 Good morning and welcome to the first meeting of the local government housing and planning committee in 2022. I would ask all members and witnesses to ensure that their mobile phones are on silent and that all other notifications are turned off during the meeting. Our first item this morning is consideration of whether to take items 3 and 4 in private. Item 3 will be an opportunity for members to consider the evidence that they have heard this morning as part of its budget scrutiny for 2022-23. Item 4 will be a chance for the committee to consider its report to Parliament on the short-term lets regulations that the committee previously agreed to approve. Do members agree to take items 3 and 4 in private? The second item on our agenda today is to take evidence as part of the committee's budget scrutiny. The committee will be taking evidence from the three panels this morning. Firstly, the committee will be hearing from Unison, then Solace and Cosla, and finally the Cabinet Secretary for Finance and the Economy and the Cabinet Secretary for Social Justice, Housing and Local Government. I would like to welcome to the committee Joanna Baxter, who is the head of local government at Unison. We are going to move straight to questions. I would like to begin by asking whether Unison has conducted analysis on the impact that the 2022-23 budget might have had on its members and the individuals and communities that they serve? Regularly survey our branches across Scotland to determine the impact of the local government's settlement on members and the services that they provide. Feedback that we have received today demonstrates that the proposed budget for local government in 2022-23 is wholly inadequate for the challenges faced by members working in local government. It does not take into account rising inflation, demographic changes and the last decade of austerity. The huge number of local government jobs that have been lost in that time and the number of outstanding commitments that Cosla has to honour to the local government workforce, not least of which one is fully consolidating the living wage across all local authorities in Scotland. That has not happened in every local authority area yet, despite there being a commitment to have done so by 1 April last year. Fundamentally, the proposed budget allocation does not take into account a decent pay rise for local government workers who have been central to the pandemic response alongside their colleagues working in health. Although industrial action was narrowly avoided in the past pay negotiations, the strength of feeling that unison members demonstrated in the numerous ballots that we had to hold last year during the conduct of those negotiations demonstrates that there is a huge amount of anger and frustration among the workforce about the lack of recognition that they have had or the contribution that they have made to the pandemic response. Thank you for your thoughts on that. Do unison believe that additional council tax-raising powers will help local authorities to alleviate budgetary pressures? More broadly, what does unison believe that council tax is fit for purpose? We know that council tax hits those on the lowest incomes hardest. That is a point that has been recognised by political parties across the political spectrum, given the numerous commitments that have been made to replace council tax. I do not believe that low-paid local government workers should have to pay for their own salary increase through their council tax. The numerous disputes that we have had with COSLA and the Scottish Government is that, when we go to COSLA seeking a decent pay rise for our members, they say that they do not have adequate funding or flexibility in their funding from the Scottish Government to enable them to fund that. When we take the argument to the Scottish Government to suggest that they should give local government the funding and flexibility to fund that, they say that local government pay has nothing to do with us. It is a matter for COSLA. Fundamentally, unison believes that no longer should it be the case that our members are used as a political football between COSLA and the Scottish Government. I do not believe that the situation will be resolved by hiking up council tax across Scotland, which will disproportionately hit those on the lowest incomes hardest and will likely hit those poorer areas of Scotland hardest because they will be in more dire need to raise funds because of the demographic pressures and inflationary pressures on their services. I do not think that that is a reasonable proposal to resolve that issue. What the Scottish Government needs to do is fully fund a decent public sector pay uplift for local government workers and to ensure that there is adequate flexibility within the core funding of local authorities to ensure that that money is passed on. Thank you very much for your perspective on that. I am going to move on to questions from Paul McClellan. Good morning, John. I refer everyone to my register of interests. I am a seven councillor on Eastland Council at the moment. John, just to ask—obviously, within the block grant, there is a limited amount of what we can do in terms of spending. If there is more money to go to local government in your own view, where should the Scottish Government take this money from? What other part of the Scottish budget should it take it from in your opinion? That is not for unison to say. Obviously, we are not in the position that the Scottish Government is in in relation to looking at the budget pressures across all service areas. I would say that there has been an uplift to the Scottish Government's block grant from Westminster. I would suggest that it would not be unreasonable to ensure that some of that increase was passed on to local government. That has not been the case for many years. Although it is not for us to say where else in the Scottish Government the money should be taken from, we would say that there appears to be money in the system. One thing that the Scottish Government could do is to take the handchains off local government and allow them to the flexibility to spend their core budget for the areas that they believe are particularly pressured in their local areas. I know that there will be questions—I will leave it to them to talk about that. I know that you had a local government in unison. I know that it is not just local government that you represent. There are other parts within the Scottish economy, if you like, that you will do that. That is the reason why I asked that particular question. Just a little bit of supplementary, which is that there have been a cancer for the last 15 years. We know that there are additional pressures on Covid, and the consequentials for that did come through last year, but not this year. I do not know if you have any thoughts on that, because I know that that has been raised with the UK Government in terms of the Covid consequentials coming through. However, as we know, there are still pressures on local authorities to deliver services impacted by Covid, and I do not know if you have any thoughts on that aspect at all. I think that there is a continuing need for additional funding to respond to the Covid crisis, because it is quite clear that that crisis is not yet over. Certainly what we have seen is that unison members across Scotland have stepped up to the plate in terms of responding to that crisis. If we look at residential and care workers, school support staff, cleaners in schools, environmental health officers who set up temporary mortars, the distribution of business support grants, all those critical services depend on unison members working in local authority areas, and it is quite clear that local government will continue to be critical to the pandemic response. The need for additional cleaning in schools is not going to go away. The need for continued support for businesses is not going to go away. The continued pressure on social care workers is not going to go away any time soon, and the continued pressures in schools in terms of the catch-up on education for children in Scotland is not something that is going to be resolved any time soon. Those pressures remain. The need for additional funding to resource those remains, and I think that one thing that we did see during the pandemic was a rush to find additional resources and support and recruitment in areas that have been hard-hit by austerity over the last decades. If you take cleaners in schools as an example, we saw early on in the pandemic a rush to recruitment for cleaners in schools. Why was that? Because there was not enough of them, because that is a service area that has been cut due to local government funding cuts over the past 10 years. We cannot allow ourselves to get into that position again, so there is a continual need for resourcing in those service areas, and that is not going to go away any time soon. The other thing that the committee needs to consider in this is the fact that the world of work is also going to be changing. Local government is not immune to that either. We conducted a survey of our members last year on the impact of working in the pandemic. The number of those who had adapted their working environments to the pandemic, working from home, and the number of increases in workload were all significant. I am very happy to share that survey with you. It received more than 12,000 responses from workers across Scotland. It is quite clear that, if those sorts of arrangements are going to continue going forward, working from home, for example, they will have to be funded and we cannot be in a position where low-paid local government workers are having to finance increases in their fuel bills in order to facilitate home working caused by a pandemic that had nothing to do with them. John, thank you for that. I will be very brief as well. Have you been in contact with the UK Government in terms of the consequentials coming through at all? The second question that I was going to ask, when you were already touched on this, was about local government role in helping local communities. I was already touched on that, if there was anything else that you wanted to add on to that. However, the first one, as I said, is, have you contacted the UK Government in terms of consequentials coming through, obviously, to the Scottish Government and then coming down to local authorities? Yes. Our colleagues in Unison Head Office are in regular dialogue with the UK Government, particularly about local government funding and consequentials. Yes, that is the answer to that. John, have you heard anything back in that regard, as of yet, in terms of consequentials? I haven't had anything specific on that, no. Okay, thanks. The second bit was on, if you wanted to add anything else in terms of what else could local government do in helping local communities and economies to recover from the pandemic. Have you already touched on what they are already doing, if there is anything else that you wanted to add? Obviously, there needs to be investment. I think that there needs to be a whole system approach and thinking about health and wellbeing in our communities and also education. Education is not just about teachers in schools, it is about the whole support system that exists within schools and also out with schools. I will give you one example. Due to cuts in recent years, you will have seen youth centres such as Kilbawe closed. That is a direct result of cuts to local government funding. People who use that service would be the first to tell you that a service such as that is vital to the development for our children and young people. It is those sorts of services that are perhaps not immediately visible to the public and that have been at the sharp end of cuts in recent years. To be honest, if the Scottish Government only focuses on the role of teachers in schools, it is not giving consideration to the whole support system that is in place or should be in place for children's development in Scotland, outdoor education centres, after-school activities, etc. In terms of health and wellbeing, we need to view those as community services that are linked together with other community services such as housing, education, leisure, culture, community organisations, families and neighbours. We start moving away from that at our peril because we start then breaking down communities. We believe that those services are local services and they should be delivered as locally as possible. There needs to be investment in those services. We need to take full system thinking specifically about education and health and wellbeing. John Lennon, thank you. John Lennon, thank you very much for that. We are now going to move on to questions from Miles Briggs. Thank you, convener. Good morning, Ms Baxter. Thanks for joining us this morning. You said earlier and also Unison in the previous committee outlined cuts to staffing and increased workloads. Some of the figures that we have been given as a committee suggest that, since 2015, we have seen a 2 per cent higher employment level. In terms of workload, we all know—certainly I know here in Edinburgh—the lack of social care staff. I just wondered where that employment figure had come from and where, necessarily, you have seen the loss of different members. We have done a number of different surveys of members and across local authorities in Scotland. Certainly, one example that I would give is one that I referred to earlier in relation to cleaning staff, for example, in schools. We might have seen now those numbers increase, but that is directly as a result of the needs of the pandemic and the resourcing that came with that. Library service staff have received cuts, planning departments have received cuts, HR departments have received cuts. All non-statutory services have been impacted by cuts to local authority funding over the past decade. There are particular concerns in relation to lettering culture services, many of which are arm's length external organisations of local authorities, but they principally rely on funding from local authorities. In relation to lettering culture staff, if you look at their contribution to the pandemic, they have been redeployed to staff testing centres and vaccination centres to deliver food parcels across local authority areas. All those workers have contributed to the pandemic response in one way or the other. SNP and Green Ministers have said that the budget will reduce inequalities. What would your opinion be on that, given that we know that the £371 million of cuts attached to the budget? It is highly unlikely that the budget will reduce inequalities, particularly if we see council tax increase across Scotland as a result of it. As I said earlier, council tax disproportionately impacts those on lowest wages and will likely be used by those authorities who have been hardest hit by local government funding cuts. Additionally, taking away some of the education support grants is not going to reduce inequalities. The very fact that the budget does not take into account demographic changes or inflationary pressures means that those issues will remain and the cuts will disproportionately impact on those particular authorities that have higher demographic and inflationary pressures. That is helpful. In the submission to the committee, unison said that you would support ring fencing in some budget areas. I wondered in terms of a degree of ring fencing that you would see as necessary. Which areas should that be attached to for budgeting, given the pressures that local authorities are seeing? The Scottish Government and COSLA consistently say that ring fenced areas are for Scottish Government priorities. That begs the question to us why an inflationary increase for local government workers is not a Scottish Government priority. We would expect that a fully funded increase for local government workers should be built into that budget. There needs to be greater flexibility for local authorities in terms of the amount of control that they have over their local budgets. North Ayrshire's budget is, for example, 80 per cent of its budget is controlled by the Scottish Government, which gives them very little flexibility at all over the money that they have to spend. I think that there has to be a balance, but, particularly in the year ahead, there needs