 Good morning, and I welcome everyone to the first meeting of the local government and communities committee in 2019, and remind everyone present to turn off their mobile phones. The committee is invited to consider and agree whether to take agenda item 3 in private. Item 3 is consideration of evidence heard today in relation to the committee's budget scrutiny. Are we all agreed? The committee will take evidence today in the Scottish Government's budget for the financial year 2019-20 from representatives of COSLA in Salis, Scotland, and then from the Cabinet Secretary for Finance, Economy and Fair Work and the Cabinet Secretary for Communities and Local Government. For the first session, I welcome Councillor Gail McGregor, spokesperson for resources, and Vicki Bibby, head of resources at COSLA. I invite Councillor McGregor to make a brief opening statement. First, I would like to extend my thanks to the committee for their invitation to hear our evidence today on the draft budget 2018-19-20. Obviously, with the cabinet secretary appearing before the committee in the session following this one, it is very important that the committee understands the impact that this settlement will have on our local authorities. Blunctly, the draft settlement, as it is, will impact jobs, front-line services and economic growth. It also puts at risk the national performance framework that we are co-signatories on. The draft budget sees a cash reduction at present to core revenue budgets of £237 million, or 2.4%, and a cash cut to the core capital budget of £17 million, or 2%. Our figures may seem different to those generated by SPICE, but I want to provide a reassurance that our figures reconcile with theirs, and we fully support and recognise the calculations made by SPICE. While our figures are in cash terms, SPICE figures are mostly presented in real terms. My colleague Vicki, head of resources for COSLA, is here to provide more detail on technical aspects like this today, if you would require. Regardless of the presentation of figures, what is clear is that, as announced, the draft budget will have a significant impact on Scottish councils, on our communities and on the inclusive growth across Scotland. Since 2011-12, local government budgets have decreased significantly, and the rate of those cuts has been disproportionate to the decrease in the Scottish Government revenue budget. Since 2013-14, the Scottish Government revenue budget has fallen by less than 1%, while local government revenue budgets have fallen by more than 7%. At the same time, the ability of councils to raise money locally has been constrained. First buy frees on council tax and now buy a cap. Scottish councils are at the mercy of Scottish Government and the decisions over the revenue we will get and the limited fiscal options that are open to us. I believe that councils have done all they can to make efficiencies and protect services and Amri may touch on some of that later as well. There is now nowhere else for local government to go. The cumulative impact of continuous budgetary pressure with demands on local services are continuing to grow. While the Scottish Government has increased the level of initiatives that councils are expected to deliver, and this has led to a situation where the core is simply crumbling. Councils have been doing more with less and have achieved great innovations and efficiencies, but the challenges brought by the current draft budget will cause fundamental considerations of the services being provided. We have moved beyond a streamlining and efficiency agenda. The effect of the settlement also brings the success of the national performance framework into consideration. Cozly is a co-signatory and this is under threat. Local authorities deliver over 60 per cent of the outcomes of the NPF, but the current level of settlement and the structure of the budget means cuts will be forced from the areas that make the aspirations of the NPF a reality. I am sure that we will discuss these issues in more detail throughout the session this morning, and Amri O'Donnell representing Solace today will be able to give an insight into the difficult decisions that councils are currently making as they prepare. I know that some of those issues were touched on in the committee's pre-budget scrutiny, which Cozly has welcomed. As budget scrutiny moves forward in the new year round, I would urge the committee not to forget the interrelationship between all services a council provides. The level and structure of the local government budget puts the councils' foundations at significant risk, which in turn risks achieving the ambitions that we all share for the communities across Scotland and for inclusive economic growth. We would be very happy to take any questions from the committee today. I ask you about the discrepancy between the two figures. Do you accept, for example, that social care education and early learning childcare housing are all core services that have to be delivered by local authorities? I accept absolutely that they are all core services. The difficulty that we have is that we have some commitments already within the core such as early learning and childcare. We are currently delivering 600 hours and that money is now sitting in our core. We then have Scottish Government priorities, which are excellent priorities, the priorities that we support, but they require additional funding. For instance, this year, the expansion to 1140 hours for early learning and childcare is a headline figure in Mr Mackay's budget, and we welcome that additional funding. However, if we cannot maintain the core, we cannot continue to deliver the 600 hours and expand. The key is that Scottish Government priorities must come fully funded but not at the expense of what we are doing on a day-to-day basis. Surely, if you take the early years, for example, and you are receiving funding that you just talked about for early years and that is part of your core, then you are receiving money for your core services? We are receiving money for our core services and we are also receiving additional money. The problem comes with the £400 million worth of additional commitments, which are Scottish Government priorities and policies, and as I say, we fully support them. We are joined up in partnership to deliver them. When we reach the stage where we have £237 million cut out of our budget, that £237 million has to come from 42 per cent of our core budget, which is not ring-fenced and not protected. The budget saving that we have to find does not just affect 100 per cent of the budget, it actually affects a very small part of the budget. The £237 million, which is the estimated shortfall that we have at the moment, can only be taken from 42 per cent of the budget. The £400 million that has been given from the new initiatives absolutely will be spent on those new initiatives and quite rightly so, but it will be at the expense of something else. Can you explain to me then that you talk about a £237 million shortfall for the Scottish Government and the figures from SPICY say that there is an increase in real terms and in cash terms, so can you explain that discrepancy to me? I will defer to Vicky, who is the technical finance expert, if that is okay. When we are saying that there is a cash cut of £237 million, we are comparing a like-for-like of what services you have to provide. As Councillor McGregor says, there is an increase overall in the settlement, but that is to deliver £400 million of new commitments. There is not a £400 million increase on the cash basis, and coming back to your early years point is quite a critical point. The ring-fenced additional funding, which is to be fully funded, takes you from the existing 600 hours to the 1140 hours. That is, as Councillor McGregor says, the £234 million. The existing provision, which is the 600 hours, is in the core budget, and that is being cut. The local government settlement is becoming increasingly complex, but the only bit that is being fully funded is taking you from 600 to 1140. The 0 to 600 provision is in the core settlement, which is being cut. If you look at it overall, you cannot say that early years are being fully funded. You are right, it is very complicated. I do not want to go into too much of that stuff, because I think we would all get lost. Surely, if there is extra money going into the early years funding, then there is extra money going into the early years funding, and that has got to benefit from—you cannot get to 1140 without getting to 600. Surely that money has to be fed into the whole process. Yes, hypothetically. The additional funding allows us to expand to 1140, which is a commitment that we have signed up to with the Government. We absolutely support that. However, the core funding that delivers what we are already doing, which is up to the 600 hours, is now subject to potentially up to 6 per cent of budget cuts. The 2.4 per cent of budget cuts across the entire budget is bad enough, but we have 42 per cent of the budget at core, which is the only area that we can touch because it is either non-statutory, non-protected or non-ring fenced. Your 600 hours sit technically within that. Our aspiration is to continue to deliver and to expand, of course it is, but it will be at the expense of something else within the council. When we are having to take savings at the core to expand and deliver new Scottish Government priorities, there is always going to be something else that takes the hit. The priorities are a part of Government, of course, and the part of decision making, council, local government or national government priorities are always a case of that. Just very briefly, I'll let you come in. Can I ask the COSLA for additional funding for social care when there were discussions with the Government? Yes. We asked for a fairly significant amount of funding for health and social care. It's a very important area. We know that COSLA and local government understand clearly that our role in delivering health is not just the NHS. Local government has a massive role in that. I have to say that the cabinet secretary was incredibly helpful and his ear was very much open to additional funding for social care. I thank him for that. I thank him that he has provided additional funding for Frank's law and all the other areas within social care, and we are grateful for that. However, the additional funding is coming at the expense of the courts. I think that it's the reality check that in negotiations, when people listen and they understand what our priorities are and what their priorities are and they meet, and we can come to an agreement on that, that is hugely welcome, and I do thank him for that. However, it will be at the expense of something within that 42 per cent in the core budget, and that's the difficulty that local government has to balance now. I like you wanted to come in. I'll pick up on that point in the IGBs. What do we do when professionals start talking about something being so complex that it's difficult to understand? I think that the public has shut off. The example that I would give is that the Scottish Government says that the education budget has been increased, but when it comes down to in 5, for example, where this year parent councils are now fighting £4 million of cuts in their actual schools, that's where it's no complex for the parents and the pupils. They've seen the real-term cuts taking place in their schools. My first question would be, is COSLA going to do some work to highlight the impact of those cuts? This year, you're talking about £200 million. Are you intending to do some work to highlight how that's impacting on services? Have you produced any work around that? In terms of the IGBs, has there been discussions in terms of the money that's going to go into the NHS? The additional money that came from the Westminster settlement understands that Derek Mackay is saying that it's going to go directly into the NHS. Is that going into the IGBs? Do you believe that there's enough transparency around how the IGBs are being funded? Again, there seems to be this argument that it's so complex that people just can't understand that. Is that really acceptable? There's quite a few points in there, and I'll let Vicky pick up on a few of the technical aspects. In relation to education funding, for instance, councils make local decisions, particularly in relation to any budget savings within education. One of the big challenges coming away from the ring ffencing of the early learning and childcare and such like is that we do have an awful lot of government initiatives again, which are outwith the settlements such as the attainment fund and the PEP funding, the pupil equity fund. This is money that local government doesn't have any overview of, so it can't apply strategically across its entire state or its individual schools. I think that while education funding may be increasing, it's because there's additional funding coming from outwith the settlement which local government has no say over and can't apply fairly across the piece. Again, it doesn't allow local government to plan that the pupil equity funding that goes into schools is controlled by the head teacher under strict regulation from government, but it doesn't allow the local council to apply that funding in a more strategic long-term fashion. While the education budget may appear to be going up, it's not necessarily within the control of local government, and I think that that's a fairly clear picture that there's an awful lot more centralisation and a lot more local democracy and local decision making being taken away. I think that that's a problem, and it's certainly something that we are tracking and monitoring. Obviously, at the moment, local councils are currently developing their budgets. They're keeping them very close to their chests for the majority of them, so we're not really sure of what areas they're looking at, but as we go through the budget process, we'll certainly start to extrapolate some of that data and see where the axe is falling. Rhygion, do you want to pick up on IGBs? It's just under my comment on the complexity. I think that the complexity is in that at the high level, yes, you can see that local government budget is increasing at a purest high level, but the complexity is. You're asked to provide £400 million more services for that, and that's the complexity. We're pointing out results in a £237 million cut. If we were required to deliver what we're delivering in 1819 and 1920, there is a £237 million cut. The money for IGBs, we welcome the fact that it's rooted through the local government settlement, but to have that transparency for local government in the broader sense that health is not just provided by the NHS. The complexity around that is in the local government circular. Local government is asked to pass on that £120 million to the IGBs and maintain existing funding on health and social care at the 1819 level, which is what everybody would want to do. It begs the question, where do you take that £237 million cut from? If you can't take it from anywhere on health and social care, you can't take it from early years, and you can't take it from teachers education because you've got the teacher numbers commitment, it begs the question, what local government will be struggling with, is where do we account for that £237 million cut on top of all the significant inflationary pressures such as pay awards that councils are wrestling with? That's what we're seeing as the budget reality, it's a difficult settlement. Graham, then Kenny, then Annabelle. Thanks. I think that members of the public will be completely baffled by all this. When they see an overall increase in the budget settlement for local government and then every single council in Scotland is probably going to turn round and say, we're having to make cuts. People would just be scratching their heads at that. Perhaps a bit more of an explanation for anyone watching as to why, when your budget's going up, you're having to make cuts. Perhaps you could tell us also which areas, if we accept there are going to be cuts, which areas are likely to face cuts. I'm not asking you to drill down council by council because you don't know that. You could spell out the areas of spending that might be affected. Cabinet Minister suggested that there was a £210 million increase in our budget. If you factor in the £400 million worth of new commitments, that means that local government is starting with a deficit of £190 million. That is just fact. People out there in the public have to understand that, as an absolute base, we have a £190 million cut to our budget. We have some fantastic new initiatives that will be of benefit to the public and they will see that benefit, but it will be at a cost to other things that are incredibly important to them. As Vicki has highlighted, there are areas in which we simply cannot take any savings from. The reality is that, particularly when you're talking about health and wellbeing agendas, we all know that our leisure centres, libraries and community centres provide facilities and the ability for people living in isolation with loneliness, with potentially mental health issues, that the opportunity to socialise, to integrate and to have somewhere to go. Within the 42 per cent that I was talking about earlier on, which is our non-protected part of the budget or the non-statutory part, although libraries are statutory, but it doesn't state how you have to deliver a library service. The reality is that things like your road service, so day-to-day people trying to get around the area and bumping through potholes, that road service could be cut, that could be part of the 6 per cent cut to the 42 per cent. Your leisure and culture, your leisure and sport, increases in fees and charges for leisure and sport, things that directly impact people, particularly people from more disadvantaged backgrounds. Your parks and open spaces, third sector funding, which deliver a massive amount of incredibly valuable support to people in our communities. Local government and councils, along with the cabinet minister, are trying to look at ways to bolster our economy, to create more jobs in our environment, in our local areas. Obviously, if we are having to cut our employability and skills areas within local councils, that makes that more difficult to deliver. As I said, things like your libraries and your community centres, the very things that people rely on day-to-day and have taken for granted probably for quite a long time, we are beginning to see a slight cut back in their opening hours, in what they are able to deliver. The reality is that people haven't noticed until now, but going forward with the settlement as it is, people are going to begin to notice and that is the reality on the ground for folk. Hopefully, it will never affect things like home care, looking after granny at home. However, there are areas that are already protected, which need more investment in because we know the budgetary pressures and the demand going forward as well. It is a massive balancing act. Speaking as a former councillor, probably people on the ground haven't really noticed this yet, but your argument is that we are at a point that they are going to start to notice. Libraries are going to start to close. Well, they already have started to close. Fees and charges going up even more. If the roads budget gets cut, we are in a city here, which is a series of potholes and bits of road in between. It