 Diolch yn fawr, ddaeth Cymru yn cymdeithasol yr IeC yn ddifuatol, yn redyn o ddifuatol, ac yn ddifuatol i'r gwrthod Llywodraeth. Onw'n ddigon nhw i'r ysgwrή ydi yn gweithio, ond yn ddigon nhw i'r IeC yn ddigon nhw i'r ysgwrth Llywodraeth i'n gyrthod, i'r 2015-16 i'r ysgwrth ddifuatol. Yr Sgwrth Llywodraeth berth spyiw gwneud clyw o'r wych ei liddiad, a ch complement yw'r cyllidoion i gael y ddefnyddio newid o'r ddau o ailtyfennol? I'm grateful for the opportunity today to respond to the UK Government's autumn statement of 3 December and to update parliament on non-domestic rates in Scotland and the terms of the provisional local government settlement for 2015-16. Summary tables containing the key financial information on the local government settlement are available at the back of the chamber. The Scottish economy has performed strongly this year, with output now above pre-recession levels. The most recent labour market statistics show Scotland outperforming the other nations of the United Kingdom on unemployment, employment and economic activity. That success reflects our approach to growing the economy and this Government will continue to focus on securing economic growth, protecting our public services and tackling inequality. However, the UK Government's approach to austerity harmed the recovery and the growth that we are now seeing follows years of underperformance. By the end of 2015, the UK economy's forecast to be almost 4 per cent smaller than was projected in 2010 when the chancellor first entered office. Real wage has also remained subdued, as a result borrowing this year will be £50 billion higher than the chancellor predicted in 2010. Looking forward, the OBR forecasts that 60 per cent of the UK Government's cuts are still to come. Those will reduce UK spending on public services to the lowest level since the 1930s as a share of our economy. Since 2010, the Scottish Government has taken steps to mitigate the impact of those cuts by protecting the health budget, increasing the provision of free nursery education, investing more than £1.7 billion in housing and addressing the impact of welfare reform. However, we are not immune from the UK Government's austerity agenda. Scotland's share of the cumulative real-tems cut planned for the next five years is estimated to be around £15 billion. There are measures in the autumn statement that I welcome, including the abolition of employers' national insurance contributions for young apprentices. I can also confirm that the Scottish Government will pass the £127 million Barnett consequentials arising from increased departmental of health expenditure on to the national health service in Scotland. The Government will take decisions about the remaining consequentials in due course. Other announcements in the autumn statement were, however, disappointing. The chancellor's confirmation that Northern Ireland will have the ability to vary corporation tax, while the UK Government continues to block devolving the power to Scotland, continues to deprive us of key job-creating powers. However, devolved taxation is clearly good for the chancellor. Despite ample opportunity to redesign the outdated and distortive slab structure of stamp duty land tax, the chancellor waited to copy the reforms introduced by this Parliament. The rates and bans for land and buildings transaction tax proposed in October by the Scottish Government were designed for the Scottish housing market, where the average house price is £100,000 lower than the average price across the United Kingdom, and only one-third of the value of the average house price in London. The rates originally proposed would benefit 90 per cent of home buyers in Scotland and take 5,000 transactions out of tax at the bottom end of the market, helping directly first-time buyers. The chancellor may have moved the goalpost, but with our proposals continuing to ensure that 80 per cent of taxpayers in Scotland will either pay no tax or pay less tax than they would under the new UK regime announced last week. Our scheme continues to support first-time buyers and be relevant to the Scottish housing market. Parliament has been advised of the delay in reaching agreement on the block grant adjustment that comes with the devolution of these tax powers. I have spoken to the chief secretary about this issue and I am anxious to resolve this question before Christmas. That factor is, of course, material to my consideration of the changes that have been made by the chancellor. Our proposals also replaced the distortive slab system with a progressive rate structure for non-residential property transactions, ensuring that Scotland remains a competitive and attractive location for business investment. This Government has a clear commitment to the most competitive package of business taxation in the United Kingdom. At the heart of our approach is the small business bonus scheme. Recent statistics show over 96,000 or 2 in 5 rateable properties benefiting this year are record high. Eligible businesses will this year be up to £3,140 better off than competitors located in England, even allowing for the temporary extension to the chancellor's equivalent scheme. I also take this opportunity in Parliament to reiterate my previous confirmation that the public health supplement will conclude at the end of this financial year, as I indicated it would. I am also pleased to announce that agreement has been reached with the Convention of Scottish Local Authorities to revise business rates incentivisation scheme, which is