for health and integration of health and social care. How much progress has been made in this towards integrating the complaint handling, which was key, and you expressed last year some reservations on it? I think that there has been significant progress in that. I am very grateful to the committee for putting its shoulder behind the arrangements, because I felt like a voice crying in the wilderness for a very long time. Once the committee began to get involved and take a serious interest in that, things started to move quickly. I think that we are on course now to have an integrated approach between the social side and the health side. One of the things that we are currently doing with the national health service is bringing their complaints process on to the same footing, the same complaints handling procedures that we have for other parts of the public sector. That will enable complaints to be dealt with through the same simple process as before. Once again, Paul McFadden has been leading on that work through the Complaints Standards Authority. Paul, do you want to add to that? No, I think that just to put on record our thanks to the committee who obviously looked at this issue in some detail. I think that we did see progress quite quickly after that. In terms of getting the legislative or the path to the legislative changes put in place for that simple standard process across all the areas within integrated social health and social care, there is quite a bit to go. April 2017 is a date by which we will have the NHS process, the social work process and the integration joint boards operating from the same process. A lot of work is on-going with those partnerships and those boards and those involved within the process to make sure that that is well prepared for. Thank you for your comments about the committee as well. I think that we will probably have something about that in our legacy paper camera. Yes, I was just going to ask that you mentioned that, I think that with these complaints, speed is of the essence, isn't it, particularly with involved with health. Are you satisfied that it is being handled speedily or reasonably speedily? I think that we are getting there. I am very impressed by the progress that has been made particularly in the national health service towards moving to a single complaints handling process based on the CHPs that we have. At the moment, I am reasonably content with that. Can you give us an idea of what specific ways the SPSO considers that you have demonstrated over the period that you have provided value for money and added value in the work that you are carrying out? Yes, it depends on what the period is. Let's deal with the year. I will set aside the fact that, through implementing the Sinclair recommendations for a single complaints body in Scotland and by absorbing things such as prison complaints and water complaints, we, year on year, are saving the public plus £1.5 million by absorbing those within the SPSO. Over this year, I think that the progress that has been made in bringing together improved complaints handling procedures across the public service in Scotland is frankly worth its weight in gold. You will see from our strategic plan evidence and the update that we gave on the nine months progress this year that, for the first time, we are able to compare year on year numbers, for example, in local government, for complaints being brought in. You will see that it is now possible to say that, for example, at the first stage of local authority complaints in Scotland, there has been an increase in the number of complaints upheld from 50 per cent to 70 per cent by local authorities. That should enable local authorities in Scotland and this committee to begin to ask the question, why is that? Is it that we are getting better at dealing with the complaints that people bring, or is it that there is a problem with the services that we have been provided? In that way, we bring some value add. We have made over a thousand recommendations for improvements in public services through health, local government, prisons and water throughout the last year. Each of those recommendations either brings some comfort to people who have had things go wrong, for example in the national health service, by bringing apologies for treatment, or they have been recommendations that have been accepted for improving processes and the way that people are dealt with in the public sector. I am pretty confident that, for £3 million spent, which is what is spent on the SPSO, there is far more than that value coming back every year. In terms of those thousand recommendations for improvement that you have mentioned there, Mr Martin, how do we ensure that those recommendations are acted upon? How do we make certain that those recommendations are known by other public bodies who may need to improve? First, I know that the committee took some time to look at some of our recommendations in detail, and I am happy to discuss that process with you. I welcome that. One of the things that we do is that we never sign off that our recommendation has been completed unless we have looked very carefully at the evidence that is brought to us by the public body to whom we have made the recommendation, so we do not give cap belongs to anybody. You will see in our strategic plan that one of the things that we are intent on doing is creating a learning and improvement unit. Part of its role will be to follow through on recommendations. I am going to ask Nicky McLean in a second convener to talk maybe a bit more about that. One thing that I would ask the committee, I have got about a year to go as ombudsman, so I am starting to put down markers. One of the things that the committee has rightly done is to look at what is the impact. One of the most frustrating things for an ombudsman sitting in my position is not being able to follow through when we see a number of individual complaints were about the same issue. The act that set up the ombudsman, the SPSO act in 2002, which was revised in 2010 after a review, tells me that I can only look at individual complaints that are brought to me. I think that that is a waste of a public