is just going to get even worse. People are going to be furious about this. Is that presumed that you would agree with that? I would entirely agree with that. Can I just come in on this point? You mentioned libraries in home care. You mentioned libraries a couple of times, but you also said that libraries were statutory. Therefore, you will have to continue to keep that service. Libraries have been closing for some time and moving into local colleges and other local facilities. There is nothing new in that. There is nothing to suggest that that is coming about because of this budget or because of any previous budgets. It is a decision that local authorities seem to have made as part of a rationalisation process. Also, when you talk about home care, if there are cuts in home care, do you accept that that would be because the local authority decided that that is where they should make the cuts as opposed to somewhere else? In respect of libraries, you are absolutely correct. It is a statutory service. What is not explicit is how that service is delivered. To put it bluntly, you could deliver a book out the back of a van and that could be a library service. Absolutely. The reality is that councils over—I have been a councillor for 11 years. I have not had one budget in that 11-year period where we have not taken budget savings. It is a long-term trickle effect. Yes, we have been amalgamating libraries into customer service centres. We have had transformational change. We have had a change across our entire estate to make savings and to make a more efficient service, more importantly. We are now reaching a stage where we have done all that. We cannot do that twice. We are now having to look at a decrease in opening hours or a relaxation of particular services within that community centre or within the amalgamated service. I made no indication that we were going to cut home care budgets. Absolutely. I suspect that every council in Scotland it would be the last budget they would cut. We totally understand the value of that. The point that I was trying to make is that, along with the teaching profession, we have a recruitment and retention crisis in care at home in particular. We are very aware of that. We are aware that it holds up people coming out of hospital and being able to go back into their own homes. As local government and as COSLA, and with government, crucially, with Ms Freeman and Mr Mackay, we have to have a big discussion about how we deliver care at home going forward and what we do to incentivise people into that particular profession, how we recruit them and retain them. That is going to come at a cost. What we are delivering at the moment is good, but we need to be delivering better. Going forward with demand, we have about a 3.8 per cent demand on social care on a £3.4 billion budget. It is a massive demand. If we do not address that going forward with Scottish Government, we are going to have a care at home crisis. We are not just looking at what we are doing now. We are looking at what we are doing next year, in the next five years and in the next 10 years, to protect the most vulnerable in our communities. There is no indication that we will ever cut home care budgets. The figures that you are presenting are prior to a possible council tax increase of 3 per cent. If council tax is up to 3 per cent, which is likely, I would imagine, the majority of local authorities will significantly reduce that gap. Assuming that we accept what you have said about the real-term reduction in local government funding over the past years, I do not think that it is quite the 60 per cent that we have seen south of the border. Even so, it is fair to say that the reductions have been higher in local government than in the Scottish Government generally, which is what you have said. Surely that is because the Scottish Government has prioritised the NHS. Do you believe that, in order to achieve parity in that regard, money should be shifted from the NHS or transport or justice? The additional funding that you are asking for, where should it come from? When I look through your document, it seems to be lacking. How should the Government fund this, raise taxes or should it come from other parts of the Scottish budget? It is way above my pay grade to tell the Cabinet Secretary how he funds services. The reality is that, as we have seen Scottish National Heritage, SEPA and other agencies at NHS have had a much less reduction than local government. Local government sits at the higher end of that scale. I think that we have possibly been a little bit of an easy hit in the past. I am not going to dictate how budgets should be spent and where it should be spent. I am certainly not going to pit local government against the NHS. They are both equally valuable. The reality is that we need to have more flexibility in what we can raise ourselves. I completely appreciate the position that we are in where the lion's share of the funding that has come from Westminster has gone to the NHS. I understand why it has. I hope that some of that funding through the integrated joint boards will filter down to local government, because I think that people need to understand the role that local government plays in the delivery of health outcomes. Crucially, the levers to raise more money locally would assist us. The cap on council tax, when it was first put in place, inflation was only sitting at 1 per cent. We are now sitting at over 3 per cent in terms of inflation. The council tax cap has not been particularly helpful. It has not enabled us to raise additional funding. I think that we have a reality check. We know that government cannot give us all the funding and we appreciate that. Nor do we have the levers to do an awful lot locally. We perhaps need a wider reform of local taxation in general. When you say levers, do you mean taxing people more locally effectively? To be blunt, it is a bit of a cop out to come and say, we are hundreds of millions of pounds short, blah, blah, blah, but you are not given any idea of how much extra the Scottish government should give directly and where that should come from in a budget that is limited. Obviously, we cannot borrow billions like south of border. We cannot run a £1.8 trillion debt. We cannot raise money from fuel tax and from alcohol and VAT etc. We have limits on how we can raise funds. If you are suggesting that we do not touch other budgets such as the NHS and others that I have mentioned, then we have to bleed the taxpayer, the ordinary householder. We have already suggested that we get rid of council tax caps, which means inflation plus hits on people. Can you explain what the levers in more detail would raise and how they would raise it and how much people would be expected to pay? Nobody wants to tax people more, but we know that, certainly not at local level. Local councils are very good at consulting with the people that they represent and look after. I think that there is an acknowledgement out there that people would be willing to pay a little bit more locally if they were to see the benefit of that being spent locally. For example, the 3 per cent council tax that we have at the moment raises around £80 million. An additional 3 per cent would take us to £160 million. We are beginning to close the gap on the deficit that we currently have. Again, it would be down to individuals to make those decisions locally. It would be down to individual councils to make those decisions in consultation with the public. Some members of the public might like to see some services taken away and not pay more, but it would be done in consultation. I think that the fundamental point is that we should have, whether we use it or not, the ability to raise more money locally to invest in local priorities should we choose. It is not about having a carp launch, everybody is going to apply a council tax rate over inflation plus three. It is having the ability and the principle that local governments should be able to make local choices. If the Scottish Government was to back off and say, look, you have got your grant settlement, because we have made those choices and we are not willing to change them, there might be a wee bit of tinker around the edges and a few million here and a few million there, but generally speaking, if local government wants to raise more money, they have to raise that. Do you think that A, the Scottish Government and B, local authorities would be thanked for that by the people who would be expected to pay us? Would the same political parties who are asking for this not be the same ones who would criticise teacher numbers? That is what the Scottish Government brought in. The policy of maintaining teacher numbers was because teacher numbers were being cut quite significantly. The same parties who were in power at local authority level, cutting them, were turning up at the Scottish Parliament and denouncing the Scottish Government for it, who were not directly in charge because it was the local authorities who were dealing with it. How do you square that circle in terms of the Scottish Government delivering those responsibilities to local authorities and then imposing them? People will come to their MSPs and say, my council tax has doubled. We might say, that is up to the council. How do you deliver that? The difficulty is that we are in a situation whereby there is not enough money to go round and difficult decisions are being made. Even if local government was to get additional powers, the burden on individual households would be such that there would be real unrest among the public unless they saw a miraculous improvement in local services. I am not here to make any political comment on what individual local councils do. I represent 32 local authorities fairly across the piece. The reality is that we could turn it around. Local councils would love to deliver new priorities, but if they are not properly funded and the core is not properly funded, please tell us which ones you do not want us to deliver. I think that there is an element of faith between government and local government that we are willing to deliver on new priorities, as you say, which government quite rightly brings in. A lot of the restrictions that are put around that funding makes it very difficult for local government to make local decisions. For instance, the social care funding that we had last year, we did not have a ring fence around that. Mr Mackay allowed it to just go straight into councils, not into the IJBs and for local councils to make decisions around that. As I have said to Mr Dornan, of course we were not going to cut the social care funding and take it away from who needs it, but having that trust and that principle of being able to maybe via it somewhere else if that is deemed more important at that time is incredibly important. I would almost turn it back that local government wants to deliver those fantastic priorities that government brings to us, because they are good priorities, but if they are not fully funded and they are going to come at the expense of something else that local councils think is equally important, I would ask the Government which one of those do you not want us to deliver. That is the territory that we are starting to get into now. We are starting to get to a level where the budget saving or the budget cut is such that we either do not continue to deliver some of our very crucial core services or we do not deliver some of the new priorities. That is a big break of partnership with Government, so I do not want to do that, but that is the reality. Efficiencies are obviously an easy thing for Governments to say, but they will look at the 7 per cent real terms cut that you have mentioned in Scotland in the last decade and compare it to the 60 per cent cut that is south of Borda. Hold on a second. Local authorities have not collapsed south of Borda. I know some of them are in very severe financial trouble. Nobody wants to see that level of cut here. Absolutely nobody wants to see that. That is what they will look at. If there is a one or two per cent reduction in some core services, while we are providing additional money to provide really important new priorities, that is something that, given the financial strictures on the local government and the money available to it, that is something that the local government will unfortunately have to live with. I will take that as a comment rather than a question. Before I had a couple of questions, I was picking up on a point that Council McGregor made earlier in the discussion on education funding. I note that Council McGregor accepts that education funding is increasing. You went on to make the point that, in your view, there was more centralisation. How does that square with the actual mechanics of, for example, the people equity premium, where my understanding is that it could not be a more local decision making as a local headteacher in accordance with the regulations that you referred to? Is that not getting really local, so that the local headteacher who knows what is going on in their school is the one driving those decisions? How does that equate to centralisation? I completely understand your perspective, and I agree with it to a point. However, local councils have been devolving power to headteachers for a number of years now, in part because of budget savings. We have had to allow our headteachers to make more local decisions. The people equity funding that is going into schools is controlled directly by the headteacher and the staff within that school, which is no bad thing. The difficulty comes when it is sitting separately to the policies and the strategies that local councils have to deliver education. We then have an issue where we have additional funding going in for staff or for incentives within that school, which does not sit within the wider local government long term plan for education. It suddenly is no longer strategic. It becomes a sticking plaster, and it does not necessarily align with the priorities for health and wellbeing, for good mental health, that the local council has. It just becomes a very individual issue within that school. I think that the reporting mechanism back is very complicated as well. Local councils do not necessarily understand what that people equity funding is being used for within the local area and how it ties in with those councils' priorities. The funding is valuable. We are reaching a stage of two or three years, and we are now into the third year of that funding, where many members of staff will now be on permanent contracts. We do not know if that funding is going to extend beyond the end of this Parliament. At what point do schools have to wind down what that particular funding is being used for in the view that it may not continue? The value is good when it is there, but it is not strategic because it is not embedded within the core business of the council. Does it have longevity and absolute value, and can we guarantee it in two years' time? Or is that member of staff going to be ripped out of that school to the detriment of the child? I think that if the funding had been given to local councils to apply in a—as I said, we have been devolving to head teachers anyway. We have given them a lot more power, but if the funding had been given directly to local councils, it could have been used in a more strategic way with a better long-term plan, rather than just a very nice sticking plaster, as many would see it. In terms of long-term planning, issues would arise as regards long-term planning for any organisation, because no budgets are certain beyond a certain period of time. I would have thought that one solution to aligning strategic objectives of local authority would be to work more closely with local head teachers and staff, and that might help to solve that problem. On a couple of wider issues, I understood that the overall share on the part of local government in terms of the overall Scottish budget is effectively the same this year, in this year's draft budget, as last year's budget. Is that your view? Yes, it is, but only through providing new services. That is a critical point. If you take it at the high-level cash terms, yes, with the £400 million additional services to provide the share is the same, but if you take it on a like-for-like core budget, it would have reduced. As we have already heard, the core budget includes all the things that we have discussed, social care, early learning and so forth, but not perhaps to reopen that debate. My other question at this stage would be, and my colleague Kenny Gibson alluded to this, that the Scottish budget is still predominantly governed by the Barnett formula. We have our position here in Scotland, as far as local government settlements are concerned, and we can look to see what is happening south of the border. Kenny Gibson referred to cuts of 60 per cent south of the border. In fact, the local government association, in terms of its figures, cites the figure of reductions in central government funding to local government in England of 77 per cent from 2015-16 to 2019-20. I am assuming that COSLA would not be seeking to have a settlement offer of the kind that is being offered to local authorities south of the border of 77 per cent cuts since 2015-16. No, but councils are collapsing in England and Wales, and that is evident. The reality is that we would not want that level of cuts to Scottish budgets. The overall funding from the centre to local government is, in that context, quite remarkable. I would have thought if we looked to see what is happening south of the border, notwithstanding the financial constraints that operate on our raising income in Scotland. I am no expert on local councils in England and Wales, but I know that they have a very different structure and a very different system to the structures in Scotland. They have an awful lot more local control and they have a lot more ability to raise income locally. I do not think that we are comparing apples for pears, but I understand your principle. I am not going to use the south of the border and north of the border. Any comparison will not perhaps always be exactly matched. However, it is fair. Members of the public would accept that, looking at the situation in England where there are 77 per cent reductions in 2015-16 to the end of 2020, and looking at the position in Scotland where we have still found an overall real-terms increase of 2 per cent, that is a broad brush comparison. Members of the public would not understand the difficulties that local authorities face in Scotland. That is quite a stark contrast, if not a direct comparison. It is very different. The situation in England down south has happened over the past few years. I do not think that anybody in local government or Scottish Government would want to replicate what has happened in a number of councils. In Scotland, we have taken quite a different approach. We have cosigned the national performance framework. We have the priority of inclusive growth. We want to avoid the stripping back of councils. The councils down south have moved to much more powers around non-domestic rates, powers around local taxation, which we have asked. We would like to explore the benefits of that to change that dynamic in the more local fiscal empowerment. We have a shared agreement with the Scottish Government that what has happened in England is not something that we would want to replicate for the benefit of all our communities up in Scotland. The letter that