to be a fully funded amount for an inflationary uplift for local government workers. Thank you. Finally, I wanted to ask a question with regard to the national care service. That is something that ministers say that they will bring forward this year in terms of a bill and what that will look like, I think, with a number of people who have expressed concerns, including COSLA and others. I just wondered what Unison's view is on that and what impact that could have on members and the recruitment crisis that you have outlined already around social care. That is a big question. We probably do not have enough time to cover that in the sort of detail that it deserves, but Unison has submitted a very detailed response to the national consultation on the national care service. I refer you to that for all the detailed comments. The case needs to be made as to why there needs to be greater centralisation of those services. As I said earlier, our belief is that social care is a community service best delivered in the community with the aim of supporting individuals to continue living in the community, and it needs to be joined up with other local community services. The other thing that I would say is that the proposed centralisation is likely to require significant resources, time and capacity from local authorities to try to deliver that at a time in which the pressure on them caused by the pandemic remains is not going away, and it will require significant financial investment from the Scottish Government, which does not appear to be coming any time soon. Thank you, convener. Thank you, Myles. Now we are going to move to questions from Eleanor Wittam. Thank you very much, convener, and good morning to you and Ms Baxter. Before I start, just to refer everyone to my register of interests, I am still a serving councillor at East Ayrshire Council. The first question that I have this morning relates to the fact that Unison recently called on the Scottish Government to introduce incentives in the 2022-23 budget to attract more people to work in the care sector and encourage social care workers to stay. Will Unison welcome the £233.5 million in this year's budget to ensure that the living wage is paid to those care workers? Should that money be ring-fenced for the stated purposes? I think that we always welcome additional investment. I do not believe that it goes far enough. It is not reaching those workers quickly enough in order to address the significant recruitment pressures that exist at the moment. We need to look at how we deliver fair work across that sector, and that is something that goes beyond workers in social care who are working for local authorities, but also in terms of the third and private sector. As I said to my colleague, we submitted a very detailed response on the proposed national care service to the Scottish Government, and there are very detailed submissions about how we can best ensure that fair work is delivered across that sector. I have another question in relation to the assertion that you have about the fact that this year that the Scottish block grant has been significantly increased. David Iser of the Fraser Valander Institute observed recently that next year's Scottish block grant is quote, not really very generous at all. Do you agree that once non-recurring Covid consequentials, the moneys are stripped out? Scotland's resource budget is being cut by 7.1 per cent in real terms and the capital budget by 9.7 per cent in real terms. That gives rise to a very difficult budget situation and presents to the Scottish Government. Therefore, the uplift of 5 per cent to local government is as fair as it possibly can be. Just to come back to the fact that you asserted that this was a real terms increase to the Scottish Government's budget from Westminster. Obviously, I am not here to answer for the Westminster Government, but what I would say is that it has a number of different publications that refer to the increase in the Scottish block grant from Westminster. Of course, there were recent announcements in terms of additional funding for devolved Administrations to assist with the Covid recovery. My general point is that increases to the Scottish block grant do not get passed on to local government. They may be passed on to other service areas, but they do not get passed on in the terms of percentage increases that the Scottish Government gets from Westminster. I do not believe that the budget for Scottish local government is as fair as it could be. You would struggle to find members of local authorities who believe that. Certainly 32 local authority leaders writing to the First Minister requesting a meeting to discuss their concerns about the Scottish budget allocation would suggest that they do not believe that it is as fair as it could be. The very fact that local government did not even receive a mention by the Cabinet Secretary for Finance in the budget statement demonstrates to everybody the priorities in relation to local government that the Scottish Government appears to have. A lot more needs to be done. Local government is in crisis at the moment. The local government workforce is on its knees. We are entering a set of pain negotiations, which, given the Scottish budget allocation to local authorities, will be extremely challenging. Given the level of anger that our members expressed in relation to the conduct of negotiations last year, I cannot see a situation in which that anger does not feed into this year's negotiations. I suggest that, if an inflationary increase for local government workers is not delivered in those negotiations, we are going to see an extremely challenging industrial landscape in local government. From myself in relation to all that you have just said, how would unison respond to the fact that local government reserves have increased by approximately £300 million over the course of the pandemic? Reserves cannot be spent on many of the budget areas that local authorities need to spend money on. Ms Forbes would deliver the same answer to us if we asked her about the Scottish government reserves, which have increased. I do not think that that is a valid argument. Reserves are tied up in a number of areas, and there is no simple solution to the problems that local authorities face and could not, for example, be used on pay. That is all from me, Arianne, back to yourself. Thank you, Elinor. I am just going to come in with a quick question. Heads of planning Scotland and the Royal Town Planning Institute Scotland raised concern when the budget was published that a long-term challenge lies ahead for planning. It is the most heavily cut public service sector since 2009. It has an overwhelming older workforce with only 9 per cent of planners under 30. I would like to ask for your views on how well budgets recognise staffing challenges for local authority departments such as planning. I do not think that they do take account of some of those staffing challenges. As I said earlier, it is those non-statutories services that have seen some of the biggest cuts to funding over the past decade. It is no surprise to me that there is a recruitment crisis within planning, but that is certainly not the only service area within local authorities that have a recruitment crisis. As I said earlier, in terms of some of the other cuts that we have seen, youth work services in some local authority areas do not exist any more. There are certainly recruitment crises within waste services, for example. Early years and home support social care workers are in massive pressures in recruitment in those areas. A lot of that goes back to funding and pay. If we want to attract people to those critical roles and they are critical, we need to pay them appropriately. Those are not low-skilled roles. They are high-skilled roles, which happen to be low-paid. 55 per cent of the local government workforce earn below £25,000 a year. Those are not high salaries. When we live in a society where someone who is currently a social care worker could leave their job and go over to McDonald's and earn more per hour working there than they could in their social care role, you really have to ask the question about where the priorities lie in society. We need to invest in all those critical roles, which requires money for pay. If I could briefly touch back on the forthcoming pay round, my concern is that we will be back in exactly the same position with the Scottish Government on pay this year in just the next couple of months, as we were at the end of last year. The Scottish Government and COSLA only narrowly avoided mass industrial action in local government last year. If an inflationary increase does not transpire for local government workers this year, I fear that we will not narrowly avoid that this year. In fact, we will see a very difficult industrial landscape ahead. Mark Griffin has a question. Thanks, convener. Good morning, Ms Baxter. I just wanted to come back to the issue around local government staff pay, morale and the ability that it will have to deliver services. The cabinet secretary has said that the local government core budget is being protected in cash terms with inflation and demographic pressures. That means that it is a significant cut, as we all know, but how would your members react to being told that their wages were going to be protected in cash terms this year with inflation running as it is? I do not believe that that would be welcomed, which is why I have referred to the very difficult industrial landscape that we are facing in the year ahead. Let me cite a couple of examples. We have talked about a number of different services areas in which local government workers have responded fantastically to the Covid pandemic. What they have seen, however, is that, while some workers have been rewarded for their contribution, the vast majority of local government workers have not. I was on a call yesterday with a head of HR for one local authority. They have had a request from their local NHS boards to provide cleaning staff to go into hospitals and clean in high-dependency wards. Those are local government workers who are not used to working in a medical setting, not trained in working in a medical setting and not deemed exceptional by the Scottish Government or essential for the purposes of the £500 Covid reward payment. They are being asked to undertake some of the most high-risk procedures in relation to supporting the pandemic response. Our members feel that they have been completely forgotten by the Scottish Government in terms of their flexibility, commitment and professionalism during the pandemic period. I refer again to the survey that we conducted of our members last year on working under pandemic conditions. The impact of the pandemic on local government workers has been extreme. We had 27 per cent of members tell us that the effect of the last year had such an impact on their mental health that they had to seek medical assistance. That is not just a workforce that is slightly stretched or a bit tired. That is almost a third of respondents telling us that they had had to have medical intervention to assess their mental health as a result of the pressure caused by the pandemic. Although other services, which are more visible and people in uniforms, might have had recognition for their efforts, much of the support that local government workers have been provided has gone unnoticed and unrecognised. We are at a point where our members are on their knees and they require and deserve an inflationary increase to their pay this year. As I said, I think that the anger and frustration that they experience at the moment for their lack of recognition means that, if that is not forthcoming in the next pay negotiations, which are going to start very soon, we will be in an extremely difficult industrial landscape. Just touching on that industrial landscape that you talked about, clearly local government workers have performed heroically through the pandemic and still do, what will be the situation for public services in Scotland if a flat cash award to local government staff is made? How will that impact on local government-provided services that we have always relied on? Even to a greater extent to the pandemic, how will that impact on those services in the coming year if a flat cash award is made? It depends what the flat cash award is. If it meets inflationary pressures, we might avert it, but I very much doubt that that will be the case. If we do not receive an inflationary increase for members, I suspect that they would vote to take some form of action to secure a better offer. Clearly, we are a member-led organisation. It will be for members to decide in our consultative ballots whether they accept or reject an offer, but what I see every day is the level of anger and frustration among our members at the lack of recognition of their efforts, at the lack of recognition of the pressures that they have experienced from the decade of underfunding to local government and the fact that they are absolutely exhausted. It is one thing to ask people to go the extra mile during the period of a pandemic, but to not reward them when they do so builds up a level of anger that is not easily dissipated. I think that what our members demonstrated last year in the ballots that we conducted is that they are prepared to take action. In the statutory industrial action ballot, the three Scottish Joint Council trade unions ran. We had mixed results across the country, but we had the capacity to deliver among the three trade unions disruption to services in half of local authority areas. We took a decision to target those ballots at select groups. I think that the level of anger that was shown in those ballots demonstrated that if they were to be ballotied again any time soon, it is very likely that they would vote in a very similar way. I urge COSLA and the Scottish Government to bang heads together and ensure that when the trade union, the joint trade union pay claim, is submitted, it delivers an inflationary increase for our members working in local government and recognises the significant and heroic efforts that they have made during the period of the pandemic. I move to a final question from Willie Coffey. Thank you very much, convener, and good morning to our colleague from unison. I just wanted to go back to the settlement that was discussed earlier by Karen Joanna. Do you accept, as in the spice papers that we have received for the committee, that the overall total settlement for local government is up? It is a real-terms increase of £603 million, or equivalent to a 5.1 per cent uplift. That is in the spice papers, which, as we all know, are independent of government. Does unison accept that so that we can clarify whether we are talking about cuts or whether we are talking about uplifts? The budget settlement does not include or account for inflation or demographic changes. It is saying that local government gets more money, but the Scottish Government has ringfenced more of it for its own priorities. It does not deliver the funding and flexibility that local authorities need to respond to the significant pandemic pressures, demographic pressures or inflationary pressures that they face, particularly in relation to inflation. As I said earlier, it is not accounting for an inflationary uplift for local government workers and pay negotiations. It is not adequate. Do you agree that an additional real-terms increase of £603 million is on the table? That is a 5 per cent uplift. You might say that it is not enough, of course, but do you agree that those are the correct figures? Well, the Scottish Government has told COSLA how it will spend most of its money. As I said earlier, in North Ayrshire, for example, 80 per cent of its budget is determined by the Scottish Government. It does not control 80 per cent of the spending that it is allocated. Although there may be an uplift, it is for specific priorities that are determined by the Scottish Government and is not a real-terms uplift, given that it does not account for inflation. Okay, let's just leave that question there. It was interesting earlier to hear you agreeing with the Conservative member of the committee about the impact of the budget on poverty and inequality. You must surely be aware that the Scottish Government spends £594 million mitigating the effects of cuts