more tightly focused on rewarding growth in the underlying tax base. Full details of the scheme and the agreed targets, which come into effect in 2014, are set out in the local government franc circular, which is published today. In addition, our community empowerment bill currently in Parliament contains provision for local authorities to offer targeted rates relief to stimulate economic growth in their localities. In 2012-13, we began our review of the rate system ahead of the next revaluation in 2017. Our consultation in 2012-13 led to a 20-point action plan, including a review of the appeals system, and I am pleased to publish our consultation paper on the future of the appeals system today. Finally, I can confirm that in 2015-16 to maintain our competitive position, we will continue to match English poundage rates in contrast to previous Administrations, who imposed higher rates and put Scottish businesses at a competitive disadvantage for years. Our overall package of rates reliefs provides increasing support to businesses, estimated at £618 million for 2015-16. Scotland remains the most competitive business tax environment in the United Kingdom. Presiding Officer, non-domestic rates are a key component of the funding package that we provide to local authorities through the local government franc settlement. In 2015-16, we will provide a total package of resource and capital funding of almost £10.85 billion in support of local authorities services. That settlement is set against the challenging fiscal environment and the austerity measures that are set to continue, with further damaging cuts from Westminster to public services. Despite that context, the terms of the settlement offered to local government continues to represent a very fair settlement. Local government and the essential services that it delivers are an integral part of the overall good governance of Scotland, and local authorities continue to be a critical partner in the Scottish Government's transformative programme of public service reform. That settlement builds on our joint priorities and is focused on growing our economy, protecting front-line services and supporting the most vulnerable in our society. The local government settlement maintains funding on a like-for-like basis in both 2014-15 and 2015-16, with the allocation of additional money for new responsibilities. The 2015-16 revenue allocations have been increased by £241 million since the draft budget 2014-15 was set out, with £54 million to give all children in primary 1 to primary 3 access to a free school meal, £44 million to fund extended preschool entitlement, £38 million for the Scottish welfare fund, £35 million to fully mitigate the impact of the bedroom tax and £6.5 million to support administration costs of the council tax reduction scheme. The 2015-16 capital allocations have increased by £39 million to support the extended preschool entitlement. In 2014-15, the main additional sums are a further £18.5 million for early learning and child care, resulting from the Children and Young People Act 2016, almost £16.5 million for the delivery of free school meals to children in primary 1 to 3, £15 million to allow us to fully mitigate the impact of the bedroom tax, £12 million to cover the cost of the enterprise areas business rates relief scheme, £5 million to provide additional teacher support resulting from the new national qualifications and £2 million to help local authorities fund the teacher's pay award. I can confirm that, following agreement with COSLA earlier this year, the needs-based formula has again been applied in its entirety to the settlement for 2015-16. In return for this package of resources, local authorities will require to deliver a council tax freeze for the eighth consecutive year and secure places for all probationer teachers who require one under the teacher induction scheme. The Scottish Government and COSLA have also agreed to work together with others towards reaching an imprincipal agreement on an educational outcomes-based approach. That approach would consider a broad range of indicators of educational improvement and should include teacher numbers as an important contributory factor. The process will be inclusive and engage other parties, notably trade unions, parent bodies and others, with an interest in educational outcomes and must be satisfactory to both Scottish Government and local government. In addition, NHS boards and local authorities are working to deliver integration of the adult health and social care system, and we have committed additional funding to tackle child poverty and will work with COSLA to extend financial support to kinship carers. This Government is also supporting the Glasgow Clyde valley city deal with £15 million of Scottish Government funding for the city deal from 2015-16, the first part of our £500 million contribution to an overall £1 billion package over 20 years agreed with the United Kingdom Government. We are also supporting our capital city with our new growth accelerator model to support an £850 million investment in the St James's quarter in Edinburgh city centre, with just under £100 million from the Scottish Government over a 25-year period, and we remain interested in proposals from all cities on how they can be helped to grow and to develop. My statement today marks the start of the consultation period with local government on the provisional 2015-16 revenue allocations, and once confirmed, I will bring the final figures to Parliament early in the new year. The Deputy