went to chief executives and directors of finance on 17 December about the local government finance settlement says that this provisional total funding allocation forms a basis for the annual consultation between the Scottish Government and the COSLA head of the local government finance order. It says in paragraph 4 that the terms of the settlement have been negotiated through COSLA on behalf of all 32 of its member councils. What does that mean? I am referring to the draft finance circular 8 2018 of 17 December. I suppose that they have been negotiated. They have not been agreed. I think that there is a difference between the two. Yes, we have been in on-going negotiations and I lead on those negotiations on behalf of 32 local authorities. We have not agreed the settlement. The difficulty is that with the budget process, as you know, and with the minority government, I go so far with government and then other wheels start to go into motion. That makes it very difficult for local government. We have been in negotiation on behalf of 32 local authorities, but through the new year budget process there is now more work to be done. It says that COSLA has been negotiated through COSLA. That does imply that COSLA has agreed that. What does that mean? What is the difference between your understanding of the outcome of those negotiations and the circular? I do not know who you are playing semantics with me. COSLA does not agree the wording of the circular. COSLA leaders have not agreed the local government settlement. In paragraph 5, it gives you all the conditions that all 32 councils must agree with to get the £11.1 billion full funding package that is talked about. Years gone by, COSLA has agreed on behalf of 32 councils. Given that, in paragraph 21 to 24 of your own submission, you talk about a reducing amount of core funding and you are talking about more centralisation. The element of local government revenue over which local governments have control is reduced from 98 per cent to 88 per cent. The central government is saying that here is the money but you have to do this with it. That is reflected in paragraph 5. Have there been any discussions about whether you shall accept this or not? It will be down to individual local councils to make that decision locally. It is not down to COSLA as a body to make an overarching decision. Have there been any discussions about whether councils will accept this or not? No, not yet. That meeting will come on 25 January. I want to look at the long-term outlook. You say that councils have not been set in their budget yet and that you are not sighted on some of their budgets. However, they have publicly stated the kind of savings that they are looking to make. Consultations have been under way and the public have been in discussions about 3 per cent cuts or whatever. What is your understanding about the difference between the kind of projections that we have seen and the reality that is coming forward in the draft budget? I think that it is worse on the ground than people would anticipate. The initial feeling with the draft budget was that it was not a great budget but they did not understand the implications at that point. The reality now is that many councils are looking at when you factor in pay inflation, demand pressure and other things that should be factored into any budget with the saving on top of that that it is looking quite dark for many councils, particularly those who do not have significant reserves. I think that that position is not going to shift at this time and councils have very difficult decisions to make. Many were looking at a reduced settlement at the beginning of mid-December who are now looking at up to 6 per cent coming out of certain areas of the budget. I think that that is a very difficult position for councils to be in and very hard decisions for councillors to make. I think that this is another reason why national priorities and government priorities cause problems for local councils as you are very aware in the programme for government this year. There was additional funding coming through for school councillors and for school nurses. There is a big discussion at the moment about music construction, all very valuable things, but all things that local councils have had to in the past few years have made really, really tough decisions to take out of the service to protect things like teacher numbers. I think that we are in a very difficult decision now as we have very difficult decisions ahead in that we have national policies on things like school councillors coming back to local councils when we have already taken those out of schools in the past. I think that that centralisation agenda again is very difficult for local councils. Ideally, we should be given a reasonable settlement with additional funding for new priorities and be allowed pretty much to deliver what is essential in our local areas without too much intervention. In terms of members of the public, your constituents and my constituents, they want to have a little bit of clarity about how much money is available, what it is being spent on and who is accountable for making those decisions. In earlier conversations, we talked about the extension of early learning and childcare to 1140 hours and how that extension is fully funded over the current base of 600 but the 600 comes out of your core. If that 600 for the sake of argument in a council is cut to 500, there is not an extension to 1140, there is only an extension to 1040. Who is responsible for that? The constituent that comes to me complains that the 1140 is not being delivered as the Government promised and I hold the Government to account. We will have a legitimate grievance but the constituent that comes to the council and says that you have all this money, I have been told that you have this money. Is there a fundamental problem here about the accountability of money? Irrespective of the sums, it seems to me that the public deserves clarity on who is responsible for making funding decisions and funding commitments. In that context, would you welcome a fiscal framework that sets out the rules about local government funding in a clearer way so that we can be very clear about who is responsible for what and who should be held accountable for decisions over funding? Yes, absolutely. I think that that would be the ideal long-term goal and I think that it would be essential. Early learning childcare is a very, very good example of partnership working between government and local government. We put together the framework for how that would be delivered and expanded. We put together the funding package in partnership. I think that it was probably fairly unique in its formation and I think that that has been groundbreaking and probably should pave the way for how we manage other government priorities coming forward. It must be done in partnership and in conjunction with local authorities, but you are absolutely right. Once you get to the grass-roots delivery of that service, the buck kind of stops with the council because that is the face of the delivery of your child going into that nursery for x amount of hours per week. I think that there needs to be a greater understanding that if that is not fully funded or if it is fully funded but has consequences elsewhere, that responsibility lies with government. As you say invariably, it is the parent that will come into the director of education and say why is my child not getting what you promised they were going to be getting. A much more transparent fiscal process and framework would be absolutely welcome. Do you have more to add to that? It is one of your aspirations. We have asked to do some cross-party work to have greater transparency around the local government settlement to have it on a more sustainable footing going forward. The majority of the settlement we are relying on and we have had annual budgets over the past few years purely on what the local government, the Scottish Government gives the local government with that flexibility of only 3 per cent on the council tax with the cap. Ann Marie will probably be able to describe what that means on the ground. Speaking specifically on early learning in childcare, I think that there is a difference between what is fully funded by the Scottish Government and what is fully funded by the local government and its link to the requirement. All 32 councils are committed to delivering that requirement of 1140 hours by the timescale that has been set in discussion with the Government. Picking up on your other point about the allocation of spend and budget across councils. For those who have been councils, forgive me, but what we do as a business is that we have a financial forecast while we have annual budget settlements. That is a core budget that we get from government. We have additional pressures as well and increasingly that is linked to pay award given that we have had a pay freeze and a pay cap for a number of years. That is becoming quite a high risk now going forward for councils because we need to have commercial salaries that can attract and retain staff and across local government we are seeing a number of our experienced staff being poached by the private third sector and academic sectors so we need to make sure that we stay viable as an employer going forward. The budget process starts off every year from April. We look to the budget that we have, we look at the financial forecast that we anticipate, the budget may be in additional pressures might be going forward and what we do is we speak to our business units, our directors and identify an allocation of a potential saving that they should look for within their budgets. In Glasgow, education had a £20 million potential allocation up to 5 per cent and in social work it was £19 million. Effectively, with the potential ring fencing of those budgets, we now need to look to other parts of the council service to identify how we might be able to balance the books because we have no alternative, we have to balance the books within the budget that we have available to us. On the early years, you are saying that you have to deliver that £1140 and the £600 is going to have to be delivered and that is at the expense of the core budget that is being cut, so it will be libraries or community centres or whatever. On the question of pay, it is a little bit tangential to the budget itself but we have had representations made from the Equalities and Human Rights Committee in response to a letter that they got from Linda Fabiani MSP about equal-pace claims. I do not want to get into Glasgow's particular case on that but obviously you have a lot of experience of that. Some of those are being settled by local authorities through making compensation payments and some through back pay and the particular mechanism has a significant impact on, for example, pension entitlement. Is COSLA cited on those issues and is there any cross-counsel working being done to ensure that people who are entitled to historic equal pay are being treated equally and fairly in the settlements that are being arrived at? I will not specifically talk about Glasgow. I understand that I am speaking to colleagues across local government. Settlements are a local set of negotiations with the trade unions and the claimants representatives if they have private firms representing them. There has been some discussion about pension allocation and pension provision but, from a Glasgow perspective, we are currently in discussions to negotiate a settlement on equal-pay claims. There are two key things that we have to look at, the taxation application. There are eight discussions with HMRC and discussions with our pension fund as to what instructions and guidance they will give us to the allocation of tax and pension costs to those compensation settlements. I think that there has been potential confusion to the word compensation and pay. I think that there is a shorthand word for used compensation but, in reality, that compensation is made up of a number of factors. It could be interest. It could be what we would class as compensation in a court action and also pay aspect of that. Currently, negotiations with HMRC and our pension fund tax and pension payments will be deducted from those payments before they are made to the claimants. That is helpful, thank you very much. Getting back to the question of ring fencing and protected expenditure, Gail McGregor, you said that 42 per cent is the amount of the broad local government budget that you have discretion over. The rest is either ring fenced or protected. By protected, you mean protected under the terms under which the Government gives you the settlement, i.e. you are not going to get this unless you do X. Again, on the question of transparency, would it not be better to be explicit and frank and say that those are ring fenced funds? Local authorities are their delivery vehicle for them, but they are coming from the Scottish Government, the ring fenced funds. In the same way that the UK Government might give the Scottish Government money but say that this is for X, you have no discretion over this. The Scottish Government agrees to spend that money but it is clearly UK money spent by the Scottish Government and that would help accountability. In effect, are we not getting back to quite a substantial amount of ring fencing? It would not be more honest to call it ring fencing so that we are clear about who is responsible for it. We do call it ring fencing and it has been increasing significantly over the past few years back in 2011-12. Only 2 per cent of spend was in a ring fenced pot and that has lifted up to about 12 per cent now of initiative funding. There has been a significant shift in initiative funding or ring fenced funding or whatever you wish to call it. As I said before, I think an awful lot of what the Government brings forward is incredibly valuable and a lot of it we can sign up to in partnership and we are very happy to deliver. I just think that, as you say, the difficulty is that if it is absolutely ring fenced and that money can be spent on nothing else, it does not necessarily reflect what is required at local level and it takes away that local decision making. There are an awful lot of initiatives that we are signed up to and we are happy with. Early learning and childcare is a prime example of that. There are other initiatives that have come forward and have been ring fenced for us to deliver, which have not particularly come forward in consultation with local government. We need to get better at that. We are getting better, but going forward we need to have much more active discussion before big headlines are announced in Parliament for money being given to a particular policy. We need to have much more discussion beforehand with local government to say, is this going to be a good initiative? Is this going to work locally? How can we make this work locally between local government and government and ensure that the funding is fully funded, not just funded as the headline but at the expense of something else, as I've said before? We do require some ring fenced and we know that. There are initiatives that come up throughout the year, £2 million or £3 million here or there, which are incredibly important. We understand that that money will be given to those and local councils do the same thing as well. Throughout the year they will say, we are going to commit x amount to x, y or z. I think that it is important, but as you say for transparency, it needs to be understood that that over there can only be spent on that. As a consequence, if there's a budget saving, it's at the expense of what's down here. You don't describe education funding as ring fenced. You call that a statutory service. In effect it's ring fenced because you must deliver it. You have no choice about that. Are the three categories discretionary ring fenced protected and statutory? Yes, and non-protected. But nowhere are those figures presented, either in a budget document or indeed by anything that you've provided. This committee has been quite keen on more and more transparency about that. That doesn't just mean what it means is taking the same numbers and presenting them in different ways so that we can understand the impact of those numbers. For example, the draft budget this year tells us explicitly and draws together in table 614 the funding that's coming from other portfolios, health, justice, transport or whatever, that are being spent through local authorities. That's helpful for transparency. Would it not be helpful as well to allocate funding to the different categories that indicate the degree of flexibility that you have in spending that and what the constraints are on it? I mean, you could produce those numbers, I'm sure, yourself if you like, but I'm talking about transparency all round, with the Government's draft budget and with the figures that you produce as well. Maybe just add to that. We've tried, and statutory is complicated. I wouldn't put it down as a category of statutory because a lot of what we do is statutory, but there is local flexibility around how you meet those statutory obligations. For example, it's a statutory requirement to collect refuse, but how often you do that has changed. We've looked at it for a number of years, trying to separate out what are statutory provisions from the flexibility. There's no issue around the statutory requirements when we've had a focus on outcomes. That was being very much welcomed by local government when we moved to that position. What we've got around education, for example, is that you've got a statutory requirement to provide it, but alongside that you've got an input measure. You've got the input measures of teacher numbers. You've got the input measures of PEF funding that you've got to spend a certain amount on there. We've moved away considerably from the good place we were in of focusing on the outcomes to having back input measures. That's where there's an issue with the statutory provision when you're focusing on performance being related to input measures as opposed to the outcome focus. That's what we're trying to do with the national performance framework, but we're operating two systems in parallel. We're talking about outcomes from the national performance framework, but at the same time we've got these input measures. That's an important point, because I think that you make the point in your submission or elsewhere that you want to focus on outcomes. You've said that there's been a drift away from that. How has that drift happened? I thought that this was all signed up to an agreed. I think that, with budget pressures and new commitments, it's the challenge that we've talked about as part of the budget scrutiny a number of years ago as well of how you monitor outcomes. We need to get better at monitoring outcomes, because in the absence of that, understandably people want to say, well, what are you doing? There's an accountability aspect, and the easiest model to move to for accountability is to look at inputs. Is that really just because you spend more? Is that service any better? Because you've got more teachers in a school, does that mean it's better for children? What we've seen is that, because of the teacher numbers, other aspects such as additional support needs, because of budget pressures, have moved. Focuss narrow on input measures is something that COSLA for a long time has not been supportive of, and it's very much about the wider system and focusing