imposed by the United Kingdom Government. One of the standard items in there is the discretionary housing payments, where £83 million is still spent by the Scottish Government that would hitherto have been cut by the UK Government. Do you recognise that that continuing investment by the Scottish Government does make a significant impact on reducing poverty and inequality in Scotland? I have seen no paper on the impact of discretionary housing payments on inequalities. What I would say is that cutting PEF funding will not alleviate inequalities in some of the poorer areas of Scotland. We can pick figures from different parts of the budget, but I would suggest that a real-terms cut to local government funding, with local authorities' only option but to increase the council tax to try to alleviate some of that, will disproportionately hit those on lowest incomes hardest. I do not see that the budget will reduce inequalities quite the opposite. It is quite a substantial cherry pick, but it is £594 million that would otherwise not be spent. Some of that money is targeted towards the poorest and most vulnerable people that we have in Scotland. I do not recognise that that is a worthwhile investment by the Scottish Government to continue to do that and to try to alleviate the worst impacts brought about by decisions taken by the UK Government. I am not going to comment on every single aspect of the Scottish Government's budget allocations, because many services are worthwhile for additional investment. However, I suggest that the totality of the budget allocations to local authorities will do nothing to reduce the inequalities that local communities will be experiencing in Scotland. I am not going to get into disputes between the Scottish Government and the Westminster Government. That is not for us to determine. I would simply cite yet again the fact that there have been increases to the Scottish Government's block grant, which has not translated to local government, and that is an issue that needs to be addressed in our view. Thank you for joining us this morning. I think that that has come to the end of our questions. Thanks for being with us today. Your responses have been very helpful. I am now going to suspend to allow a changeover of witnesses. Thank you. Welcome back. We continue to take evidence as part of our budget scrutiny. I would like to welcome our second panelist morning, councillor Gail MacGregor, who is the resource spokesperson for COSLA. Eileen Rowand, who is the executive director of finance and corporate services of Fife Council. Martyn Booth, who is the executive director of finance for Glasgow City Council, representing SOLAS. Thanks for joining us today. We are going to move straight to questions. Witnesses, if you wish to respond or contribute to the discussion, please add an R to the chat box to indicate that. We tend to try to direct our questions to specific people. I am going to start. I am going to direct to Eileen Rowand, but, as I said, anyone is welcome to come in on this. Eileen, what are COSLA's views on the real-term cuts to core revenue funding in 2022-23, and what impact could that have on the services, communities and employees? Thank you for bringing me in on this. From the spice briefing that was issued last week and the budget reality that came from COSLA, we are in agreement that there is a flat car settlement, but once we take into account national insurance and council tax reduction increases, we are seeing pressures of £100 million. For a number of years, local government has had broadly flat car settlements of a look at my own council over the past four years. That is what the average is, and what that has meant is that we have had to deliver significant savings in order to fund inflation and meet demographic growth. We are now at a tipping point where the sustainability of local government is really in question. When I look forward to the next two years after this budget settlement, I am really concerned about the sustainability of local government. We have got to be clear about what local government's role can be going forward with the level of funding that will come from the UK to the Scottish Government and then to councils. Probably my play would be to look at the role that local government plays in improving health and wellbeing. There is a level of protection that is given to the health service. NHS boards are receiving a 2 per cent increase where councils are receiving flat cash. The last thing that I would point out is that the level of new commitments and new burdens that are coming to councils are good things, but they really are at the expense of core services such as roads and transports and bins and libraries. It is a very precarious position for local government. I have a question now that I would like to direct to Councillor Gail MacGregor. Considering the Cabinet Secretary for Finance and the Economy said that she did not recognise some of the figures used by COSLA in response to the Finance and Public Administration Committee, can you first give your views on this yearly recurring debate between COSLA and the Scottish Government? Secondly, could you suggest potential solutions to encourage co-operation between the two? That is for Councillor Gail MacGregor. Thank you very much, convener, and good morning, members. We seem to have a bit of a tune for every single year. I have been doing this for five years now, and we do not always agree on the figures. I think that the discrepancies come when we begin to weed out the ring-fence pots of funding and how much is notionally ring-fence or absolutely directed to Scottish Government policy. If we look back to last year, for instance, 58 per cent of the budget was absolutely directed to individual policy pots that were part of Scottish Government policy. That has actually risen to 62 per cent this year, so we are not disputing that there is more money in local government's budget. I did watch Joanna's submissions earlier on in and around that additionality and how it is being presented. The difficulty occurs when you begin to look at what that money is for. At the moment, as Ileens said, we have £100 million decrease to our budget. We absolutely know that that is fact through national insurance and the council tax adjustment. When we begin to factor in the £800 million worth of ring-fence policy commitments to the Scottish Government, which we have to deliver, some of those were signed up to do others that are slightly more imposed on us. The difficulty will come in trying to establish better partnership working with Government. I think that what we need to do and Ms Forge and I think that we really need to concentrate on is the development of policies, rather than Scottish Government announcing a policy and announcing a fixed pot of money associated to that policy. It would be far better if there was better consultation with local government through COSLA and our member councils to ensure that whichever policy Scottish Government has announced and wants to deliver is absolutely fit for purpose. I will take free school meals as an example. There was a commitment in the 100 days and in the manifesto that there would be a roll-out of free school meals across primary. There was an unrealistic expectation as to how councils could deliver that, and there was an unrealistic pot of funding put towards that. They are now having to rail back from that. I think that it is really important as we go forward that, when we develop crucial policies that can help inequalities in our communities, that we do in partnership, we make sure that we get the absolute best policy that will deliver the best outcome for our communities. That would probably be my plea to Government that, if we have to continue with those ring-fence pots, which, believe me, leaders do not like because they like local autonomy, we might be moved on to that in another part of the session, so that, if we can co-construct those policies, we will end up with better outcomes. Thank you very much for that. I will move on to a question from my colleague Megan Gallagher. Thank you, convener, and good morning, panellists. Before I ask my questions this morning, I would like to draw members to my register of interests as I am a Serban councillor on North Lanarkshire Council. I received a statement that heavily criticised the Government as councils face a real-time reduction in funding of £284 million this year. I would like to ask Gail Fersh to consider that some councils may have to increase council tax significantly to offset the cuts administered by the Scottish Government. What impact does COSLA feel that that will have on taxpayers, particularly people impacted by the pandemic, in struggling to make ends meet? I have never seen leaders as angry as they were at our special leaders meeting when we were going through the figures for the settlement and, obviously, the relaxation around council tax. It was unanimous that every council leader of all political persuasions were deeply disappointed in the settlement. When we factor in all the additional ring-fenced pressures that we will have to deal with, it makes it a very challenging landscape. The anger was even more that the Scottish Government had the ability to raise income tax themselves and chose not to. What they have essentially done is passed the buck to local Government to fill that funding gap because there was not sufficient funding within the block grant in the settlement. There is a real anger among leaders that the pressure is now being put on them to make very difficult decisions locally. I know that you will know that better than most. I do not see an appetite from leaders to hit households any more than is absolutely necessary. Leaders and councillors across Scotland understand the pressures that households are currently under. Above the inflationary rise in council tax would be seen as very unpalatable. I suspect that we will be seeing around about an inflationary mark of maybe 3 per cent which we have had in recent years. However, the anger is there that that gap is needing to be filled by us making tough decisions rather than by the Scottish Government. The impact going forward in respect of economic development and recovery out of Covid is going to be even more challenging given that we already have a reduction of £371 million. Within our settlement, we are expected to continue to do what we are doing. We are expected to deliver on Scottish Government current priorities and new priorities. We are also expected to look at pay aspiration. We have already heard within the budget that there is an aspiration now of £10.50 for a living wage. That puts a real pressure on local government. I have to say that, going forward, coming through from councils now, their budget reports are looking really challenging. We want to deliver for our communities, but it is where we have to cut to continue doing the ring fence and the protected elements that are going to cause the difficulty. Hi, thanks for bringing me in. Just to clarify, council tax counts for a relatively low percentage of councils' income. In Glasgow, it is only about 14 per cent. In other authorities, it might be as high as 19 per cent. It is still a relatively low percentage. If council tax is being used as the sole source to close any financial pressures, it would be in the 20 per cent increases, which, as Ms Baxter pointed out earlier on, does impact more disproportionately on our poorest citizens. It is a tool that will be used to help to close a budget gap, but it is not a sole solution by any stretch of the imagination. Thank you very much for that input there, Martin. If I could just ask it one quick follow-up question, convener, and then if I could hand back to yourself. It is in relation to the letter that council leaders wrote to the First Minister over the unacceptable cuts to local government funding, and I am just wondering if it has causally received any update from the Scottish Government regarding the meeting. Will a meeting take place? If so, what are the leaders hoping to achieve from that meeting? If I could hear from Eileen or Gail, please on that. Eileen, I will hand over to Gail, because she is the best place to answer that question. I was waiting for myself to come off mute. We wrote to the First Minister on the 24th of December that we received a response yesterday. It was not directly sent to me, but it was sent to 32 council leaders. The response came from Ms Forbes. My understanding at this point is that the First Minister is not willing to meet council leaders, and obviously we will pursue that. Now we are going to move to questions from Willie Coffey. Thank you very much, convener. I would like to ask the question that I tried to ask the unison representative earlier on the total settlement, probably for councillor MacGregor. Do you recognise the figures that we have for the committee in our spice papers, which are independent councillor MacGregor, that show an increase to £12.5 billion in terms of the settlement, and that represents a real-terms increase of £603 million or 5.1 per cent? We can argue about whether it is enough and whether we could do more and need more, but do you at least recognise those independent figures as being accurate? My answer may surprise you. Yes, I do recognise them as being accurate and I do recognise that in its totality there is more money coming to local government, but in that funding a huge amount of that is going through local government rather than to, so we are merely a conduit in the delivery of some of those payments and some of those policies, so that the funding is not directly to local government, it is being vired through local government. Over and above that, as we have already stated, there is a huge amount of ring fence pop, which is for delivery of early learning and childcare, it is for expansion of free school meals, it is for music construction, there is a plethora of things that we could list. The difficulty there is that a large amount of those policies were policies that councils were delivering on in the past 10 years, and due to budget cuts, councillors have had to make really difficult decisions at local level to perhaps take out music construction or to impose charges on it, and further down the line the government has ridden in on a white horse, essentially, and put funding towards that. I think that that really undermines the role of local government, because we have had to make incredibly tough decisions over the years to protect social care or education or many other services at the expense of some things that are now being funded directly from government, and I think that it is just taking away that local autonomy. An example that I would give you is perhaps that Joanna Baxter mentioned funding towards teachers. Teachers have been relatively protected over the past 10 years with teacher numbers protected, so putting additionality in for teachers might be highly valuable in North Ayrshire, but in borders they may require social worker, or in Dumfries and Galloway they may require investment in roads, and the key thing is that when we have these overarching ring fence pots, policies, they do not necessarily fit in individual councils, and really our plea would be if there is additional funding that can come to local government, give us the flexibility to spend it where it needs to be spent, whether that be on mental health or child support or whatever. I think that the difficulty is that it is not that we do not recognise that there is additionality in the system, absolutely there is, but it is the restrictions and the protections that are put on that funding that makes it very difficult for local government, because within the core we still have to deliver all the other things as well. I really need to thank you for that response, Gail. That is a very fair response that he gave to the overall figures in the settlement. They are in black and white, they are independently produced by spice, so it is really appreciated to do that. Do you see on this issue about ring fencing and amounts and so on? We heard Joanna saying that, in North Ayrshire, 80 per cent of her budget is controlled by the Scottish Government. There is another piece of information that we have in front of us today that the Scottish Government said that 92 per cent of funding to local government is controlled