 Fyelodau a hyn yn byddag i'r gynllun ar gyfer y Gwyltaeth Llywodraeth a Gwyltaeth gyffredin wrth ardal, a gwnaeth amgylcheddau ar gyfer ei ddim... Mae'n gwirioneddaint ar gyfer i'r cyffredin yn y cyfodol iawn. Gorff Lorff mwy o'r diwrnod erbyn gerai tro yn y cyd-dweithio nefyd yn gripwyr. Mae'n gwirioneddau ar gyfer i'r diwrnod yma. Fyelodau ar gyfer y gyd-dweithio'r diwrnod ar gyfer o'r diwrnod ar gyfer y Gwyltaeth Government's Budget 2020-24-25. Rydw i'n gweithio'r pannadau i'r unrhyw gwaith yng Nghymru byddai cancer Katie Hagman, rydw i'r cymdeithas yng Nghymru, ac yn y rhwng byddai Myryn Kelly, rydw i'r cyffredinol yng Nghymru Llywodraeth Llywodraeth Cosla, ac David Robertson, rydw i'r cyffredinol yng Nghymru Llywodraeth Llywodraeth Llywodraeth Cosla i'r cyffredinol ynghymru. I welcome our witnesses to the meeting and we'll try to direct our questions to specific witnesses where possible, but if you would like to come in, please indicate to the clerks. Councillor Hagman, as you're participating virtually, if you could do that by typing R in the chat function. I'd now like to begin by asking, and maybe I'll direct this to Councillor Hagman initially. The Deputy First Minister told the Parliament that the 2020-24-25 revenue settlement presents a 5 per cent real terms increase compared to last year's budget. However, Cosla states that the settlement is actually a £62.7 million reduction over the year. I would be, myself and the committee, would be interested to understand how Cosla arrives at this figure and why it appears to be so different to the Scottish Government's interpretation. A follow-on question is that last we heard from the director of finances that the provisional 2020-24-25 budget allocation should actually be compared against the final budget figures for 2023-24. Thank you. I appreciate being able to join you online this morning. Apologies, I'm not there in person. Absolutely, there is a discrepancy in terms of the figures that are being discussed. I appreciate that the Deputy First Minister and I believe the SPICE report has also indicated that there is an increase. However, as you quite rightly pointed out there, convener, the director of finance also pointed out that the comparisons are not exactly even as such. I think it's fair to say that if we go back to the beginning of December when Cosla launched our campaign, our budget lobbying campaign, we were very clear that in order to stand still, we needed an increase to our budget of around £14.4 billion. Excuse me. Within that, we were very clear that it included the revenue settlement from last year plus the policy commitments. My understanding is that those policy commitments haven't necessarily been captured throughout the year. In part, this may be because we're not at the end of this financial year currently, so therefore it may not be possible, but there is certainly a discrepancy around that. Cosla leaders met on 21 December and at that point, we had our budget reality document published, which, if members of the committee haven't seen or have access to, we can certainly provide that following the committee today. However, that clearly shows where there is a shortfall within our revenue budget and, importantly, a significant shortfall in our capital. Clearly, I've got Merron, who's my chief financial officer with me and obviously we've got David here as well, so they may wish to come in, and perhaps more of the technical details on that. Thanks very much, Katie Merron. You want to come in? Thanks very much. It is always complicated. What our budget reality document does is try and set out how we get to that. It's because the comparison made by DFM in Parliament is from the Scottish budget as published last year to this budget as published. The differences, as Councillor Hagman mentioned, of things that have been added in year, or commitments that are already known for next year, are included in what makes it then appear to be an increase, so significantly over the 23-24 financial year there have been substantial additional allocations to local government to support a pay award, so that's part of that total. Our point about where there is a cut in terms of a real term, we've received £62.7 million less in revenue than we expected before you take into account any inflation. In the budget reality document that we published on 21 December, the first table sets that out. It sets out what we were expecting for pay, the fact that funding has been baselined in this year adds an additional complication to it, but we've set out what we expected to receive just as a flat cash before anything was taken into account and the revenue total is £62.7 million short. David, have you got anything to add? The funding has increased for local government, but so have the commitments. That's the key issue. What we're being asked to do with the money that's based on Government policy and distribution of funding has also increased. What we're being asked to do with the money that we have goes beyond a cash settlement plus inflation to fund those policy commitments, and that's where we end up with the almost £63 million of reduction in funding that local government is looking at. Taking a longer term view, the Scottish Government informed the committee in November that local government revenue funding is 2.6 per cent higher in real terms than it was in the year 2013-14, as confirmed by the recent accounts commission report. Around the same time, Cosa wrote to the Parliament's Economy and Fair Work committee saying that, over the past decade, local government has experienced significant cuts to funding. 9.6 per cent reduction in revenue funding from 2013-14 to 2020-21 was followed by further real-term reductions from 2022-23 to 2023-24. I'd be interested to hear how you account for the differences in interpretation. I'm happy to pick that up. I believe that that was some work that was done by Audit Scotland within a particular council, where they did try and look at exactly the issue that David mentioned in terms of picking up where there's been additional money added in, but for the purpose of a specific policy, and therefore it's committed funding, it's not additional funding that can go to support everything else compared to the real-terms position. It's helpful. David, do you want to come in? Great. Obviously, what we're trying to understand as a committee and we have no considerable discussion around this is that we've got various versions of reality, which is how it was described by the director of finance, Argyll and Bute Council last week. It's difficult for the committee to scrutinise the Government's budget with the different versions, and it's also challenging for councils to make budget decisions. I'd be interested to understand why there's such a disagreement over budget figures each year, despite the Scottish Government committing now to work together. Katie? I can come in on that one. Absolutely. There is a commitment for us to work together. I think certainly last year was my first time in this position going through the budget process. There is often a different reality said by the Scottish Government as what there is by local government, and that doesn't help anyone, and at least of all, helps our communities who then have a lack of trust, because who do they believe? This was one of the main reasons, and one of our huge drivers in taking forward the Verity House agreement. Certainly within that there was the ambition, and there still is the ambition, to work towards a fiscal framework. But I think it's fair to say that we are quite a distance away from the completion of that work, and the fact that we're still in the same position this year is disappointing. However, I think it is also fair to say we're less than a year into this partnership working, and it takes time, and it does take time to bed in. However, I think we absolutely must have a renewed commitment to accelerate that work. There was a few meetings earlier in the diary, but to say that there were significant discussions and that there was a no-supportising budget would be unfair, because that work hasn't yet been completed, but it is important that we continue on this journey, because absolutely we must get to a point. I think the fact that we're using different sets of figures, because obviously, as has been said many times, the figures that the Scottish Government are publishing are not including the in-year costs that have come about within local government, at least of all pay, which is going to be a significant issue going forward. I would imagine this year ahead as well. I think it is a challenge, and nobody is underestimating the financial challenges that the Scottish Government are facing. We understand that, and that's even more important and imperative that we've pressed ahead with this work so that we can work collaboratively together. Thanks very much for that. Any more to add, David? I suppose that we just really need to get to the point where we're ensuring that everybody's comparing apples with apples in terms of what we're looking at and what COSLA do, what local government does, is compare the settlement to the settlement, so you're looking at the movement in a fixed point in time, and then any in-year commitments that have been made based on new policies have to be added to that position in arriving at an assessment of whether there's flat cash or an increase or a decrease in terms of the settlement. Okay, great. Thanks very much for that. We're going to bring in Pam Cosall. Thank you, convener, and good morning, panel. My questions round, obviously, the ring fencing. The director of finance at East Lothian Council spoke about how around three quarters of their budget is wrapped up in directed spend. They are still got all of the policy commitments to deal with, so it doesn't really provide any flexibility. That is despite some formally ring fence budgets being baselined, so my question is round, to what extent is the budget unring fenced, and what was COSLA's role in this process? I know Councillor Katie mentioned the policy commitment, so can I start with you, please? Thank you for your question. I think there absolutely is still a significant amount of our funding that it does go towards directed spend. Huge portions of our budget does go towards education, and also the staffing are pay elements. There's around about 75% of that, and as well as education, there is obviously the commitments to our IJBs, which nobody is going to argue against the importance of that. As I said previously with the convener, the fiscal framework is continuing that work, and I know that my chief officer, Maren, has been working very closely with the Scottish Government and with officials within that sphere, so that's a continued piece of work. Maren maybe wants to come in on some of the details of that, but certainly there is, COSLA leaders have reaffirmed their commitment to the Verity House agreement. Nobody is walking away from this new partnership of way of working. That being said, there is disappointment, of course, of all leaders, that the settlement, as published at this stage, doesn't give us what we require to deliver the services fully that we want to within and across all our communities, but I'll maybe pass over to Maren in terms of the specifics. Just to give you two examples to illustrate our point, part of the funding that was baseline, £522 million for the 1140-hours commitment for ELC. That money is no longer formally ring-fenced, but we're still delivering it. There's not a suggestion that 1140-hours is being cut, so that it's still directed spend and there is extremely limited flexibility to do anything else, that commitment still has to be met. Another example would be the £333.5 million that was baseline, which has been supporting the real living wage for adult social care staff. There's an additional £230 million being added in this year to get to £12 an hour. You can't stop paying the previous £10.90 if you're going to pay £12. It's still directed spend, it's directed for a specific purpose and there's no flexibility to change that. Those are just two examples to illustrate what we mean when we're describing that. The vast majority of local authority expenditure goes in two areas, education and social work. The very biggest cost in terms of the education budget is teacher pay. Of a total of around £13.9 billion in the local government's settlement, £3.2 billion is directed to pay for teacher pay. We can do little with that in a scenario where we're saying that we can't vary the number of teachers that we employ, 54,000 teachers across Scotland. That huge element of the education budget is essentially directed towards that spend. Another area where there's a high level of direction is around integration joint boards. Every year councils are told that they can't reduce the amount of money that's been put into your integration joint board, and in fact, you're expected normally to increase that. That direction is coming out of the overall pot, reducing flexibility to invest in other services. There are direct policy choices being made by Government in terms of the local government's settlement, which is reducing flexibility to deliver the other services, the other important services that we deliver for communities. Katie, I want to go back to what you mentioned around the fiscal framework. The Verity House agreement stated that a fiscal framework would be concluded by the end of September 2023. That hasn't obviously happened. Just four weeks ago, the Deputy First Minister said that already many of the principles that we have agreed together are being put into practice, such as improved engagement ahead of the Scottish budget. Would you agree with that assessment, given that the COSLA was admittedly blindsided by the decision to freeze council tax? When can we expect the framework to be completed? I don't recognise that there was an agreement that it would be completed by September 2023. Certainly, there is a commitment to continue on that work. The word within the Verity House agreement was the aspiration for a fiscal framework. There is a difference there, but, as I said previously, there has been challenges. Absolutely, COSLA was very clear that they were not consulted as part of the council tax freeze. Certainly, COSLA leaders were very clear and collectively, with one voice, made that point direct to the First Minister. That clearly has gone against the principles, and it has put strains on it. It is a new partnership, it is being tested. However, there has been engagement going forward. We had our first meeting with all group leaders and spokespeople with the Cabinet led by the Deputy First Minister. That engagement has taken place, the