First Minister will now take questions on issues raised in his statement. I intend to allow till 5pm for questions after which we move to decision time. It would be helpful, then, if members who wish to ask a question of the Deputy First Minister were to press a request-to-speak button now, Sarah Boyack. Thank you very much, Presiding Officer. This year, there is no sign of a flat cash settlement, and several local authorities have received cuts. Will the Deputy First Minister admit that, when he says that he will work to achieve an educational outcomes-based approach, that this is code for dropping the commitment on teacher numbers and class sizes? And what does the Deputy First Minister have to say to the EIS, who has described this as a betrayal? What does he have to say to Unison, who has predicted a further 40,000 jobs lost as a result of the settlement today? Given that the cost rises for local authorities of 10 per cent since 2007, the fact that the Scottish Government now controls 82 per cent of local authority budgets, that people on lower incomes in disadvantaged areas are the hardest hit by cuts to local government services, will he agree, as recommended by the local government and regeneration committee, to widen the scope of the cross-party talks that he has proposed on what comes after the council tax, to include local government finance more widely, to enable more financial flexibility for local authorities to be considered? First of all, Presiding Officer, can I respond to the first part of Sarah Boyack's question in which she raised the issue of the pattern of local authority expenditure? In the table that I have made available to members, it indicates that, in 2014-15, with a number of factors removed to ensure a like-with-like comparison, the total local authority expenditure was £9,435 million. In 2015-16, it is estimated to be £9.5 billion, so that indicates the strength of the local government finance settlement that we have put in place. In relation to the points that Sarah Boyack made on the issue of teachers, I set out in my statement the contents of the approach that we are taking with local government to consider how we can concentrate and develop a model that is designed to improve educational outcomes. That should, after all, be the focus of our educational investment and our educational policy. Fundamental to that is the involvement of our trade union partners in the education of trade unions, including the Educational Institute of Scotland, and parents who clearly have a very clear and significant interest in the whole issue. On the wider question that Sarah Boyack raised about the perspective that was raised by unison on the impact of the local authority settlement on employment, I acknowledge the fact that employment in local authorities has fallen. Employment in the public sector has been under acute challenges as a consequence of the general financial climate in which we are operating. If the budget of the Scottish Government is going down in real terms by 10 per cent since the United Kingdom Government was elected in 2010, it is a little surprise that there are financial strains as a consequence of all that. Some of that has been dealt with by the Scottish Government very directly. Some of it, inevitably, is dealt with by our local authorities, but we address those issues in a spirit of partnership to achieve the most we can from the resources that are available to us in the climate of austerity. On the final point that Sarah Boyack raised about the cross-party discussions that have been encouraged by the local government and regeneration committee, which has just been the subject of debate in Parliament this afternoon, the Government has not fixed the remit of that process. As I speak to Parliament today, we have had a number of discussions with COSLA about those questions. We are very anxious to take forward the inquiry in a spirit of partnership with our local authority partners. We have obviously made an invitation to all political parties to be involved in that process, which was made by the First Minister when she set out the programme for government, and we are certainly open to consideration of the relevant issues to be considered as we address what I acknowledge to be a significant issue for local authorities in Scotland. I thank the Deputy First Minister for advance sight of his statement and apologise to him and the chamber for missing the opening minute. A couple of questions. First, how much of the consequentials from the autumn statement come from measures related to business rates? Secondly, I give a cautious welcome to his announcement on the business rates incentivisation scheme. I obviously want to see the detail first, but can he tell the chamber today what happens to financial year 1314, because he mentioned that targets were set for 1415 onwards? He talked about local government having expenditure of £10.85 billion next year, whereas the draft budget says £10.75 billion. I just wonder if he can explain the difference between those two figures. Finally, he normally mentions the local government share of Scottish Government spending. For 1516, has it gone down in terms of its share from 1415? Has it gone up or has it remained the same? In relation to the points that Mr Brown has raised, first of all, on the question of business rates, the consequentials that arise as a consequence of business rates are about £63 million, if my mental arithmetic has not deserted me this afternoon. On the question of the business rates