by the local council, so that is a huge difference there, isn't it? In between, there are probably lies to the truth. There are shared priorities all over the place in there. You mentioned it yourself, but is it not a little bit unfair for some representatives to say that it is all dictated by the Scottish Government when most of it is a shared priority at the end of the day? Yes. I am not going to disagree with you, Willie. There is an awful lot of what we do together, which is incredibly valuable in early learning and childcare as a prime example of that. However, if we do not continue to maintain core budgets at core, once that particular service becomes embedded within a council, it becomes part of the core. We can continue to put the cherry on top of the cake, but if there is no cake left, there is not an awful lot there to support the cherries. The difficulty is that we need to look at ring fenses, which is very much Scottish Government policy priorities. That is determined by the Scottish Government, as I said to the convener. We need to develop those in partnership to make sure that we get the best delivery of policy that we possibly can. We then have, I suppose, essentially statutory services, which we are obliged to do in a certain way. We have protected. There is an awful lot within that. Perhaps that is what Joanna Baxley was hinting towards, that the 80 per cent is a larger thing than just ring fence that it takes in protective and statutory as well. Our modelling shows that, as I said, we have gone from 58 per cent directed services to 62 per cent this year, so it leaves only 38 per cent of the budget, which can essentially disdain the cuts. We cannot take cuts from the 62 per cent. We can only take it from the 38 per cent, which makes that a very difficult landscape. We really just wanted to focus on the Covid pressures at the moment. We have heard discussions in the debate about whether they are real terms and how they respond, but what we are at the moment is probably a question to yourself, Gailers. Obviously, we have Covid pressures that are still there for all local authorities, and they are still the same for my own local authority. I asked the question of unison. Have they contacted the UK Government in terms of the additional Covid consequentials that were previously there, but not in the budget this year? I asked David Kennedy from COSLA around this in the middle of December. Have COSLA written to the UK Government asking about Covid consequentials coming through this year or additional funding from the UK Government to the Scottish Government in terms of that, because the Covid pressures are still going to be there for this financial year and probably beyond that? Thanks very much, Paul. We have not directly written to the UK Government in and around the Covid consequentials. We recognise that there are on-going pressures of Covid. Absolutely. The councils are dealing with that every single day in many ways, and there are leisure and sports and cultural facilities. They are a prime example, and Martin knows an awful lot about that. We are seeing an on-going loss of income in those areas, so that gap needs to be filled. Every single time that I have met Ms Forbes and we have a good relationship, I have offered to potentially do a joint submission to the UK Government and stand shoulder to it in that respect. It is incredibly important that we look to protect services in Scotland, whether they are delivered by local government or Scottish Government, and I will continue to commit to that joint approach. As yet, Ms Forbes has preferred to deal with Treasury on her own, and I totally respect that. It is important that local government and Scottish Government stand together where we feel that there is a bit of discrepancy around funding. We know that the Covid pressures are not going to go away any time soon. A good settlement for local government would be the ideal, but how we get there, the devil is always near detail. We can obviously ask the Cabinet Secretary for Health and Sport about that. Have you causally estimated— I have done that as well. We did meet Michael Gove in December, myself and the presidential team. That was the first meeting that we had with him in respect of levelling up agenda, so we have passed that particular issue to him as well. Just on that, on the additional Covid pressures, have causally estimated or asked local authorities for the estimate of additional costs that have come through? I know my own local authority and he has slowly done that. It is not the easiest piece of work to do. I appreciate that. Is there an approximate figure that causally arrived to say that Covid pressures for the next year are directly related to Covid? If there is going to be an ask of UK Government and consequentials coming through, what are we asking for, if you know what I mean? I think that I might pass to Aileen and Martin, because they have been directly involved in that data gathering. Aileen, if you would like to come in now, that would be great. I will probably add some context. Obviously, at the end of the financial year in March 2021, there was a lot of money passed to local government from Scottish Government, and that was done partly because there is a limit to the funding that Scottish Government can hold. When councils closed their books last year, we carried forward around 700 million of Covid monies. We anticipate that we will have to use that over the next two years. We have been working closely with our colleagues within councils to look at their estimates. The Covid money will not be sufficient going forward. For the coming year, we have plans in place, but there will be pressures that come. We support the Scottish Government in ensuring that we make cases for additional funding to come where it is required. I know that there is a lot of scrutiny of councils reserves and why we are holding such an increased level, but it is partly because of the Covid monies, which we will no doubt need and more. I am sorry, it is just a supplementary, if that is okay, convener. Will there be—I know that analysis has gone on, and I think that, as I said to Gail, that note is not the easiest piece of work to do? Will there be a stage in the next month or two that, for example, COSLA will say that we need an extra £200 million, £300 million to get us to there? Will there be a point where we can work out, approximately, how much would be required from UK Government to come down through consequentials and so on? Again, I think that getting back to the point that Gail mentioned, obviously, maybe then liaison with the Scottish Government to ask the UK Government on that. Will there be a point soon that will know an approximate figure that would be required? If we are talking about—we can talk about the £371 million that caused the siege, now part of that might be through—part of that we can dispute that one way or another, but in terms of that, could additional funding obviously help to negate that figure that would come through? A lot of the Covid monies will be used within this financial year, so we have been working with colleagues to see what will be carried forward into 2022-23. It is less than 40 per cent, I would say, but we are certainly within my council, and I know from other colleagues as well, we are seeing the impact of a loss of income and additional costs and certainly for leisure and the likes. We expect that to go on for two, three, four years. Once we get to the point whereby we need to make a call for additional monies, we will work closely with the Scottish Government. We have obviously been focusing on the current year and looking forward to next year, but it is surely an exercise that is more medium-term. I see that Martin would like to come in on that as well. Thank you, convener. It is very difficult to know what is going to happen in the future when we do not know what the future holds. I think that our position probably before the turn of the year would be different from what it is now, because we did not know about Omicron in November, so that is changing all the time. Going forward, our lost income is probably the biggest challenge earlier on when Ms Baxter was talking about some discussions around culture and leisure services. The amount of support that we have had to provide to our culture and leisure trust ensure that it is continued viability, and that is not just going to be last year and this year. That is going to go on for several years, and it is until confidence is rebuilt into the public to return. In Glasgow's position, Glasgow Life, which is the culture and leisure trust in Glasgow, had direct earned income, including the contract from the council of £38 million that fell off a cliff and disappeared overnight. We are anticipating that that will take four or five years for that to recover to that level. That level of support going forward is really difficult, and I would imagine that we will not have figures through yet, but the Omicron outbreak over the past few weeks will have set them back on that challenge. It is understanding that we do not know how much it is, because we do not know how long it is going to continue. Thank you for that, Martin. I think that we are going to move to questions from Eleanor Whittam now. Thank you very much, convener, and welcome to the panel this morning. I am going to direct my first question to Gail from Cosle, if I can. Her Majesty's Treasury's own figures, as published in the block grant transparency document, show that the Scottish Government's resource budget has been cut by £2.6 billion in real terms between 2021-22 and 2022-23, taken together with the real-terms capital budget cut of 9.7 per cent. Does Cosle agree that the Scottish Government's budget position is actually quite difficult and that the focus must be on those shared priorities that we do, shared between local government and national government, such as lifting children out of poverty? I think that it is a very difficult comparison, because comparing 2021-22 with all the additional Covid consequentials was a very large amount of money. What we need to be doing is comparing 2020-21 to 2022-23, and we will probably get a more accurate comparison. If we begin to compare last year's funding, it does not give an accurate picture now. We have already said that we will require additional Covid funding, and we will need to have on-going support through Covid. If there is an argument to go to UK Government to request additionality in that respect, I think that we should absolutely be doing that. I do not think that comparing last year's budget to this year's budget is a true comparison. We are looking very much at pre-Covid figures, and where we are at now, and not looking at the Covid in the middle. Obviously, we are still in the middle of the pandemic, as I say. Additional support may be required in many areas going forward, and there will be additional pressures, but the key thing is not to compare. What we tend to do is look for trends over a longer period of time, and our tables tend to track back to 2013-14 to today. That gives a much more accurate comparison. I would like to ask a few questions around the £1.3 billion that will be transferred to local government from other portfolios during 2022-23. I know that there has been a long-standing request that consequentials in terms of social care get to local government as opposed to always going to health. Is that money welcomed? What extent of it is going to be round-fence? Is that the right thing to do? How does that work in practice? If that is money that is coming from other portfolios into local government? Any money that is coming into local government is obviously welcomed. As you all know, we have been in on-going discussions with the Cabinet Secretary for Health, Ms Forbes and the wider Cabinet. We need to continue to push that case for additionality to come from health into our IJBs and our local boards. Integration is absolutely key. Where we can deliver services and prevent people from ending up in acute care in hospital or supporting them to stay in their home will take a massive burden off health. Those discussions need to continue. As you know, we have always had additional support for real living wage in health and social care and that is something that we have negotiated certainly over my tenure over the past five years and continue to do so. There is probably always going to be a need for some round-fencing in some areas, where there is joint agreement and where there is joint priority commitments. The key thing is to continue to look at how our communities can be supported locally in the context of council services, leisure and parks, our health and wellbeing agenda and trying to keep those people from having to go into hospital in the first instance, which will, as I say, save the NHS a huge amount of money. I think that Eileen could come in at this point as well. Yes, thanks, Gail. Obviously, the money that is coming from the other portfolios is £1.367 million. What I would say about that money is all committed for things that we have to deliver on, except for a small element of the money that we have for the living wage. As Gail has alluded to earlier, the bulk of it is being passed through councils to partnerships. There is also money in there for additional teachers and support staff, but the bulk of it is to deliver a new thing. The money is welcome, but it does not help with our core underlying problem. Thank you for that addition. I think that we could all agree that the things that we are seeking to do that are shared priorities are things that money is definitely well spent on and that will have a significant impact on communities. The final question that I have is for Gail. Cozla's blueprint for local government did call for the removal and council tax, so that, as a truly local tax, I know that you have already touched on that. Moving on from that, my question is roundabout the fiscal framework. I know that that is something that we have been waiting for for a very long time and that it is something that the Cabinet Secretary for Finance has alluded to and will enable us to set multi-year settlements. It is just to get a feeling from Gail and from Cozla's perspective on it. Lifting the council tax caps is something that was asked by Cozla, but, going forward, how do you feel that negotiations for a fiscal framework is actually going to take us to the next level with that local flexibility? Thank you very much, Elena. It is a really important piece of work that we have been doing for the past couple of years. Obviously, it was put slightly in abeyance due to Covid, as many things are, not least of all the working group that was looking at a replacement for council tax. Absolutely, we are looking for local autonomy on tax-raising powers, whether it be council tax, whether it be the transient visitor levy or workplace parking or the number of other things that we are looking at. Within that, we are now reinstigating the conversation with the Scottish Government. We have had a working group within Cozla, which has been cross-party in a very useful working group, looking at ways that we can empower local government more, and we will be reporting to leaders on that soon. We obviously discuss that with the Scottish Government all the time. The key thing for us is that it kind of works in tandem, because obviously we are looking at a fiscal framework between the UK Government and the Scottish Government as well, and we are looking at remodeling what they do. We have to run in tandem, but the key principle for us—and I suspect that the key principle for the Scottish Government to the UK Government—is more autonomy to decide how to raise additional funding or how to spend that funding. In a lot of ways, we are very much on the same page. We will pick up those conversations now, and hopefully run with them. Our key thing is that we need stability of budget. Where possible, if we can get two- or three-year budgets, that will assist us with pay negotiations, it will assist us with service delivery. We have been in a period for the past 10 years where year-on-year budget cuts, light budgets, for whatever reason, be it the UK Government or the Scottish Government, have meant light budgets for us, which meant light decisions as to what services we are going to cut. The key thing is that, if we