first of those, which we agreed would happen twice a year. I know that the COSLA President and Vice President have met the First Minister regularly, so that has been taken forward. I have had meetings with the Deputy First Minister to take those issues forward. Has it been enough? Would I have liked more? Would we have wanted more information prior to the publication of the budget? Absolutely, yes. We need to improve on that, but, as I say, we are at the early stages of this. I think, as I said, there were surprises within the budget. One of the lines that we were working on was that there would be no surprises, and that has not been the case. That being said, we are fully committed to the three outcomes going forward, which is primarily sustainable public services, of which obviously budget decisions are vitally important in that sustainability, but also tackling child poverty, and the just transition to net zero, which, with a cut to our capital budgets, is going to have a significant effect going forward as we work towards meeting our net zero ambitions of the future and of the current, I would say. Thank you. Just to clarify, it was absolutely the aspiration that we have a fiscal framework for September 23. We underestimated the complexity of genuine things that we need to work through and model in terms of the capacity, both within the Scottish Government and within COSLA, to take that forward. It is the aspiration to get this completed as soon as we can, but clearly quite a lot of us that I needed to work on the fiscal framework have been subsequently working on the budget, so I expect that we will make significant progress over the next time. Just to note, I think that everyone agrees that a fiscal framework for local government is a prize worth having, and it is something that we are committed to working towards. As Myrna says, capacity is a challenge both for local government and the Scottish Government in moving this forward, but we are absolutely committed to working towards a system that gives us increased sustainability, greater transparency and, hopefully, more financial flexibility in terms of what we can deliver for the people of Scotland. Council Katie, can I just come back to you? You said that you had already made with the Scottish Government and that that was a positive meeting to move forward after the council tax freeze. I have been speaking to local authorities, I have spoken to now 24 of them, and I have obviously got their part, how they are feeling. After that meeting, have they felt that they have much more certainty with this Verity House agreement and the work that we are doing on the fiscal framework? So, in terms of council leaders at COSLA, that position has not changed. Not one leader was welcoming of the council tax freeze in terms of what it meant for our budget. The discussion with Cabinet was an opportunity for us to have an open dialogue to raise these issues. From that point of view, it was a positive space because previously we did not necessarily have that open dialogue space, which absolutely is important. There are large challenges looming ahead and it is only when we can have that open dialogue and have that really honest conversation that we can move the narrative forward as such. There was an opportunity there to speak with the cabinet secretary regarding the issues around education. There were also issues to raise about net zero ambitions. Of course, we did raise the issue of the council tax freeze and how that did not sit within the Verity House agreement. Damaging that could have been, however, that we reiterated our commitment going forward. We were not wanting to walk away from that. As David said, there is a greater prize to be won within that. Being able to take that holistic overview, being able to work together to make the case that it is not necessarily just teacher numbers that are going to improve the outcomes of our young people. If we want to take forward our net zero ambitions and deduce our emissions, your local government partners are absolutely key in taking that forward. I am now going to bring in Stephanie Callaghan. If I could start with yourself, David, and I am happy for others to come in as well there. He described the fiscal framework as a prize worth having. Councillor Hagman has already touched on the three-year priorities, poverty, transition to net zero and sustainable public services. My initial question was to what he has said. Does the 2024-25 budget enable local government to progress to the three-year priorities? I am quite interested in how that might look in the future. Will we have the fiscal framework? Does it seem realistic to you that we could have complementary policies from national and local government that focus on those priorities and have you working together to really best meet the needs of people and our communities? In terms of complementary policies, local government delivers the vast majority of outcomes that the Scottish Government is trying to deliver in terms of public policy across Scotland. We make significant contributions to those policy objectives in terms of education, social work, transport policy and a whole range of other issues. We are working closely with the Scottish Government on a whole policy agenda in terms of early years and social care and a whole raft of issues. Much of what the Scottish Government and local government are trying to do is entirely complementary, although local government is obviously ensuring that the specific needs of local communities are being met. The extent to which the budget assists with that process is slightly more debatable. There are signs of increased strain in terms of local government and its financial sustainability, which have not been helped by the reductions that we have seen in terms of the settlement and the pressures that we are trying to manage through things such as inflation. The reductions that we have seen to the capital budget in terms of our desire to invest in areas such as net zero is not being assisted by restrictions in the funding that we have available. Councils are struggling to deliver against key priorities such as poverty and exclusion in local communities and having to divert a bigger share of our funding towards those areas, while other areas in terms of quality of life and the assistance that we can provide to communities in a whole range of ways are being reduced. I am not convinced that the settlement, as it currently stands, is necessarily assisting local government to assist with those three policy priority areas, although they remain an absolutely key focus for us. I am happy to hear from your self-counselor, Hydman, on the meeting. Do you want me to come first, or do you want me to go ahead and then I will come in and capture any other aspects? To agree with David, the quite stark and obvious one is net zero and the capital budgets that are available. We do appreciate that the capital budget to the Scottish Government has been difficult choices were needed, but it is clarity on why those particular choices were made, given that there are shared priorities and what that means. It would be good to see that across the piece, in terms of contributing to some of the other ones. I would strongly echo David's point. There is serious concern about the financial sustainability of local authorities that there is a direct cut to the revenue budget, so that means that services will have to be cut to address that. The knock-on impact that that has for our staff and our communities and the services that are provided will be noticeable and will be significant. Recently, the LGIU survey that was published just before Christmas indicated that there are serious concerns throughout senior directors of finance, leaders of councils, chief execs of councils about the impact of budgets. It has been particularly compounded over the last few years by the rates of inflation that everyone has seen and everyone has been dealing with. Local authorities have attempted to mitigate the impact on communities as much as possible, but the energy bills for all the schools and for all the care homes have increased significantly for the public sector. That has a compounding effect. I do not think that the budget allows any significant progress towards the three targets. It would be fair that we all understand that, because the Scottish Government is in exactly the same position with hospitals and so on. I am interested to hear from you, Katie, and could you perhaps touch on, for example, the Scottish child payment, which has lifted around 90,000 children out of poverty? Does that have a knock-on effect on councils as well? Does that stop some families having to come to councils and look for additional support there? Thank you for the question. Clearly, with your background, you will be aware that, as councillors, we are trying to make decisions across a whole host of services that we are providing and, you know, some line services. I think that it is very important that we always keep in mind potentially any unintended consequences, and that is always in the background. So, when we are working towards the ambitions, we are always trying to look at new ways to ensure that we can progress those. I think that it is important to mention teachers and the fact that we absolutely want to be committed to closing that poverty attainment gap, but we also want to be lifting our families out of poverty. Certainly, the Scottish child payment is doing that. I am aware that the Joseph Downtree Foundation was giving evidence to the Finance Committee last week, and, certainly, I think they provided evidence that this is a really good policy, and their request is that that money, that is increased. Now, I appreciate that there is not enough funding to go around to meet all these aspirations, but I think that the Scottish child payment has proven itself to be of value, and it is doing some really fantastic work at the same time across councils where we are attempting, and we are trying to capture people before they find themselves in difficult situations. The budget, as it stands, is challenging. One of the key aspects that was brought up in numerous forms when cabinet secretaries were hosting round-table discussions on child poverty, which the First Minister had made a commitment and had taken forward that piece of work. One of the points that was brought up repeatedly was that around pay, and actually having sustainable and fairly funded pay for families. Unfortunately, the budget, as it stands, there is nothing within that budget that is allocated towards pay. Now, I appreciate that our budget lobbying does include a level of inflation, which would have captured the opportunity to put forward pay increases. Within that, I absolutely accept that the Scottish Government's budget that they received from Westminster isn't inflation-proof, so, therefore, that makes it even more difficult, but that issue around going forward with pay awards, we are going to find ourselves in the challenging situation. Additionally, the cut to the affordable housing supply program is going to have significant effects, knock-on, which is going to make it harder to reach those shared ambitions, though I appreciate it. I think my colleague Councillor Moran Chambers is going to be coming to give evidence to yourself next week on that specific issue, so that will be something that you are able to explore further. It is a challenge, but we are committed to those outcomes, and it is how do we navigate our way through? We have not yet had confirmation. It is still uncertain what the implications are going to be around teacher numbers, and that is something that continues to have dialogue, so we will continue to work with Government, cabinet secretaries on finding a holistic solution to the issues that we are all facing across the country. Just before I ask my questions, I will declare an interest. I have been a former councillor in Weston and Bartonshire up until May 2022. We heard last week from the four directors of finance who described the pressures that their councils are facing. We have also had the report from the local government information unit showing real concern about the future of council finances, which was backed up this morning by the council commission report. What would you like to see happen from now until March, when the budget is finalised, to help public services and local government finance to become more sustainable? I will pop it to you, Councillor Hagman, and then over to Ms Kelly, thank you. The simple answer to that is that we would like everything in our councils, our key documents, to be recognised and to be fully funded. However, we appreciate that that is not going to be possible within the current financial climate. However, we absolutely must recognise that the pressures that are being faced. Certainly, the budget is only at the stage one. Just now, it has still got a significant time to go through. I am happy to share with the committee that I have a meeting with the Deputy First Minister on Thursday, along with the President and Vice President. We are continuing to have dialogue with Government, and we will be working closely together to ensure that the information is shared properly and to make that case as to why we need to see an increase in funding. That being said, I am not realistic. I understand that there are endless amounts of money in difficult and challenging decisions that must be made. This is where we go back to the issue around directed spend, about ring fencing. There has to be those difficult conversations. What areas are we going to have to perhaps deep prioritise? If we do that, we have to have it in a grown-up manner. We do not end up with the finger-pointing of blame, because so often within politics, we end up in this blame culture. It is somebody's fault, and it is this party's fault, and this individual's decision. Of course, it comes down to individual political choices, but if we are going to find a solution through, we do need to have to almost rise above that and actually have those really difficult conversations and work through these together. Ultimately, if we do not end up, the trust from members of public within our communities is lost, because we are seen to be arguing over different figures on what is going to be working. It is hugely challenging, and I do not think anybody is shying away from that difficult process, but we have to find a different way of doing this, which is why that reinforcing and coming back to that fiscal framework and actually progressing that at pace, from my point of view, must come forward, but that is not going to help us in the immediate terms right now. We remain open, and I know that directors of