on the outcomes. I think that we've been talking about that for some time. I think that we've just moved to give an assurance to the committee that, locally, local governments are working with all of its community planning partners, third sector, housing associations and other agencies, importantly on outcome-driven initiatives. Youth crime reducing doesn't help by itself, it's by working very closely together with police and third sector and charitable organisations, which has a direct impact on health and justice going forward. So, just to reassure committee that we are focusing on outcomes, our community plans, our strategic plans that are agreed by each of our councils are outcome-focused, and we do monitor those on outcomes. What we need is more flexibility and how we will apply the resources that we have and our partner agencies have to continue to drive that effort into outcome-driven initiatives, which clearly have a direct impact on society. We've heard various views this morning about the funding process and even the different names that budgets are called, and that has created some confusion. The reality on the ground is that, as far as I can see and for the time that I spent as a councillor, we have seen an increase on charges, three, five or even six, seven per cent across some councils in the last year or two. All councils have made efficiency savings, all councils have reduced their workforce and some councils have had to balance the books by going into reserves. That is the fact, the way we are at the present moment, before we have implications from the new budget process that we're about to look at. Can I maybe get a view from you about, with that whole cumulative approach and taking forward, the pressures that are upon local government can no longer be managed by local government themselves? There's nothing that you can mitigate further to ensure that you can get the result that you want, which is to provide the facilities and services for your community. Yes, I would agree with that. One of the difficulties is that fees and charges are a means of creating income for councils, but it tends to be in areas that affect the most vulnerable in our communities and those that perhaps need those services more than most. You cited three, four, five per cent there, I think that burial layers have gone up by up to 20 per cent across Scotland as a means of plugging the gap. This is what I mean about the unintended consequences of new priorities and the funding there at the expense of something else and the hard decisions that councils have to make. I think the reality is that one year budgets are very difficult as well because it doesn't allow you to long term plan and there's obviously efficiencies in longer term planning as well. Sometimes we have a spend to save so you have a bit of an upfront cost, but over the longer term you can find more efficiencies. Working hand to mouth year on year, and I appreciate that the Scottish Government is not in any different situation either, but hopefully if the UK Government were to have a slightly longer term financial strategy, that would certainly be useful to the Scottish Government and the local government. I think short termism is a huge problem. It's a massive problem. We can't think three, five, ten years. Although we have projections, we don't have certainty, so it pays the prime example. I'm in the process of negotiating a multi-year pay deal and I have no idea what budget we're going to get in 2021-22. So going forward that is a massive issue. I think areas like your IJBs, which we have concerns over funding with, we know that money isn't being transferred from acute into preventative and early intervention. I think that's an area that we very much need to focus on. There are things that can be done to improve the outlook for local government, so I'm not all woe is me in doom and gloom. We're very positive about what we can do to improve our situation, but that has to be done in partnership with NHS, IJBs, Government, departmental agencies. There's a massive piece of work to improve the situation for us and it's not guaranteed that it would happen, but for instance that the NHS have now had an indication that they will have three-year projected funding and be able to work within a 1 per cent window. Wouldn't that be lovely for us? I think that if we could work towards, in the longer term, two or three-year budgets, that would be fantastic. It would help, but it doesn't take away the fact that in this period local councils may look to having to put up fees and charges for junior swimming or higher of pitches or the list is endless. I think that we're reaching a tipping point where we get to a stage where the fees and charges prevent people from using the service and I think that has to be balanced as well. You're also indicated earlier about trying to attract your new personnel for the future. Local government is going to continue. Organisations and structures are there. You need to have that projection of your short and medium-term advance so that you can attract individuals who will come into the sector and manage the sector on behalf of the communities that they represent. We, as politicians, can add to that mix, but we need the co-staff to be there. That has been very difficult. You've been trying to attract. There's been some councils that have looked at golden hollows to try and encourage individuals to come into various sectors so that they can have, because you're having to re-advertise a number of posts across the piece. All of that is creating uncertainty for the sector because of the funding and the anxiety that has been created by the prospects of continual cuts within the facilities. I think that that's a very valid point. All of chief execs across 32 local authorities have workforce planning as a key risk within their authority. We forecast where the risks are, where the demand is increasing and we are all looking at initiatives about redeployment. With the early years' increase, we are looking to offer redeployment to our staff and staff across our community planning partners and our local government areas to retrain as child development officers. That's been a very successful process. We now know that, with the current economy, people are going to move into portfolios of employment and understanding what our young people are looking for in terms of career and reward. How do we create an employment model that is attractive for people to come and join us and stay with us? We also have to look at our training and development programme, but that also comes at an essential cost because the risk is that, if we don't have those in place, we will lose experience in high-quality staff. Can I ask about the way that councils are evaluating the impact of the budget reductions when it comes to particularly vulnerable groups, where they have a bigger impact within our community and through the increased charges and the increase of fees? That has a massive implication to those individuals who are in a vulnerable situation. There are a number of aspects to that. Often it's easy to say, just increase a charge, increase a fee, but that can often be a false economy because participation declines but local authorities are still left with the cost of the service and the people running the service. Everything that we do is an option, or we look at it as an option, has to go through an equality impact assessment. That also includes looking at protected characteristics and ability to pay. More and more, what we're also doing is understanding what would be a direct and indirect consequence be of a fee increase or a service reduction on other parts of the public sector because there could be effectively cost shunting to other areas. We need to understand what the direct and potential indirect consequences of that are and how we would be mitigating that. A couple of questions. You've talked about the core budget in the £2.37 million cut. Have you factored in there, or what have you factored in there for pay awards? The teachers' negotiations didn't make the progress yesterday that some were hoping for. What is your assumption that if there is a settlement on teachers' pay that that will be fully met by the Scottish Government? What are the implications then? Other trade unions have said that, based on that, they may come back looking for more. What are the assumptions that have been made around pay and specifically on teachers? Is the assumption that the Scottish Government will fully fund that? With my other hat on, because I'm also the employer's lead for COSLA, so it's me that's negotiating with all the unions and the EIS at the moment specifically. Obviously, the lifting of the public sector pay cap last year raised aspirations for our workforce. There's no question of that. I think that COSLA and Good Faith mirrored Mr Mackay's policy. We felt that if people within the public sector were being offered the policy that he put forward, it was fair to mirror that and add that value into our workforce. However, I'm nine months into negotiations and I'm not going to go into the specifics of that. Local councils will obviously forecast within their budgets pay going forward. They will put a percentage in. Not all of them will have put in 3 per cent, which is what we're actually in the end kind of offering. Some will have a shortfall. They may only have put in for 1 or 2 per cent, but there's always pay pressure and pay budgeted into forward budgets. The pressure itself is not horrendous, but where we're having to get to actually get these deals over the table is really going to stretch local government. The commitment to a three-year deal is a very, very big commitment. At the moment, we're looking at circa £380 million just to cover this year's pay rise, if it's agreed. In respect of the teacher pay negotiations, the offer from COSLA is similar to that of other bargaining groups. Any additionality from that would come as a policy intervention from the Scottish Government and, yes, would hopefully be fully funded by the Scottish Government. More important, we would require it, because it's a multi-year deal, to be fully funded going forward, because there will be knock-on costs that are obviously on costs for teachers and all our workforce as well. We have a big pension cost coming over the hill in April this year now. There's massive pressure because of pay, but we do value our workforce. We've had a period of austerity and they deserve a pay rise. There's no question of that. It's just doing it within the means that we can do it. I note that five council have said that, in order to meet the cut that they're facing, they would have to increase council tax by 11 per cent. Has the finance sector been clear this year that there is a copy 3 per cent and any local authority who puts their council tax up over 3 per cent would face in car penalties? Is that your understanding? Before I go on to Kenny Gibson, we've talked about raising local taxation, etc. What are your views on the tourist tax? Causla has lobbied very hard over the recent months. We launched a campaign last July for the transient visitor levy. Causla's view is that it's not there to plug the gap of budget cuts. It would be there for individual councils if it was going to work in the local area to be applied to bring in additional income to cover the pressures that tourism creates in that area. It's certainly not a stock gap for budget cuts. It would be down to an individual authority to see whether it's going to work for that area and have value to bring in income to cover, as I say, the cost of tourism and the associated costs that go along with that. The principle is that local government should be given the discretion to raise monies locally if the conditions suit. I was a member of the committee in 1999, which you believe. One of the issues that we wrestled with at the time was the issue of the then Scottish Executive not fully funding what was called additional burdens for local authorities or responsibilities. I suppose that the more things change, the more they stay the same in terms of the relationship between local government and this Parliament. The issue of ring fencing is a really serious one. Obviously, when the Scottish Government came in in 2007, there were over 60 funding streams at that time that were ring fencing. They concorded that in November 2007, abolished those and they've started to keep back, as you've pointed out. However, what the Scottish Government has said, because I remember asking Mr Swinabout this directly when he was finance secretary, was that the reason for ring fencing coming back in was because additional money, for example, has been allocated to local authority specifically for additional teachers and free personal care. At that time, there were police numbers, but councils were just spending it on other things, even though it was specifically given for those purposes. The Scottish Government felt that the partnership wasn't being fulfilled from the local government side. Therefore, it said, I will only give you the money if you spend it on that. I think that there's a wee bit of an issue of trust in how the relationship is broken down. I'm wondering how you feel that can be rebuilt, if you like, because the Scottish Government obviously has a manifesto to bring in. I've always taken the view that any additional response since 1999, whether it was Labour, Liberal and Power or SNP just now, that any additional burdens or responsibilities should be fully funded, but if you're giving a local authority additional money for something, then it should go on that and shouldn't impact on the core budget. I would entirely agree with that synopsis. 100 per cent. I think that there was a breakdown of trust and faith between local government and Scottish government over a period of time. You're asking what we're going to do in the future to improve that. I think that we already are. I think that we've spent the last year and a half since the new presidential team came in and the new spokespersons came in at COSLA. I think that we have much closer partnership working. We have much more liaison between government and local government. We have a much more proactive attitude between ministers and the spokespersons and the associated boards within COSLA to work in partnership. I think that it's very much the start of a journey, but that trust is beginning to be rebuilt. Things like the national performance framework are obviously going to guide that as well. The negotiations on early learning and childcare is a prime example of good partnership working between government and local government and concessions that Mr Mackay made in the budget last year around lifting of ring fencing and, as I say, firing some of the social care funding directly to councils rather than putting it through the IJB. It's hugely perfaith for Mr Mackay and he took it and we haven't abused it. The trust works both ways and we must continue to build on that. Our president continually says that we shouldn't have tears of government, we should have spheres. If we can work more proactively and more closely with government and build that trust, then it will deliver better outcomes for everybody. Ring fencing is difficult. When I was first elected in 2007, all the ring fencing was being lifted and it was fantastic and we were all happy. Suddenly, we've got pretty much between statutory and ring fencing, 58 per cent of our budget that we can't touch, so ring fencing does exist. The only way that we can start to break that down is to develop the policies more closely with government in the first instance and then ensure that the money is going to where it should be going to point, but obviously with an element of local discretion. We do know our areas better. I'm sorry, but we do. It's going back to council tax. Right at the start, Councillor McGregor, you said that councils had been constrained by the freeze. Implication is that they're not constrained anymore, although there is a cap on how much they can increase. Is it your position that any increase in council tax should not be used to plug funding gaps? That's the first question. The second question is, if every single council increased by 3 per cent, would there still be a funding gap in every single council? Yes. I think in respect of council tax that the 3 per cent cap takes away the local autonomy. I'm not suggesting that any council would actually put their council tax up by 11 per cent if it came to that because people have to be judged at the ballot box next time round and we're very aware of that. The local discretion to raise it to a level that assists in not necessarily plugging the gap because I don't think that it should be used for that. I think that it should be used for other initiatives within the area, but if we are into dire times and we have a reality check, it would be useful to assist in continuing to deliver core services. There's no question of that. 3 per cent cap, as is, would create £80 million worth of additional income for 32 local councils, but no, it wouldn't go anywhere close at 3 per cent currently to offsetting the budget cut that we have. We'd probably need to put it up to 9 per cent, which is a say, no council's going to do. That's the same, but every single council is in this position. Yes, I think so. Thank you very much. That's the end of our question sense. Thank you very much for that, that was very helpful. I'll now suspend briefly to allow a witness change-over. For our next evidence session today on the Scottish Government's budget for 2019-20, I welcome Derek Mackay, the Cabinet Secretary for Finance, Economy and Fair Work, and Aileen Campbell, the Cabinet Secretary for Communities and Local Government. Aileen Campbell, this is your first appearance in front of us in your new position. Thank you. Hopefully it will be a nice experience. Right. There's no promises, but it's nice to see you start off in such a positive vein. You're an optimism. Thank you. Okay, let's get back to business. They are supported by Graham Owenson, Head of Local Government Finance, Robin Haines, Head of Local Taxation, Caroline Dicks, Investment Manager, More Homes Division and Angelo Bryan, Team Leader, Better Homes Division from the Scottish Government. The committee undertook pre-budget scrutiny work during 2018 in relation to workforce planning in local government, housing adaptations and more generally the suitability of affordable housing stock for older and disabled people. Following that work, we wrote to the Scottish Government with recommendations in relation to these matters for consideration and advance of the budget being finalised. We've now received a response to this correspondence, which is included in our papers, and we have the opportunity today to discuss this response as part of our wider scrutiny of the Scottish budget for 2019-20. First of all, I invite Mr Mackay and Ms Campbell to each make brief opening statements before we move to questions from members. Thank you, convener. I welcome this opportunity to discuss the Government's spending priorities with you and hear the views of committee. As I made clear to Parliament, the 2019-20 budget is being delivered under the most challenging of circumstances. If the budget consequentials for investment in the NHS are excluded, this year's block grant would be £340 million or 1.3 per cent less in real terms than it was this year. Despite that, the Scottish Government is providing local government with a real-terms increase