 Rhaun i chi'n teimlo wrth gwrs i ddim yn gweld i'r llwy ffordd i'n gweld i'r certhens치dd i'r gwrs i ddim yn gweld i'r cefnod, a ers hwn ar ddysg yw yn gweld i gerdd, oherwydd y diolch gan oedd yn gweld ti'n gweld i'r cwrs i gyrdd na bobl yn ddigital sefydlu. Rhyw binglyn gwrs i ddim yn gweld gwrs i gerdd, sy'n ddyn ni'n gallu chael bod yn ymweld i'n gweld i'r cwrs i ddim yn gweld i'r certhenschiad Eileen Smith, ond dwi'n gwybod i chi ddod yn ôl i dynnu i gyd yn ymdraeth. Ond mae'n gweithio i agenda item 1, drath budget scrutiny 2017-2018. Rwy'n gweithio i gyd yn cymwybod i ysgol sydd o'r gwnaeth o'r cymwybod i'r gwaith o'r drath budget 2017-18. Gweithio i gyd, roedd oedd yn cymwybod prifwyd y bydd y bydd y bydd o'r cymwybod i'r bydd y bydd o'r cymwybod i'r groes i cynnig trefn i'r bydd y bydd. ond, ond da. Felly, byddai'n edrych cymdeithasol ar gael yn 2015-16, ac yn y pethau fyddai, yn y year 2017, rydyn ni'n archonwch yn olwbo i siaradau cymdeithasol. George Black, Professor of University of Straft Clide, Professor Richard Kerley, Professor of Management at Queen Margaret University, Counselor Michael Cook, Vice President and Vicky Bibby, Chief Officer, Local Government Finance, COSLA, Eileen Howe, Chief Executive of South Ayrshire Council, Solace Scotland, Counselor Frank McAfee, Leader of Glasgow City Council and Morag Johnson, Executive Director of Financial Services, Glasgow City Council, representing Scottish Local Government Partnership, Kirsty Flanagan, Head of Strategic Finance, Argyll and Bute. We're almost there. And Alan Russell, Director of Finance and Resources, Renfrewshire King. So thank you everyone for coming along. A couple of brief matters at the beginning, just to note that Professor Kerley may have to leave early and he's intimated his apologies if he has to do that. And thank you for coming along, we understand that, we know the pressures on your time and we're delighted to have Scottish Local Government Partnership and COSLA bring along some officials to give additional support on technical information. So thank you to Vicky Bibby and Morag Johnson for coming along to do that. But given the size of the panel in front of us, we're keen to have the elected representatives where possible to have that input, just to allow that kind of, if possible, such a large panel, a zippiness in questions and scrutiny and answering and the like. So with the housekeeping over, we'll move to questions. I'd really interested in reading through the submissions and it's called The Challenging Financial Times and a couple of pressures identified in the papers was in relation to social work, it was a theme and there was also budgeted pressures in relation to wage demands and staffing costs. I noticed both of those as a number of themes running through the papers, obviously. I'd like to link that to a theme because we've got our own outcomes as a committee we are seeking to get from our budget scrutiny. One of the themes that we've got is how we keep track not just of the Scottish Government revenue grant going to local authorities but all the monies meeting the statutory duties of local authorities and all the monies in that local authority area. So we were particularly interested in the accountability around and the spending and direction of the health and social care integration fund, which is £250 million a year, and there's predecessor funds in relation to that. In Glasgow, for example, that has seen a significant benefit in area around social work in relation to delayed discharge numbers and there's been really good joint work in relation to that. I'm just wondering how we track the monies or how we should seek to track the monies in the future and how those funds can help in relation to things such as staffing costs. So the living wage for care staff was part of that £250 million. How we track that money and how you think that that can assist or help local authorities meeting some of their statutory duties. Yes, councillor Cook. Okay. Thanks, chair. I'll come on to the question that you've asked, but I think it might be useful to start with some general propositions to begin with. So where are we coming from? We're coming from a position last year where local authorities saw a cut of 3.6 per cent across the board. In real terms that was 5.2 per cent. That's a very significant cut to our budget. It has very serious implications with regard to council services across the board. It certainly impacts on communities. I'm sure you've read the Spice report. You should be under no illusions about the impact so much as local authorities are doing their damnedest to protect those who are further down the social and economic spectrum because of the configuration of local government services. Inevitably this impacts on those people and impacts on communities at large. Within that you need to think about another number of considerations here. So it's not simply the level of cuts that we're now talking about and it seems that the cut this year could be of the same order as last year, but it's the sheer inflexibility in the budget and that will bring us on to things like the health and social care budget. So there are all sorts of restrictions in terms of how we as local government can spend our money. The most obvious of those are in relation to teacher numbers, the creation of a detainment fund. We did ask about pressures in social care and how integration funds feed into that. Whether, for example, you believe you mentioned flexibility, would you rather that money, the £250 million, went to local authorities rather than to health boards? I'm trying to tease out some of that, but we've asked specifically in relation to all the opportunities this morning to talk about these other issues, I can assure you, but we've asked a specific question here. Let me come on to that then. The £250 million, the mechanism that was used for that last year was that the £250 million was directed through health, apparently to IJBs. I think it would be fair to say that councils generally were unhappy with that mechanism. There was no clarity about it and effectively, the whole of that resource was soaked up on the health side. It certainly didn't attenuate any of the cost pressures that councils were suffering from and I think that's something that you need to understand. The proposition in relation to the living wage was something that was floated in very much at the last moment in terms of discussion with the Scottish Government. Now, that's not to say that local authorities aren't committed to that as an objective, but clearly there needs to be an understanding of the implications of such approaches. Frankly, if resource is being directed towards the living wage, then it doesn't attenuate other cost pressures either in health and social care and it certainly doesn't on the other side of the house. Effectively, the 3.6% cut that I was talking previously about in relation to local government services applied over the full spectrum of local government provision. The only attenuation that there was was actually in health and social care with that £250 million, but a large chunk of that was used in relation to the living wage. The rest of it was used in relation to pressures there and local authorities didn't really