finance are also meeting regularly to look at ways of how they can prioritise what would be their ask, and coslin leaders will be meeting at the end of the month and we will be able to take forward more information as it becomes apparent and as we have a greater understanding of what the issues are to go and get over. I appreciate your comments there. Ms Kelly, do you want to expand on that? Just ever so slightly, what Councillor Hagman outlines is the key bit. We need to be having the honest and open conversation with the Scottish Government and the public about the difficult choices that need to be made. What do we want our public services to look like? Where do we prioritise that? Where does that mean that, if there is not additional funding, where do we have to change what we do and potentially stop what we are doing? That is the conversation that needs to be had. At the moment, the local government is looking at dealing with a £63 million direct cut before dealing with any pay or inflation. To illustrate the challenge that pay has within the local government sector, a 1 per cent pay rise costs £105 million. Any pay rise is more than £100 million. It is not a small issue. It is a big challenge. It will be difficult conversations, but those are the ones that we need to have with the public. I know that local authorities have done it locally and that there has been research on a more national basis about the public appetite, willingness to pay and willingness to fund public services. Quite often, when local authorities go out and ask, they say that they could put up their council tax by 5 per cent and that that is what will happen. Or that they could put it up by 8 per cent and that is what will happen. The response is generally, well, we quite want to keep our libraries in with swimming pools and those sorts of things. If that means paying a bit more, that is what we need to consider doing. That is the space that we need to get to collectively as a nation. No, absolutely. We heard similar views last week. Moving on to my next question, the very-to-house agreement commits to the multi-year budget certainty when possible. However, the Scottish Government budget only includes the one year. We heard some views last week from finance officers on this too. Does it cause a belief that the Scottish Government could and should have provided indicative multi-year settlements in its budget this year? What impact does a single-year budget have on local government and third sector partners? I will pop it to yourself, Ms Kelly first. I think that, as was expressed by the director of finance, there can be a mixed view and there is a risk of where multi-year budget settlements do not provide the level of certainty and are not based on the certainty, then that introduces additional risks within that. We do appreciate that it can be challenging to do that, but local authorities set their own medium-term strategies. There is a bit about surely there is more that can be done, even if where it is not possible, due to the Scottish Government itself not having the certainty that they feel they cannot set formal multi-year budgets. There was a second impact on local government and third sector. The impact on local government is that it is less efficient. It means that you cannot properly plan forward what you are intending to do. It makes any kind of medium or long-term change difficult. It can lead to quite a lot of inefficiencies, particularly around staff, staff retention and all of those issues. That is absolutely a big issue for the third sector, because it prevents local government from being able to provide much certainty to the third sector partners who they work with, either that grants or commissioning might be able to continue in the way that they are. I am aware that local authorities can provide multi-year grants or commission services with third sector partners, but the ability to do that is limited. The local authority is then taking on all of the risk that the budget comes through, and it turns out that there is a £63 million cut to it. Not really. Merdyn's answer is quite comprehensive. It does come down to workforce planning, both for local authorities and our third sector. I know that, certainly within my own local authority in Dumfries and Galloway, we have committed to commission services beyond a year, but that does fall to the local council to take that forward. It is vital that we look at our workforce planning, but without that uncertainty. It is accepted that Scottish Government does not get a multi-year funding settlement itself, so that creates that level of challenge going forward. I have a question that comes up for me, and I am not nes-expecting anyone to have the answer to that. What is the root of the single-year approach? Obviously, it is coming from the UK Government, and the Scottish Government gets the single-year funding, and then a knock-on effect is for local authorities. Historically, where that came from is astounding that the whole of Scotland is run on a one-year budget. How can you run a country in that way? It emerges from cash budgeting at a central Government level, and there is annualisation around the UK and the Scottish Government budget. We have previously had a scenario in which we have received indicative multi-year settlements, and that has been hugely helpful in planning a long-term transformational change, which is absolutely the key to that. The bottom line on it is that councils spending four or five months of the year putting together a budget is an inherently inefficient process, and if we could get more certainty in terms of our financial planning, recognising that things may change, that would be hugely helpful to us. Katie, do you want to come in on that? No, I think that David has covered it. I could make all sorts of comments about the political nature of that one, but I will not at this point. Ultimately, we want to be working in the most efficient way, and this is not the most efficient way. Good morning, everyone on the panel. I would like to focus on the council tax freeze issue with Councillor Hagman. As you know, the offer on the table is £144 million, and that represents about 5 per cent. The big question is, and everybody says that it is not enough, what is enough? Has Cosla got a settled view on what the figure should be? The minister will be coming in in a wee while to join us in part 2 of this committee session, so unless you have told him directly yourself what is enough, what would you say to your committee just now about what Cosla's view is on that? Thank you for that. I absolutely recognise that the £144 million has been framed as a 5 per cent council tax increase. However, I think if we go back to maybe the start of the questions in terms of looking at the core budget, when we take into account the core budget and the drop in revenue on that one, it translates to approximately a 2.8 per cent council tax increase. Now, again, we are perhaps comparing apples to oranges or perhaps apples to pizzas at this point. You know, they are very, very different, and it is a real challenge. Ultimately, I recognise that we are in a cost-of-living crisis, and as a Government, the Government is looking to support hard-working families who are paying council tax going forward. I recognise that this was a political decision going forward. However, if we go back to the point that Mirren had just made there, when we are looking at cuts to our services, there are times where communities do not mind paying that little bit extra to make sure that their services are safeguarded. Certainly, from our council's key documents, we were very clear that there was a range of council tax figures used within that, and certainly one local authority was planning on a council tax increase of up to 10 per cent. If the core budget had not been cut, it would be a different situation if we were looking at that 5 per cent funding, but it will be different across local authority areas. We are still looking at how that 5 per cent potentially is going to be distributed, because that information has not been settled upon as yet. That is an ongoing dialogue right now within the council tax freeze funding of £144 million. You said that people would be happy to accept a little bit extra, but what is that? Is it the 2.8 per cent that you mentioned? Is it the 5 per cent that the Scottish Government thinks it is? Is it the 8 per cent that one of the contributors last week thought it could be? We never quite pinned that down to an acceptable little bit extra figure. Does COSLA have a view from your member authorities about what they consider that figure should be? Within the budget lobbying document, we did include the full council tax freeze up for £300 million. We included that as part of our budget lobbying. We asked for £300 million, and we got 144. That did relate to about 10 per cent to include and capture a range of opinions across local councils. I think the real difficulty with this one is councillors don't want to ever put up council tax. We absolutely appreciate that it is a tax. There is an ongoing dialogue of which I co-chair with the Minister about looking at council tax reform. That is a really positive space. That is something that we are progressing. That is almost a separate dialogue of empowering local authorities and the Englishies on Second Homes. There is a real positivity coming out of that space, but if we were to turn to where we are right now, we had asked for that 10 per cent, essentially, to cover a whole host of bases. But ultimately, until we know what the settlement is, the council tax is one of those questions that will ask, what cuts are we able to make? What is palatable? What is not? How do you balance putting up the council tax reference to what you may need to have to cut? I think it is fair to say that council administrations rise and fall on council tax decisions when you speak to your constituents and it is coming up the budget. One of the first questions people ask is what is happening with the council tax this year, but until we know the final settlement figures, it is quite hard sometimes to judge where your local authority is going to pitch that council tax in place or not. Okay, thanks very much for that, KTL. I will move on and ask you perhaps about the workforce challenges issue that has been featured at the committee during the course of this. We know that there are workforce shortages particularly, but there are also workforce challenges, which is a different thing. I think that we alluded to that earlier when we were talking about directed spend and the lack of flexibility. What kind of discussion is the Scottish Government having about those issues, the workforce issues? Am I interpreting what your colleague said earlier about flexibility when it comes to directed spend? Does that include workforce issues and workforce numbers? It absolutely does, and I think it was referenced the £3.2 billion that we spend that goes on the pay bill for teachers. That is a significant spend within that area, but we also need to have that flexibility and that understanding that in order to have good education, absolutely, we need good teaching staff and we need teachers within the classroom, but we also need a whole host of support as part of that holistic viewpoint. Whether that is classroom assistance or the delivery of free school meals, that is a huge issue, and it is a real positive and will bring positive outcomes to our young people. You cannot learn if you are hungry. The Scottish Government's commitment to the delivery of free school meals is absolutely admirable, and we need to find a way to progress some of these. In terms of the workforce challenges, there is the recognition that each local authority is so very, very different, and what is a challenge in one area is not necessarily reflected in another. I think it is fair to say that we are looking at ways to be innovative, and we have got a special interest group in COSLA that is directly looking at ways of transforming. It is an innovation space. It is allowing that space to have dialogue to say, where can we do things differently? How can we be more efficient? How can we work collaboratively? We have got that working group space that is ongoing. However, it is also fair to say that across local government we have been doing this for a number of years. We are not finding our way through it, which is why returning to the Verity House agreement, where we are focusing on these three outcomes and how we take that forward, has to be key. We have to be fully committed. It is about having those really difficult conversations of saying, sometimes we are not going to be able to deliver that, and we do not end up in that blame game. Any comments on that issue in the workforce from David Ermyrwen? It is just to highlight that around 70 per cent of local government spend is on staffing, any budgetary decision has necessarily has to consider the workforce, but the workforce has a vast, vast majority of front line, and it is delivering key services. Cutting the workforce means effectively cutting those services. There are many spaces where there is limited opportunity for efficiencies in how some things are delivered, but there are opportunities in other spaces. The size of the workforce in local government is now recovered back to where it was in around 2011, but that ignores a significant increase in responsibility. The 1140 hours, the free school meal provision, the requirements to maintain teacher numbers, etc., and the improvements on PTR, pupil-teacher ratio. The workforce is doing a lot, but every change that we make necessarily has to consider the workforce implications, and there are huge challenges in terms of recruitment and retention. You heard some really good examples last week from director's finance of the challenges that they face locally in councils. The point is that it is not just remote and rural areas, but they have unique and added challenges. It is also the director of finance for Glasgow saying that the real difficulty they have in recruiting key professionals that keep everything going. I suppose that there are 260,000 people working in the local government workforce in 2023. Councils are very complicated businesses, and they require professional people to run them from a variety of different professional backgrounds—surveyors, lawyers, planners, engineers, clerks of works—and we are increasingly struggling to recruit people to those professional disciplines in local government. One of the reasons for that is that there is not the money to employ the numbers of people that we would wish to see in a number of those areas. We prioritised education and social work quite correctly