resource. I think that there are systemic issues that the ombudsman should be encouraged to raise these systemic issues and investigate them. If I can give you an example—I know that this is a long answer, convener—in one hospital, we had five different complaints come to us over a relatively short period of time where cancer diagnoses had been missed in radiography. Technically, I could look at each of these only in isolation and come to decision and demerence. Once you have seen four or five of those things, you begin to think that there is a systemic issue. There are two ways that you can deal with that. You can either informally, through back channels, raise this with the appropriate bodies, which we do, or on the back of one of the complaints, you can put a recommendation for which it goes through the systemic issue. I think that Scotland would be better served if the ombudsman were able to flag up that a number of issues in the same area had been spotted and that the ombudsman then intended to conduct a systemic investigation into these issues. However, I may say more about that next year when I am here, which will be my last appearance. Perhaps Nikki McLean might talk about the learning and improvement unit, convener, which I think that the committee might be interested in. I thank you for that, Mr Martin. There is absolutely nothing to prevent you from raising systemic issues with this committee or with others of the Parliament. Obviously, in your previous answer, you pointed out where the committee has been helpful to you in terms of dealing with the complaint system for the integrated health and social care system. Is there a reticence sometimes for you to come here to Parliament with some of those things so that we can undertake investigation and inquiry if there is some real difficulty in a particular area of public service? No, there is no reticence. However, I am always conscious of the legislation under which I have to operate, which sets out quite clearly what I may or may not do. I think that bringing issues to committees of the Parliament is a very good and valuable way of getting things done. We only have to look at your involvement in the health and social care complaints system to see that that can work. I am thinking more in terms of having to move quickly and directly on issues, like the one that I gave about radiography departments in a hospital and enabling the very good people that I have working with me to bring their expertise to bear to look at whether or not there are systemic issues as well. I do not see the two in competition. I think that they can run parallel. Let us stick with the example that you have given. In terms of your recommendations about the separate cases, who at the health board would your findings go to? Who all would be in receipt of your findings? I think that that is one of the improvements that we have made in the last couple of years, particularly in health. On the back of the Midstaff's inquiry down south of Robert Francis' inquiry, where it became perfectly clear that one of the reasons that a number of the things that happened, some people died, what Francis identified was that these could have been prevented had the board or the trust in England and the chief executive in the chair in particular taken the complaints process seriously. In the NHS in Scotland over the last couple of years, the governance arrangements for dealing with complaints is a lot better than it was three or four years ago. It is now taken very seriously indeed. To that extent, I am happy that there is visibility of individual cases being brought to boards. Sometimes things happen in an individual board or they happen between different boards that are missed because they are only seen in the time that they are presented. Whereas where we sit, we tend to see those things and can identify them a lot more simply. In some cases, boards will grasp with two hands when we say to them, we think that you have a systemic issue. I include local authorities in that as well. In other cases, people will point out to me the limits of my legislation and what it is that I am permitted to do and not permitted to do. They will tell you basically that you are limited here and what you can do to deny you interferes. Is that what we are hearing from me there? I am not going to name names given here. That has been said to me not often as politely as you have put it. Basically, your strain beyond your powers limits you to do this, this and that. If Scotland is going to still be in the forefront of developing the Ombudsman service and we recognise internationally as being there that this Parliament has created it, will you have to free up the next Ombudsman to be able to look at those issues? It would be very interesting for the committee to catch sight of documentation of where folk think that you have overstepped your powers. We could then look at what situations they have found themselves in before they have reached the point of saying to you that you have overstepped your powers. On the systemic issue, because I do not think that we should drift away from that. If I was an individual member of a health board and the same kind of complaint was cropping up again and again and again, surely it would be my duty to delve further into that and surely I should be grateful for the Ombudsman for pointing those things out. Do folk not feel that way? One of the things that we have introduced this year that will help individual boards to join up the dots is that we have introduced in our annual letters to all health boards a learning and improvement statement. We have asked for all bodies under jurisdiction in our largest sectors to sign up to say that they have carried out that kind of analysis. They are not just looking at individual cases on a piecemeal basis, but they try to identify systemic issues and that they confirm to us that they have done that. That is a part of the process that we have introduced this year. Mr Martin, you look like you were wanting to come back in there. No, I think that Nicky has summed it up very well. Willie Coffey, please. Thank you very much, convener, and good morning to you