see any return on that other than the alleviation of pressures in that sector. Can I just clarify that? My understanding is that almost half of it was used in relation to living wage pressures. My apologies, I've got that number wrong. £125 million. The vast majority wasn't used for health then if half of it was used for living wage pressures. The point that I'm trying to make is that local authorities were seeking to meet wage demands and pressures that go beyond health and social care. I fully accept that. I'm trying to scrutinise the public pound that eventually found its way into wage responsibilities of local authorities and whether that has been helpful or not. In relation to the other half of the £250 million—this is not chicken feed, Mr Cook—there was co-sign-off in relation to that between local authorities and health boards. He said that it all went on health. That wasn't my understanding. If you want to clarify and add on to those two things, then we'll take some other witnesses in relation to that. Yes. Notionally, the £250 million was split. The £250 million was split between £125 million that was supposed to be directed towards meeting those cost pressures associated with the living wage. The rest was, in theory, meant to attenuate cost pressures that local government had generally. That was the proposition that was put to us in the negotiations with Scottish Government. What I'm saying to you is that the feedback from councils generally was that that was not how matters crystallised. Effectively, money was soaked up in relation to attenuating the costs of the living wage, the rest of it went in relation to cost pressures in health and social care and any anticipated attenuation of general local government pressures did not accrue. We're not trying to make light of the cost pressures that local authorities are facing. You will put all that in the record before us today. It's just maybe an acknowledgement that some of that money helped pay low-paid care staff in our communities better wages and those were cost pressures mitigated by that money and that money went to social work. But Councillor McAfee, could you help us out further? Obviously, the question is a very effective question because we're trying to work out how the budget is allocated and who has responsibility for trying to meet the pressures that are there. Obviously, we've identified in our submissions both the SLGP and COSLA about the kind of core issues to do with the funding for local government to deliver much of the demands that are quite rightly there in terms of what our citizens expect but also in terms of new measures that governments have had to identify that they want local government to be one of the vehicles to deliver it. In terms of the living wage, obviously, we were the first council in Scotland to advocate a living wage. Obviously, part of our debate in Glasgow was to ensure that we tried to ensure that the living wage would be part of the stuff. There are still some tough decisions behind the scenes on that, convener, in terms of what do you do with the private sector in terms of their capacity to meet the needs of their staff in terms of a living wage and the pressures that they would have, that they would want the IJB resource allocation to meet just the pressures that they have rather than necessarily the work commitment. In terms of the figures that we had for our IJB, there's a fundamental structural issue of when you notify councils of that, and I've got to say in terms of any recommendation I'd like to see would be a much earlier contribution about knowing exactly where the figures are. I think that was one of the concerns that we certainly had because we were going through a budget process and we had a kind of dance of the seven veils around the budget about trying to work out what bits of it we could actually allocate to the pressures that we had. I mean, in terms of figures that I have available for Glasgow and then obviously SLGP Leveria, across the four authorities, £33 million was the element of the IJB resource allocation that was placed to the council, of which half of that had to meet the obligations when the living wage, and the other half was about pressures in social work services. But we're still in this situation as we're developing the IJB, convener, where there are a number of issues that the health board are going to push down the IJBs that are very difficult decisions and very controversial decisions about community health provision. There may be decisions that they should have been dealing with for a long time and chose either not to do it or couldn't do it because of their resources. So there's a big concern on that, and certainly our view as SLGP, in order to my particular view as Glasgow council leader, is that we really need to get much earlier clarity, and that's even the case obviously with the budget settlement, because we had anticipated we like to have gone for a budget in early December, because there's not been any clarity yet at the Scottish level. It may mean that that's been delayed till probably early February. We hope that's helpful. That's actually very helpful. In terms of the process, we want to be helpful to local authorities on how we can structure that process to make it easier for you to set your budgets, even though it's challenging circumstances. Mr Black, you've indicated you wish to come in. Just on the point that you asked about how you could track the £250 million going to the integration authorities, I think that that will become an even greater difficulty in the years ahead, because if the reform is to be truly successful, then the money that the councils put in and health put in will lose their identity as the integration takes place. So in the years ahead, I think that if you were to look and say, as that integration being a success, part of that success would be that you wouldn't be able to track the money in the way that you can at the moment. That certainly makes this committee's job in tracking the public pound to scrutinise moneys available for statutory local authorities to services challenging, which is why I was so persistent councillor cooking in relation to getting an idea of some of those moneys. Would any other witnesses like to add to any of this discussion before I take in one of my colleagues for an additional question? You've touched on it, gentlemen, the earlier we get indication about where we're going with the finances from the Scottish Government and your own financial situation, the better. We all seem to, over the last few years, be very much towards the end of the timescale, and we're all trying to run to get the budget out in time and make things happen. You might have done a lot of work in the past to try and put together some plans and formulate strategy how you're going to go, but the pressures continually grow in the elderly section of the population, with a growing population and a growing elderly poor, and that seems to then take a large constraint on the services that we're all trying to provide, and at the blunt end of it local governments suffer because they have to try and make that progress move forward. Can I tease that a little bit? When we're talking about the allocation of money that you get, how