over the years, but councils have had to make deductions in other central services. We are increasingly struggling to get the breadth and quality of people that we need to run Scotland's councils effectively. That is a major challenge for us in terms of workforce planning. When we look at the age demographic around the workforce, bringing people into local government and making young people see that as an attractive career where they can develop and flourish, it is a real challenge. Sitting at the heart of that is resource and what we can afford to do with regard to our workforce. Thank you very much for that. I am sure that that will be an important part of your discussions, your on-going discussions with the minister, and I am absolutely certain about that, because it crops up time and time again. My third question is really about capital budgets. I will start with you again, if I can, Councillor Hagman. We know that there has been a reduction to Scotland's capital budget, but one of the provisions that the Scottish Government has made is to allow a transfer of £120 million from capital to revenue. It is just to ask you your view of that. On the one hand, it will help the revenue budget, but on the other hand, it clearly has an impact on the capital budget. I am thinking particularly about issues such as RAC and how we make progress towards net zero within the various council estates that we have. Could you give us your view, Councillor Hagman, about what you think about that and whether that is the right measure to do, or whether we need to do more or differently? No, thank you. In terms of the figures there, I will pass over to Mirren, because I think that the transfer of funding was to do with last year and the pay, and that is maybe a more technical point. The wider issue of cuts to our capital budget, yes, absolutely. The issue of that is ongoing, and certainly we are working closely with the Scottish Government on finding solutions going forward. Clearly the issues of RAC within schools were highly publicised within the media, but RAC is not just in schools, it is across our community centres, and certainly Minister Shirley-Anne Somerville has been in touch with myself and written to, to keep in touch and to continue that dialogue on how we progress that. There are also issues, as you mentioned, about our ambitions to net zero, and about 82 per cent of all emissions are within the scope and influence of local government decisions. Clearly that is going to have a significant effect. There has been cuts made to the regeneration capital grant funding, of which it really allows, exactly what it says in the 10, regeneration of some of our derelict buildings, of some of the projects taken forward. I have seen some hugely positive projects progress and be completed with the assistance of that Scottish Government funding. Obviously there is the derelict land improvement programme, which again is taking forward some really ambitious targets, but with cuts to that funding as well, it is going to have a no-corner effect. What was the other point that you made there about the capital? I might be passing over to Mirren in terms of the actual details on that one though. Just to pick up about the £120.6 million that was put into the local government settlement as capital to support the £22.23 pay deal. That was by agreement with local government where local government had identified areas where we could effectively release revenue by having the capital funding. Where local government was maybe using revenue to support a capital project, instead they were then able to take the capital money and release the revenue to support the pay. What we had said at that point though was that we can only sustain that for two years and it must come in as revenue funding from this year onwards. That was a known and expected in terms of what we were expecting as a base. However, there is a cut of £37.1 million to our core capital grant. There are additional cuts to our specific capital grants and even more cuts to other areas such as the regeneration and capital grant funding that Councillor Hagman mentioned and the affordable housing supply programme. All of those will have a huge impact on the capital plans that had been made and were already significantly revised due to inflation. Communities in the local economy, the impact of that huge cut to the affordable housing supply programme, will be noticed both for those who seek homelessness but also for the impact on the economy. However, it goes back to your point. The core capital grant that we have is used to invest and maintain some key and useful community assets. That cut makes it incredibly more difficult for local authorities to be able to deal with issues such as RAC or any other maintenance issue that exists. It just makes it that much harder for everyone. As you were talking about, I was trying to double-check some of the figures that I mentioned in the briefing that we have from our space colleagues. It shows an additional £120.6 million being switched from capital to revenue for the £24.25 budget. That is quite clear in the figures. I do not know what we could clarify that, but that is what it says here. That measure last year has been repeated for the year coming. It is the same capital to revenue switch. Instead of receiving it as capital this year, it has been switched to revenue. Last year, and it is being done next year. It was capital last year, or this year, for £23.24, and it is coming in as revenue in £24.25. Thank you for your responses to all those questions. I appreciate it. Thank you very much, Willie. I am now going to bring in Miles Briggs with the last few questions. Thank you. Good morning. Thanks for joining us today. I wanted to ask a couple of questions, firstly with regards to COSLA's views around the hopes for the European Charter of local self-government bill, which we are expecting to come back to Parliament for reconsiderations stage, and your views on how you think that can help, especially around the financial situation that we have discussed this morning. Katie, I do not know if you want to come in first on that. No, absolutely. It was a question that was raised at our leadership sounding board on Friday of where are we? COSLA's leaders are very keen that this progresses, and certainly there are huge advantages of getting this bill enacted, and about raising the parity between Scottish and local government. I think it is absolutely one of our long-term objectives that this progresses, and it is one of the key elements that has been mentioned as part of the Verity House agreement. I think it strengthens the status and standing of Scottish local government, which, obviously, from a COSLA point of view, we have that ambition going forward. Within that, there is also a side to that. There is a desire to have those general powers of competency for local government to empower us going forward as well. However, again, we have to be really mindful around the language and the framework, the wider framework we are working within, where other countries across Europe maybe have this. It is not necessarily always in the gift of Scottish government to pass those powers to Scottish local authorities, because the Scottish government does not have those powers from Westminster. We are working in a slightly different landscape and framework to perhaps other European countries across Europe, but it is absolutely an ambition and one that we are keen to progress, and one that was, as I say, placed last week and the question raised off, where are we and can we get this progress at pace? I think that Maren maybe wants to come in possibly with some further comments, though, in terms of the opportunities. A key point is establishing that right to local self-governance in legislation is value. One of the areas that we would see that that provides benefits quite apart within that parity of a seam space is ensuring that, where there are any changes that might affect local government, there is a stronger requirement to ensure that we are part and party of that discussion and development at the outset rather than sometimes brought in as things have already been developed. One of the other areas that has been flagged this year from it is the impact that we would expect the EU Charter for local self-governance to have on decisions around, for instance, council tax freeze. That is helpful. We have touched upon reserves already this morning, but I wanted to ask what COSLA's view is around the use of reserves by councils to cover some of their funding gaps that they face. Again, some of the conversations that we have had around how big reserves are, how depleted they are over the past few weeks have also been part of our deliberations, but I just wondered what COSLA's view is and advice being given to councils as well. If I may be coming in with some of the general points and then there and can fill in with the level of detail, but certainly across our councils, all councils are holding varying levels of reserves. I think it's really important that we bear in mind that reserves are just one-off pots of funding. Therefore, it's not possible to use one-off funding for recurring costs that wouldn't be seen as good governance or good practice going forward. We've also got the situation that some of our reserves are used for underwriting some really ambitious projects going forward. There's funding that comes in from a whole load of streams. Ultimately, the councils are sometimes faced with having to underwrite those themselves. Reserves are there for those emergency situations. I think it was mentioned earlier about the use of reserves in dealing with environmental and storm damage. I know, for example, Angus was particularly struck at the tail end of last year and had to rely heavily on their reserves to combat that. We have to ensure that our reserves are there and utilized correctly. Ultimately, yes, reserves are there for that rainy day. I think it's fair to say it is pouring quite heavily at the moment, but the rain could continue for a long term. We have to be mindful of how those are utilized. Yes, we acknowledge the way that they are there, but ultimately, the majority of those reserves are earmarked and therefore good reason. Once they've gone, they've gone. I think there has been stark warnings from south of the border across England where some local authorities are facing those issues of bankruptcy. They don't have those reserves to see them through. We're not in that situation in Scotland right now, but there are some local authorities that are exceedingly concerned and worried for the future, so we do have to be really mindful of how those are spent. However, in terms of specific further clarity, I'll maybe bring Mary Nenifemi. I think that the key point is that there is an increasing number of councils that are unfortunately having to rely on reserves to balance their budget, and that isn't sustainable, and that is of significant concern. I think that that is echoed by the Accounts Commission report today. You might want to hear from David on this one from specific examples. I suppose that what I would say on reserves is that the maintenance of reserves is a fundamental part of good financial planning, and you would expect businesses as large and as complex as local authorities to face the range of risks that we have to run an appropriate level of reserves. The local government benchmarking framework set out for 2021-22 showed that the majority of cases—the average level of reserves is around 3.5 per cent of net revenue expenditure. Faced with the range of uncertainty that we have in terms of potential storm damage, or winter weather conditions, or a whole host of other issues that we are seeking to manage, that does not seem to be unreasonable. The key point about reserves is that they can only be used once, and they need to be topped up. People should remember that those reserves are not necessarily cash backed. There is not necessarily an account that you can go to and say, I am going to withdraw my reserves now. You need to go out and borrow that money in order to replenish your reserves. They are a fundamental part of good financial management, but there is not necessarily a big pot of bail-out money sitting there that we can draw on. They are very much there for an emergency situation. In my authority, we maintain a winter reserve. A large dump of snow will cost us £1 million to £2 million to deal with that over a week. If you look at the 3.5 per cent in the context of operating expenditure, that is probably equivalent to two weeks' operating expenditure for the majority of councils. There are maybe more questions around that. We could ask the Scottish Government for those councils that have had to use their reserves and are looking at them. I also wanted to ask a question about national policies, which are announced requiring local authorities to help to assist in their delivery. To what extent COSLA will ensure that policies that are asked to be delivered by local authorities are appropriately funded and going forward how they can be properly maintained with inflation and, potentially, additional demands that might emerge? What sort of framework currently exists, what should maybe be coming out with Verity House and what that looks like and what needs to change? I might bring you in, Katie. Clearly, there are going to be political choices, national policies coming forward, and, certainly, COSLA is very, very clear that we must have early dialogue of any of those where local government is the delivery partner, that we work collaboratively together on that one. They absolutely must be fully funded. Importantly, not just fully funded for that first year, but then baseline going forward. However, we are very clear that we need to move away from that direct spend and ring ffencing. Ultimately, it comes down to trust. If that funding is going into the local government budget, and we have made a commitment to deliver some of these initiatives, then the trust comes down that local government will do that. I think it is a sticky situation because you have that ring ffence money, that direct spend, which we have seen an increase going forward. I think that was one of the key drivers within the Verity House agreement as we move away from that model. There has to be that level of trust. Councilers are the closest to our communities in so far that we are right there on the front line. Within the communities, our councils sit there. We understand sometimes what the communities are maybe needing more than ministers at some point with all respect within that sphere. We have to base our decisions on the evidence and what our outcomes are going to be. Again, there