again. Can I continue this wee discussion about systemic issues? I used to be a member of the audit committee and in our previous life spent some time as a quality manager and so on. This kind of golden holy grail of performance improvement really interests me. Despite anyone identifying systemic issues in the public audit to Audit Scotland, I used to do that regularly too and point up and recommend and so on and so forth, but it did point to certain patterns within the public sector, but there it ended. What would you like to ask you and get your thoughts on when you produce your reports and make recommendations? I would suggest that I invite you to make recommendations for systemic improvement, but how on earth do we get systemic improvement back into the system? What is coming through is that you get something like 5,000 complaints a year and you get 76 per cent of them are dealt with within the period and everybody is happy with that, but is it the same complaints that keep happening year on year elsewhere so that the next 5,000 next year is the same stuff? How do we get that improvement to go back into the system to really start to bring that sort of complaint tally down and really see improvement right across the public sector? You are absolutely right, and it is one of the great frustrations that we see as well. Nicky Will and I will talk about learning and improvement. What we are trying very hard to do is, through the limited information that we see—remember, I only see complaints, I only see things that go wrong—is to try to enable each of the parts of the public service to work out how they can tackle those issues, so that I think I have said to the committee before that we are the only committee in Europe that can see the local government complaints numbers for the whole of your country and take decisions about it. Nobody else has that information in the whole of Europe, only you. One of the things that we are encouraging the improvement service and others to do is to get beyond the top-level numbers here and look at the areas where complaints are being generated. Is it in housing? Is it in social work? Are there common factors across that? This committee is doing excellent work in trying to push benchmarking, and I think that this is an area where benchmarking could work. In order for us, we are a small organisation to try to help the whole of the public service in Scotland. We have a proposition, which is currently going to the SPCB, to staff a learning and improvement unit of two or three people in our office. Nicky, would you like to explain what that is? To give a bit more context, there are two issues here. The first issue that Jim talked about is how you get benchmarking information within each of the sectors, and Paul and colleagues have done an amazing job working with local authorities. We now know that there were 66,000 complaints across local authorities last year. Because you have that data, as Jim said, you can really start to drill down and understand the problems. In terms of us as a service, we obviously see a very small percentage of those cases that then flow through to our office. Even then, given the low volumes, there are still opportunities to identify potentially systemic issues. It is hard to say because of the small volumes that we are dealing with, but the proposition is that we establish some form of learning and improvement unit. At the moment, when we make recommendations, and you will have seen this through the four cases that you looked into further, you will see the range of subjects, the range of the types of recommendations. The recommendations can really be split into two parts. The first part of recommendations is about addressing the personal injustice and hardship that has happened to that individual. It is important to remember that, fundamentally, that is what an Ombudsman service is for. It is about getting personal justice for people. The second part is about improvement and learning. The quality of the recommendations that we make around that is really important. We want to make sure that we, as far as possible, are consistent in our recommendations and are challenging in our recommendations in terms of driving improvement within the organisations that we are working with. I think that we get the gist of that. What I would like to know is that you are talking about a new learning and improvement unit. It was mentioned during the course of that wee bit there, the improvement service. Are we talking about duplication here? Is it actually required, or is it just the fact that information should be passed to the improvement service to deal with this situation? I will really play devil's advocate here. Do we actually need an improvement service if you are going to carry out those kinds of functions? I think that there are two separate areas of work that we perform. We are obliged to make recommendations through our case work and only we can do that. Only we have the statutory powers to do that, so what we need to do is, when we are making those recommendations, make sure that they are smart and they are challenging and that we are being consistent and that we are following through with organisations. We do do that at the moment, but I think that what we would like to do is have a distinct part of the organisation that takes on that responsibility. I think that the level of recommendations that we now make is 140% higher than back in 2010, so we are making significantly more recommendations. The work involved in following up those recommendations is significant, and we think that we could do that in a smarter way. The improvement service only operates within local government. The whole of the public service in Scotland does not have an improvement service as local government does. I am not a can of worms there that I may fall into, Mr Martin, because I could say something about that too, but we will go back to Mr Coffey. Sorry, Willie. Thank you very much. What I was hoping to get about closer to was that when you come back next year, Jim Wright, there will be another 5,000 complaints that will have happened between now and then, just on the basis of the figures that