then do you prioritise that, ensuring that the worst situation scenario gets the money first or the one that is showing the most pressure, or do you try still to align it to the areas that you've put in place when you're doing your short-term and long-term financial management practice? If that is the case, then you're still managing to cope with the situation, or do you have to firefight as you move forward because of the lack of expenditure that you have left and the timescale and also the constraints with reference to the size and the ageing of population? I think that the simple answer is that you need to do all of those things, so clearly budget planning is an incredibly detailed and complex process. Local authorities have an obvious responsibility in relation to community planning partnerships, they've got a statutory responsibility in relation to that, they've got single outcome agreements, all of these are things which filter into the process in terms of working out what the priority spend is in relation to the resources that the local authority has available to it. At the same time, and I think this is the significance of the SPICE report, you can see that there are inordinate pressures on local authorities, and really as I was trying to say, as a general proposition that's really composed of two facets, so one of those is simply the level of reduction in resource, the second facet of that which is composed of a number of elements is simply the lack of flexibility that we have to deploy the resource in the way that we judge appropriate, and actually I would say to you quite straightforwardly that generally speaking, when it comes to making budgetary decisions in local authority areas about what the priority should be, people on the ground in those authorities are much better placed to make those judgments than our ministers. So that really is how things are unfolding. In terms of some of the difficulties that we have in turning around in our own skin, you have got obvious restrictions in relation to teacher numbers. So the reality of a teacher number requirement is that it effectively locks up resource in terms of maintaining that number or at least the proportion of teachers relative to the number of students across Scotland. That gives us considerably less flexibility in terms of how we employ that resource and is actually counterproductive to some of the aspirations of Scottish Government in terms of attainment, which are obviously shared by local authorities generally, so that is the nature of the problem. There is also a massive gearing effect. The gearing effect is such that if you make an across-the-board 5 per cent cut, because of the level of protection that you have afforded to some discrete areas, then the effect of that cut is disproportionate in certain areas. So actually a bit of work that we have been looking at emerging from a particular local authority suggests that a 5 per cent cut can amount to a 55 per cent incursion into a particular service area. That is the level of the difficulty that we are dealing with. Our related problem, obviously, is that local government frankly is not the master of its own house in terms of how it works out its resource base. So we have no flexibility, for example, in relation to local taxation and what taxation powers we have are being further restricted and, frankly, reutilised for national purposes rather than local purposes for which they were designed. Clearly I am referring to the multiplier and the creation of attainment fund, which will see resource drawn off from local authority areas and used to support a national policy. We do not bridle it the national policy. I think what we do bridle it is the fact that this drives a cooch in horses through the principles of local taxation and completely trashes the democratic mandate of local authorities. In terms of how to respond to it, I established in Glasgow straight after we set our budget in March, tackling our steady group, which meets every fortnight with the finance director and the chief executive and senior councillors, to try and interrogate our budgets, to try and make ourselves as least as ready as we can be for whatever decisions are coming in terms of grant allocations. There is a structural issue that I said earlier about the relationship between central government and local government about the capacity to find allocation resources when much of it is predicated by either grant or pre-conditions in the grant. So, for example, last year's budget settlement essentially was a challenge for a number of authorities because we had to meet some of the key priorities that the minister defined were the key priorities rather than the individuals at a local level, who would be, I would presume, know as communities the best that there can be on that. In terms of our reality, though, we have a £74 million gap emerging in Glasgow for the next financial year. The cumulative total includes £30 million for Renfrewshire, South Lancer, £35 million for Aberdeen 44 million, so there is an incredible high figure of gap to be met. Even if there was flexibility around some of the issue around the allocation for attainment fund, which is a debate for another committee in another time when we will make reviews, it is known on that. Essentially, even if we have the flexibility of the 3 per cent variation, you are really only talking about a tenth of the £74 million figure that Glasgow needs to find could even be funded from that. So, there is a real scale issue, which I know that the committee members really need to interrogate. A more fundamental issue for us is how do we actually recalibrate the debate that we need to have between ourselves? I do not think that there is much that separates ourselves in terms of ambitions for how to transform the communities that we represent. How do we actually pull together the levers at national level, both Scotland and the UK, and calibrate that with the pressures that we know at local government level that we need to respond to? I think that there is a genuine need for that to be opened up and about who makes the decisions, what are the parameters of financial allocation and also what we need to do in terms of local authorities. Okay, thank you, councillor McCabe. Where is that supplementary in from Mr Simpson? Would any other witnesses like to reply to that question, Mr Black? You mentioned earlier about the severe financial challenges that lie ahead. You could also add on to that the management of the new devolved tax powers that will come into play. It seems to me that there is a need for the budget process to evolve to take account of those factors and not continue as business as usual. There are two issues that I think would be helpful in terms of managing that. The first one is for, rather than decisions taken about how the cake is divided up and how much goes to local government, and then councils taking a view on their priorities, I think that it would be more useful if local authorities were given planning assumptions by the Scottish Government, say for example what would be the impact of a 3, 4 or 5 per cent reduction grant, so that the Scottish Government could take account of issues such as equality impact assessments, economic impact