are national policies that come forward, which will help towards those agreed priorities. Again, that is where that real honest dialogue of if there is a new policy coming forward that does not necessarily sit within those agreed outcomes. Perhaps local government has to say, no, we are not able to deliver that going forward because these are priorities. This is what we have agreed. That is not being tested as yet. We are still, as I say, early stages of the Verity House agreement, but it is about that level of bravery and actually doing things differently. Again, I may have mentioned this in previous sessions. I am now 18 months into this role. I do not want to be sitting here in four years' time going, well, that was our ambition. It has not happened. I would really hope that if I am invited to give evidence this time next year, I am able to maybe demonstrate and give some real key examples of where we have deep prioritised some of the commitments made. It is not because we do not want to make them. It is just the real financial constraints that both local government and Scottish Government are facing due to the financial uncertainties. That is helpful. Finally, with the period of change that we are going to go through, is it also now time to look at and review the funding formula for councils? I represent Edinburgh. Edinburgh receives the lowest share per head of population but has some of the largest challenges in the whole of the country around homelessness, children and temporary accommodation and the national events, which also take place here in the capital and the costs that that arises with. I wondered what COSLA's thinking was around that. When I put this to the Scottish Government, they are happy to take that forward, but they would want COSLA's suggestion that they want that to take place. In terms of the funding, it does come down to quantum. How much have we got going forward? However, how that is distributed and any formula going forward is something that is being looked at as part of a Verity House agreement and the fiscal framework or aspiration. If we have an agreed framework, we have to be mindful of those unintended consequences. There are going to be some local authorities that are perceived winners and some that are not, depending on what option. It is a very complex landscape. We have to balance a whole host of things. For example, East Lothian and Mid Lothian, as rapidly increasing populations with growth, is a real issue. Similarly, Epshaw Stam Trees and Galloway, where I am, Epshaw Stath Highlands, you have areas of depopulation. However, you still have to provide those statutory services, the issues of roads maintenance. I think that my local authority has the second largest level of road network. How do we maintain that? How do all those formulas work in? It is really, really complicated. I am not going to sit here and say that I understand every single aspect of it, because that is why we have directors of finance. That is why I have Meron, who is living and reading this stuff, as chief financial officer for COSLA. Perhaps, at this point, it is maybe best for me to pass over to her, but it is not an easy one. I know that, again, we have a working group looking at fiscal framework and how those formulas, different options, how they could be, and we are still working through modelling of that as well with the Scottish Government to ensure a really good outcome. Fundamentally, the issue is the size of the cake that we are given rather than the size of individual slices that local authorities receive. If the cake was big enough, you would not have the struggle that you do. I guess that the experience that you hear locally from your councils who are raising the challenges that they have illustrates what we have been saying for the last 10 years or more, that there have been real-terms cuts to the local government settlement. That is why it is so difficult for councils to deliver the services that they are required to do and wish to do. That has been a very useful session. We will now come to the end of it. You will be glad to know. It is a very helpful day to hear your perspectives from COSLA—oh, sorry, Stephanie. Do you want to come in with a brief supplementary? No, just very quickly to declare an interest. I forgot about Erludon. Up until 2022, I was a councillor at Southlandshire Council. Thank you very much. That demonstrates why you have such good questions, because you have got the previous experience at the local authority level. Thank you so much. I want to note that there are quite a lot of food metaphors here. We had a cake and apples this morning while we were busy with all of those numbers. Thank you so much for joining us this morning. Thank you very much. I forgot about that one. I now briefly suspend this meeting to allow for a change of witnesses. On our second panel today, we are joined by Joe Fitzpatrick, the Minister for Local Government Empowerment and Planning with the Scottish Government, and Mr Fitzpatrick is joined by Ian Storey, who is the head of local government finance, and David Cowan, who is the head of regeneration and place at the Scottish Government. I welcome minister Ian and David to the meeting. I would like to begin by inviting Mr Fitzpatrick to make a short opening statement. Thank you very much, convener, and happy new year to all members. I want to thank the committee for inviting me to participate in the session today. I am particularly grateful that it is providing an opportunity to discuss how important our relationship with local government colleagues is in relation to fiscal matters, and how the Scottish Government has been working to ensure local government views are included within the broader priorities of government as part of the budget. In line with Verity House agreement principles, this year has marked the beginning of a more meaningful pre-budget engagement process between local and national government, something that I was pleased to see recognised by local government heads of finance during their session with committee last Tuesday, and I heard Councillor Hagman reference that too in her evidence. I would also like to take this opportunity to highlight that pre-budget engagement with local government has largely mirrored discussions undertaken with cabinet secretaries for their respective portfolio interests too. However, as with cabinet secretaries, in the face of a deeply challenging financial situation following the UK Government's autumn statement, inevitably the budget wasn't able to fully meet all of local government's asks. Whilst we appreciate local government will have hoped for a more favourable settlement, we continue to do all that we can to mitigate over a decade of UK Government underinvestment in public services. Despite the financial challenges faced, we delivered record funding of over £13.9 billion and made available a further £144 million to support reaching agreement with councils to freeze council tax in 24-25. Critically, in the most difficult budget since devolution, we have prioritised local government and the local government's settlement share of the discretionary budget has increased, and the analysis to support that has been placed in Spice. In the first budget since the signing of the Verity House agreement, we have already baselined almost £1 billion of funding across health, education, justice, net zero and social justice prior to agreement on an assurance and accountability framework. That is a significant step for ministers and we hope that it demonstrates both our commitment to the principles of the partnership agreement as well as our willingness to place trust in local government to make more decisions locally that enable better outcomes for communities across Scotland. In the last year, we have worked in partnership with local government to agree greater flexibilities, including on the visitor levy and increased discretionary powers over tax treatment of secondary and empty homes. That could raise an estimated £35 million for local authorities should they decide to use those powers. We will also continue to work with COSLA to empower councils through a new fiscal framework with an initial joint progress report published on 14 December. The Scottish Government has also committed to empowering local government through increasing discretion to determine and set fees and charges locally. In the coming year, we will include joint work on building warrants and planning fees. Although inflation is slowly falling, the damage caused by the UK Government's economic agenda of austerity and Brexit have hurt everyone, but particularly our most vulnerable households. We believe that, at a time when rising prices are putting significant strain on household finances, a council tax freeze will give some certainty to households over the next year. By funding a freeze, we have helped councils to maintain their services while ensuring that households are protected from increasing budgets. I know that local authorities share in our desire to help people across Scotland during these difficult times, and the Scottish Government is hopeful that councils will be able to support this policy initiative locally. I want to assure the committee that we will continue to work with COSLA to conclude the new deal with local government and provide greater flexibility to councils in future years once the unnecessary assurance and accountability arrangements are in place. I believe that this will enable local government to better tackle local challenges in ways that work for them, achieving our three shared priorities of tackling poverty, transforming the economy through a just transition to net zero and delivering sustainable person-centred public services. As has often been said by ministers and local government, this is the beginning of a journey. As with the building of any new relationships, there will be challenges and missteps along the way. However, if we can successfully achieve the goals of the Verity House agreement, that can only be to the benefit of everyone that we jointly serve. You mentioned the Verity House agreement, which is our new deal with local government, and the three shared priorities at the end of your opening statement. I would be interested to understand from your perspective, from the Scottish Government's perspective, how the 2024-25 budget and specifically the local government settlement will help local authorities to work towards those priorities that you outlined. In line with the Verity House principles, this year has seen a significant increase in meaningful pre-budget engagement with local government, equivalent to the process followed to ensure that cabinet secretaries' portfolios and the three shared priorities were factored into the budget consideration. We did that up front and prior. A lot of that work was prior to the autumn statement, which clearly was a surprise and was a shock to the Scottish Public Service when that statement was made. The budget invests in the Verity House agreement by baselining almost £1 billion of funding across health, education, justice, net zero and social justice. It is crucial to make the point that that baselining, which provides greater flexibility, has been provided in advance of the agreement and assurance accountability framework, which has to go alongside the fiscal framework that we are also working on. We will continue to work with local government to develop the necessary assurances and accountability arrangements as we go further, because that is what will allow us to provide more flexibility to make sure that the priorities of the Scottish Government, the priorities of this Parliament are achieved alongside the priorities of local government and the three shared priorities of the Verity House. To be clear, for this budget, the most difficult budget since devolution, we have prioritised local government with a higher share of our discretionary budget. I just wanted to talk about presentation of the budget figures and how we compare like with previous years to allow the committee in Parliament to scrutinise those figures. Government has talked about a 5 per cent increase in this year's budget compared to previous year's budget. COSLA and local authorities have said that a better interpretation would be to compare the money that local authorities received in its entirety for this financial year with the coming financial year. Their interpretation of that analysis would compute to a 0.2 per cent reduction in real terms. Why is it that the Government chose to compare a budget with a budget, rather than considering the new additions that the Government has made to support teacher pay and core pay? The short answer is because the Parliament tells us that we have to. The agreement between the Scottish Government and the Finance Committee is absolutely clear that we have to compare budget like with like. The pre-budget compared to the pre-budget would be appropriate to compare the outturn to the outturn, and it is comparing apples and apples. We have invested record funding in local government £14 billion to local authorities, including the council tax fee. If we compare budget to budget as required, that represents an increase of £795.7 million, equivalent to a 6 per cent cash terms increase of 4.3 per cent in real terms. Looking at the resource budget, that has increased by £840.3 million since 2023-24. 