incentivisation scheme, the Government has put in place the arrangements for 1415 and 1516. Those are the arrangements that I announced today. We acknowledged that there was a difficulty with the operation of the previous scheme that we conceived. The one that we have moved to is focused intently on business rate growth, on co-economic growth, as opposed to the other factors that were skewing the earlier business rates incentivisation scheme. I think that we have a stronger foundation for that approach, and I am very pleased that we have managed to secure agreement with local government on that question. In relation to local government's share of the Scottish Government's budget, it stood at 36.7 per cent in 1415 and stands at 36.4 per cent in 1516. One of the factors that will continue to have an effect on that question is the fact that we are passing on a real-terms increase to the health service, which will have an effect on the share of the budget that is allocated to local government. I know that that is a policy position of which Mr Brown has been supportive, but what I would say to Mr Brown in the context of the acute financial pressures that we are wrestling with is that we are delivering a strong financial settlement to local government, which commands a greater share of the Scottish Government's budget and the resources that we have at our disposal than when this Government came to office. I welcome the cabinet secretary's statement. One of the difficulties that emerged from the recession, which was highlighted by both the Office for Budget Responsibility and the Institute of Fiscal Studies, is that productivity in the UK has unexpectedly stagnated in recent years, placing a major drag on economic growth. Can the Deputy First Minister tell the chamber what steps he is taking to raise productivity in the Scottish economy and enhance competitiveness? The type of measures that the Government is taking in its wider agenda are to advance many of the priorities in the remit of the new Cabinet Secretary for Fair Work, Rosanna Cunningham, where we will concentrate on improving the quality of employment, which will be a product of the investment that we make in skills and learning, but also in the encouragement of the payment of measures such as the living wage to improve their immunisation and the quality of employment that is available to members of the public in Scotland today. Yesterday, the Government held the 14th meeting of the national economic forum, which brings together a variety of private sector, public sector, third sector and trade union leaders to focus on joint and shared priorities very much at the heart of Ms Cunningham's remit. One of the commitments made by one of the employers who spoke yesterday, our focus yesterday was on improving the quality of work and issues of productivity. One of the employers who was in attendance in his preparation for the event had examined and explored the implications for his company of paying the living wage and decided and announced it at the national economic forum. He was going to go ahead to do that, because he was concerned that, as the issue was raised to him, he had not responded positively as an employer. I thought that that was a great example of how employers can lead by example. The living wage is central to that process. I would also highlight the emphasis that is in the Government's economic strategy and will be very much central to the economic strategy that the Government sets out in the spring, which will be to deliver a never-greater focus on innovation and the way in which innovation applied right across our economy can enhance the quality of employment and, as a consequence, improve productivity into the bargain. Willie Rennie, followed by John Mason. I thank the Deputy First Minister for an advanced copy of his statement and also his recognition of the UK economic recovery based on the UK Government's economic plan. That is welcome. He has also indicated that the extra funds from the Barnett consequentials will go directly to the NHS. Can he also indicate whether he would be willing to consider a further investment in nursery education, which I have argued for for some time, so that we can, at last, catch up with England on two-year-olds? Finally, on Aberdeen Council, can he indicate to this year whether he is going to reach the 85 per cent threshold, or is it going to be like every other year where he has failed to meet it? On the first point about UK economic recovery, there is undoubtedly progress and development within the United Kingdom economy, but we are recovering from very significant difficulties in the UK economy. The level of growth, as I indicated in my statement, falls significantly short of what the Chancellor predicted would be the case in 2010, and the consequence of that very practically and financially is £50 billion extra borrowing that was envisaged in this financial year that the Chancellor estimated back in 2010. The fact that the Chancellor went out of his way to praise the level of employment growth in Scotland must be the vindication of my economic strategy. I know that Mr Rennie has been long waiting to applaud, celebrate, compliment and shower with the usual volume of rose petals that he is always deploying within the chamber. I think that there is a lot to be confident about in terms of recovery, but let us not underestimate the significance of the economic impact that we have faced. On nursery education, of course, there has been significant investment made by the Scottish