assessments, prior to making a decision about how much money goes to local government. The second factor that I think that it could be managed would be to, instead of taking a one-year budget approach, to look at a one-year fixed budget, followed by two-year indicative budgets, again to understand from councils what would be the impact of grant reductions over a longer period. I think that if the budget process was to evolve in that manner that you would get, I think, better outcomes in terms of reducing inequality and increasing economic growth. Okay, thank you very much. Counselor Cook, did you want to come back on some of that? Yes, if I may, obviously the question that Mr Stewart asked was about timescales and planning in the context of the pressure of timescale. I just wanted to make a couple of additional comments about that which I hope might be useful. The first is, I suppose self-evidently, the later that the budget is announced. That is a pressure in its own right because it impacts upon the ability of local authorities to plan ahead. One thing that they do need to plan and what Mr Black said about resource allocation and all of that actually would assist this process, but in order to deliver a transformative change which local authorities are engaged in in order to get budget fit, you need time to do that. You simply cannot do that in rapid quick time and certainly not on the back of a fag packet. So an added complication there is, of course, the propensity towards single-year financial settlements. That is a major problem for local government. What we want really is long-term planning so that we can see the topography ahead of us. Of course, the single-year settlements that we had both last year and this year needs to be understood that these are a matter of a decision by Scottish Government. They could have decided to have a multi-year arrangement or a multi-year set of assumptions, but they have chosen not to do that. Far be it from me to suggest that the 2016 election may have been a consideration in terms of the single-year settlement last year, but again, we are going into a single-year settlement this year. That seriously complicates our ability to plan, which I am sure Scottish Government, you want us to do, and we certainly want to be able to do. Thank you. Any other witnesses before we take Mr Simpson in? Thank you. It does follow on from all that. Councillor Macaviti, you have given some interesting figures what you think Glasgow and other councils may have to cut, which will be news to Eddie McEvoy at South Lanarkshire. I speak as a South Lanarkshire councillor who has had a private paper on these figures, not for release, so thanks for revealing them. You have come up with these figures for yourself, so have you been given a heads-up from the Scottish Government? My second question, which follows on from what you were saying, Councillor Cook, is that there are a number of submissions from a number of you that are complaining about the centralised control of budgets and the Government applying conditions to the money that is given to councils. What would your plea be to the Scottish Government on that? For anyone watching this who has not read the newspapers this morning, South Lanarkshire councillor has said that they will freeze council tax for the next financial year. Mr Simpson might not have been at other current events happening through the night. Who would like to deal with those questions? I am delighted to have Councillor Cook and Councillor Macaviti answer those questions. I am conscious that there are a variety of witnesses here, but I am quite happy to answer questions all day long, really. In terms of the question about, do we have a heads-up, I am slightly constrained in terms of what I can say about that, to the extent that clearly there is a negotiation process between COSLA and Scottish Government in relation to some elements of the budget. I think that it is safe to say that we do not know at this juncture what the level of the settlement will be that local government will receive. We certainly do not know that. Clearly, if the Cabinet Secretary for Finance was challenged about that, he would be equally straightforward in terms of saying that those figures have not been articulated. Clearly local authorities are responding to a context in which they have read the Fraser of Allander report, they have read a whole series of other staff. They are making assumptions about how the world is likely to look, although I suppose that it is the last 24 hours that demonstrates that it is always difficult to make assumptions about how the world will look, but they are making assumptions all of the time and they are doing budget planning on the back of that. Clearly, the delay in the announcement of the settlement is a difficulty in that regard and may impact further down the line. In terms of what do we want most? I described earlier two aspects to this. One is the level of cut and the other is about the inflexibility in terms of the current budget. The simple answer to that is that we want maximum flexibility. That is the position. Scottish Government, for understandable reasons, will say that ring fencing is a thing of the past. The reality is that an awful lot of our budget is fixed in particular ways. Teach your numbers is simply another form of ring fencing, is the reality. If capping of council tax is not a form of superseding judgment by Government of a decision that should ultimately be taken on the basis of the democratic mandate, then I do not know what is. Flexibility is the key word as far as we are concerned. Councillor Macavite. Thank you very much. I agree just to say that it was on the blower earlier on to Eddie, so he sends his love and affection. I hope that that is mutually beneficial as well. Is that nice, Mr Simpson? It always is. It is always mutual. Essentially, when we walked to the principle, I mean, there was the SLGP figures. They are basically predicated on the kind of information that we had for last year and the likely direction that is contained in the paper that Mr Black has produced, which is in the committee papers about direction of travel over the next three years. There are three caveats every time on this one. One is that it depends what the input is at the Scottish end, because, for example, after the brew of Ha Ha last year, some other information and flexibility was introduced on the IGF funding, which allowed for some of that allocation to be redefined to help with some of the pressures on budgets itself. We still do not know that until the minister has to come in front of the Parliament to announce that whenever the time frame is. I know that is something that your committee and others have been having views on. The second issue is just that what we have been doing particularly in Glasgow is that every fort might be looking at the financial projections, because the other factors are, what do you then have to meet in the gap? The gap, I do not think, is a really difficult to identify. It is about how do you meet the gap is the key challenge. We are operating to the assumption that we are in a similar ballpark figure of a 4 per cent cut for Scottish local authorities—in some cases, 5 per cent—for some councils. We just