6.8 per cent cash terms and 5.0 per cent in real terms. I want to go back to confirm that the way that we have presented the figures compared comparing budget to budget is as prescribed by the Parliament in our agreement with the Finance Committee. Take that on board when it comes to the presentation of figures. We had directors of finance in front of us last week. I think that it was director of finance from Ergel and Bute who almost talked about the presentation of figures being alternative realities. I just wonder whether there would be any discussion with the Parliament and the Finance Committee when it comes to the development of the fiscal framework with COSLA to come to a figure that is universally, commonly accepted as the reality facing local government that would allow both sides, when it comes to the annual fight over figures to come to an agreed position? That is what we are all hoping that the fiscal framework will help us to do. We heard from COSLA that that has proved to be more complex than perhaps some people at first thought, but it is important that we get that right. We are doing the work, COSLA and the Scottish Government, working in good faith, to take that forward. Once the fiscal framework is concluded, I would not be surprised if the Finance Committee took an interest in that, but it might be more for this committee to look at that once we get to that point. COSLA has articulated where it got to the figures that does not align with the Finance Committee's and the Parliament's view of what it is comparing like with like, and that clear clarity. The important distinction is that this is about budget scrutiny and the issue that COSLA rises about spending power rather than about budgets. I have a recollection that I cannot quite remember the financial year, but somewhere about 2016-17, maybe 2017-18, in agreement with the Finance Committee, we did publish the budget to budget, as well as autumn budget revision to budget, which would start to stray into that territory, in the sense that the budget is not a static position. The budget is a constantly evolving position. To pursue the COSLA ask of the latest stated position, you have to do the same for every other portfolio and every other directorate in the Scottish Government, because there was no new funding that went into the Scottish budget at the start, so it had to be redistributed from within the budget. As soon as you start to get into that position of departing from budget to budget, the comparisons across the entire budget change constantly. At the time, it was widely agreed by everybody that that did not work as a comparison, and we have never done it since, but again that was in partnership with the Finance Committee. I am sure that we could find the financial year, but I just cannot remember which year it was right this minute. The other issue that we have spoken about previously when it comes to the presentation of figures is that the Government says over the period from 2013-14 that local authority finance has increased by 2.6 per cent. That is an entirely accurate presentation of the figures. Local authorities contension is that between 2013-14 to now they do far, far more, and that is obvious. We are looking at social care contributions, 1140 free school meals. There is a whole range that they do, which is over and above what they did in 2013-14. How can we, as a committee, get to an analysis of essentially what is the baseline of local government funding stripper out those extra commitments to try to get an understanding and appreciation of what has happened to core local government budgets over that period? It was directed finance at Glasgow, which talked about working 20 hours a week for £40,000, and then expected to work for 40 hours a week for maybe £41,000, and now that represents an increase in pay, but does not take into account the huge increase in working. What is your take on that and how we analyse core government funding without the extra things that are significant national priorities? We agree with how we get a deeper understanding and analysis of what has happened to local government finance. That point being made by local government is an absolutely reasonable point. If we take a step back in the aftermath of the Smith commission, there are significant additional responsibilities across a range of public services in Scotland that need to be funded from our devolved budget. On top of that, we also have significant costs of a range of mitigations that this Parliament considers are necessary to protect communities across Scotland from the worst ravages of Westminster. It is also worth noting that, in a lot of those areas, there is shared responsibility and we need to balance our available budget to get the best outcome. For example, the £457.3 million, almost half a billion that is budgeted for the Scottish child payment, is removing thousands of children from poverty and is working in synergy with anti-poverty actions being taken by many local authorities. We need to look at the budget in the whole. We need to know that we are all doing more. If anyone hears from me or any other Government minister suggesting that this is a budget of easy decisions, it is not. There have been difficult decisions in this budget for the Scottish Government and there will be difficult decisions for local authority leaders in setting their budgets as well. We all want to do the best for our communities with the limited resources that we have. Does the Government have an analysis or an interpretation that I asked the director of finance last week to get an understanding of core local government services and how the financial settlements over the years from 2013-14 have contributed towards the services that are not ring fenns or are not mandatory services? What has the impact been on that core budget? I am just wondering whether I have done any analysis of what the core local government spend is. In general terms, I would suggest that that is exactly the kind of analysis that we need to get away from because that is looking at the inputs. That does not help. We are doing things differently. Across local authorities, we are working across some amazing innovation in terms of the way things are happening. Sometimes a piece of work can help many of the outcomes. We need to look at outcomes. I am hoping that the fiscal framework with accountability and assurance framework sitting alongside it gets us to that point where across local government and wider public services, we can focus on what is making the difference for communities across Scotland. The idea of looking at the way we did stuff 10 years ago when we do not do any of it the same—I do not think that it is a civil comparison, but maybe Ian, do you want to add a little? You can point to some of the flagship expansions, such as the free-skill means in the early years, but you would have to look at other things that have fallen away as well. I remember back in 2013 when there were probably class-sized commitments and things. The nature of that analysis, I completely agree with the minister that we have moved away from those input-style measures and that we are increasingly trying to move away from them. However, the short answer to your question is that I do not think that such analysis exists and that it would be intrigued to see what directors of finance would come up with. My question is moving on from Mark's question, the fact that councils are providing more new and improved services. For example, as I mentioned, free-skill lunchease, early childhood education and certain social care obligations, for instance, have outpaced the funding supplied by the Scottish Government. My question is about the teaching numbers, minister. Do you think that local governments must retain teaching numbers even in places where enrolment is declining? It is very promising to hear from you today that you have said that you are moving away from input measures and moving more to outcomes. After speaking to around about 24 authorities, they have very much welcomed that sort of language outcomes, especially with teacher numbers, because where teacher numbers are declining and they still have to basically deliver on what the Scottish Government proposed and put forward, but they are feeling that teachers are important, but also innovation is important and teaching in different ways. Many things surround teaching, so it is not just about teacher numbers and the declining, so what is your view on that? In that specific area, some of the points are absolutely right. What is the outcome that we are trying to achieve? The outcome is better education and better destinations for young people. That is the outcome that we are trying to achieve. How do we get the earth always the question? In the Scottish Government, there is no surprise that we are committed to supporting the recruitment of teachers and we are providing local authorities with £145.5 million to protect teacher numbers. Our ambition is clear that it is to close the poverty-related detainment gap, but this is an example of an area of shared responsibility and it is why the work on the outcomes and accountability framework is so important to go alongside the fiscal framework. That work is on-going, but I think that it is really, really important in terms of the very house that is moving forward. There are areas within the very house where there is specific funding, so £45.5 million in the local government settlements to protect teacher numbers. That is a policy decision of the Scottish Government. I am not sure that I have heard any of the Opposition parties articulating a desire to reduce teacher numbers, so we need to look at it. The way that we make progress is by having that making progress on the accountability and outcomes framework. We all have the assurances that we need, but those policies, particularly those policies that are shared between the Scottish Government, the Parliament and local authorities and councils across Scotland, are able to move forward in a way that works for everyone. If I may comment very specifically on the teacher numbers point, as part of the budget letter when the Deputy First Minister wrote to COSLA leaders, there was a request in that that they take full very specifically a request on to establish an education assurance board. That is very specifically being established to look at things like, as teacher numbers, the best way to improve educational outcomes. That was a request to COSLA leaders alongside the budget to be established in the early part of 2024. I am fully aware of that letter. It is good to see that progress is being made and that you are looking at it differently. I am going to probe back into that. The question that I asked was, must they retain teacher numbers? It is not about whether teacher numbers should be. Of course, teachers are very helpful. I absolutely agree that your right and no opposition would come back to you minister in relation to that. However, it is about declining enrolment, so how do you work that? What formula, what sum do you use? If the teacher numbers have, the pressure is put on the local authorities and the fact that they have to retain them, but yet numbers are declining. I have heard from many local authorities. I spoke to a lot of the COSLA leaders, and that is what they said. They have still got the pressure. I think that that is exactly what the education assurance working group is there to do to take forward where. If it is not being set up, it will be set up shortly. That will allow the Scottish Government and local government, along with other partners in the education field, to take that forward in a way that is meaningful and to get that shared reality that we all want. What is the right number? What is the best way to spend money? What is going to get those outcomes that really matter in terms of attainment that ultimately will help to drive down poverty levels? It is not good to hear, because I welcome that and the fact that I will wait to see the progress because it is a shame that they have still got those pressures when declining when other areas are actually growing and they probably need funding as well. You mentioned £144 million. Obviously, the Scottish Government claimed to have funded the council tax freeze pledge by providing £144 million for local authorities in order to fulfil that pledge. However, the Fraser of Ireland Institute estimated that freezing council tax alone may cost Scottish councils up to £229 million, leaving a substantial shortfall for our councils. How does the minister respond to claims that a freeze will determine impact on council tax base in future years? Where do you think that councils should look for savings in their budgets? What departments? What areas? The £144 million that we have set aside in the budget is equivalent to a 5 per cent council tax increase nationally, so it provides the money that would have been raised by a 5 per cent increase. If councils agree to that, then over £2 million council tax payers will benefit from a council tax freeze in 2024-25, providing much-needed financial relief, particularly to vulnerable households. As I understand the Fraser of Ireland, the Fraser of Ireland figures included an allowance for the multipliers, which the Scottish Government consultation on the multipliers was very little support for that. The analysis has been released today. Out of all 32 councils, there were only four councils that came forward saying that they supported the changes to the multiplier. It was a consultation that was not supported, so it is not being taken forward. The £144 million funds for a 5 per cent increase in council tax across Scotland. I have heard in the last suggestion that some councils were talking about a 10 per cent increase in council tax, and that might have almost been able to fly last year when inflation was running at the levels that it was, but inflation is expected to be around 3 per cent. I think that it would be difficult for councils to be talking about. I think that the 5 per cent allocation is a fair allocation for a council to fully fund the council tax phase across Scotland. I hope that all councils take that up and I hope that all council tax payers will benefit from that. I can probe further into that. Let's put the phrase valentine's to estimate to a side, but we have heard from councils in here and from COSLA, and I have heard from them personally, like I said, I have been speaking to the CEOs. They are under pressure, whether the 5 per cent is good enough or whether it should be 10 per cent, they are going through really challenging times at this moment. If I was to ask the minister what sort of savings could they save, and what would be your examples? Obviously, we know certain areas such as education, social care, certain things such as ringfence, but what areas do you think that councils need to start looking at, because there is a massive budget gap and they are going through challenges? No one is suggesting that there is anything easy in the budget this year. It has been really difficult decisions for the Scottish Government, the Deputy First Minister in particular, in looking at all the challenges across the Scottish Public Service, and equally it will be challenging for our local government colleagues. It would be disingenuous of me to come and tell local authorities how they should allocate their budgets, and there will be different decisions made based on local circumstances. What we have done in this budget is increase the discretionary value by £1 million on ringfence. I want to go much further than that, but it is difficult for us to go much further than that without the work on the fiscal framework, the assurance and accountability framework, which makes sure that not just the Scottish Government but this Parliament has confidence going forward. That gives us the trust that the council has been talking about, a two-way trust. It has to be two-way, and I guess that is why there is so much effort being put into those discussions with COSLA. We have heard previously