have longevity of budget and an understanding of a two- or three-year budget plan, that will enable us to invest far, far better, both in capital terms and revenue terms, to ensure that the services that we are delivering are absolutely sustainable. The other key point with that is that it gives stability to our third sector and our voluntary partners who are absolutely invaluable in delivering services for us, usually on a commission basis. Again, with that uncertainty of budget, we have been unable to give them certainty of contract. If we can get into a pattern through UK Government settlements, Scottish Government settlement, where we see a three-year plan and a three-year budget, that will be immensely helpful. Thank you very much for that, Gail. I do not know if Eileen wants to come in on that, or if that was from the last one? That was from the last one. Thank you. Back to yourself, convener. Thank you, Eileen. Now we are going out to Miles Griffin for a question. You are mixing us up, convener. It is Miles Griffin. Oh, sorry. It is new year. I will let you go. Mark Griffin. Sorry about that, Miles. Thank you, convener. A quick question off the back of the evidence from unison in the earlier panel. Clearly, unison is making a case for an inflationary uplift for local Government staff. I just wanted to ask Councillor McGregor whether she feels that that is going to be possible for an inflationary uplift for staff. Can that offer be made within the budget settlement? Thank you very much, Mark. I did hear Joanne earlier on. Given the settlement that we have, it is going to be very difficult to give or to make an offer at an inflationary level. We obviously have not had to pay claims in from the unions yet and will work very hard to try and deliver the absolute best pay offer that we can when those claims do come in. One difficulty that we have had in recent times is public sector pay policy. It has raised an aspiration within the public sector as to where pay will be pegged. Local government is not covered by public sector pay policy, so, when we talk about it in Parliament, we are not included in that. There is no additional funding that comes to us for that, but it immediately raises the aspiration that we will automatically match whatever that policy is. As I said earlier, the £10.50 aspiration is quite an ambitious one. It is one that is going to be very difficult to cover and fund through local government. Any additionality going to other areas of the public sector seems to be getting additional funding for that, but local government has had no additional funding for public pay. It makes it very difficult for us to go into those negotiations, because our staff have done an absolutely tremendous job over the past two years. They do anyway in an ordinary year, but in the past two years they have been exceptional. Joanna made the point that local government is not terribly well paid in the first instance compared with some other sectors or some other areas. We might need to address that in the longer term, but it is going to be an incredibly challenging time to make a pay offer that respects and rewards our workforce when we do not get any additionality from the Scottish Government to do that. I have a final question about the three island authorities. Given the unique pressures that the three island authorities face and complex services that they run with limited resources—for example, ferries—I would like to ask for your views on the impact of the real-terms reduction in their overall revenue allocations for next year? Thanks very much, convener. I will pass to Eileen or Martin in a moment. The islands are incredibly challenging because, as you know, it costs more to live there than it does in the mainland. When you look at the statistics and the numbers on pieces of paper, they are getting more per head of population, so it would appear on the surface that they are getting more than other areas. However, whether that is sufficient to cover their budget pressures and the strains that are within those very rural remote communities is a conversation that I will be having with Jane Stockton fairly soon and will continue to have with island authorities. We want them to be as supported as possible. Certainly, in previous budget rounds, additionality has gone to the islands. When we have had stages of budget, we have a different situation now because we have a co-operation agreement between the SNP and Greens. However, I will work very hard with the island authorities to ensure that they feel as supported as possible. If they require additional support to two Governments, we will give them that as well. Thank you, Gail. I see that Eileen would like to come in on that as well. Then we will go to a few questions from Miles Briggs. Why? Obviously, there is a real-term reduction for all councils. I know that there have been concerns raised about the islands, but, as Gail has outlined, they receive the highest share when we look at the allocation per herd, and it is quite considerable. That is because of the way in which they have to deliver their services. If you look at the settlement that has come through, what I would say is that the impact on councils varies. That is linked to the way that the money is distributed. We will update the indicators that are influenced by things such as population in the likes. We offer a degree of protection for councils so that they will not be as adversely impacted by movements in the indicators when it comes to their settlement. That is where we have the floor that protects councils. It is probably quite a sensitive area, but we have to look at local government funding, totality and work within the individual councils that have concerns to get behind why there are movements on what can be done. Thank you very much, convener. Good morning to the panel. I want to ask a couple of questions with regard to the impact on council tax increases. In the year before the pandemic, council tax debt increased by 25 per cent to more than £95 million. I wondered from the previous evidence that has been given with a suspected 3 per cent increase in council tax, what impact has been done on the potential for people to be pushed into council tax debt by the budget? Start with Gail. If others want to come in, please put an R in the chat. I think that it would be better to pass the question to Martyn and Eileen, because they will have been working on it more closely. I do not know who wants to go first. Eileen, do you want to come in on that? Certainly, we are seeing pressures on our debt collection around council tax already. Within Fife, we have a £1 million issue already, so that is clearly causing us a problem. With the pressures on household expenditure, with the likes of energy increases and the likes, we expect that we will work more closely with households to encourage them to pay and put in place payment plans to assist them. We probably want to flag up that there are changes to council tax reduction coming in from April this year. The intention here is to provide more support to people who are requiring that support. When we moved from housing benefit to universal credit, there was a change in the cohort of people who received support, so that is trying to be addressed. I expect that the budget will continue to impact on people paying their council tax, because I envisage that most councils will be looking at a 3 per cent increase, so that will increase pressures on households. Martyn, do you want to add anything to that question? I think that Eileen has covered our experiences. During Covid, we had a reduction in our collection rates—a fairly marginal reduction, but still a reduction. We are expecting that to recover, but putting council tax up will not help that position. We will work very closely with households to support them as much as we can, but it is definitely a risk that we are very aware of. Thank you for that. My second question was about how the councils are likely to push down on some of those cost pressures to therefore not increase council tax above inflation. Given the previous settlements have seen cuts to services, which areas are still there for councils to look towards cutting, increasing charging or reducing service? Across Scotland, what that would look like? I might be ringing Martyn and if Gail Eileen wants to come in, can you put an hour in the chat as well? Thank you. It will be increasingly difficult to close those gaps after a number of years of austerity. There are not many easy options left. We are looking across the board, and it is probably important that I state at this moment that anything that I see here is in my opinion. Those decisions will be taken by our elected members, and it is for them to make those final decisions, but we will be looking at every single area of service delivery. The opportunity to increase charges is fairly limited, and quite often we are a provider of last resort, so the people that we would like to impact on the most are the people that we would like to impact on the least by charging. That is a challenging area, but there will already be moves where green spaces will be rewilded, i.e. there will be less cuts to grass, maintenance budgets for roads and pavements are likely to come under scrutiny. Some of the additional education services that we provide in Glasgow will definitely be under challenge, so Glasgow has over 100 different languages as a first language among its school population. Support for English as a second language will undoubtedly come under challenge. Glasgow also has a specialist dyslexia unit that provides support to teachers with the number of children that suffer from dyslexia and other conditions like that. That specialist unit will come under pressure. Glasgow is also very proud of the impact that its nurture provision has had on educational attainment, but, again, that additional resource will undoubtedly come under pressure as part of those budget decisions. I think that we have already referred to the pressure on leisure and culture services. At the moment, Glasgow has not reopened all its venues since after Covid, and the ability to reopen all those venues will again come under increasing pressure. It is really just to highlight the disproportionate percentage of cuts that we have had in certain areas of budget in recent years compared to others. We have seen a sort of 22 per cent increase in the education and social care budgets, which is absolutely fine and valid and has gone towards certain policy commitments. Within that, we have also seen a 17 per cent reduction in roads and transport, a circa eight per cent reduction in culture and leisure, and around about five per cent in planning and building control and economic development. We are seeing a disproportionate amount of cuts having to come from a very small part of the council to ensure that we can continue to deliver the ring-fenced overarching policies. Within the pandemic, when businesses were reopening, we had a huge shortage of environmental health officers and we needed to rally and put some additional funding into that particular budget to get more. If we continue to erode our roads and transport, our planning, our building control, our backroom and our digital work, that has a disproportionate impact on those services and how we can deliver. Within the fiscal framework work, we are looking at seeking greater ability to raise planning fees and to look at building control fees. Very low hanging fruit is not going to bring in a fortune, but I think that every little bit can help. Obviously, we will work with the Government to develop those areas as well. In terms of the funding formula, which councils are least able to meet that challenge? In my earlier era of Edinburgh, which receives the lowest funding per head of population, we know the pressures on social care and housing. Most of the delayed discharge problems in NHS Scotland are facing being here in the capital. I wondered from the discussions going on at national level in COSLA, which councils are most likely to be leaving to see the largest council tax increases, do you believe? It is not information that I have to hand. We could potentially provide the committee with that information. That would be helpful. Thank you very much. I just want to say thank you to councillor Gail MacGregor, Eileen Rowand and Martin Ruth for joining us this morning and providing us with very useful responses to our questions. We are now going to suspend to allow the witnesses to leave. Thank you, convener. Welcome back, and we will continue to take evidence as part of our budget scrutiny. I would like to welcome our third and final panel this morning. That is Kate Forbes, Cabinet Secretary for Finance and the Economy, Shona Robison, Cabinet Secretary for Social Justice, Housing and Local Government, Caroline Dicks, investment manager for the Scottish Government, Ellen Lever, deputy director of local government and analytical services division, Katrina McKean, head of better homes and Ian Story, who is the head of local government finance at the Scottish Government. Thank you for joining us today. Witnesses, if you wish to respond or contribute to the discussion, please add an R to the chat box to indicate that. Before we get going with questions, I would like to invite the Cabinet Secretary for Finance and the Economy, followed by the Cabinet Secretary for Social Justice, Housing and Local Government, to give brief opening statements. Thank you, convener. It is good to be able to join you this morning. I appreciate that you have had a long session already this morning and that the deputy First Minister and Cabinet Secretary for Covid recovery provided you with a detailed written response to a range of questions late last year, so I will keep my opening comments fairly brief. I will start, however, with a comment that you will not have heard for the first time, but I need to be very clear at the outset that this budget has been hugely challenging. The Scottish Fiscal Commission, which is obviously the key forecasting body in its economic and fiscal forecast report, states that, overall, the Scottish budget in 2022-23 is 2.6 per cent lower than last year, after accounting for inflation, the reduction is 5.2 per cent. It is against that backdrop that we discussed this morning, the local government budget. Our budget has had a laser-like focus on three key challenges, tackling child poverty, climate change and economic recovery. We endeavour in this budget to strike a balance to ensure parity of funding across sectors with limited resources. The budget that was published for next year confirmed that, even in the face of its significant economic uncertainty caused by the pandemic, we, among other things, are providing councils with a real-terms increase to their overall budgets for the coming year of more than 5 per cent for our shared priorities. Local authorities are key partners with the Government and perhaps never more so than during the pandemic, as we tackled it together to protect communities, businesses and public services. Moving forward, they will quite clearly play an important leadership role. I recognise, just one last brief comment, the importance of planning as part of this. Our transformation of the planning system will help to streamline the system and free up resources to enable good quality development that we will need in the future. To support that, we are bringing forward new fees regulations, which will help to ensure that applicants, rather than the taxpayer, cover the cost of processing planning applications. We are also investing in the digital transformation of the planning system. I mention that because I know that that has been raised in the past. I will stop now and hand over to my colleague Shona Robison to say more about the settlement in relation to her portfolio. Shona Robison Thanks very much, convener, and thanks to the committee for inviting me to speak to you today. I will be brief also, but just to reiterate what Kate Forbes has said, the 2022-23 budget has been challenging and has been one of difficult decisions and choices. The ones that we have taken should help lift children out of poverty, provide investment in social care and help tackle the climate emergency. Our budget for next year increases funding for affordable housing by £174 million, so we can continue the