Government. We have expanded provision to an extent that the volume of provision in Scotland is more significant than is the case south of the border, and the budget provisions that I have made in the Government's overall budget and in the local authority settlement reflect that. Finally, on Aberdeen City Council, as I look at the numbers, Aberdeen City Council in 2014-15 had at its disposal and government grant £318 million, and in 2015-16 it will be £328 million, an increase of £10 million, or £9.637, to be absolutely precise, a 3.02 per cent year-on-year change. The 85 per cent funding formula has been applied for the city of Aberdeen, and it is delivering significant benefit to the city. Can the cabinet secretary confirm that the local authority distribution formula is agreed by COSLA last year as a result of its internal deliberations on that matter? The local government agreed to apply the distribution formula as it has been previously set out, and that has been applied to the information that is before Parliament this afternoon. I welcome the confirmation that, on this occasion, at least the cabinet secretary has allocated all health consequentials to the NHS. He also mentioned in his statement the role of the NHS in delivery of integrated health and social care. What steps will he take to make sure that the additional funding ensures that the NHS plays a greater role in the delivery of health and social care in order to turn the tide of the growing bed blocking crisis? On the first point about health consequentials, the Government has fulfilled utterly its commitment to pass on the resource Barnett consequentials to the health service. As we said, we would do that back in 2011, and we have fulfilled that in every year since. On the second point, the issue of health and social care integration has been taken forward jointly by the national health service and by local government. There is an intense level of co-operation between health boards and local authorities at local level. The health secretary and the social justice secretary are very much involved in ensuring that that takes its course. There is, Mr Gray, a direct relationship between delayed discharge and the whole opportunities to resolve many of those questions through health and social care integration. I can assure him that those issues have significant attention at ministerial level, and the Government will work in partnership with health boards and local authorities to ensure that that very important part of our public sector reform programme is delivered timuously and effectively to deliver the appropriate care and support for members of the public. A recent local government and regeneration committee meeting, I asked the Deputy First Minister about local authority reserves being used to invest in preventative spend and transformation of services, given that the commentary after the autumn statement warns of colossal cuts to come as part of the continued austerity agenda. Does the cabinet secretary agree that those local authorities that are holding substantial reserves, such as Aberdeen City Council, which currently has £116 million in cash reserves, should seek to use them in this fashion? On the substantive point about the approach to shifting the emphasis of public services much more to a preventative model, that is central to the Government's public service reform agenda. Indeed, that is at the heart of the approach on health and social care integration, to try to anticipate and to predict the demand that may be made on public services and to find ways of meeting that demand in a less costly setting than when an individual requires more expensive support from the public services. The very strong examples of that will be about providing, for example, support to some of the more vulnerable elderly people in our community and supporting them in their own homes to make sure that they are properly supported and equipped in their own homes before we have to face some of the difficulties of emergency admission to hospitals, which is a much more expensive care setting and where demand is much stronger. That shift to more preventative interventions lies at the heart of the Government's agenda. Our local authority partners and the health service are jointly focused on how to deliver that approach. The substance of that agenda is the one that I would certainly encourage. On the question of utilisation of reserves, local authorities have a prudential responsibility to exercise control over reserves that they hold. Audit Scotland gives guidance to local authorities as to what is an appropriate level of general reserve to be carried to meet particular circumstances. I, for example, make assumptions about local authority reserves in measures such as the application of the Bellwyn formula, where I anticipate that local authorities have certain reserves to deal with emergency circumstances. Notwithstanding the particular identification of purposes for reserves or following the Audit Scotland direction on generally sustainable levels of reserves, I certainly think that it is a valid consideration for local authorities to be using reserves to facilitate and to finance service transformation that will deliver a more preventative approach than the delivery of public services. That is to be welcomed and encouraged. Appearance in East Renfisher and across Scotland facing drastic cuts to their school budgets will have been particularly anxious about one line in the cabinet secretary's statement when he referred to teacher numbers