assume that we are getting an annual cut. That is just the burden that we have in Glasgow. Thank you very much. Essentially, what we want to do is to work through that about what do we then do in terms of the balance of what you have on reserve, what you can generate via income and what kind of transformation you have. The key point is that Michael is identified as the flexibility to allow us to get to that in years 2 and 3 by, in the sense, identifying the way in which we meet change services. I will be blunt with you, but there will be cases in the next three years in Scotland that councils will have to sit down and think that there might be some services that they can no longer provide to the level that would be expected by any taxpayer. That is a real challenge. Anybody in Government has to wake up to that, and if I hear again that this is unmodest changes that will not really impact on how we provide services, like they are kidding themselves on. We are up for that challenge. I have never shot the difficult decision in my life in terms of the roles that I have played at local government and in national government, but we need to be honest with each other about the parameters that we are operating with. That is something that we need to deal with. In terms of decisions about flexibility of whether people wish to use or not use the potential for the 3 per cent for local government, that is a balance that has to be determined locally in my view in relation to what you think is acceptable locally or what you think is worthwhile locally. There is a massive gap between that, as I said earlier, and the reality of the budgets that many local authorities, not just in the SLGP, are facing. I will take Mr Simpson back in a second. Any other witnesses want to add anything to that? Yes, Mr Russell. I was just reiterating the echo of some of the earlier comments. Certainly, from my point of view, the advice and guidance to members at Renfrewshire and, I think, most local authorities are same in terms of the development of medium-term financial planning, as well as the more immediate budgets that we are moving forward into 2017-18. There is obviously a whole range of uncertainties that councils are dealing with in relation to that, both in the medium term and also in the short term. I think that it is about recognising that there is a continual process, and I think that it is councillor Macavity. It is about getting in Glasgow, and it will be very similar, I am sure, across all councils, of continually refining what you are expecting the position to be the following year. I think that one of the big challenges is trying to come to a view as early as possible of what that is going to be, and the position on grant is only one of those areas that feeds into that, but getting as early sight as possible of what that is and what conditions are associated with it is to allow councils to help to manage their budget process in a way that is, I think, important to say, sustainable in terms of service decisions and not in a position, particularly in 2016-17, where there is information and clarity around the budget being received very late in placing councils in a position where they are having to set budgets at very short notice in terms of the clarity over the grant position. Thank you very much. Do you want to come back in on that, Mr Simpson? Yes. You mentioned the frustration about being told how many teachers to employ, were there other areas that you would like restrictions to be removed? Anyone? The three per cent is clearly a restriction. Clearly, councils can judge to freeze council tax or increase it. They should have latitude to do that. In relation to the health and social care moneys, that should be routed directly to local authorities. That would be the view of local authorities in terms of others. I will allow others to think of some, and I am sure that I can come back with some others. Attainment is another one. I can say more about that, but I will let others come in. I think that Mr Simpson has additional things that you would like flexibility on. I think that the things that we have had on the record are the commitment to have to maintain teacher numbers and the capric of council tax at 3 per cent are true things that we are raising. It is an opportunity really for witnesses to put on the record any additional flexibilities that they would like, and then I will take Ruth Maguire in after that, if you are finished at this point. Discretion retaxation would be another, chair. Discretion retaxation would be another. I will set aside for the moment the discretion over local taxation. That has been discussed at an earlier point and this little point now returning to it. What I see is a degree of confusion between prescriptive certainty aspired to by the centre, by which I mean the Scottish Government, to some extent the Scottish Parliament, and unpredictable flexibility that is being proposed. So, for example, the cap on teacher numbers strikes me as being a particularly heavy-handed exercise of central control. Once you get down to the level of what Argyn and Bute does and whether it has one or two teachers, the consequence of that, as I observe in some councils, not necessarily represented here, is rather, as we know the consequence to have been in what is now Police Scotland, which is staffing cuts are made in other aspects of the total workforce rather than uniformed offices. I wanted to turn to the preschool education proposals, for example, where what I see is considerable confusion that makes planning ahead remarkably difficult, because if there is an ambition and a wish to extend the hours available to those who have preschool children, in effect, given the pattern that operates, I think, throughout Scotland, as far as I can judge throughout Scotland, that requires a doubling of the preschool estate. There just aren't enough rooms to get wee bodies into in morning and afternoon, because at the moment, one lock go in in the morning and the other lock go in in the afternoon. The response that is being debated and suggested and whether modelled on it, I don't know, involves, once seems to me, the equivalent of a preschool voucher, which could be issued in some ways. I think that illustrates a broader conceptual discussion about how we are organising the provision of education before the statutory school age. If I tie this into some of the earlier questions, I think that that has implications for what I think is the very good work that Spice have put in front of you by colleagues of mine at Glasgow and Harriet Watt in terms of pro-rich and pro-poor services. I would challenge some of that. For example, arguably, secondary education, certainly in the upper years, pro-rich is the wrong term, but it's certainly not pro-poor. When you have a very high proportion of kids in lower socioeconomic groups leaving school at 16, the money poured into sixth year and upper six is by no means pro-poor. Equally in terms of how you judge that and how you deal with that, that's a long-term phenomenon. Nobody imagines we're going to close the attainment gap, which I guess we would all think is desirable in anything less than 10 to 15 years, because those kids who are not benefiting from education at the moment