important work that was started back in 2007 and assure that everyone in Scotland has a warm, safe and affordable place to live. We are allocating £831 million towards the delivery of 110,000 affordable homes by 2032, of which at least 70 per cent will be available for social rent and 10 per cent will be in our remote rural and island communities. More than £80 million will be allocated to discretionary housing payments for housing support and to fully mitigate the UK Government's bedroom tax. We are making a further £10 million available for our ending homelessness to gather fund as part of our investment of £100 million transformation funding between 2018-19 and 2025-26. Finally, the 2022-23 budget provides our local authorities with a fair affordable settlement of over £12.5 billion under the most challenging of circumstances. That will provide £554 million extra for health and social care, £145 million for additional teachers and support staff and £94 million to support the expansion of free school meals. It gives local authorities a number of fiscal flexibilities, including full autonomy on council tax rates, setting as they requested in a commitment to collaborate on a fiscal framework for local government. I look forward to your questions. Thank you very much for that. I'm going to start off with questions and I'm going to direct this one to Kate Forbes. I'm aware of the future plans to publish multi-year settlements, which is strongly welcome. What else do you think the Scottish Government can do to help local authorities tackle long-term challenges and plan strategically? That's probably one of the most pertinent questions right now. The committee will know that, alongside the budget that was published in December, we published our consultation for the spending review. That spending review, as the convener has referenced, will provide certainty to all parts of the public sector on what their budgets look like for the next three to four years. I'm conscious that, when it comes to long-term reform, when it comes to prudent use of public finances, being able to plan on more than an annual basis is absolutely essential. We had already done that, taking steps to do that on a capital basis last year, but with the UK Government spending review published on 27 October, we can now proceed. The key here, too, is that I want the consultation process to be as engaging as possible. What I don't want is this to be a Government document that's published without input from our partners. I've already had a number of conversations with the cause of finance spokesperson, Gail MacGregor, on how we can ensure—notwithstanding some of the challenges, but some of the uncertainties that local government is facing, in light of changing personnel and having conversations with elections and so on and so forth—how we ensure that, over the next six months, we are engaging considerably with local government through my relationship with Gail MacGregor. The other part of that, and I know that it was referenced in the earlier panel, is the long-standing discussions about, essentially, a fiscal framework for local government. We have been in discussion, as Gail MacGregor said, about building a fiscal framework for local government. The letter that was published alongside the budget to COSLA confirms our commitment to undertake very intensive collaborative work on that fiscal framework for local government. It's unfortunate, but it's understandable that a lot of time has been consumed by Covid, certainly on a local government level, with officers who are very consumed with that mission, and the same goes in the Scottish Government as well. However, that intensive work, I hope, will allow for more flexibilities and for more empowerment for local government to make decisions that are best suited to their local authority areas. Thank you for that. I'm just going to continue along that line a little bit. In the previous panel, I raised the question about the yearly recurring debate between COSLA and the Scottish Government. You've already touched on your desire for more engagement, more collaboration, and Councillor MacGregor was talking about the idea that the policy is developed in consultation with COSLA local authorities. I'd love to hear a little bit more along those lines of other areas where communication and collaboration could be carried out, and that's for Kate Forbes. Two points in response to that. First, prior to the publication of my budget this year or in previous years, I met regularly with Gail MacGregor. There was probably, if I remember off the top of my head, four or three or four very intensive meetings in the immediate run-up to the budget. Obviously, I meet regularly more generally, but there are very intensive conversations with Gail to get a full understanding of the pressures facing local authorities. I don't dispute that there are pressures, but also to understand our shared commitments. Sometimes, during annual debates, as the convener has understandably put it, we lose sight of the fact that there are a lot of shared commitments between COSLA and the Scottish Government. I say COSLA because, as the body representing all local authorities, each local authority will have slightly different nuances. The other thing that we have done this year, which is unusual, is that between Shona Robison and myself, we endeavored, over the course of the last essentially two months, to meet with every single local authority—meet with chief exec and local authority leader—to make sure that we had a handle on their own local circumstances. Although COSLA will, understandably and rightly, present the blanket approach for local authorities, we wanted to ensure that we understood what the challenges were facing each different local area. That invitation went out to local authorities. I cannot remember the call precisely how many I have met and how many Shona Robison has met, but we have endeavored both to get the high-level view from COSLA as well as get in to the detail for each local authority area. The challenges facing Inverclyde are different to the challenges facing Murray, which are different again to the challenges facing Glasgow City. That conversation does hugely inform our budget. A lot of the financial commitments perhaps are not taken into account in the annual debate about core budgets, but, for example, the two areas that I am regularly hearing from local authorities individually and from COSLA would be the challenges around social care, which is why we have significantly increased funding on social care. Incidentally, I have tried to ensure that money, consequential funding for health and social care, has gone to local authorities precisely because I know of the pressures that they have cited on social care. The second one is on incoming inequality, the fact that the pandemic has exacerbated challenges facing the most vulnerable in society, which is why we are rolling out free school meals in collaboration with local authorities. I just cite those two examples, which I do not want to speak for COSLA, but I think that COSLA and individual local authorities would both agree that important shared commitments and that is why they have been prioritised as part of the overall local government settlement. Thanks very much for that, Kate. Shona Robison, I do not know if you want to come in on either if you have got any responses to my first question about supporting local authorities to tackle long-term challenges in planning or this piece around what are the potential solutions for encouraging co-operation between COSLA and the Scottish Government. I think that, as Kate Forbes said, there is good, very close working relationship with COSLA. Like Kate, I meet the COSLA leadership on a regular basis, but, as Kate has laid out, I have met, as she has, a number of individual local authority leaders and their chief executives. That has been useful to get in underneath some of the priorities. Affordable housing is a key priority for many or most, nearly all, local authorities, but it has been one area that we have managed to discuss in those individual meetings. A number of projects and potential collaborative working have emerged through those meetings, so I think that that is helpful. Clearly, there will be a number of major pieces of work around the fiscal framework around Covid recovery, which is key around tackling child poverty. Again, there is a collaborative approach with COSLA, which, as I know, the local government is committed to working with us to tackle child poverty. The debates that we will have around the quantum and the figures perhaps sometimes do not tell the full story of the work that is going on behind the scenes between us and the local government on the joint priorities that we share. I am now going to bring in Megan Gallagher with the question. Thank you, convener, and good morning to both cabinet secretaries. I have a question for each cabinet secretary this morning. If I could start with Shona Robison, please. Councils are struggling to maintain vital services due to the level of cuts administered by the Scottish Government in recent years. We heard some examples earlier on of cuts that councils have had to make in order to balance the books. Does the cabinet secretary accept that it is due to the decisions taken by the Government that local government budgets have been cut year in year, and that has led to councils being unable to provide for their communities? I am not talking about the Government's key priorities, but I am talking about the basics, such as education, bins and roads. The first response that I would give to Megan Gallagher is that the budget that the Scottish Government has is, by and large, the block grant received from the UK Government. Of course, we have seen years of austerity and difficult decisions following that settlement in itself. If you look at the comparison of funding north and south of the border, it is very clear that, despite the challenges that absolutely Scottish local authorities face, it is a completely different ballpark than the challenges and the cuts to local government funding that local authorities south of the border have faced. We have a lot of joint priorities with local government. Megan Gallagher talked about the funding that is over and above the core settlement, but those are key joint priorities. Tackling child poverty is a key one, making sure that we are supporting education, supporting social care, and the money going into social care has increased considerably. Those are priorities that I hope would be shared across the Parliament. Difficult decisions have to be made. The final thing that I would say to Megan Gallagher is that, obviously, as part of the budget discussion, it is open to parties to come forward with amendments and changes to the budget. However, of course, wanting money to be spent in one area of government requires that party to see where that money should come from. I am sure that we will get into some of those detailed discussions over the next few weeks. Thank you for your answer, cabinet secretary. I have a question for Kate Forbes. Council leaders have written to the First Minister to request a meeting to discuss the budget settlement. As we heard from Councillor Gallagher earlier on, the First Minister has declined the request. If the Scottish Government is confident in the defence of the local government settlement, why would the First Minister decline such a meeting with council leaders? I think that my answer would be that she has not. Perhaps, rather than disputing the characterisation of the letter, it would be easier for me to share our letter of response with the committee, so that the committee can read that letter. The letter states quite clearly, and it is written by me in response to the letter that I received. We were... Local Government leaders wrote to myself and to the First Minister. I have responded as I have responsibility for local government finance, and I said that I was very much looking forward to meeting with the council presidential team. I believe that on 20 January, if I have that date wrong, I will correct the record. I would be happy if it is permitted to share that letter of response with the committee. That would be useful, if you could, cabinet secretary, and thank you, convener. Thank you, Megan, and I would now like to bring in Eleanor Whitham. Thank you very much, convener, and good morning to both cabinet secretaries. I know that this has already been touched on, but, given its significant importance, I want to raise it again. Given that this budget year has been particularly difficult for the Scottish Government in relation to the cut that we are experiencing through the bloc grant in real terms, and if we can think of £2.6 billion in resource budget alone, can the cabinet secretaries explain how the Scottish Government has focused on shared priorities with local government, such as lifting children out of poverty, building more affordable homes, investing in social care, tackling the climate emergency, and how the vast in-year transfer from other portfolios will help to deliver on those critical shared priorities? And how, for some of them, we're going to have to actually look at them in terms of the whole parliamentary term and not a single year, and here specifically I'm thinking about housing. So I don't know whether we want to start with yourself, Ms Forbes, and then perhaps if Ms Robinson wants to come in specifically around about housing. Yes, I'm happy to come in. I appreciate, again, I've said it when I've been in front of committee before, but I appreciate that there's a lot of experience and expertise around this committee in particular when it comes to local government, and Elena Whitham in particular has extensive experience of local government. If I take a brief step back from the question and say that, as a result of the challenges in this budget, I don't think that anybody actually disputes that it is a hugely challenging overall budget. In light of those challenges, I made a conscious decision to identify three priorities that we could really get behind and we could focus on and maximise our effort in dealing with. Those were, as I said in my opening remarks, tackling child poverty, because we know that the pandemic has had a hugely detrimental impact on some of the most vulnerable in society, seconding continuing to tackle Covid, because Covid is still quite clearly with us despite the fact that there was no Covid consequentials, so tackling Covid at an economic recovery go hand in hand. The last point is on climate change and on helping us to shift when it comes to our investments. Therefore, where does the local government budget come in? We can't achieve any of those three aims without local government. Of that, there is no doubt that local government is not just a valued partner rhetorically. I engage with them, rely on them and work with them on probably a daily basis—certainly my teams do. The budget that you see before you in terms of local government settlement could be categorised in two ways. The first is that there is protection for the core budget and cash terms. I understand that inflation is having a significant impact on all budget lines. I cannot inflation proof any budget line, because my overall budget that I receive is not inflation proof. I cannot inflation proof when inflation is running at 5 per cent or more. However, we have protected the core budget and cash terms. The second part is the real-terms growth to the overall settlement. I have already referenced some things, but I have just mentioned some. Again, 68.2 million pounds for child bridging payments and an additional 64 million pounds of resource, 30 million of capital to facilitate the expansion of free school meals and 353.9 million pounds of funding for health and social care integration and 200 million pounds on top of that from health and social care consequentials. Those are all dealing with those three big objectives. I think that local government would fairly identify the fact that education is part of their core remit. Providing additional support for teachers, social care is part of their core remit, so providing additional support for social care does help. However, I do not dispute—and I will never dispute—that those are challenging times. I have huge respect for local government leaders who have