in both revenue and capital funding to invest in our public services and deliver a joint priority of sustainable and inclusive economic growth. Local authorities are key partners in delivering the vital services that the people of Scotland expect and deserve, and that's why I've treated local government very fairly in providing a total settlement of over £11.1 billion. Within that total, I have increased the resource budget by £197 million, £1.5 million and their capital budget by £207 million, which will result in a total increase in local authority core funding of £405 million. That is a real-terms increase of some 2 per cent. The funding package includes an additional £210 million to deliver on our commitment for the expansion of early learning and childcare entitlement and £160 million for investment in social care. It's a real funding to support real day-to-day core services. To exclude it, it presents a distorted picture of the resources available to local councils. Local councils also have the flexibility to increase their council tax by 3 per cent, raising an additional £80 million, securing a real-terms increase of 2.7 per cent or £485.1 million when local government spending on services again next year. Mr Campbell, I welcome the chance to be here at committee. Despite the tough public expenditure conditions driven by the UK Government, we have managed to secure significant investment for the community's and local government portfolio so that we can maintain our focus on creating a fairer Scotland, ensure provision of accessible, affordable, energy-efficient housing and promote community empowerment and inclusive growth. The budget shows increased investment to support the delivery of 50,000 affordable homes over the five years of this Parliament, with the total spend on more homes increasing by 9 per cent to £789 million in 2019-20. All of the £574 million more homes capital funding will be directly invested in the affordable housing supply programme, chiefly for social housing. Together with the £112 million budget for transfer of management of development funding, which sits in the local government budget line, the total capital investment for affordable homes will be £686 million. We have also allocated £141 million of financial transactions to the affordable programme, which means that the total budget for affordable housing in 2019-20 will be £826 million, an increase of £70 million from last year. We are also maintaining our commitment to reducing overall energy costs for Scottish consumers by improving energy efficiency in homes where we can, address fewer fuel poverty inequality and deal with the challenges of climate change. With an extra £116 million allocated to tackle fuel poverty and energy efficiency in 2019-20, it means that we have allocated over £1 billion in this area since 2009. I record my thanks to the committee for raising the housing needs of older and disabled people at the heart of their budget, pre-budget scrutiny, with a particular focus on adaptations and funding for registered social landlords. I am pleased that I have been able to maintain this budget at £10 million for 2019-20, championing independent living for older and disabled people in their own home. We are also continuing to invest in supporting measures to tackle poverty and build a fairer and more equal society. To do that, we will continue to strive to reduce child poverty levels backed up by the £50 million tackling child poverty fund. We will also do more to tackle food insecurity, experienced by families during the school holidays and will expand access to free sanitary products. We will also invest £10 million in 2019-20 of the £50 million Ending Homelessness Together fund as we implement the commitments made in the action plan that we published in November and provide £23.5 million to local authorities to support the provision of temporary accommodation. The role of the third sector can play to help to reduce inequality cannot be underestimated and we continue to provide financial support to enable them to work with communities to tackle tough social issues at source. I recognise the value of investing in regeneration activity to stimulate inclusive growth and to empower and improve the wellbeing of people and communities. The Empowering Communities Fund helps to develop strong and resilient communities, providing investment to enable communities to develop local plans and proposals, prioritise budgets and develop local asset services and projects. Overall, the budget continues to provide significant investment to meet our commitments in creating a fairer society, providing opportunities for our most vulnerable citizens, supporting regeneration and empowering our communities. I thank you both for those opening statements. Cabinet Secretary, Darren Mackay, you talked about being a good deal for local government. Cozler did not quite agree with that. You talked about the fairness. Cabinet Secretary, Darren Mackay, you suggested that local government was treated less fair than other areas. Even excluding health, they were treated less fair than other areas. Could you respond to that? I disagree with that analysis. For as long as I have been finance secretary, local government has enjoyed a real-terms increase in the resources that it has proposed by the Scottish Government. For this financial year—just take this financial year—UK Government said austerity would come to an end. It hasn't ended. Again, if you exclude the Barnett consequentials, I think it's reasonable to do so. We've said we'll pass on the Barnett consequentials for NHS, so if you exclude that element, if I had simply replicated that budget to local government, it would have been a real-terms reduction to local government. That's not what they're facing. It's a real-terms increase in resource and capital for the local government settlement. In this continuation of UK austerity, I think that's a fair deal for local government. The settlement that I have from UK Government, excluding Barnett consequentials specifically for health, would have been a real-terms reduction to the resources at our disposal. I'm proposing for local government is a real-terms increase because of the choices that the Scottish Government is proposing and using our other levers. Recognising that NHS is indeed a priority for this Scottish Government, we set out manifestal commitments about passing on Barnett consequentials. We're doing that. I think we've treated local government very fairly. I've been financed. This is my third budget proposed to the Scottish Parliament, and I'm proposing a further real-terms increase to local government in its very challenging economic and fiscal climate. That's why I would describe it as fair. Of course, I would expect COSLA to argue for more. I think that I did the same. When I was part of COSLA and when I was a local authority leader, and I know that I'm not the only former local authority councillor in committee this morning, of course local government will quite rightly argue for more. I'm not underestimating the challenge that local government faces in terms of the fiscal pressure and the other pressures upon public services. In terms of the resources and the choices that we have available, it's a very fair settlement. If other parties wish me to do something different, it's up to them to say what different priorities they would have, what else would you do around taxation or reduce budget elsewhere if you wish to change the local government's settlement. In that context, convener, I would say that it's a very fair settlement to local government. If you take out health, where does local government sit in terms of a level of increase? Again, it was suggested that they are not the next priority. Over the 10-year period since 2010, we have had spending reviews, and the Tories have been in office beyond that. Over that period, there has been a £2 billion real-terms reduction to resource in terms of the Scottish budget. If you exclude health uplift, and I welcome the health uplift, I've done so publicly, but if you exclude that for the purpose of understanding the impact for every other portfolio within the expenditure on the Scottish budget, it would have been a real-terms reduction. It's a real-terms increase that we're proposing. In terms of share of the budget, the Scottish Government is making choices to invest in our public services, which means real-terms growth, for example, in education as well, including local government. Within that, we are making choices to provide stability for the country, sustainability for our public services and economic stimulus to give us positive economic and sustainable growth. Share of the budget, so share of spend to local government, as proposed for financial year 2019-20 is about the same, at about 27 per cent. In terms of capital specifically, I was watching as much of the evidence as I could earlier from COSLA. I think that some of the very specific elements of what we're choosing to fund surely have to be welcomed as well. I'm just referencing what the Scottish Government is doing here. Of course, local authorities have the ability, unlike other portfolios, to raise revenue and to raise local taxation. I think that that also has to be set in the context of what other portfolios and other government departments can't necessarily do that local government can, but the starting position is a real-terms increase, as I've described. Within that, yes, there are specific commitments to be made, and I have discussed them with local government. There won't be a surprise to Parliament because convener Parliament has asked us to do many of the things that I'm proposing to do, whether it's free personal care or the expansion of early learning and childcare. They won't come as a surprise because it's the expectation that these commitments are delivered, and there are many expectations that have been asked for by parties right across the Parliament, so it's not unreasonable to have them funded in the settlement that I'm proposing to local government. I'm watching the evidence that I saw Councillor Gail MacGregor describe to our priorities. They are excellent priorities. They're priorities we support, so it's hardly that we're foisting upon local government unreasonable demands when actually they're priorities we support and causalist support as well. Thank you very much for that. Mr Mackay, you're obviously an entertaining best this morning. Let's have a look at what you describe. You can share that with us. Yes, we'll do our best. Let's have a look at what you describe as a fair settlement. When you strip away the ring fence money and we look at the core budgets of councils, we're left with the real terms. According to SPICE, £319 million. Councils are going to have to make cuts. The first question, do you accept that all councils are going to have to make cuts? Is that the end of that particular question? That's the first question. See if I'm asked a theoretical question to speculate. If you discount money in the settlement, is there less money? By definition, yes. If I am forced to discount resources in the settlement for a purpose, then by definition there is less money. In reality, there is more money in cash terms and in real terms. Of course, when you use the public sector deflator, as we understand it, there is a real terms increase, so there is more money in the settlement going to local government as outlined in the budget and as proposed by the circular. I don't accept the argument that I should discount resources just because someone else wants to define it in a different way. The Scottish Government's view is that if we are funding the public services of Scotland, it's ultimately things that Parliament has agreed we should do by and large, such as free personal care, or for example early learning and childcare, then I think it's reasonable to describe that as part of the settlement and that's what I've done. For the public, the public will want to know, is that more money or is it less? In fact, that proposes more money for local government in cash terms and in real terms. We're not going to get very far if you don't answer the question. The question was, will all councils have to make cuts? Well, in the same way that any part of the public sector right now has to look at efficiencies, has to look at balance in the books, of course local authorities will have choices to make, but I don't think you can separate out this issue of core and other things. I was watching the evidence earlier, early learning and childcare, general welfare, social care partnership priorities and our functions of local government already. How can you describe that as anything other than core to what their duties are? As to the question whether they have to make efficiencies, yes, so will Scottish Government, so will other parts of the public sector. We all have to make choices and priorities in the context of continuing UK austerity, of course, delivered by the Conservatives. Right, so I think we've got somewhere, so you've accepted that councils are going to have to make cuts. You have accepted that. We can dispute the language. What I'm describing is local authorities will have more. You call it efficiencies. Okay, let's not argue about the definition, but it will have to make efficiencies in the same way that the UK Government expects others to make efficiencies as well. I'm here to grill the Scottish Government, not the UK Government. So £390 million real terms cut core budgets. I don't accept that analysis, convener, and I've tried to, as clearly as I possibly can, explain why I don't accept that analysis. Graham is working on one set of figures. You're working on the other. There's a cut to core budgets, expenditure on things like roads, leisure, library. Let's take roads as an example, because I saw it referenced earlier today. The capital budget is going up, so arguably there is more resource in capital. If local authorities want to spend it on roads, they can spend it on roads. I'm aware of some local authorities proposing an increase in the roads budget, for example. We can pick examples, but my point is that in the real world there is more resource. If you want to argue over definitions and where that leads you to, then fine, let's do that, but I'm talking about real money. Two local authorities, as proposed by this budget. This budget isn't approved. There's less money for local government. That's the reality of the budget not being approved. Let's see how we resolve that. There's more money overall. Nobody's arguing about that. That's very welcome concession indeed. No, that's not concession. That's fine then, in cash and real terms. Good. I'm glad we clarified that. That is the reality, but 42 per cent of that money councils have no discretion over the bulk of that money councils, because it's Scottish Government priorities, which people aren't arguing about, good priorities. What's left is where the cuts are going to hit. How is that fair? You are right to say that there is more money overall, but when you strip out your commitments, there is less. How is that fair? Is Mr Simpson suggesting that 42 per cent of local government budgets ring fenced? No. Good. What element of the budget does Mr Simpson think is ring fenced? The majority of it. That's totally inaccurate. That's an inaccurate figure, with no basis in fact. Mr Simpson, 58 per cent is the figure that Caws look him up with when they were talking about statutory commitments. That's a different question, convener. To be fair, the committee runs the risk of getting different elements mixed up between what's a statutory function and what's ring fenced. Actually, the Scottish Government, since its time of office, has reduced ring fencing, has absolutely reduced ring fencing, taking billions of pounds out that were previously ring fenced so that local authorities had the discretion. Yes, there are statutory requirements. That's quite a different thing altogether than ring fenced funding. Statutory requirements, is that which this Parliament of whatever persuasion has chosen to say is a statutory service? Are we saying that every local authority should be left at its own devices and not have a national consistent service in certain regards? I think that the committee has to be very careful not to mix up statutory services with necessarily how they're funded, because there are very specific conditions around ring fenced funding, which the Government has reduced since the signing of the concordat and the change to the arrangements and how local government was funding. Are there some elements of this budget that is ring fenced? Yes. Early learning and childcare? Yes. Do you know the total of funding? I think that it's about £210 million for early learning and childcare. That composition of how that would be distributed was done in agreement with local government. There was a departure from normal process here, which is sometimes distributed on what could be a population basis or a pupil basis or whatever else. Local authorities costed what they thought would be the reasonable amount to deliver the policy in a local authority by local authority basis and asked us to fund that in that fashion. That element is ring fenced, but that totality and that distribution was agreed with local government. Sometimes there are occasions to have a ring fenced fund, convener, and that's a good example. I'll let people ask you questions. I'm trying to answer it as comprehensively as I can. Graham, do you have any other questions at this point? No, for now. I did think that the pantomine season was over, but we seem to be drifting back into it there. The question that ring fenced is that, if you look at a council budget, almost 50 per cent of that council budget will be education, for example. The bulk of that will be on pay, teachers' pay and other staff pay. That is the point that we are trying to make. If you then take the IGB and social work, you start to see that you are up about 70 per cent, 70 odd per cent of the council budget. The ability to cut starts to come from those other services disproportionately. You get to a point where we are talking to council leaders this week. They are saying, do we just stop cutting the grass? Do we stop the street cleaning and the impact that it has? If we are being serious about that, that is the difficulty. You and I won't disagree over failed Tory austerity. We won't disagree where we are at with that. The causallist point, however, is that they believe that they have taken a disproportionate cut of 7 per cent over the last, I think they said, 10 years, compared to less than 1 per cent of the Scottish Government budget. Can I focus on a few points? The first point is that, if you take the example A5 where I live, despite the fact that you say that there is an increased budget, in this current financial year there is some like £4 million being cut out of the education budget. Secondary schools across Fife are having to take a cut of around £2 million. As a result of that, parent councils are now campaigning together because the impact that that cut is having on front-line learning and teaching is horrific. We kids have to be no supply teachers or not know where teachers are off sick etc. I think that we really need to boil this down to the public hearing this debate about whether it is a cut or not a cut, but they know that their kids are going into schools and those schools are having real-term cuts that are impacting on their education. The key argument that COSLA makes