you produced year on year. What I am trying to get is that that new improvement service will really look at some of those systemic issues and try to get that kind of shared best practice, or good practice, or whatever you want to call it, shared in the public sector to really try to get that down, because if it doesn't, it will see it. I think that the answer is yes. We do do that already. As you know, we share all of our findings and all of our recommendations already, but yes, we would hope that we can continue to drill down and to support organisations to use the information that they gather from complaints to learn. Something did me happen as a result of a recommendation. It's quite hard to do that, but you would begin to see the volume dropping down, and you would hope to be able to attribute that to some of those interventions here. I wonder if I could ask another question, convener. It's about the complaints process. I wonder if we could stick with this improvement topic first, and I'll take you back in. I don't want to move away from this improvement scenario. You're talking possibly about requiring more powers, Mr Martin. We're talking about the learning and improvement unit. How are you driving improvement at this moment in time with the powers and resources that you currently have at your disposal? I'm glad that you said powers and resources, convener, because we mustn't lose sight of the fact that in my organisation I have just under 50 people. We have around 30 of those people who are working directly on individual complaints brought in. The complaint standards authority that we currently have are two people. My training unit is 0.6 of a person, and yet we're producing front-end training materials, e-learning materials, face-to-face training, which is being used in the whole of the national health service in Scotland, across all the local authorities in Scotland. It is even being used, I understand, in universities in Ireland and local authorities in New Zealand. We're trying very hard— Universities in Ireland and New Zealand. Well, convener, just as you didn't want me to go into improvement, I'm so glad that you asked me that question, because I've been banging on for about three years now that the fact that we're producing training materials that are not licensed but are free to use by anyone else in other parts of the United Kingdom and abroad is a missed opportunity by the Parliament to generate income that could subsidise the activities of my office. I've made this point on numerous occasions and in numerous places, and I'm so glad— Not here. I'm so glad that you've given me the opportunity to raise it here as well, thank you. I think that we may look into that, Mr Martin. Could you expand so in terms of what the current powers that you have, how you're driving improvement? Remember, there are basically three things that I'm charged to do. One is to set up and look at complaints that are brought by individuals seeking remedy and who feel that they have an injustice. The second is through that work to do what I can to raise issues that will help to improve the provision of public services in Scotland. The third, through the 2010 act, is that I should monitor the handling of complaints and set forth a standardised complaints process for complaint handling across the public service in Scotland. The second of those is much dependent on the other two activities so that the improvements that we can suggest come out of the individual complaints that are brought to us, which takes us back to the systemic issue. What we try to do with our recommendations is to make sure that we can push as far as we can that people take those recommendations seriously. We were the first ombudsman's office in the public sector in the United Kingdom to publish our decisions. Every month we will publish between 68 and 70 decisions and we will lay more serious reports, perhaps three or four individual reports directly before Parliament. We make those accessible and we know that those are accessed by bodies across the public service in Scotland. I do not want to become the improvement unit for the public service in Scotland, but I want to use the experiences of the people that come to us where things have gone wrong to help public bodies to think about the provisions that they are making. With the limited resources that we have, we try to do our best to do that. I was picking up on your point about the NHS complaints process being brought more into line with the rest of the public sector. Is it still the case that the complaints processes that people have to engage with are by and large pretty different? If you look, for example, local authorities, NHS, police, fire or anything else, it is a different kind of system that we have to interact with each time. Are we trying to get a consistent consolidated experience for the public so that they have to complain in the same way, no matter who they were to complain about? The 2010 act that we work under charged me with putting in place a standardized complaints process across all the bodies for which I am responsible as ombudsman. We are by and large there. The last part of that is the NHS and the last part to tell you where we are going with that. Police does not fall under my responsibilities and not should it. I am happy to discuss that anytime. By and large, the aim is to get as many organisations as possible in the public service in Scotland operating on a simple, standardized process so that the ordinary person in the street knows how to access things and that things are accessed and resolved as quickly as possible. That is the aim. I am glad that the NHS has now decided to go down that route as well and that we are making substantial progress there. In terms of NHS, a lot of good work was undertaken in terms of complaints, and in the back of the Patients Rights Act and all the supporting legislation and work that went around that. There are some differences between the process and the way of handling complaints in that sector compared to where we have gone in other sectors. One of the crucial differences is that the emphasis on early local resolution close to the front