are already in the system, and turning that round is a long-term process. That's why I would argue for the longer-term planning that George Black and the two councillors here have suggested to you. I would have thought that modelling budgets, now if the gloomy reality given the circumstances we face is of a continuous reduction in central government to support to local government, which I think it is, certainly over the next three to four years, then government should have the courage to indicate that and say you should plan in 17, 18 and 18, 19 and 19, 20 to have a reduction of one to one and a half percent in your budgets, rather than the modelling that is sometimes attempted, which is service directors are asked to, what would you do if your budget was reduced by 10%, what would you do next year? And invariably they bring out the used to be called shroud waving options so everybody goes oh no we're not doing that. Whereas a sustained planning exercise would have a far smaller variation because the Bank of England called fan graphs show that over the past X years the variation has been continuous but it's been relatively small year by year. I know there are exceptions Michael, so don't rebut me on that one. The question was of course in relation to flexibility and thank you that was very helpful. You mentioned preschool childcare commitments. Obviously it was reported recently that in relation to moneys made available in the last three years for preschool childcare was £329 million to local authorities but the expenditure was £189 million which would be a shortfall of £140 million of the moneys that were earmarked. I have to say I'm not criticising that or otherwise, I'm merely making the point does that show a flexibility that exists because you could make the political point and say where's that money going. The Glasgow figure Councillor McAfee to give £15 million in the last financial year for childcare commitments and £9.1 million was unspent, 60% of that provision. That could just be good management of resources and redeploying that money elsewhere but it's quite hard when you look at the numbers to pick some of that up. Is that an example of flexibility that already appears in the system or does it want to come back on in relation to those numbers? I can't think of the right phrase. There is little evidence Scotland-wide that based on our current model of preschool provision that there are parents queuing up with children unable to get them in. They might like to have a different provision and I think that part of our current debate that I find I think will be very hard for any of you and when I say you, I mean you and you too, to manage is that we have overemphasised the available flexibility that is remotely possible. I've listened to people on the radio, I've read in BBC reports parents talking about well you know I'd really rather take my daughter to nursery school at eight o'clock and pick her up at four in the afternoon. Imagine if you said that about primary school people would just say well that's not how the game works you know it's a different model so I think that underspend is a reflection I don't think it's a deliberate starvation of the system but given the way we operate at the moment and that is a broadly accepted way of operating across all Scotland's authorities three hours ten minutes morning three hours ten minutes afternoon um it's it's a mismatch between what we do under current regimes and how that is funded but the gap between making the preschool day the same as the primary school day is a big one to bridge an impossible to bridge in a year or two years in my judgment I may be wrong in this these folk here have got prefab units. I'm slightly careful I'm conscious we're not the education committee with the local community committee and I'd love to have that conversation as well as something I'm passionate about and keep the work in partnership with the local authority on it as well it was it was more about funds were identified there was a budget line for them and the last three years 140 million pounds of that budget line wasn't spent on that outcome but the service was still delivered that could just be good management of the system and that money could be used elsewhere we're looking at the budget so it's a reasonable question to to ask. Councillor Cook I think it's important to remember of course that that assessment of the figures came heavily caveated so that's the first thing I would say the second thing I would say is by its very nature it goes back to the whole proposition about planning long-term planning medium-term planning but the raise time it takes time to feed that resource into the system is another aspect of this a third aspect of it I suggest is that actually getting the two-year-olds into the provision which is directed towards them has been something of a challenge so I think there are three propositions there which provide an element of challenge to to a simple easy conclusion in relation to the underspend as you described it. Okay but the money was spent I assume the money was spent it just wasn't spent on that Ms Flanagan. Well that I think these figures do need to be challenged and I think they are being looked at and whilst there was seemed to be an overall underspend in that funding we could equally give other examples whether that gave some flexibility we could equally give other examples of areas of funding that were underfunded for example in Argyll and Bute Council the Children and Young Persons act and certainly the through care and after care for us has been severely underfunded so there's lots of examples on the other side. Yeah and we don't have the Government viewing whether they would agree with that or not I wasn't actually criticising the underspend and please come back and challenge those figures and talk the question was about flexibility and monies that were identified not all of it was spent and local authorities weren't able to deploy it elsewhere I was teasing up where the flexibilities exist I'm indulging myself as chair I'll move to another colleague Mr Gibson. Yeah thank you very much convener firstly I would say that a lot of the evidence you're giving today gives us a lot of food for thought in terms of the questions myself and indeed our colleagues will be putting to Scottish ministers I think there's a lot of really emotional and very passionate kind of you know responses that we've had today but I want to just touch on George Black's paper when he says and I quote by giving such a high spending priority to health adult social care and to police it falls other areas of spend had to be a greater proportionate share of the cuts and the Scottish you know Dell actually suffered a real terms decrease of 1.4 percent and I mean that's really the elephant in the room here obviously the Scottish Government has itself had a reduction in its allocation from Westminster the proposal was put forward at the Scottish election to raise taxes was rejected by the electorate so really although everyone you know from the local government side and there's great sympathy in this committee for it would like to see more money spent on local government how do we actually square that circle because clearly political parties are