from the directors of finance in COSLA arguments that budget reductions mean that councils spend all their time and money reacting to problems, rather than trying to prevent problems from arising. I wonder what your reflections are on that. I heard—I am trying to remember—was it Glasgow that I made that point last week? I think that the kind of selling is a bit short. There is some amazing work going on across local authorities who are generally—and it is generally when they work in partnership with other public services that we can really see the difference and some great results being achieved. I am going to give a shout-out to three local authorities, which I think are showing the innovation that is happening across the country. Glasgow and Dundee have the Pathfinders Work, which is innovating to support families out of poverty by testing innovative models of person-centred service provision. Once that work is completed, we will be able to look at that and see whether that can be applied to other authorities. The model in Glasgow and Dundee is not the same—they are different. You would look for local adaptation to that innovation. The other place is Collette Maninshire, where the family wellbeing partnership is testing and embedding wellbeing and capability approaches to tackling poverty. No-one is saying that it is easy to manage the budget, and that is for sure. To suggest that there is not time for innovation, that is absolutely the time for innovation. Since I have been an MSP, we have always been talking about how we shift resources from reactive to preventative. I think that we are starting to see that work happening. It is always going to be difficult, but it is happening. The work in Dundee, Glasgow and Collette is all about prevention, all about saving those individuals from trauma in the future and saving the public service in the future preventative work happening across the country. I gave three examples, but there are many, many more across Scotland. I think that I will come in at a more strategic aggregate level. A huge amount of funding has gone into early years expansion, a huge amount of funding has gone into free school meals, so enormous pots of money have gone into activities at a national level, which are ultimately preventative in nature. I will follow that up. How big a priority will that investment in prevention and early intervention be when you are working with local authorities in the future? Clearly, it is something that we all know saves us money in the long term. However, it tends to be the outcomes that we are targeting on or whatever the targets are leads the direction of where the focus is, so how will you make sure that that is central going forward? I think that we all have a role on that. It is outcomes that we want to be looking at, but still we all often find ourselves going back to what are the inputs in terms of either finance or numbers of X or Y, whereas it should be the outcomes. As a Parliament, as a Government, as a society, we need to find a way to shift our analysis on what is going to make the difference. There are a number of pilots on-going, but it should help us to do that. Government cannot do that in isolation and neither can local government or the health service right across the system. We need to work in partnership, but there are, as Ian said, some big-ticket items where Government is putting significant funding in to support work, which hopefully will have prevention in the future. The Scottish child payment being just one huge example. Do you see that as something that you can embed in your frameworks going forward? I think that we have to, and I think that that is why the agreed three principles were so key to going forward. It was crucial that those principles were able to be agreed across all the parties, because preventative work is not for the right here and now. It is for the long term, so we need to all buy into that. I think that there is political buy-in to those principles. Clearly, there are differences in how we take things forward. We are all in different parties, so we cannot understand that there will be different political views on certain parts of that. However, the basic principles appear to be universal agreement across the Scottish political spectrum. That is helpful. Thank you very much, Tiffany, and I will bring in Marie McNair. Thank you, convener. Good morning, minister and your officials. One of the aspirations of the Vettie House agreement was the fiscal framework that we have obviously spoken about earlier, which was concluded by September 2023, and that has not happened. How confident are you that the fiscal framework can still be agreed? Do you have any timescales on when that will happen? I think that, as Councillor Hagman said, that was an aspiration. The reason that would have been good is that if we had the fiscal framework in place by September, it would have been able to feed into the budget, and that would have been good. However, it is important that we get it right. There is a huge amount of collaborative work between the Scottish Government and COSLA going into the fiscal framework, and that work will continue. As I said, we want to get it ready as soon as we can, but it absolutely needs to be right in the meantime. We have taken a number of actions in this budget, which supports some of the principles that we expect to be in the fiscal framework around ring fencing, for example. Billion pounds being baselined is really important. However, it is important to recognise that it is not as easy—there is not a simple formula that we can just say. There was a suggestion previously, that the percentage of the Scottish budget—well, we have given the local government a higher percentage of the Scottish budget this time, but it still does not meet the aspirations because of what we are all trying to do across Scotland's public services. It is important, but it is important that we get it right. No time feels and time is going to be later on in the year. I do not want you to press you back. It is important that we get it right. It is a huge amount of work going on. It is not something that is in the Scottish Government's gift that we are working with COSLA. There are two partners here, but Ian is going to come in on that as a process, which does not stop short of answering your question, but it explains the situation. We have been working with COSLA constantly on the fiscal framework over a number of years. In May last year, we had taken papers to our political leaders, the respective political leaders, to try to take forward a fiscal framework. At the end of May, COSLA leaders said that they tasked their officials with taking forward exploration of a rules-based framework. That had never been discussed up until that point at the end of May. We worked with COSLA to clarify what a rules-based framework was. There was not a particularly clear understanding, and we discussed whether it was something like the statement of funding policy, the Gabonet formula, the Scottish fiscal framework with the UK Government and all sorts of different interpretations of what a rules-based framework might look like. In June, we took a paper to COSLA officials that set out half a dozen different scenarios of what a rules-based framework might look like. They then took a paper to COSLA leaders at the end of September, which set out the opportunities but also the risks. There are huge risks in terms of other technical issues such as machinery government changes, how would a formula reflect that, how would the NDR guarantee feed-in, how would the bellwine scheme operate, what would the timing of it be, what would happen with the UK budget. Huge complexities underpinning that. COSLA took a paper to their leaders at the end of September and have now approached us to explore with them on two preferred fixed percentages of the Scottish budget. They have asked us to work with them to try and develop that. I have hopefully set out the complexity of that. That is a brutally complex ask for us to look what it would have looked like in the past couple of years. It is hugely complicated by things such as the Covid funding. We do not know how that would feed into the percentages. We are continuing to work with COSLA to try and understand what a rules-based formula might look like to enable COSLA to hone and ask two ministers at the moment. They have not placed an ask on ministers. Once they have placed that ask, we will work with ministers and COSLA to understand how that will operate in practice. My position as the head of local government finance, I would now be looking again at September as our deadline to get it into next year's financial position, but I do not think that we can understate how complex a mechanism this will be. Thanks for that information. That gives us a better understanding. I move on to my next question. Obviously, we heard from the directors last week all the pressures that councils are facing. Obviously, with a report as well, the local government information unit has published showing a real concern about the future of council finance, obviously backed up by the report published today. To what extent do you think that this budget will contribute to public services and local government finance becoming more sustainable? I think that it is good that you have mentioned the council commission report published today. I think that the conclusion of that is that the conclusion that I am going to take from the report is that the Scottish local government is in a very different position than the local government in England. For instance, we have seen a number of local authorities effectively going bankrupt. The auditors did not identify—I am taking a quote from the report—any council in Scotland as being ffiscally unsustainable in the short term. Clearly, we need to work to make sure that we continue that position. I think that the fiscal framework will help with that. We have prioritised local government within the budget, so a larger share of Scotland's discretionary budget is now going to local authorities. Clearly, local authorities will still have tough decisions to make. Part of it will be public service reform, which has to happen across service in Scotland unless something changes in terms of the quantum of budgets. Clearly this year, the autumn statement reflected a budget that had priorities of tax cuts for the richest, rather than investing in public services. We have had to try to adapt to that. It was far tougher than anyone had expected. It is making it difficult for the whole of public service, including local authorities. Minister, you mentioned the autumn statement. I wonder what your sense is. Do you feel that that has caused local government and the public more generally to understand the seriousness and depth of the impact that it has? I am not sure that the public fully understands the challenges of what Scotland is facing based on what was agreed in the autumn statement. There were some headlines, but devastating cuts to capital—for instance, 10 per cent cuts to capital. Those things cannot just be wished away. We have to deal with it. We have to have a balanced budget in Scotland, which is something that we have to do. I think that local authority leaders in public are, of course, that is the job of the local government. Of course, the local government is arguing for more money for local government, but speaking in private to political leaders across the spectrum, there is a recognition of just how difficult that was. Clearly, political decisions have to be made, but at stage 1 of the budget, there are suggestions about how the budget can be moved forward. I know that DFM will be having discussions with finance leaders of all parties. Good morning, convener. I wonder if Joe could ask you about the multi-year settlements. It was clearly the intention in the Verity House that we would try to do that wherever possible, but the constraints that you face as a Government is that we do not get multi-year settlements in terms of our budget. How do you square the two? How do you resolve that? Is there ever going to be an end to this particular debate? I have been using it for years, every single month and multi-year settlements, but we never seem to be able to deliver it. We gave effectively our heads up in terms of the high-level spending in the resource spending review that was published in May 2022. We are looking at Scottish budgets up to 26-27, but it is clear that we are publishing a one-year budget for 24-25, because, while we recognise the merits of multi-year budgets, the nature of the autumn statement and the OBR forecasts make future prospects more volatile. I could be misleading and more unhelpful to suggest that there is some certainty about what is going forward. We will revisit the multi-year outlook in the next medium-term financial strategy, which is due to be published in May 2024. However, to suggest that we could promise what is coming in the future might not be as transparent as it might appear at first. Is there any progress with colleagues in the UK Government about this big issue, because it recurs year on year? Is there any progress in that old direction of travel? This year was the least transparent process that we have ever experienced in relation to discussions with the UK Government about what was in the autumn statement unheard of. I think that the scale of what came to Scotland with no discussion and other parts of the UK are facing those challenges too, and we will have heard comments from Welsh finance colleagues. Let me ask you about ring fencing, unring fencing, directed spending, those issues. You have removed nearly £1 billion that was formerly ring fenced, and you highlighted some of the policy areas that have reached, but we did hear from the directors of finance last week who were a bit sceptical even of that. First, have you removed nearly £1 billion of ring fenced funding and baselined it? Yes, we absolutely have. It is just under £1 billion and we have put that out in detail in terms of what areas we have on ring fenced. I totally get that local government wants us to go further and I want us to go further too. We have to have the outcomes, the assurance and accountability framework in place so that not just Government but this Parliament has the confidence going forward and we can build that trust that Katie Hagman talked about earlier. That is a really important part of the work that we are doing around the fiscal framework. It is one of the workstreams that is laid out in Verity House. We need to do that. There are many things that local government delivers that are joint responsibilities with this Parliament, and this Parliament has its priorities as well. The