line of that point of service delivery is something that has not really worked in NHS. That is one of the key areas that we are working with NHS to implement. In local authorities, for example, we now know that we have over 80 per cent of complaints resolved at that front line or close to that front line in five or ten days in a very quick timescale. We want to get the NHS to that point. Bringing the NHS into line with where we are with our sector is our standard process, not just in terms of timescales and stages but also the governance mechanisms that are in there and how and what the report is and the work that we are continuing with the NHS stakeholders and progressing very well. Do you routinely consider material that comes from Audit Scotland in terms of the big picture, this global picture of issues that are going on? I know that you were saying that you are restricted in your ability to investigate in a systematic way, but you can consider messages that are coming from various Audit Scotland reports. Do you do that as part of your work, too? We speak very often with Audit Scotland, the Accounts Commission, Healthcare Improvement Scotland and the Prisons Inspector. Across the various different sectors, including the water regulator, we have discussions about what we are finding, what they are finding and we try to feed in. For example, when Healthcare Improvement Scotland undertook an investigation into Royal Infirmary in Aberdeen, one of the things that we did was we worked with them to devise a tool that would enable them to work at how efficiently the Grampian Health Board and Aberdeen Royal Infirmary were handling complaints at that time to help to inform Healthcare Improvement Scotland's decisions at the end of the day of their investigation and inquiry, so we will work with other agencies as much as we can. Can I ask you, Mr Martin, what if any consideration is given to determining from the outset a wider public benefit that could arise from an investigation? You have to remember that when a complaint comes to us, it comes as an individual who is at a poor, in their view, a poor experience with a public body. In the course of that investigation, many different things might arise. It might be a simple thing where someone comes, for example, saying that their council tax has been miscalculated or whatever, and we can resolve that very quickly. Sometimes it can be more complex, and sometimes—very rarely, but sometimes—things will have a broader implication. Those will be flagged up to me as the investigation is going on. One of the things—for example, a work-a-day thing—if every case that comes into my office into the SPSO involves a death or a vulnerable person, I will be informed immediately that that is in the building. That will enable us to say that we have looked at the circumstances of that. We want to see that one looked at it in a bit more depth initially, or we want that fast track. I saw one yesterday, which pertains to the treatment of a child in an infirmary, and we want that fast track. When it comes to general public policy improvement, that is something that, once we have been through an investigation, will be an adjustment for me to take, whether it is something that is broader than just the individual complaint or something that has a wider implication. I am restricted to looking at the individual complaint. I am not supposed to look at other complaints that come through, but the way of the world, you do those things. What do you consider to be the added value of investigating cases solely to recognise the validity of the person's complaint and what consideration is given to the implications for those being investigated? I think that when we look at cases, what we do is consider the proportionality of the investigation of that case. For example, we look at whether or not we can achieve a practical outcome for someone who is over and above what they have already had. In an example where we felt that a body has already carried out a thorough investigation, they have made comprehensive recommendations and implemented them. We feel that it is not possible for us or practical for us to go beyond that. We would not progress that case any further. We are mindful of the impact that our investigations have on the bodies that we investigate. If you feel that everything that has been done by the body is possible, you would not take that any further, and you would communicate with the complainer as soon as, given your reasons why you are not taking that any further. Mr McFadden, you look like you were wanting to come in there. On that communication, which we have talked about on many occasions when you have been in front of this committee, do you think that you are better communicating with complainers about your reasoning for maybe not pursuing a complaint or communicating with them about the recommendations that you are making, which they may not think are the right ones? I think that we do a lot of work with our staff to support good communication skills. We have clear service standards that we operate to. I think that, in giving decisions, we do that as far as we can over the telephone. What we try to do is give people assurance that the body has done everything that they should and could have done. Ultimately, people will feel often that that case should have been investigated. I think that all that you can do in those circumstances is give very clear explanation and assurance as far as you possibly can. There is a flip side to this, convener. I do not know whether that is informing your question. Very often, public bodies will say to me, but we have already upheld that complaint, why you are investigating it. There are a number of reasons where we might do that. One is that the complainant might not be happy with the outcome that has come, that what has been upheld might not be the entirety of what the person was complaining about or that we are just not convinced that a full investigation has actually taken place. If I give you an example, I recently had a case—I am using health cases because this is local community. I will use a health case. Someone had made a complaint about the death of