to, in the same way that I have to, make difficult decisions in order to reach a balanced position and invest in their priorities. Thank you very much and could we perhaps hear from Shona Robison in terms of housing and looking at it over the longer parliamentary term as opposed to just a single year? Yes. The affordable housing budget, as I have set out in my opening remarks, is increasing by £174 million. That is broken down with £40 million on the previous published capital spending review figure and an increase of £134 million in financial transactions, so £174 million increase. That brings the total now available for affordable housing across this parliamentary term. It increases it from £3.444 billion to £3.618 billion, so that is a 21 per cent increase compared to the previous five years. Of course, that will always be phased across the five years in slightly differing from year to year. What is important is the quantum across the five years. We are well aware of some of the pressures on that. We know that there is on-going market condition pressures facing the construction sector. That is why there is going to be a targeted review of the Scottish Government's capital spending review in early 2022 alongside the resource spending review. That will be important. We need to make sure that that investment delivers the affordable housing across Scotland that we know is so badly needed. It will go a long way towards doing that. Thank you very much for your answer, Ms Robison. Finally, I have another question to Kate Forbes. I know that you have already touched on that and Councillor Gail McGregor was quite clear on her position on it. We know that we have looked for some fiscal flexibility, and it has been given in terms of removing the cap from council tax, and there is a lot of discussion around the fiscal framework. Indeed, Gail McGregor mentioned the negotiations between the Scottish Government and the UK Government on reworking that whole agreement. Just a couple of words to reiterate how important that fiscal framework is going to be and how quickly we can expect that to be agreed. It is hugely important. It is one of my top priorities. I would like to see that completed as a matter of urgency, so that local government, COSLA and ourselves are happy with that. You will also know that we have committed to a citizens assembly on the sources of local government funding, so we are looking at taxation as well. Work has begun to prepare for that citizens assembly, but in terms of the importance of it, it is hugely important. Thank you very much, cabinet secretary. I will take a little dive up north and ask a bit of a question that I already asked in the previous panel around the three local island authorities. I would like to address this to you, Kate Forbes. I am curious to know why the three island local authorities, the sole authorities, the real terms reduction in their overall revenue allocations in 2022-23, given the unique pressures they face and the historic being historically underfunded for the additional services that they manage for ferries, for example. I should say that two years ago, if I remember correctly, was one of the first times where I intentionally ensured that there was additional funding specifically for ferries in the additional money for ferries in the local government settlement, which I know was warmly welcomed, particularly by the Northern Isles. The local government settlement is distributed and full, as you will know, using an eats-based formula. That is discussed and agreed each year with COSLA on behalf of, quite clearly, all 32 local authority members. When it comes to the island specifically, it also, as part of the overall methodology, receives a special island's needs allowance and recognises the methodology. I think that I heard one of your previous panel members touching on that, that there is additional funding embedded in the methodology that helps to meet the additional costs of providing services in island communities. Combining the fact that that is referenced within the core methodology and also in the special island's needs allowance, there is additional funding in the process, as it were, to recognise those additional needs. I will say that I am open to any review of the methodology. I am open to any changes to the methodology. That would need to be a request by COSLA. It is not something that I would want to impose on COSLA, but if there was to be a request from COSLA to review the methodology, for example, if some local authorities feel that the methodology does not take into account their particular unique circumstances, I would be very open to an intensive piece of work to review the methodology. Thank you very much for your response. I will now move to questions from Miles Briggs. Thank you, convener, and good morning to both cabinet secretaries. On the previous question, I think that that is a welcome move, because for too long, many councils, including my own in Edinburgh, have been expressing concern that they are the lowest funded council, but also that we have the lowest funded health board. I would just say to the cabinet secretary that I hope that both will be looked at, not just council funding. I wanted to ask a specific question about council tax increases. Specifically to the cabinet secretary, Kate Forbes, what would you see as the likely average level of council tax increase that we are likely to see that councils have to set following your budget? I am going to resist answering that question directly for one very good reason, which I will unpack. Local authorities have long asked for flexible and discretionary tax setting powers. For me to now say that that is what I expect of them, I think would run the risk of undermining that position. However, I have to take or make tax decisions that reflect the particular challenges facing households that reflect our particular budget needs. I would expect local authorities to do likewise, taking into account some of the burdens on households right now, but also the need to fund local services. Miles Briggs will know that perhaps for 14 years, although neither he nor I have been here for 14 years, local authorities have been requesting that discretion to set council tax, and they are able to do so this year. As a result of that freeze that we have for a number of years, he will also know that, on average, council tax bills at band D are significantly lower in Scotland than they are in England and Wales. However, quite clearly, it is a challenging time for households. I think that reading between the lines is the inflation increase. Nothing above that is what COSLA outlined previously in the previous session would probably be expected. That is your expectation as well, I think. I am going to resist making any expectations, because it does completely fly in the face of the whole point of setting a discretion. On average, about 1 per cent of council tax increase raises about £30 million, so 3 per cent is about £90 million. That is certainly how we funded the freeze last year. That is a ballpark figure that you are talking about by referencing 3 per cent. Thank you for that answer. I think that all of us as MSPs will be acutely aware of the cost of living crisis, especially around increases in energy costs. For many people, seeing a potential significant increase in council tax is going to hit them hard. What work has been undertaken to look at any impact assessment on that? I know that the cabinet secretary, Shona Robison, has been at other committees in the Parliament saying that the council tax element of people's outgoings is one of the hardest taxes for people to pay. What impact assessment has taken place? What extent is it going to push more people into poverty in Scotland if we see above inflation increases? Will we bring in Shona Robison and then the cabinet secretary, Kate Forbes, after that? Obviously, the first thing to say is that, thankfully, the council tax is lower in Scotland than elsewhere, which is helpful. Importantly, Miles Briggs will be aware of the council tax reduction scheme to ensure that no one has to pay a council tax liability that they cannot be expected to afford. Presently, around 480,000 households are nearly one in five benefits from a council tax reduction, and that is going to be really important. The local government budget includes £351 million to compensate councils for the reduction in council tax receipts derived from the operation of council tax reduction scheme. It is taken as a basket of measures supporting families across all the other things that are outlined, whether that is the discretionary housing payments, whether it is the Scottish welfare fund, whether it is the benefits and supports that are paid through Social Security Scotland. The Scottish child payment is one that is critical and our commitment to doubling that. As a basket of measures to support families taken in the round, those are available here in Scotland and are not available anywhere else in the islands. Before I bring in Kate Forbes, that basket of measures has resulted in a 25 per cent increase in council tax debt over £95 million. It is clear that those who are least able to pay the council tax are having arrears, and councils are reporting that. What else will be taking place within the Government to look at that? It is quite clear that the cost of living will impact on those least likely to be able to pay the council tax increase, especially if it is above inflation, and many councils potentially could see way above inflation council tax increases. The whole cost of living issue is something that all Governments will need to look at. If you look at the rising energy costs and food costs at the moment, we have been calling on the UK Government to be far more proactive in tackling the issue of rising energy costs. The cost of living pressures are across the whole of household income and expenditure. Of course, the Scottish Government has a responsibility to try and support families as best we can. I have outlined in my previous answer some of the ways that we are doing that—whether that is through the welfare fund, discretionary housing payments, Scottish child payment, the winter package that we announced to £41 million, which was to support families with pressures on food and fuel costs around household income pressures. I hope that our Government has a good track record on supporting families. Obviously, we need to look at what more we can do, and I am always open to having those discussions about how we support families. The next few months, particularly around energy costs, are going to be really challenging. That cannot be the Scottish Government's response to that. We need to see more coming from the UK Government to support families and household incomes. I do not want to constantly compare households north and south of the border. It is important that it is coming from the same overall settlement because of the Barnett formula. Shona Robison has already said that the council tax is lower in Scotland than elsewhere. Remember that, last year, on average, council tax went up very significantly in England after a number of years of rising, whereas in Scotland there has not been that compounding effect of an increase last year. That is precisely why, on average, band D charges in Scotland are about £590 more in England and £423 more in Wales than in Scotland. In terms of what we are doing, in your previous panel, it alluded to the fact that we have, from April, reformed the council tax reduction scheme. £351 million will be baselined within the local government budget for the policy cost, but we have changed it in order to ensure that we do not miss people as a result of changes to universal credit. In other words, we are trying to ensure that, as many eligible households are covered as possible. For the past few years—certainly for the past five years—the amount of money that we have provided to cover council tax reduction schemes has been higher than the demand, so there has been headroom for local government to manage that. The last point that I would make is that I do not think that you can look at council tax arrears in isolation. Challenges in paying council tax are part of a challenging financial situation for households. You cannot look at council tax reduction, for example, in isolation of our wider budget commitments. There is £197 million in my budget to double the Scottish child payment and extend it to under 16. Jonah Robison has taken forward a huge amount of work over the last few months to provide additional support to households. You need to look at the wider support, and without getting too political, a lot of that is compensating for a welfare system that is not helping families where they need to be helped. Removing £20 a week from those households is not going to help with them paying their council tax. With respect, it is the SNP councillors who are speaking out against the current proposed budget and the letter that they have sent to the First Minister. It is clear that SNP council leaders are not content with the budget that they have put forward. In terms of the Barnett consequentials, would you accept that, as a percentage, local government is not receiving the full allocation that it should? In fact, £371 million should be additionally being provided to local government in Scotland. I would question what the basis for your figures are, because those are not figures that I recognise. If I go back to my opening comment, in fact, do not use my words to use the Scottish Fiscal Commission. It has said that the overall Scottish budget is 2.6 per cent lower next year than it is this year. If you account for inflation, the reduction is 5.2 per cent. At the same time, I have protected in cash terms the local government core budget, as well as delivered a 5 per cent increase to the overall settlement. I would question your figures as not being entirely consistent with what the Scottish Fiscal Commission is saying. They are not my figures, they are COSLA's figures. They have specifically said that this is a £371 million cut to councils across Scotland. That was what all the SNP councillors have signed outlet to the First Minister complaining about. Where I was disputing your comments was the fact that our budget settlement allows for inflation-proofing all budgets. It does not. Our overall quantum does not allow us to inflation-proof all budgets. The £371 million that COSLA is citing is taking into account the impact of inflation. I am quite open and upfront that I cannot inflation-proof all budgets. In terms of the overall quantum that we have received, which has been stripped of all Covid consequentials, it has not been inflation-proofed, we have tried to be as fair as possible in distributing that funding. I will go back to Shona Robison's point that, if there are areas that should be increased, which is a perfectly legitimate position to take, I would need to know where it comes from, because I have maximised the spending power within the budget for next year. If that is the case, where did the additional £100 million come from, which was found beyond the budget that you announced to Parliament? I am assuming that you are talking about for Omicron business support. That is this year's budget, which is fundamentally different from next year's budget. That was within the allocation. It is more than that, but we have announced £375 million. You will know that a lot of that is from the UK Government and £200 million from our own budgets. That comes from a number of different sources. The First Minister has already set out that some of that is from a health portfolio in terms of consequentials that were received earlier in the year. It also comes from requirements from every portfolio, as it were, to contribute towards those costs. Every portfolio is now managing budget pressures in order to get to a position of balance this year. I would also cite the fact that, in previous budgets, some of the funding for the next year has been based on carry-forward. For example, coming towards the end of the financial year, we look at your head and identify where there might be late money, for example, that we can carry forward. There is no forecast headroom in this year's budget at all, which can be carried forward into next year's budget. From that perspective, it is quite an unusual year and