point would be that respect needs to go both ways. We need to recognise that this Parliament has roles and responsibilities and we need to recognise that local government has roles and responsibilities. That is the big win from the new deal. We would be having that accountability and assurance framework going forward so that we have a certain understanding around what we are trying to achieve and what the outcomes will make a difference to the people of Scotland. I want us to go further for sure, but we are having on ring fenced nearly £1 billion. I was going to come in on the ring fenced point. The concept of ring fencing is often misrepresented, but fundamentally very little of the budget itself is actually ring fenced. I think that the point that I am directed is more important, but by far and away the largest ring fenced funding line was for the expansion of early learning and childcare. That is ultimately ring fenced by statute, not by Scottish ministers per se. The huge part of the ring fenced funding was supported by statute. It is not always that Scottish ministers have imposed ring fencing on local government. It is the way that funding has evolved for the expansion of key services. That is a key thing that has been removed. It is now local authorities have far more flexibility in how they deliver the 1140 hours, but they are still statutorily required to deliver the 1140 hours and it is therefore the flexibilities that are in that space. I mean, the discussion that almost sounds as though directed spend is some kind of constraint on local government, but I was understood to be shared priorities, commonly shared priorities. But minister, do you see further flexibility in that space, though, to address these issues that the COSLA keeps raising? I certainly hope so, and I think that that is what we are working on, is to get more flexibility particularly. I mean, there are some things which, as you say, are shared responsibilities. This Parliament has taken a decision that it wants school mails, for instance, but, in order to deliver that, can we be less prescriptive in how local authorities do that, so that they can look at their local priorities and work out what works for their local areas? We are clearly on a direction of travel. We are not there yet, and certainly nobody from Government was ever suggesting that ring-fencing would just disappear overnight. We do not want to have ring-fencing without agreement. Clearly, Pam Gossel talked about speaking to lots of council leaders as well. Often, they are asking for more money for X, Y and Z, and what they are talking about is more ring-fenced pots for specific things that they know will help their local authorities. I absolutely get that. I come back to that why, in the greed, fiscal framework and outcomes in the accountability framework are so crucial if we are going to make the difference that we want to make. My final question to you, minister, is basically on the capital allocation. You mentioned yourself as a 10 per cent cut in the capital allocation to the Scottish Government, but we ourselves have switched some capital spend to revenue in the last stage, for the last two years in the year, coming up, as far as I am aware, about £100 million or so. What impact do you think that will have due on some of our priorities and issues that we face, particularly rack issues in the local authority estate, particularly the school estate, perhaps, in our net zero commitment? Having a reduced capital budget, then switching capital to revenue, is bound to have an impact on that? Surely, could you just give the answer to the switch in from capital revenue? That is quite complex. You mentioned rack, so it is really important that we touch on that. It is slightly separate. We have previously set out that we will give consideration to funding around rack once we fully understand the scope and nature of what we are dealing with, and work is continuing to gather information across the public service. That is not something that Scotland is dealing with in isolation, so the CABSEC is in regular communication with her UK counterparts in relation to that. However, in the wider capital budget, 10 per cent real terms cut added alongside the challenges in terms of the construction supply change issues, shortages and high inflation all make it impossible for us to deliver on all the capital projects that we had hoped to. There was no inflation protection of the capital budget and, as I say, we are looking at a 10 per cent real terms fall going forward. There is no way that local authority could not be immune from that. It will be challenging. We need to prioritise those things, which most support our wider term priorities, keeping us on a sustainable look forward. We will need to come back to Parliament with a refreshed multi-year capital allocation projection, but, as I say, focusing on the maximum impact that our capital investments can have to deliver on the priorities of Government and this Parliament. However, there is no way that we can have a cut and not feel the impact. Obviously, a number of capital projects are already legally committed, so they have to go ahead and, therefore, that leaves less. Some of the cuts in other parts have felt much more strongly. I am not going to pretend that there is a magic wand that I can make that go away, because there is not. Ian, any further on that, particularly the local government response to that? I witnessed Mirren trying to explain this earlier, and I would confirm that Scottish Government and COSLA are in exactly the same space on this particular technical adjustment. In 2022-23, local government were identifying locally across the 32 councils, were identifying capital projects that they were funding using resource funding. Then, when the local government pay deal came along, the Scottish ministers wanted to invest £260 million, I seem to remember it being, into local government pay deal, but did not have the resource to do it. Scottish ministers provided local government with £120.6 million of capital, which, locally, the councils could then use that capital to fund what was a capital investment to free up the resource to be used for the pay deal. The agreement at the time was that that would happen for the first two years, and then in the third year we would take the capital away and give them resource to fund the pay deal. Councils, in a like with like comparison, councils could still use that additional £120.6 million of resource this year to fund the capital projects that they were funding previously, because they were already using resource to fund capital investments. I am sure that they will say that that is not affordable anymore, but the technical change of that switch was purely a cash flow issue in those two years, and it should have no impact locally on local government's capital programmes. I am delighted to hear that. I think that the complexity of this just shows the challenges of Scotland's current fiscal situation. My solution is that we have the full powers of a normal independent country, but we will leave that for another debate. Without getting into the political bit of that, I think that there is a fact that local government has far greater flexibility in currencies and they have far greater flexibility at the end of the year than the Scottish Government does. In the last couple of years, Scottish Government and COSLA have worked together to use local government's greater flexibilities to support difficult decisions such as paydeals. I want to start with a question with regard to how Scottish Government responds to the directors of finances. We have heard from a few of them during our time looking at the budget when they say that there is no more room for efficiency savings. What the minister would say to councillors who are now potentially looking at cuts to non-statutory services, and then another question that I will bring up. I guess that that goes back to the question that Pam Goswell asked. There will be hard decisions made. The Scottish Government has had to make hard decisions, so what I am saying is that I am not pretending that any council budgets will be an easy process. They will have to make difficult decisions. We have supported local authority colleagues much as we can by increasing the share of the discretionary budget that we have, so we have prioritised local government. I do not think that anyone is pretending that the settlements anywhere meet the aspirations that we have, but we have the reality of what was delivered to us in the autumn statement, and we have to make a budget of works. A lot of councils have taken decisions in the past, for example, to set up allios for leisure services. There are reports here in Edinburgh of significant potential cuts being considered in closures. Does the Scottish Government advise councils when they have taken those decisions and are now looking at cutting the funding that they provide to those services, which will make them unsustainable going forward? What different models have often suggested that this is where councils take those? Is our Government working with councils to develop to make sure that we do not see those cuts and closures? I know that a lot of local authorities took the decisions to move their services into the allios in order to get a more favourable VAT response, for instance, and maybe it would be better if we managed to have fiscal arrangements on VAT and non-domestic rates, which did not distinguish so that we could do things that were best rather than having to try to work around the system to make what is, effectively, public money circulate in a different way. Ultimately, those are decisions for local authorities to make. I know that it is never easy. I urge local authorities, particularly when they are looking at things and colleagues across in this Parliament, when we are looking at things like leisure facilities to make sure that we are looking at that through the eye of that preventative spend that we talked about earlier. We are making sure that we are accounting for all the benefit of that spend. It is more difficult to look at things as a cost and not to record the benefit to the local community, to the local authority or to other service providers. No-one suggests that this is an easy fix, but I know that a number of local authorities are considering bringing their allios back in-house in order to be able to be more integrated with the rest of their services. Thank you. In the Scottish Government's letter to committee, Ministers acknowledge that there are significant workforce shortages and challenges and that those are continuing to have a significant impact as well, making it often more difficult for local and national Government to achieve shared priorities and those that are committed in the Verity House agreement. We have touched upon this in previous meetings with regard to the planning departments and the workforce challenges that we have seen there. Why do you think that workforce planning has been so poor over such a long period now, and what can change around that? I do not think that the Verity House agreement has a real emphasis on that future workforce planning need as well. As you said, we have talked about this before. There are generally three areas where there is particular pressure, such as environmental health, planning services and building standards. As we have discussed before, there is significant work in all three areas to improve that. Environmental health is obviously a lot of work on-going, but in addition to the work that we are doing directly with local authorities, Food Standards Scotland has awarded the Society of Chief Officers of Environment Health in Scotland a quarter of a million pounds in order to provide funding to Scottish local authorities for the sponsorship of trainee food safety orders and the new qualification pathway to the higher certificate in food control. We have discussed this in depth previously, but we are continuing to engage closely with COSLA and the heads of planning Scotland to understand the pressures by planning services and what action to strengthen the future pipeline of skilled planners entering and being retained in the planning sector in Scotland is a high priority for us. It is a core part of MPF4 delivery. There are a number of actions that we have talked about just a couple of months ago. Those actions are on-going, but we recognise the challenges. The third area, again, with my direct portfolio, is building standards. We are working closely with local authorities. It seems that one of the challenges in building standards is the profile and esteem of the profession, so there is a lot of focus on that. One of the specific pieces of work that we have in there is the ambassador's network, which is helping to promote job roles and improve attraction into the profession. There is obviously the new modern apprenticeship pathway, which was just introduced last year and is now seeing apprentices starting to come through. We are taking action on all those three areas. Obviously, working in partnership with local government is not something that we can just take forward on our own. We have to work in partnership as you would expect. You mentioned a couple of times—in relation to the fiscal framework—the accounts and assurances framework. It seems that there is quite a lot of importance to that. You are putting a lot of weight on the development of that. I wonder whether you were in a position to give us a little bit of an indication of what you want to see in that accountability and insurances framework in terms of the relationship with coslin and the Scottish Government. That is one of the workstreams that is agreed within the Verrithee House to take forward. Clearly, it is a partnership, so we need to make sure that, ultimately, I would see an assurance framework sitting alongside the fiscal framework to give not just the Scottish Government assurance but the Parliament assurance around those areas where we have shared accountability. Part of that will be important in terms of the work that the accounts commission takes forward. Obviously, it is work that is on-going, and it is a partnership, so I would not want to be too prescriptive. Thanks for coming this morning to give evidence. I think that, Ian, it was helpful to get the background, the process of the fiscal framework and the complexity that you have come up against in the months and trying to develop that in a sense that, hopefully this time next year, we will be in a different position. We agreed at the start of the meeting to take the next two items in private, so that is the last public part of the meeting for our agenda today. I will now close the public part of the meeting.