someone during an operation. The complaint to the health board about how the operation was conducted investigated it and said that it was satisfied that the surgeon involved had acted appropriately. I think that it had also been looked at by the fiscal. What the complainant wanted to know was not had the surgeon performed his duties appropriately, but was the operation carried out appropriately. When we investigated that, we found a couple of things. We found errors by an anesthetist. We found that the relationship within the operating theatre at the time that the operation was being conducted was, at best, described as dysfunctional. None of those issues had been looked at by the board or by the fiscal. Technically, the board is saying that one or two things might have gone wrong and we uphold part of it. We felt that we should look at the rest of what happened. We looked at that. We found learning points for the board and the anesthetist. We were able to give the complainant some comfort. We will not automatically assume that, because a public body says to us, we have upheld this, you should not look at it. We will have a good look at what the complainant is saying to us and determine whether there is something still there to be looked at. In terms of your efficiency and effectiveness as an organisation, we have had a look at four complaints about that. One from Glasgow University comments on the potential effects that the time taken to investigate could have had for the complainant. How can you improve in your own efficiency in dealing with those things to me, Ysley? I think that we have submitted evidence previously to the committee and again this year in terms of the increasing efficiency in case closure rates. I think that within the resources that we have available, we have clearly demonstrated a history of improving efficiency. I think that the gains that we can now make are in supporting and encouraging the bodies that we work with to improve in their own efficiency and handling of cases so that, when complainants do come to us, we receive clear, well-documented complaints investigations that make it easier for us to reach quicker decisions. If I were unhappy about the length of time that you are taking to investigate my case, what is my redress? You approached me and I would look at it, convener. I am not happy about the time we take to look at some of our cases. No one would be. In our defence, if we need to defend ourselves, we are probably the most efficient public service omersman body operating in the UK. We, for example, will measure the amount of time that we have cases in our building by the minute it arrives. All our comparable offices, to my knowledge, only start the clock once they have had all the paperwork and all the information that they need to begin an investigation. We take the view that the time that is important here is the time that the individual is spending with us, not the time that we are taking to deal with the case. I have said to the committee every year that I have come here that the increasing complexity of cases, particularly in health, are putting a real strain on our organisation. This year, for the first time since 2002, we have had a reasonably significant drop in the number of complaints coming through our door in the first nine months of the year. I think that we are down 4.5 per cent or something. That is the first time. Even allowing for that, we have had a 41 per cent increase in the number of cases coming to our office on the 2009-10 numbers, and our staffing is virtually the same. What we are trying to do is to use the resources that we have as efficiently as we possibly can now. When it gets into looking into matters that require a great deal of investigation, sometimes we are in the hands of the public body, and sometimes we need to get advice from people. At all times, we try to make sure that we put the interests of the person who has brought the complaint to us as our first priority. However, inevitably, with the volume of complaints that we have and the number of staff that we have, some of those complaints are going to take a long time. In terms of not repeating complaints from individuals but issues that are repetitive in terms of complaints, are there a huge amount of issues where there are repeat complaints on that particular subject? There are a number. What areas are those, Mr Martin? I will come to that in a second. There is one of the reasons why we want this learning and improvement unit to operate so that we can flag those up and have the bodies concerned deal with them. You will find similar cases will arise in planning. You will find that housing association waits for repairs will be an issue. You will find in some housing associations that the quality of repairs will be an issue. When I first came into office here, the thing that struck me most was the number of cases in health flows that we had around bed sores and pressure ulcers. In each of the sectors, you will find that there are areas that continually repeat. In prisons, it tends to be progression or training courses. What we try to do is engage with the public bodies and say, look, this is what we are seeing. These are coming through. You need to try and get a hold of these. Those things keep reoccurring in the same areas. It does not really show that you are being effective in terms of getting the message out there that these public bodies need to improve in these areas. That is why we are looking at this learning and improvement unit, why we are engaging with bodies up and down the country in all of the sectors. I can sense the frustration behind your question, convener. It is nothing compared to mine. I talked earlier during the course of the budgetary examination of that decisive shift to prevention that the Government has been looking for in almost every area. When I say prevention, I am not just talking about in terms of health. In terms of what you are describing, there does not seem to be very many lessons learned in certain areas from your previous findings, which would of course lead to that decisive shift to prevention unless complaints come into your office. I think that