it illustrates just how challenging next year's budget is. On this year's budget, the fact that there has not been funding identified, which we can carry forward. One really brief last point that I would make is that one of the advantages obviously of having an early budget is that we can give more certainty to taxpayers, to local authorities and so on. One of the drawbacks is that the later you are in the financial year, the more certainty you have of where you will land in this financial year. Because we are doing it so early, we are basing it on forecasts at this stage, which is to say that there is no headroom available this year to carry forward into next year. If there are late consequentials, we expect supplementary estimates to be over the course of the next few weeks from the UK Government when they finalise what this year's budget looks like. If there is anything available on that, we will either need to use it for pressures this year or there might be something that we can do into next year, but that will be quite late on in the process. Thank you, convener. Thank you, Miles. Now, we have moved to questions from Willie Coffey. Thank you very much, convener, and good morning to both cabinet secretaries. First point that I would like to make. I think that the causula that spoke to me just earlier was gracious enough to acknowledge and recognise the overall settlement being £12.5 billion, a real-tenzing piece of £600 million, which is a covenant of 5 per cent increase. She was gracious enough to recognise that, and there has been a whole lot of debate around that during the session. However, my first question to cabinet secretary, Kate Forbes, is on the methodology again, if you do not mind, which was discussed earlier too. My good friend and colleague Miles Briggs said that Edinburgh is hard done by the settlement, but if you look at the percentage uplifts that some of the local authorities are receiving, Edinburgh is getting more of an uplift than, for example, East Ayrshire, Inverclyde, Glasgow and Dundee. Is one of the factors in the methodology, cabinet secretary, population, so that if an authority loses substantial numbers of its population, then its overall allocation diminishes? Do you recognise, though, that those local authorities still have to deliver by and large the same level of service to a diminishing number of population, but it is still very difficult for them to do that? Is that something that you might look at in any further review of the model that we have in place for awarding the cash to local government? I think that the methodology does take into account population amongst many other things, and I may bring in Ian's story straight after this to talk more about what the methodology includes and what it does not include. I go back to the comment that I made in response to a previous questioner, which was that I am very open to reviewing the methodology. I think that every local authority has unique circumstances. The Highlands, where I am a resident, may have fewer people that have a lot more miles of road that need to be maintained. Clearly, in Edinburgh, there may be a higher population, but different challenges. Again, in Ayrshire, there will be their own unique challenges. The methodology is hugely complex because it tries to take into account all of those unique circumstances. As I said to the Highlands, over and above the methodology, there are special allowances. The methodology endeavours to do that, but I am not beholden to that methodology. If there was an appetite for reviewing it, I have already had conversations with some local authorities who are seeing, for example, exponential population growth or exponential population decline and ensuring that the methodology takes into account that. However, if the convener does not mind, Ian's story might want to stay more on what the methodology includes and does not include. I welcome Ian to speak to that. I do not have a great deal to add to Ms Forbes' comprehensive summary. The distribution formula is a hugely complex distribution formula. It has 73 pages of tables that include things like road length, teacher numbers, flood management, building control and waste disposal. All of those different factors are then weighted into the distribution formula on a council by council basis. For each additional spending line, that will be considered by a joint group through the settlement and distribution group, which is a joint group between the Scottish Government and local authorities and directors of finance and COSLA, where they consider all the additional spending lines and what is the most appropriate methodology to distribute that individual funding line. For example, on the recent teacher numbers, it was on pupil numbers with a weighting added for deprivation. That individual spending line is given its own distribution formula, which is then factored in. If you take that across all of the individual service levels, you get this really huge complex formula. All decisions by the settlement and distribution group are then endorsed by COSLA leaders. Ultimately, as Ms Forbes said, that is jointly agreed with COSLA. It would be quite difficult for the Scottish Government to impose a different distribution formula without a specific review and request from COSLA themselves. I think that it is a point worth making here to have that discussion, convener. By any stretch of the imagination, authorities like East Ayrshire or Inverclyde and Dundee are glad that poverty and inequality are probably much higher than some of the other authorities, getting a bigger award or a bigger settlement surely has to call into question whether the modelling is weighted correctly appropriately for circumstances like that. I would leave that particular question to a future discussion, convener, and ask my second question, if I may, to the cabinet secretary, Kate Forbes. We heard in the previous session, unison representatives saying that the budget does nothing to tackle inequalities in Scotland. Could you give us a direct response to that in the outline for the committee how the budget actually does tackle poverty and inequality? Tackling poverty and inequality is one of the three top priorities in this budget. In fact, such is our commitment and effort to tackle poverty and inequalities, that we have perhaps not funded other things in order to maximise the support to tackling child poverty in particular, but tackling poverty and inequalities. Shona Robison will be able to speak at length about the commitments in her portfolio, and I can speak about the funding that backs that up in order to ensure that we are tackling poverty and inequality. Local government are the most critical partners when it comes to doing that, whether it is in terms of support in education, whether it is free school meals, whether it is doubling the Scottish child payment. Those are all financial commitments that we, as a Government, are choosing to make. In doing so, it means that there is less funding for other things, but that is the right decision to make because of our commitment to end the scourge of poverty in Scotland. Shona Robison is probably better equipped, as it is her portfolio, to speak about policy commitments. Just an addition to reiterate what Kate Forbes said, there is a huge amount in the budget that is aimed at Covid recovery, supporting household budgets and tackling poverty. That has meant that difficult decisions have been made because we cannot fund everything. The budget provides for the continuation of child bridging payments in advance of the doubling of the Scottish child payment by the end of this year. There are other things such as the scrapping of curriculum and music tuition charges that help low-income families, the expansion of the school clothing grant, extra £64 million of revenue and £30 million of capital funding to support the expansion of free school meals. As I said in my opening remarks, more than £80 million is being allocated to discretionary housing payments for housing support, and that is to fully mitigate the UK Government's bedroom tax. If we did not have to use it to mitigate the bedroom tax, if the bedroom tax was scrapped at source, which we have been urging the UK Government to do, we could divert that money to other anti-poverty measures. Meanwhile, we have to maintain that. We are making a further £10 million available for our ending homelessness strategy to tackle homelessness. Of course, the housing budget in itself is an anti-poverty measure. Good affordable quality housing is absolutely key. It is a key anti-poverty driver and being able to increase the funding by £174 million against a backdrop of a really tough budget has been extremely important. It is also an important economic lever, making sure that we can support local economies through that house building programme. In the round, I think that it absolutely does try to focus on supporting household incomes and low incomes at a very, very difficult time indeed. Thanks very much, Willie, for your questions. We are going to move on to questions from Paul McClennan, followed by questions from Mark Griffin. Just a touch on the on-going impact of the Covid pandemic. You mentioned the discussions about Covid consequentials and all that. It has been raised by Shona Robison and the Deputy First Minister as well. The progress that has been made in discussions with the UK Government was also raised this morning by both COSLA and Unison. If we have an estimate of how much that has impacted on the forthcoming budget this year? I have another meeting with my counterpart in the UK Government in the next few weeks. In fact, it might be this week. I think that it is this week. Apologies. It has been brought forward because of Omicon. Again, that is one of the most frequent issues raised in my agenda with the UK Government. I will again be talking about the need to cover Covid consequentials. In every budget, I do not think that there are any budgets that I can think of, often on my head, that have been immune to the impact of Covid. Whether it is justice remobilisation, hospitals and wider social care services that need to be remobilised, Covid has an impact right across the board, yet we will have a budget where Covid consequentials have been stripped out. Over the past two years, that amounted to about £14 billion. Last year, it was about £4 billion, and that will not be available, but we still need to absorb the cost of Covid, because we cannot wish Covid away. What that means is that Covid is quite clearly a priority, so we have got to meet the costs of Covid quite rightly, but it puts pressure on other things that we might want to do. That is probably how I would frame it. One of the last things that I did in the last financial year—in fact, just before the product started—was to allocate an additional £275 million of Covid consequentials to local Government. That was over and above £259 million, if memory serves, of Covid consequentials in the settlement for local government. There was quite a considerable amount of funding that was allocated to help local authorities with Covid pressures, but those were clearly one-off Covid consequentials in the same way that the Covid consequentials from us are one-off, which makes it harder for local government in the same way as it makes it harder for us to deal with the on-going costs of Covid without the additional funding that is available to deal with Covid. Thank you, Paul. I have a question from Mark Griffin. Thank you, convener. Given how heroically local government staff have performed throughout the pandemic, how frustrated they have been at not receiving a pandemic bonus payment or a pay increase at a similar level to NHS staff, can I ask cabinet secretaries if they feel that local government staff deserve an inflationary pay rise this year to cover the increase in cost of living? Is that directed at me? Will I answer that one? Go ahead. Mark Griffin wanted to respond as well. On pay, we have set out our public sector pay policy. I have been open with the unions that I cannot inflation-proof all elements of the public sector pay policy, so I am being quite upfront and open that I cannot inflation-proof. What we have chosen to prioritise is those at the lowest pay to ensure that those policies are inflation-proof. I have responded to Mark Griffin a number of times on that point. Pay is a matter for local government. Pay for local government employees is a matter for local authorities. They are responsible for managing their own budgets. Pay for local government staff will be negotiated between the trade unions, GMB Unison and Unite, and caused that through the Scottish Joint Committee. I think that local government employees have responded heroically. I have seen their work day in, day out, distributing welfare payments or distributing business support grants or being on the front line. They have responded heroically. I would like a scenario where all key workers are recompensed and rewarded for the work that they do. Where I have responsibility, which is in our public sector pay policy, which is obviously not applicable to local government, we have set out our own policy choices. I do not really have much to add to what Kate Forbes has said, other than to add my comments and put on the record that we do absolutely appreciate and recognise the extraordinary efforts of council workers and the role that they have played in the fight against the pandemic. Absolutely, as have so many across the public sector. As Kate Forbes has said, we are not a member of the SJC in terms of the negotiation on pay. Those are matters for local authorities to take forward. Thanks for those answers. Both cabinet secretaries, if we were watching earlier evidence panels, will have heard from Unison representative about the surveys that they have done of their members, of the consultative ballots that they had last year. I guess that your constituency is just talking to local government workers themselves about how undervalued they feel, essentially how angry they feel at the amount of work that they have done and a failure to be rewarded from that. There was a very real prospect of strike action disrupting public services last year, which was averted at 11.30 by the Government providing additional funding to make a more generous pay offer. We have heard from COSA, who has said that making an inflationary pay award would not be possible within the budget with a flat cash settlement for the core budget. What would the cabinet secretary say in response to the prospect of industrial action this year and on top of the disruption that we have already seen because of the pandemic? I know myself from disruption to nursery and primary school education. What would you say regarding the prospect of strike action and the possible impact that that would have on public services because of a breakdown and a lack of feeling valued by public sector local government, public sector workers through an adequate pay offer? I start off in answer and hand over to Kate. We want to avoid strike action, and we hope that the unions and local government, COSA, will continue to discuss pay and that strike action will be avoided. At the end of the £30 million that Mark Griffin referred to, it was difficult to find in my budget, but we found that it was a one-off payment to support COSA in its pay negotiations for this financial year. It was not baselined into next year. I absolutely appreciate what Mark Griffin has said. I hope that strike action will not see that and that we can avoid that and that the pay discussions will continue and will come to an amicable resolution. I will add briefly to echo Shona Robison's comments that industrial action is in nobody's interests. There is obviously a process of negotiation through the Scottish Joint Committee and we are not members of it. I engage regularly with Gail MacGregor as a finance spokesperson in terms of financial challenges and budgetary conditions, but ultimately that is a matter for negotiation between COSA and the unions. I think that we have come to the end of our question, so I would like to thank Shona Robison and Kate Forbes for joining us this morning and responding to our questions. As agreed earlier in the meeting, we will consider items 3 and 4 in private and now close the public part of the meeting and we will move into private.