is that, yes, Aileen Campbell outlined the additional monies coming into communities for specific policy areas that nobody would dispute. We heard COSLA this morning saying that those are good areas. The free sanitary products that Aileen Campbell rightly mentions cost £3 million. The bar play implementation at the finance secretary is dealing with £3 million. The carer act is £10 million. Frank's law is £30 million. Integration is £120 million. Extensionally, learning and childcare is £234 million. The good point is that, if that is where those areas are focused on, they still end up with a deficit to continue to deliver the current services that they are running. Do you accept that? Do you accept that as a result of that? That is why in Fife parents are rightly angry and calling on the Government and the local authority to do something about the cuts to front-line education? First of all, there was a question about the treatment of local government as part of Scottish Government budget decisions. I also know that you discussed earlier the nature of reductions elsewhere. In Scotland, local government has the best treatment of local government in terms of the resource settlement to local government, which is less protected in Wales and less protected in England. I want to put that in context. Part of the issue in terms of the longer term, and I have referenced it earlier, is that the Scottish Government has made a commitment on passing on Barnett consequentials in relation to health services, and that is what we have done. That is an issue there as well. However, for as long as I have been finance secretary, and that is how Mr Rowley posed the question, I have proposed in terms of two budgets passed and another one being proposed, a real-terms increase to local government. Being asked what am I going to do for local government, I propose a real-terms increase to the local government settlement. Within the other priorities and choices, yes there are. Interestingly, we have, as a Government, tried to protect education. It is up to local authorities if they wish to do that as well. Actually, a number of local authorities and overall spending on education has been improving. Yes, we have embarked to do things like protect the pupil teacher ratio commitment, deliver the pupil equity fund and, in terms of the education portfolio as proposed in the Scottish budget, that has also improved in real terms. I would say that we have tried to honour our commitments around education and tackle the attainment gap. I know that it is important to Mr Rowley. In terms of individual local authorities, I do not think that as finance secretary I should go through each local authority and instruct them how to do the absolute detail of their budget and what proportion they should allocate to every portfolio. They will have choices to make. There are also live pay negotiations under way at the moment in terms of teachers and non-teachers as well. Again, I just put it in the context. Let's take non-teachers as a live pay offer, about 3.5 per cent for 18, 19, 3 per cent beyond that. Surely local authorities could only make such an offer if they thought that was affordable. I would suggest to convene on that. It is about choices. Local authorities will have to make the choices that are right for them locally, but Parliament has asked us to do certain things. Members of each party in here have campaigned for certain elements to be put into the budget and they have been built in. Do members wish to go through it and say which we shouldn't fund, which should be de-ringed fenced? If Parliament is asking us to make those commitments around expansion of services, it is not unreasonable to have them identified in the budget, I would argue, convener. I say fair settlement. The share of the Scottish Government's budget is protected. I have received from UK Government a real-terms reduction for the reason that I have explained earlier, excluding health consequentials, but in that context proposed a real-terms increase for local government. Local authorities can use their council tax power up to 3 per cent to generate a further £80 million for local services. Let's come to that point in terms that we discussed earlier whether it was efficiency savings or cuts. Local authorities would argue that there are no efficiency savings left to find that they have cut to the bone and that's why they are now cutting directly into front-line services. Are you satisfied that, within all the other Scottish Government departments and portfolios, you have done your job to look at where there are efficiencies and are you satisfied that there are no efficiencies to be found within those other portfolios and other areas? Very fair question, convener, and of course I've gone through with each Cabinet Secretary their portfolios to be assured that they've tried to identify any savings or efficiencies that they possibly can. Of course I have gone through that. Will we find new efficiencies that we work our way through, whether it's procurement or better productivity or asset approaches or whatever it happens to be? Of course, and there are also priorities and choices to be made as well. There might be some things that are less important to local authorities as well, but when it comes back to what we choose as priorities, I tell you again what COSLA told you this morning. That was the words of the resources spokesperson from COSLA. They are excellent priorities. They are priorities that we support. I don't think that it's an unreasonable place to be for the Scottish Government to say that our priorities are those, and COSLA happened to think that they are excellent priorities as well, but it will potentially mean deprioritisation of other things. It's not for me to say every element of a local authority's budget, but that which we have set out has been clear and transparent and set out in the budget documents, set out in my statement. I also caught reference to the national performance framework earlier on. That's about outcomes, not about inputs, it's about outcomes, and I believe that that will still be delivered, because that's about how you work together. It's not about the quantum of resource. It's about how we bring to bear the totality of our resource to deliver transformational change. I have no reason to believe that we won't deliver on the purpose and outcomes that we have identified in the national performance framework. I think that you have heard the nail on the head in terms of that. Nobody is disagreeing with the priorities that the Scottish Government has set out, but those are your priorities, and as you say yourself, as a result of those priorities, local authorities are having to deprioritise other areas. One of them in Fife is front-line education and schools. That's the bottom line, but could I turn to Aileen Campbell? I do want to ask a question in terms of the portfolio and the housing. Given the housing crisis in Scotland, 50,000 new affordable homes are commendable and we need to work together to deliver. Are you satisfied, however, that we are getting it right in terms of prioritising the kind of homes? When we talk about age and adaptations there, we talk about the demographics of people getting older. I say that we experienced in Fife the last five-year session the built 2,700 homes. That was good, but where we could have done better was to prioritise the kind of housing. Are you satisfied that we are getting that right and at length some with social care and at length some with all those other areas? The ambition behind the 50,000 houses is the correct one. You have articulated that there had been issues and challenges around housing, so it is correct that we focused in on delivering 50,000 houses. We have articulated the significant investment that we are putting in and have put in over a number of years to increase the number of houses. Of course, we are also cognisant of the fact that we have an ageing population. We need to make sure that those houses that we are building are fit for purpose, not just in the here and now but also in the future. Alongside the current ambition around the 50,000 delivery, we are also working around what that vision will look like beyond 2021, working through with partners around the changing demographics and the different ways in which we will need to ensure different innovations around building techniques and all those things that enable us to adapt those homes to be suitable. That is also happening, and it is working with partners, housebuilders, public and private sector, local authorities, housing associations and such, to make sure that the point that you make, which is a valid one, is to make sure that we absolutely get it right. In the here and now, we are also making good progress on ensuring that the housing stock that we are delivering now is also mindful of the different needs of people in the communities that we serve. Can I just ask a question? Who is responsible for the cuts in education in the five council areas of the Scottish Government? I am very mindful at this stage—I am trying not to be too partisan—that, at this stage, local authorities put up options, not all those options transpire to be a finalised budget. I have to say that there is a consultation period, but I do not run five council, the administration of five council run five council. I am responsible for Scotland's budget, so that would be for the administration of five, in terms of the decisions that they take. I am just very mindful at this point in the budget cycle. Councils will consult on saving options, but ultimately their budget meeting decides what they are taking forward. We are at the point in the cycle where the decisions of a council might not necessarily be the decisions that materialise the budget for the year ahead. Specificly in relation to education, education has been protected in so far as the portfolio was protected. We are protecting the pupil equity fund that I do believe is making a difference. We have agreements around pupil teacher ratio that are really important. The extension over the last number of years of things like free school meals has helped me to make a difference in poverty, inclusion and giving children the best start in life. Of course, we are working on the evidence that is told that early years really matter. If you want kids to get a good start in life, primary education is important, but so is early years. That is why we are expanding the entitlement to early years as well and we are funding it. Incidentally, it might be worth noting that sometimes we over-provide, we over-fund a particular commitment. We do not necessarily ask for a clawback of that resource. That did happen in terms of early learning and childcare. We over-provided for the results. We did not claim it back. In addition to that, we are putting in the resource that was asked of us to meet the requirement for 1,140 hours. Andy Wightman It has been interesting listening to those exchanges. The fundamental problem and the issue here is that the non-ring friends, the discretionary funding available to local authorities, has been cut. To deliver early years or anything else, they are going to have to be deprioritising or cutting other services that local government provides. I want to assist this analysis in tables 6, 11, 6, 14 and 6, 15 of the budget. I understand that you are not able to answer that right now, but if you could follow it up in writing that would be useful. What proportion of the funding identified in those tables is ring fenced? Andy Wightman To ask me to do that analysis, you need a break, convener, if you wish to do it. Andy Wightman Can I give an area of context overall? When the previous administration was in office, ring fencing was well over £2 billion roughly. £2.7 billion It is currently at about 0.9 billion. That is the context of ring fencing. We have taken it from that figure down to point nine. That is the headline figure, if you like, convener. The point nine is the answer in tables 6, 11, 14 and 15. Is the answer from table 6, 11? Okay, fine. 6, 14 and 15 are ring fenced, too? 6, 14 is the revenue funding within other portfolios? Those sums will be transferred into the block grant. They won't be ring fenced. When it says, for example, £120 million for health and social care and mental health, that's not ring fenced? It will go into the block grant. And local authorities can spend it on libraries or roads? You need to refer back to the cabinet secretary's settlement letter about what the expectation is on social care spend, but the £120 million will go into the block grant. So when you refer back to the cabinet secretary's letter, that's a letter that says you get this money if you do that. If that's accepted, that is in effect ring fencing. I think again need to be careful with the definitions here. That was my point about the difference between a statutory duty and how certain elements are funded. I think you need to be careful around that. It's true to say that there are conditions attached to certain elements of funding. Table 6, 14, as is described, is coming from other portfolios to local government. Very specific about that and that's the reason for that particular transfer. Right, but the health and social care and mental health £120 million. The intention is that that £120 million shall be transferred to local authorities, and the intention is that it shall be spent on health and social care and mental health. That's the intention, but again, being clear, the specific terms of a ring fenced fund, which is what the member asked about, doesn't apply. Fair enough. We may have to review the language around this in the years going forward. Are you correct about the intention? Yes, I'll accept that. In 615 local government funding outwith course settlement, for example Clyde Gateway Urban Regeneration Company, half a million, the expectation is that that will be spent on the Clyde Gateway Urban Regeneration Company. In table 6, 15, yes, it would be. That's helpful. Can I just turn to a sort of different matter, but it's relevant to the budget. This was an issue that was raised by the Accounts Commission in their financial overview 2017-18 report at the end of last year. They talked about the funding distribution model and how the granted expenditure needs-based methodology, the quantum to which that is applied, has been frozen at £7.9 billion since 2008-09. Further funding that has been provided since then, on top of the grant-aided expenditure, has been distributed either using the same proportions as the guy funding or through a separate methodology, etc. The Scottish Government advises that in 2017-18, £0.2 billion was distributed through the guy methodology and £3.5 billion through individual separate methodologies. The basis of the calculations for the separate methodologies are not publicly available and should be more transparent. My question is, is the Accounts Commission correct to say that they are not publicly available? Secondly, can you make them publicly available if they are not? I don't have the report in front of me, but the basic answer to the question is that local government funding is indeed complex, but the methodology is agreed with local government. The distribution is generally worked through with local government. Like other former councillors in the committee, 32 local authorities will have 32 different perspectives as to local government finance distribution, each with a view that would suit their own council. For that reason, it's no surprise that there's no rush from COSLA to suggest that we revisit the methodology. In essence, I have no objection to the workings being shared whatsoever. It fully reboots, convener, to the internal workings of how every penny is distributed. Ultimately, the principle behind it is a degree of equalisation. Of course, if every council retains its council tax and its non-domestic rates, the purpose of the rest of the grant-aided support is to provide equalisation so that services can be provided on a fairly equitable basis across the country. That's what that element of funding does. Generally speaking, that needs-based approach can be determined by population, length of road, a whole host of indicators that take you through that. The committee is more than happy to look at it, but there has been no request from COSLA to revisit it. Is there a guidance sent out to the local authorities about how your sense of very complex methodology is 32 different responses? Is there a guidance sent out and how that methodology should be worked at? There is a distribution and settlement group within the Scottish Government in COSLA that works. Every time there is a fund or a change to methodology or something, it would go through that group. It would be agreed with local government. Early learning and childcare is a good example. We have stepped away from the needs-based formula in terms of just how many young people we have, but actual costs, because there is a recognition that different councils may need to do different things. If there is a departure from it, it has been done in agreement. If it is the application of it, it is understood that members will be well aware on each issue that goes to council leaders following a recommendation from that group. I am more than happy to share what we have with the committee. I am sure that COSLA would feel the same. My point is to change any formula. Each local authority would argue for any change that would suit them best. That is a duty, and that is the expectation. To be fair, my line of questioning I was not asking. I am just explaining how it has come about, that complexity. My question is merely that the Accounts Commission says that the methodology is not publicly available. Will you commit to making them publicly available? If COSLA agrees, why wouldn't I? I think that I started off my answer to say yes. COSLA would have to agree. We could share what we have. I am trying to be as helpful. I do not think that anyone is trying to object to sharing the information. We can happily provide what we have. Members can probe it. That is fine. I think that I said fill your boots, because you might think that it is not as interesting as you think it is, convener. I was the first time that a cabinet secretary invited me to film my boots, but thank you so much. With respect to making the methodologies, that is fine. I have shared whatever we can in terms of that methodology. You talk about, and in your circular to local government you talk about 3 per cent candle tax cap. What statutory authority do you have to impose this? We have proposed a sanction-free budget in previous years. There is an expectation that local authorities continue to cap at 3 per cent. That has been the expectation of the Scottish Government. The Scottish Government does have capping authority and statutory powers to use. We have not had to deploy them, because it has been done by local authorities thus far. Your statutory authority to cap is not the power that you are invoking to impose the 3 per cent cap. That power is not designed to control how much the council tax rate under section 93 of the local government finance act of 1992. I am making it clear that, convener, there is an expectation that it has been complied with thus far and no statutory power has been required. In our pre-budget scrutiny, we were looking, among other things, at workforce planning. We wrote to the Government and received a response in November. What aspects of the report that we provided in the