as an important contributory factor in their children's education. Can the cabinet secretary confirm that that means that he has officially abandoned his commitment to maintain teacher numbers—a commitment that he has singularly failed to achieve in any event? No, I will not confirm what Mr McIntosh has said, because that is not the position of the Government. Thank you, Presiding Officer. Mindful that the City of Edinburgh Council has committed 7 per cent of its transport budget for cycling, can I invite the Deputy First Minister to match that ambition and allocate some of the funds coming to Scotland under the Barnett formula to cycling so that the Government can be in the strongest possible position to meet its vision of 10 per cent of all journeys by bicycle by 2020, meet our ambitious climate change targets and make people healthier? What better return on investment could there be than that? First Minister, let me acknowledge the sustained approach that has been taken by Mr Eady to encourage the Government to invest more in cycling infrastructure. I am very interested in the points that he raises about the approach that has been taken in the city. I set out in the budget the resources that would be available to support cycling, walking and sustainable travel, and I would be very happy to meet Mr Eady again to discuss those issues if he would like to put those points to me in the new year. I thank the Deputy First Minister for his statement, and I know that on those occasions there is always a little bit of local pleading, but I point out that Glasgow and Edinburgh both see significant reductions in their funding against an overall increase in local government. Almost every other council seeing at least some increase other than our two biggest cities. Can the Deputy First Minister explain for my constituents why the figures for Glasgow and Edinburgh stand out so starkly? I would say to Mr Harvey that the figures are derived by the application of the distribution formula that has been agreed by local government. The consequences of changes, for example, in population within a local authority area, will have a significant bearing on the calculation of the impact of the distribution formula. All those factors have their impact on the resources that are available. I point out to Mr Harvey that, in my statement, I made clear the sustained support that the Government is making to both of our major cities in Edinburgh on the growth accelerator model and on Glasgow on the city deal to ensure that both of our cities are able to rely upon sustained investment to assist in realising their ambitions. The statement confirms that the public health supplement will conclude at the end of this financial year. Does the Scottish Government therefore still plan to introduce a social responsibility lefi? As I understand, that was said previously that it would be at the earliest 2015, and if so, when? There are no announcements in my statement today on the any question of a social responsibility lefi, and obviously, if ministers are coming to that conclusion, they will advise Parliament accordingly. Stuart McMillan, then finally Lewis MacDonald. Thank you very much, Presiding Officer, and I thank the Deputy First Minister for the statement. Can I ask the Deputy First Minister what the average household has saved as a result of the council tax freeze, and is he aware of the recent report by researchers at the Scottish Public Health Observatory, which states that the policy will have a positive impact on health? The council tax freeze has been a significant benefit to individuals in our society. The impact on individuals has been an average saving of around £1,200 for households as a consequence of the application of the council tax freeze between 2008 and 2015. I would also point out to Mr McMillan that the council tax freeze has had a significant impact on lower-income households as it represents a greater proportion of household income that has been saved as a consequence of the application of the council tax freeze. I should also point out that the council tax freeze has been applied and decided upon by every single local authority in the country. Despite the muttering to my left, I was always led to believe that the Labour Party would be great supporters of the council tax freeze. I listened very carefully to the Deputy First Minister's reply to Mr Rennie. Will he confirm that the new level of funding that he mentioned for Aberdeen City Council leaves its per capita revenue support at less than 81 per cent of the Scottish average, and that that in turn means that the revenue support for Aberdeen City Council falls more than £17 million short of the 85 per cent target that he himself has set? As Mr MacDonald knows—and certainly as Mr Rennie knows, because I have been around the houses with Mr Rennie on his question several times—we applied the 85 per cent formula at the start of the spending review in 2011. We do not reopen the basis on which we make those applications for the duration of the spending review, so it has been applied in full. I would have thought that Mr MacDonald would have welcomed the fact that the funding available to Aberdeen City Council has increased in this statement from £319 million to £329 million, an increase of £9.637 million. Can not Mr MacDonald welcome some good news for Aberdeen when it is set out to Parliament? Thank you. That ends the statement from the Deputy First Minister. The next out-of-business order is consideration of a parliamentary bureau motion.