asking for more money we spent in local government and to free up you know restrictions on teacher numbers will be the first to denounce the Scottish Government for you know switching money from the NHS to local government and be the first to denounce the Scottish Government if they relax teacher numbers and teacher numbers falls how do we actually square that and the other point I would like to to to raise at this moment as well as the funding formula I'm not really seeing much about funding formulas I remember we used to debate and discuss funding formulas ad nauseam I mean it's quite interesting that for example if we look at what's happened in Glasgow since devolution for example when we deliver liberal labour coalition Glasgow started off with about 130 per cent of Scottish average in terms of capital resource by the time the SNP came in that was down to about 120 20 percent of the average and it's now 114 per cent so there's been significant alterations in terms of how money's been allocated but I've not really heard anything about that so I just wonder if you can touch on some of those matters thank you mr Gibson who'd like to come in on that one mr black touch on the point that was raised about the report a simple point was just simply to make that there is a fixed cake and that the more protection you give to priority services the greater pressure it puts on other services so that's a political choice that was only point was trying to make there there's no magic bullet as to how you can get through the next few years without addressing the severe financial pressures that that we face and I mentioned earlier and colleagues have raised again but in terms of helping to manage that if local authorities had three-year budgets they're able to go into their transformation programmes with much more confidence that they've got the right envelope there and they're in a better position to explain to the public why they're going through that process so my point is that we can't change the numbers but we can actually make the process much more transparent to the public and easier for councils to implement good point I'll take it if it's specific to that response yeah it was just specific to that point of course it relies on the Scottish Government always knowing exactly where its budget is going to be allocated from Westminster year on year it doesn't always know that so sometimes it can actually have a longer-term budget but not every year because of spending reviews and things so if I just reply there will always be uncertainty about the overall envelope but in the same way that as you heard earlier that councils don't get the heads up about what their grant is going to be and they go ahead with their financial planning I can't see why the Scottish Government can't give indicative figures to councils to allow them to carry out that planning and can you just come in some of that yeah yes please um I absolutely agree with what george black has said about this i'm in the happy position of not being a government minister and nor am I a party politician so i'm quite happy to make criticism that I think where they're appropriate on behalf of cozzler obviously last year there was actually a cash increase in relation to the money that Scottish Government received um that there could potentially be a cash increase this year the the important thing to bear in mind is that this is partly a consequence of what Scottish government has done in terms of its own spending power so actually even though the resource may not be significantly different and there can be argument about that I would accept a position that there are pressures in the system there from a Scottish Government perspective but the simple fact is they have reduced their spending power by the decisions that they have made so for example if you have free tuition fees if you have free prescriptions if you have teacher numbers if you have police numbers these are all restrictions in the system all of which require resource which means that you have less flexibility in other places now you may say to me and this is perfectly legitimate that you absolutely support each of those policy positions but the simple consequence of that is that you have less flexibility in other places so it's simply an augmentation really of the point that mr black was making and the simple fact is as we've said earlier if you lock up resource in relation to teacher numbers then you simply can't deliver some of the things that you might want to deliver in terms of classroom support classroom assistance things of that nature okay thank you any other witnesses want to add to some of that don't you want to come back in that Mr Griesan or wants to talk about the funding formula in terms of the of our councillor Cook's points I understand what he's saying but obviously these things were voted on by the electorate and there's a mandate for these decisions I'm just wondering in terms of the evidence that we took from the accounts commission they were they they they actually expressed some concern that given the pressures that local government actually faces there's not enough sharing of knowledge experience best practice in terms of optimising service delivery in that a service in one part of the country could be delivered for a significant different cost at the same quality the ascertain and so there is still much more room in the system regardless of what the budget is to to deliver efficiencies whether the budget's going up or down how would you how would you want to respond to that not specifically to you councillor Cook just the panel anyone who wants to speak he's indicated cows loving me interview I'd be nodding to say I agree with you my observation is that various local authorities could gain some do and in some particular services there is a better record of cross authority discussion about how do we do this what is the consequence that tends to be actually quite long established so for example in what we now generally call consumer protection environmental health there are networks of sharing which are pretty fast and instantaneous given the nature of the demands placed on those those particular services in other areas I'm struck by the extent to which I wouldn't name organisations or people here but I've heard people say oh no we can't you know we can't learn from them what that too small or too big but I think that could be far more and where it happens and it is encouraged by councillor I'm aware of that and Frank I'm not sure that the polite term right um it has appears to approve beneficial. I think that that has to be the direction of travel for local authorities that where we can part of the Christy commission policies was worth to collaborate on a series of ways to try and maximise the best use of public resources given that we are facing a combination of reduced budgets now they're all political choices whether it's at the UK or Scottish level I mean there's still many political choices that individual parliamentarians can make and bring pressure to the respective political parties to to define that so I don't think an absolute position today necessarily is the exact same position in the years time politics has to be very fluid. What we will guarantee is