observations and recommendations that we made have been taken into account in the budget? We sent a response to the committee, and we did absolutely consider not just the issues that the committee raised on workforce planning, but, as I said in my opening remarks, the issues that you have been looking at around adaptations into account as we decided on the budget. It is also important to recognise that local authorities are responsible for their own workforce, but that is not to say that there is not a common interest in making sure that we make the issues of resource and that we work together on the issues around workforce planning. Certainly, predominantly, local authorities are responsible for their own workforce, but we took account of the issues that you raised in your response. The example of how it was taken account of in the budget? For instance, I talked about some of the things that we do in the Government around working with our own portfolio. We work with local authorities around making sure that we have the right skillset there, in terms of making sure that we can build houses to reach the 50,000 targets. That is work that is always on-going. Generally, the points that you make are things that we take on board as a Government around how we work through any challenges around workforce. I reiterate the point that local authorities are predominantly responsible for their own workforce. I would not be right for us. I do not think that you would want us to tell local authorities how to manage their own workforce. In my regular meetings with COSLA, we can talk through and engage with the relevant cabinet secretary. For instance, we have had a strong interest today in education. Those are things that the education ministers will be taking forward, along with COSLA and other interested parties, to ensure that we have the right workforce balance in all parts, from the further and higher education systems that we are all working together to make sure that we can work together. I would not get the right balance in place. You mentioned housing. In the budget statement that you made on 12 December 2018, you said, We have had confirmation of 80,000 affordable houses built since 2007. However, SPICE have done the research on the Scottish Government's own affordable housing supply programme statistics and found that, in fact, there is only 58,427 have actually been built that the rest have been acquired off the shelf for rehabilitations. Do you agree with that? We have delivered on the 80,000… The secretary said that we have had confirmation of 80,000 affordable houses built. Built means to build something. He did not say that we have had confirmation of 80,000 delivered. Okay, let's say 80,000 delivered for the avoidance of doubt. By the way, the budget proposes in the next financial year over £800 million to stay on track for the 50,000 commitment. The 50,000 commitment is to build. To deliver 50,000. Patrick Harvie asked on 17 May 2018 at First Minister's questions that the First Minister stood in a manifesto that promised that we will invest £3 billion to build at least 50,000 affordable homes within the next five years. Does that commitment stand? The First Minister said yes. Our commitment is to deliver 50,000 affordable homes, which we are making good progress on. We expect to meet that target. We have considerable resources behind that. In fact, of any of the Governments across the Isles, this Government is the one that is delivering affordable houses for people in Scotland. We expect to meet the target of delivering 50,000 affordable homes. We have made good progress on. In fact, since the Government came into power in 2007, we have made incredible progress on delivering affordable homes. The First Minister agreed that the commitment was to build, not deliver. I have read the SNP. You can argue over the semantics. My point is that we have told you about the resource that we have got there. We are delivering on target to deliver and reach the 50,000 target. We have more houses built in Scotland compared to other parts of the UK. I am not asking about other parts of the UK. We are making good progress and we have over 800 million there to fit that commitment. That is like an earlier conversation when we are going round in circles. Andy is talking about build. You are talking about delivered. We have got that on the record. I do not really think that there is any more point in going over it. I would like to say that we do not want to spend any £800 million to build houses. Approving the budget helps to meet that target. It helps as well. It is 880,000 affordable homes delivered since 2007. Over 54,000 for social rent, including over 10,000 council houses, 19,000 for affordable home ownership and 6,000 for affordable rent. That is since 2007. We are on target to deliver the commitment to deliver 50,000 houses for people of Scotland, considering that everyone has an understanding of the significant housing need that is out there. Andy, do you have any more questions? Good morning, Cabinet Secretary. I want to first leave with Mr Mackay on the issue of reserves, because that has not really been mentioned thus far. It would perhaps be helpful if the Cabinet Secretary could indicate how much by way of reserves the Scottish Government holds. We have a particular reporting process for reserves that the Scottish Government would hold. The arrangements have changed in terms of the reserve. It would be of interest to know that, at the most recent reporting stage, the Scottish Government held revenue reserves of £192 million. It might be of interest to the committee to know that local authority, general fund and revenue reserves, as reported on 31 March 2017, were £1,178 million just to put the Scottish Government's reserve into context. I respect that our financial arrangements are different but I think that both figures are helpful. I thank the Cabinet Secretary for that. It is quite a contrasting position. Will the Cabinet Secretary be aware, since 2010, whether that amount that is held by local authorities represents an increase or a decrease? As I understand it, let's figures show that, over the period 2010-17, local authorities' general fund reserves have increased from £680 million to that figure that I have just given of £1,178 million, so that is an increase of 73 per cent. I have to say that we have been hearing about the problems that are caused in particular by the continued UK Tory Government austerity programme at Westminster and reductions in the Scottish Government's budget. I wonder how, if you are a member of the public and you have been trying to follow the debate that we have had thus far in the committee this morning with COSLA and now with the Scottish Government Cabinet Secretaries, how could I explain to my constituency of Cowden Beath that, although we have heard that the Labour SNP5 council administration is looking at different spending decisions that it may wish to make in education in other areas, how does that fit with the fact that all those local authorities are sitting on £1 billion? It is quite a contrasting position when we hear about what they feel they may have to do in terms of local service provision, and yet they are sitting on those reserves. I understand that reserves are for a rainy day, but have we not reached the rainy day? I don't know if the cabinet secretary would like to do his thoughts on that. I would wish to be slightly careful here as finance such as I absolutely answer for the Scottish Government's very modest reserve, which I frequently engage with the finance committee around, and I do that, I'm sure, at next evidence session there. I shouldn't make any comment on local authorities' individual reserves other than to say that I overheard Mr Rowley saying that it's raining now, not actually outside, but I'm glad to say that the sun is shining. I think that the point is that, in the period of austerity, we should be using the resources to the maximum to try and provide stability, sustainability and stimulus, yes, I should, as a general rule. In terms of the reserve that I have, again, the financial arrangements of the Scottish Government have changed as a consequence of the fiscal framework, and local government has actually been a beneficiary of the underspend that's been generated and carried forward. I've been asked about previous reserves, how would I spend it? Actually, local government was a beneficiary of an underspend being carried forward into the following financial year, so I carry forward resources, anything that's unallocated and held in reserve, again, at a report to Parliament at the appropriate fiscal reporting stage. That's the figures that's last reported. I can only say that it's for local authorities to be asked about how they choose to use reserves, which I'm sure they would say in some cases are allocated, some are unallocated, there is a healthy range at which to keep reserves, but that's the context at which the Scottish Government has. Is there any perception that I have fantastic reserves to deploy? I don't. The position is as I've outlined. For that answer, it is interesting for the public to be aware that since 2010, as we've experienced sadly many, many rainy days in light of UK Government austerity in particular, that local authority resources in terms of their reserves have increased by some £350 million. I think that some members of the public would find that quite difficult to understand, and they might be encouraged to ask local authorities what is the position per each local authority. If I may, convener, one last series of questions to the Cabinet Secretary for Communities. Talking of the UK Government's austerity programme, which has not sadly been brought to and then far from it, I just wonder if the Cabinet Secretary could let us know what she plans to do in the next financial year to mitigate against these continuing, austerity-driven measures and welfare cuts? As Derek Mackay has talked about, our own budget has suffered. The block grant has reduced by £2 billion in real terms over the last decade. I think that that has undoubtedly impacted on our ability to pursue policies that can help people cope with the social security cuts and the welfare reforms that have been happening. As a result of UK Government decisions, what is very important has been the very recent visit to Scotland by the UN special rapporteur, who made some very telling comments about what surprised him about what devolved Governments were having to do to cope with on-going austerity. Our decision to mitigate as best we can some of the worst impacts of welfare reform and social security cuts made by the UK Government. In fact, he also made a comment that mitigation comes at a price and is not sustainable. He was surprised that we were having to do as much as we are to try to help to provide that buffer towards people who are particularly vulnerable. We expect to spend over £125 million this year on welfare mitigation and measures to help to protect those on low incomes. I have also talked about some of the things that we continue to do around child poverty and the £50 million that comes along with that. However, there is a significant spend on mitigation, which will have to continue, particularly because the very much politically driven and politically motivated decision to impact most on those who are most vulnerable in society means that we will have to continue mitigating and softening the blows of UK Government decisions. I think that the UN Rapporteur made some very interesting comments around that. I think that it has shone a light on just what devolved Governments across the UK are having to do to help to protect their citizens. I hear what the cabinet secretary says. I wonder if the cabinet secretary could just off the top of her head give us a few examples of what she could do with that money if it went to harm Mr Mackay's looking. Let's assume that it went to the cabinet secretary for communities. The money that we are spending mitigating the policies that we didn't vote for and don't support, what could you do with that money? We made a commitment to, and we are working towards, the commitment around income supplement. That would be a policy that we would pursue as a Government to try and lift children out of poverty, which would be made all the easier if we had more resources at our disposal. If the UK Government weren't continually politically motivated decisions around cutting social security or changing welfare benefits, we could use income supplement as a way to help lift families out of poverty. The reality is that we are continually having to mitigate those impacts, which prevents us from doing some of the things that we would want to do. It also reduces the budget that we have at our disposal to pursue other policies that are positive policies, things that we would want to do in our own right as a Government. That would be one thing. One of the policies that we are working at the moment is one of the things in the tackling child poverty plan that we are working towards at the moment. Everything would be made more easy or simpler if we had the funding that we are currently having to use to mitigate if we were able to use that funding elsewhere. Earlier on, Cabinet Secretary, I asked COSLA about the situation that we find ourselves in in councils at the present moment in time. We talked about that councils are increasing charges and I indicated that it might be 3 to 5 to 7 per cent, and they indicated that 20 per cent increase in charges was going on burials. That is the current situation that some councils are finding themselves in. I also indicated that every council is doing efficiency savings. Every council is reducing its workload, and a number of councils are balancing their books by using reserves. In my region of Mid-Scotland and Fife, I think that every single council across that region is out to consultation to the general public about what is going to happen to their services. They are giving them some options, but the majority of those options are for a reduction. That is the reality that I face in my region at the present moment in time. It would be interesting to hear your views on that. It would be interesting to understand, therefore, how a £0.5 billion tax cut to the richest in society would help us with that particular predicament convener coming from a Conservative member. That is very interesting. Charges are only allowed if you are charging for education, of course, whether that is tuition fees, although I accept the Conservatives have changed their position on prescription charges with the latest U-turn. It appears that the Conservatives are for charges if you are trying to be educated or if you are potentially in another position. I think that all members have to reflect on their own political position when asking about budget choices. The member did not reflect on the positive things that the budget is proposing in terms of continued support for school building, housing and capital. Town centres at one point were something that Conservatives were interested in and demanded a ring-fenced fund to support town centres. I propose a capital investment in town centres and not a mention from the usually generous Mr Stewart. I think that every member should reflect on the positives of this budget as well. The alternative of this budget not being approved, as I have described at the outset convener, is less money for local government. That is the reality in terms of decisions that we are asking Parliament to take. All those things listed that were described as excellent priorities and very welcomed in Mr Stewart's nodding in agreement cannot happen if we do not fund them. As I tried to outline earlier, local authorities will have to make choices and will have to look at efficiencies naturally. As I heard in the evidence session earlier, it is not necessarily Scottish Government decisions. It will be other pressures that the public sector faces. That could be pay, other demands and services and so on. That is all within the context of our funding decisions to allow local authorities to have more resource and the ability in terms of real terms to increase in resource and capital and local authorities can raise more through council tax. Again, in the context of a £2 billion reduction over the 10-year period in the resource budget that we have from the UK Government. Excluding the NHS health consequentials, if I had not taken the decisions that I am proposing to take and applied and photocopied the cuts coming from the Chancellor, it would have been a real-term reduction for local government, not real-term growth as proposed in the budget that I am presenting to Parliament. Cossill talked about the £400 million new commitments that are involved in that. Maybe some of the good stories and the new initiatives that they believed were going to be beneficial to their communities and their council areas. If there is the £400 million of new commitments that the Scottish Government is asking local government to take on board and the funding package that is there, do you not accept that there will be a shortfall in some areas? I have tried to describe and I appreciate that with the pressures that local authorities face. I am actually not underestimating that because it is faced right across the public sector. The problem at source of course is a UK Government that is continuing austerity but even with the limited levers that the Scottish Government has at its disposal, we are taking choices to turn that real-term reduction into real-term growth and we have set out priorities. Some of those priorities I thought the Conservatives shared. For example, there has been campaigns for the extension of free personal care. Frank's law is being funded as part of this budget. I have now been told by the Conservatives that we shouldn't be funding that and we shouldn't let that happen. It has been campaigned for us in the budget. I could go through each member of the committee with interests that they have that are funded in this budget to suggest that I shouldn't fund it and leave it at the total discretion of local government. I suspect that I would end up in the chamber of the Scottish Parliament to have demands made of us and why we didn't provide the funding to deliver the commitment. I accept that there are challenges and pressures but what I am proposing is a real-terms increase. What I am proposing is to ensure that local authorities can raise the necessary revenues to deliver their services. If I had followed the plans from Mr Stewart to deliver a tax cut to the richest in society, the highest earning in society, it wouldn't mean more for local government or anyone else for that matter. It would mean more than half a billion pounds less resource for Scotland's public services if I followed the full advice of Mr Stewart. Before I let Kenny Gibson under Graham and Alec Rowley, I have a question about adaptations. Is that okay to ask that now? Yeah, yeah, yeah. Okay, so that's to yourself Cabinet Secretary for Communities. We wrote to you, as you know, about adaptations and in that letter we pointed out that the budget had been 10 million for some years but demands had actually outstripped that. So there is a growing funding gap for adaptations and you replied to us and you reiterated it earlier that there are no plans to increase that budget. The budget will remain at 10 million. So isn't the situation just going to get worse and worse? So we've maintained the adaptation budget 10 million pounds