you must remember what we are looking at. The tip of the complaints iceberg is what we are seeing. We are flagging up, we are engaging, we are trying to find ways of working in partnership with organisations. If I give you an example, we reckon that something like 40-45 per cent of all the cases coming to our office were coming from around 10 or 12 different organisations only of the whole of the public sector. We began to engage with those organisations individually. We said to them that there are a number of things that put you into that group. The number of premature complaints coming to us—that is people who are coming to us when they should go to you—is too high. The number of upholds that we have is too high compared with the rest of your sector, and the volumes are not the volumes that we would expect to see. We begin to engage with those so that, for example, with Lothian health board, we sat down with them and said that your volumes are too high, your upholds are too high, your prematures are too high, and we are not convinced that you are actually investigating complaints properly. What that has done is allowed them to revise the way that they do things. We have to remember that we sit here as an ombudsman office, and that the very fact that we are an ombudsman office means that we flag things, we can try and push things, but what we do not have is a big stick to make people do things. I will stop you there, because I am a bit of an anorak when it comes to your reports. I say that I read them all, because that would not be the case. I read a fair bit of them. You are talking about a number of organisations that seem to be the perpetual difficulty for yourself. Where in the annual report is that information available to me and to members of the public? And if that were available in the annual report, why is it so difficult to find? It is not something that we put into the annual report, but all the figures about it— Why not? I think that it is around something that we have spoken about previously at this committee that we do not feel that we wish to name and shame. I am sorry, but I will stop you there. Earlier on, we talked about the interventions that this committee has taken to try and resolve difficulties. Now, it is impossible for any one of us to track all the cases that we get sent to us. That would just be an impossibility. The annual report would be useful for us to highlight the organisations that are causing difficulties so that either this committee can take interventions or other committees of the Parliament can take interventions. In terms of effectiveness, which we have already touched upon, and that decisive shift to prevention, we really need to have that information in one place, simplified so that we can move forward to try and create better services for the general public. I would ask whether we can have that in the annual report. In terms of that, we do not want to name and shame. We are never going to improve situations unless we know which organisations are causing you the most difficulty. I will put a little bit of context into my response. We provide on an annual basis, as I think the committee knows, and we put it into our briefing statistics about every organisation about which we have received complaints, the subject of the complaint, whether we upheld it or not. In addition to that, we provide on an annual basis a letter with detailed statistics about each organisation with comparisons of their statistics with other organisations, the premature rates and the upheld rates and the subjects. It is possible for anyone to look at all the information that is in the public domain and do analysis in order to ascertain what it is that they are wishing to find out. It is very difficult to find the time to deal with every aspect of this life, it has to be said. I do not think that anybody around this table would have the time to complete the analysis that you are talking about, but beyond that, in terms of the numbers and the tables that are provided in the annual report but also in other material that you produce, it tells members very little about what those complaints are. They could be the most simplistic thing under the sun or they could be the most severe thing. There could be a smattering of one-off cases in an organisation that has no connection whatsoever in those statistics, or they may all be a complaint about the same thing. We cannot analyse that, and that is why what we require is something that helps us to get to the point where we can say that we actually require an intervention here to try to improve the situation for the public. As it stands at the moment, we are unable to do that from the information that we get. That is a way to think about it. If you could, Mr Martin, I think that— The reason I say that—yes, we will do it and no, we will not do it—is that you just said all the things that I think I was about to say. There is a difference between raw data and raw leak tables and qualitative issues. For example, in those 10 or 11, whatever it was, 12 organisations that we had, there is one or two that you would expect to be there. You would expect Greater Glasgow and Clyde health board to be there because it is a health board that has a huge volume, so you would expect it to be in there. It is the outliers that fall into that area that will worry me more. If, for example, a smaller health board finds itself in earth top 10, I am asking myself, why is that? Let me take away and think about what qualitative information might be useful for the committee, rather than just bombard you with raw statistics. That might be more useful. I am happy to raise with the clerk on what you think would be useful. I think that that would be extremely useful. I really do think that there should be some simple way of dealing with that issue in the annual report, so that not only this committee can pick up on it, but other interested parties can also pick up on it, too. Are there any other questions from committee members? No. In which case, I thank you for your evidence today. I think that the clerks will be in touch and we hope to hear from you in some of the matters that we have raised.