for RSLs and that covers the 30 local authorities. In addition to that, Glasgow and Edinburgh adaptations funding for RSLs is provided through the TMDF budget and that adds a further, on average, another 3 million pounds to that pot provided by the Scottish Government. So while the £10 million is a very explicit line there, that's not the totality of the pot that's used to fund adaptations. Now what we do agree with in terms of the suggestions made by, for instance, the Scottish Federation of Housing Associations and their evidence to you for better alignment between people who need an adapted property and the allocation of void properties and that's why in my recent correspondence I think with Mr Dorn and my officials are working on a review of existing legislation and guidance in relation to adaptations because I think there's probably a bit of complexity there that's probably unnecessary and in the attempt to try and corral that, coordinate that, make sure that it's very much more focused on the individual needs of a person then I think there's much more work that we need to do. So there had already been work and pilots in place and I understand that one of the ones that's making some good progress around how you coordinate that adaptation pot of money much better is the Scottish Borders. So there is work on going that has been on going to try and test out how we can use that funding in a better way and that's what I mean as well around the taking real cognisance of what the committee have told us in their letter to me and why we've made the decision to maintain the budget at £10 million but certainly along with that commitment to ensure that we look at this a bit more carefully about how we maximise the impact of that money which is not just found in that £10 million line but in other parts of the in public life as well. So I think that's why I think I've valued the committee's work on this and the committee's letter to me because it enables us to maybe put more pace into that work that is quite necessary and clearly necessary from the evidence you got from the House and so the Scottish Federation of Housing Association. I hope that that will continue to keep you updated on that because I understand and realise and recognise your very keen interest in this. It was October that you heard some of that evidence and it's been an on-going issue that I think has been raised by the committee over a number of months and there is progress to demonstrate movement on this but I think that the £10 million plus the further money that's being spent on that to Glasgow and Edinburgh through the TMDF budget line and the IJB responsibility. I think that there's a need to make sure that we're seeing demonstrable change now that the IJBs are there in place with some policy lead on that. I think that as a committee, as you know, it's been an on-going piece of work so I think that we would need to be assured on an on-going basis that things are improving. I absolutely agree and I think that again that's why we wrote back to the committee in the way that we did to make sure that we maintained the budget line but that didn't lose sight of the fact that there was an on-going need to explore the totality of that landscape to co-ordinate it in a better way to enable us all and local authorities and RSLs to focus on the individual needs of the person so that that's the motivating driver in how we get the adaptation of that. Of course, alongside that goes back to the question that I had from Alex Rowley earlier on about making sure that we build houses that are more easily adaptable or are fit for purpose from the outset. That work on the adaptations alongside the on-going work, existing work, to make sure that the houses that we're building now can be adaptable but also the house building projects that we take forward post 2021, those are much more understanding of demographic changes and they need to make sure that we are building houses of good quality that are adaptable to the changing needs of our population so I think that looking at that in the whole is important as well. Perhaps you can keep us informed about that. Absolutely, happy to do so. Yes, absolutely. Thank you very much. You said earlier that you could talk about your last two budgets and the real-term increase in them. I met some council leaders earlier this week and one of them told me that they were planning a number of scenarios and one of them was based on your last two budgets where you announced the settlement for local government. There was then negotiations with other parties and I think that last year was an additional £35 million went in for local government and they were working on the scenario if that happens this year, what would it mean for them? Is there more money on the table? Is there an opportunity for other parties to come to you and negotiate like you have done the last two years, further money is going into the local government settlement? That's a very good question, convener. If it's a serious invitation to ask as my door open to other parties in Parliament to be serious and come and meet with me to discuss how a budget might progress, I would welcome that, but it's not in all seriousness a reflection of the Labour Party or some other party's current approach to me in terms of the budget positioning. If a party wishes to come to me with ideas and a credible plan as to how we could amend the budget, I am open to such engagement. I have said that consistently. I recognise that we are a minority government. I would require the support of another party to get the budget through Parliament. That's not news, a minority government, and I am open to that engagement. I should say—I hope that I reflected that earlier—in terms of the fiscal flexibility that I have, it is very limited, because I have tried to set out a budget that Parliament can support by putting resource towards the commitments that Parliament has asked us to make. It is also seen through the Government's programme for government in ensuring that we can provide stability, sustainability for our public services, and then economic stimulus as well, because that's for the good of the country and the good, ultimately, of revenues. I don't have much fiscal headroom left, no, but am I willing to engage with other political parties to enable the passage of the bill? Yes. The reason that's important is that it's not just what a political party may seek by way of concession or amendment, but the risk of the budget going down is the difference of some £2 billion. In everything that we were discussing earlier, £826 million, just for housing, for example, that members have touched upon, or the sum for free personal care, or the £700 odd million increase for the NHS is all at risk if a budget doesn't pass. For that reason, every opposition party should take the opportunity to engage with me seriously. I have to say that some opposition parties are not doing that, whether it's their constitutional obsession or what. I don't know, but other parties are maybe not taking the budget processes seriously as they should, because members are true to their work. This is about the jobs and services and people of Scotland that we're talking about, and that's why the budget is so important. Do I have much fiscal headroom? I say again, no, I don't. I have described the position in terms of the last reporting figure around reserves. I've proposed in the budget how the budget is funded. I don't have much room for manoeuvre, but I'm happy to engage with any political party to see how we can find the necessary compromise to allow that £2 billion extra expenditure, as currently proposed, for Scotland's public sector, for Scotland's country and to make the necessary progress that I'm sure we all share. I say, convener, people shouldn't play games with this budget. Of all times, the country needs stability and certainty right now, and I think that the chaos that's unfolding in Westminster is an absolute disgrace, an abdication of duty by the UK Government. The Parliament should show itself to be the competent, reasonable and socially-minded place that it is, and it was built to be. I pass you on to Kenny Gibson. Thank you very much, convener, and finance secretary. I wonder if you can share my bewilderment. We've heard a lot of evidence from COSEL this morning and questions from colleagues around the table. We've expressed a number of concerns about the budget, but no-one has put any numbers on the additional funding that they think should go to local government this year. Or, indeed, how that should be sourced, whether it's from taxation from other areas of the Scottish budget. Or we did hear some undefined, rather wooly suggestions about additional levers. I don't know how they would be introduced in the time that we have before the budget comes in. I wonder if any other political parties or, indeed, COSEL itself have come to you with any specific numbers, or if they're being as coy with you as they have been today. Not as yet, convener, to be transparent with committee. I know that there's been some reference to the negotiations with COSEL. COSEL has set out their asks in relation to social care, and I surpassed their asks in relation to the pressures that they were experiencing around social care. A figure was offered, and I went beyond that in terms of the proposed support around the line on social care, for example. In the public domain, the Greens have described a position around meaningful reform and local taxation. That's in the public domain. As it stands, I don't have a specific figure as to what a budget amendment would look like. I understand other parties have described their position. I've seen from the Conservatives that they haven't set out a figure of increased resources for local governments. It's hardly a surprise when the position of the Conservatives is a tax cut, essentially, of over £0.5 billion to match the UK position just income tax. I do not have a specific quantum that's been asked for by other parties. I would, of course, respect that negotiation if that was offered up privately through any discussions that I would have with parties. I don't have an alternative budget proposal, as Kenny Gibson has requested from another political party or, indeed, from COSEL. Are there any additional powers that could be delivered this side of the budget? We heard from COSEL requests of more flexibility in terms of powers, which means an ability to raise more funds from the people who live in their specific areas, I would imagine. I've said that I'm open to discussion on local discretion, local taxation and individual ideas, but they have to be raised with the Scottish Government in a serious and credible way. If it requires legislation, then it will require the necessary process to legislate. Mr Gibson will be aware that the Government has no plans for what is described as a tourist tax or a transient visit to Levy, but we are conducting a national discussion and a national conversation in that regard. I have asked whether it is parties or COSEL or anyone else if they have a proposition about a levy or a tax one and so forth that they bring the detail to me. That offer is still open to all in Scottish politics. We heard today from Gail McGregor, who said that local authorities in England and Wales are collapsing, given the funding reductions that are taking place. Is he therefore finding it extraordinary that Tory colleagues are castigating the Scottish Government over local government funding while at the same time supporting a UK Government that has cut Scotland's budget and is eviscerating local government south of the border? Well, indeed, I would agree with that characterisation. It's more as we say not as we do, where the Tories are in office. I've highlighted earlier the position that we've protected local government in a way that local government has not been protected south of the border. In fact, our protection is better than is the case in Wales as well. Share of the budget, as proposed, is continuing to be at 27 per cent. I think that some of the elements of capital have to be particularly welcome, because surely members welcome the town centre fund of £50 million. Surely every community would welcome that, for example, in the real-terms increase in resource. I think that there is a very interesting contrast between what's happening south of the border and what's happening in Scotland. Can I say that the only member who did welcome the £50 million of the budget statement was me, who asked a question about that, which was one that you were not expecting to understand. In terms of like for like that was raised by COSLA, they say that, like for like, the Scottish Government reduced local government's share of the budget. Given the fact that the NHS is a host of new procedures, whether it's surgical, whether it's new medicines that have come out, et cetera, et cetera, and indeed it's dealing with 25 per cent more A&E cases than there were only five years ago, is it not the case that the like for like has shifted in the NHS quite considerably as well? That's a fair analysis. I tried to describe that earlier when we have a commitment to pass on the Barnett consequentials in relation to health resource. We have been doing that, and that gives an explanation about the share of the budget. I have maintained local government's share of the budget at 27 per cent, and over the period local government has been treated fairly. I have turned real-terms reduction to Scotland's resource block grant still into real-terms growth to local government. Surely, by that analysis, that's a fair settlement for local government, notwithstanding the challenges that all of the public sector faces, but they're not an isolation to local government. That's right across the public sector, but we have commitments around the NHS. If another political party in this Parliament has an alternative plan about funding the national health service substantially less to give another part of the public sector, for example, substantially more, then say so. Our proposition is to give the uplift to the national health service, as I have described in the budget of over £700 million, passing on the consequentials, making up for the shortfall, quite an underhanded shortfall at the hands of the Tories as well. They promised so much for Scotland's national health service and then under delivered. The Scottish Government's budget makes up that shortfall by £50 million, although at the same time it allows more resources for local government in real terms. That's why I think it's a fair settlement. If it had simply replicated the cuts from the chancellor, local government would have been in a much worse position. NHS would be £53.5 million worse off. It's not something that's been touched on, but you'll know all about it, because I've been raising it for the past four years within the political party of which we are both members. That is the issue of radical reform of the public sector. There's not about time that the Scottish Government looked at much more radical reforms of the public sector. For example, Fife is coterminous local authority with the NHS, and yet it's got an integrated joint board, a local authority and a health board. Would it not be better, rather than have a tug of war between the council and all the bureaucracy that entails, and the health board to look seriously, perhaps, merging the health board and the local authority so that it has one democratic structure that would reduce bureaucracy and allow greater transparency and need more resources to go to the front line? Of course, as you know, I've got proposals for all parts of Scotland of a similar nature. The Greens are not sure what they are proposing in terms of reform and about having more funding control, but, in my view, the structure of local government and the public sector in Scotland needs much more radical reform. Is it not about time that the Scottish Government looks very seriously at this, whether it's going forward or not, is another thing that should at least be examining this? Otherwise, this time next year, we'll be having exactly the same debates as we're having at the moment. I'm not convinced that it's part of the budget process, Cabinet Secretary, but it's all a bit more efficient use of public money. The good news, as convener, is Ms Campbell's desperate to take on this question, as community secretary with lead role for the local governance review. As to the question, should we achieve public service reform, transformation, efficiency through how we design services and focus on outcomes, of course I entirely agree. We don't want to waste resource on unnecessary boundary disputes, power struggles or anything else. However, there is a live engagement going on right now to try and achieve those kinds of outcomes. The Cabinet Secretary leads on that, so I think it's right that I defer to Ms Campbell. I think that it's not a new concept either. I think that these are some of the things that you talk around, maybe not as explicitly as some of the suggestions that you outlined, but certainly some of the issues that Campbell Christie challenged us to examine when his report in 2011 around wider reform, about making sure that we have people at the centre of decision making, that we empower our communities. I guess that's very much the focus of the local governance review, which has very recently closed its consultation. My officials are currently looking at the analysis of what people have suggested they think would be the way in which the governance of Scotland should look like. If you have not had a chance to take part in that consultation, there is still an opportunity to make sure that your views are fed into that, but certainly there has been a wide range of people engaged in that around some of those things about why, what power could be further devolved, what powers and from what body or entity should be further devolved to communities, or is the power balance the right one at the current time? I think that some of that will allow us to pursue some of the issues that you have raised around quaternions boundaries, making sure that our public entities work far better together, that there is not that wrestling around who is in charge of what and whose budget, and why that's my budget and you can't touch that. I think that that's the reality of where we want to go, is to make sure that we get to that place where we can move community planning partnerships further forward so that they have much more ability to work together to make better decisions for the communities that they serve, putting them at the front of decision making, as opposed to having and disregarding their own boundaries as whether they're NHS or whether it's local government or whatever entity it is. There's an opportunity to do more of what you've described through the local governance review, and we've not ruled out legislation if that's required. Community planning partnerships yet another layer that nobody knows what they do in terms of the general public. At the time for tinkering is really over, we do need radical reform of the public sector, if we're going to be able to deliver for the people we represent. Raising your consultation decision. I've been pushing it for four years. I won't go any further to internal machinations. That would be something that we need to address. Thank you both very much and everybody else who came along with you. That was very helpful indeed. I now conclude the public part of the meeting. Thank you.