SLGP of Ask Fraser of Allander whose report on the issues the impact of the European Union vote has been welcomed by the Government we've asked Fraser of Allander to look at the grant distribution so we're happy to share that with the with the committee and due course I think we've benefited to everybody in the final debate. I think the third big challenge for us over the next three, five, ten years is that those authorities because there's now a number of city deals across Scotland about how do we use that partnership that's in the city deal structures with each other to try and combine and crack that big issue. Coevena which is capital monies and revenue spend and trying to make sure there's a kind of better partnership between those and again that's something that we want to develop further itself. Okay. Okay, thank you Chris McVity. Chris, did you want to come in? Yes, really just I think adding to what others have said I think Richard's absolutely right that there is a process underway here so some of these developments are clearly taking place in terms of shared best practice, shared service provision things of that nature. Is there more to be done there? Absolutely, there's always more to be done. Efficiencies can be eked out of the system but to believe that is the answer is to misunderstand the nature of the problem. I think that's the issue. The level of difficulty that we're now dealing with is of a completely different order from what we've seen before. The other thing is I sometimes think that there is a trap in terms of how people perceive shared services. They routinely imagine that shared services is some kind of silver bullet. Yes, it has a part to play but it plainly isn't a silver bullet particularly in the context that we're talking about and actually one thing I think we've been seeking to prevail upon with Scottish Government and I'd emphasise today is that you need a whole systems approach here. This is not simply about public sector reform within the confines of local government. This needs to be looking at public sector reform right across the breadth of the public sector and it's only when you engage on that scale will you be able to respond to the scale of the difficulty that we've got. Scottish Government, as we ourselves are keen to do, are constantly talking about communities. We need a much more locality based premise underpinning our public sector reform approach and I think that that is something that's really still in development. The tortured process to some extent of community planning partnerships is indicative I think of some of the challenges there. Just before, I'll take a few of your final points but Mr Russell had said he wanted to come in and then yeah. Thanks chair. Just a point to make for the committee I think it's just that I need to recognise that councils have obviously been on a journey probably 2011-12 in delivering significant savings and through that time certainly to Renshire and again I think it will be very similar across other local authorities a big drive to deliver efficiency savings through that process and protect the delivery of front line services and certainly Renshire participated in a Joseph Ryan T foundation study that was published in March 2015 and that concluded looking at the range of savings that Renshire had made of 80% of those had been delivered through efficiencies predominantly in back office but also how we deliver in front line services. I think the point I would make is that that savings journey has been significant not just to deal with the reduction in grant over that period to deal with the very significant cost pressures but certainly for Renshire has been the biggest driver of savings requirement. That challenge is becoming more and more difficult to squeeze more and more efficiencies out of the system and to protect front line services and I think it's just about recognising I think local government generally has got a very good track record in delivering efficiencies and that's about recognising that that's becoming more difficult to do and more difficult to protect front line services moving forward and what we anticipate to be a further difficult period for local government. I personally am in favour of wholesale public sector reform not just local government, more radical than the Scottish Government I believe are going to be proposing soon but in terms of the issue I wasn't just talking about shared services I was also talking about how local authorities can look and learn from each other for in-house services that may be entirely for one local authority but seem to be delivered more effectively and efficiently elsewhere without any loss at the front line and so I don't want you just to think I'm talking about shared services which are going to be very complex and are not always appropriate. Indeed, I absolutely... I think really just to pick up the point around shared services and councils working together I think there are some really good examples across the country where services are working together but it's not necessarily a quick process to get there and it doesn't always generate the efficiencies that you think it might do. What it does do is gives you some additional resilience across the country but local government speaking on behalf of souls very much up for doing things differently and lots of good examples of transformation where councils are working together. I quite appreciate that you weren't simply referring to shared services. You're also right that it's extremely important that local authorities learn from the best practice of others. I sit on the local government benchmarking framework board and clearly benchmarking is an important aspect of how you drive change so I've been here answering questions about the benchmarking process. Previously, the way I see benchmarking quite simply is that it's principally a tool for managers and senior members and local authorities to understand the difference in service provision. Why is that local authority much more efficient in its deployment of that service than we are getting to understand that and then really delivering benefit as a result of that? I think that that is one of the principle tools that benchmarking represents for us and of course what's extremely important here are what are called the family groups within the benchmarking process. So actually as far as it's possible you're trying to compare like with like in terms of local authority, population density, topography etc etc but it's an extremely useful tool. I think the inference that we draw from your question is a more to be done absolutely. I think we agree that there is more to be done but I think what we're saying to you quite gently also is that it's only a small part of the answer that we now need to find to the challenges that we face. Any other witnesses who want to follow up on that? I was going to respond to Mr Gibson. Obviously you need to deal with the territory that's in front of you so for an example we're no longer obviously a landlord in terms of housing which is a big decision. I know that Mr Gibson was involved in sort of debate and discussion with myself over the years and the previous roles that we had on the council but we're now in a situation where we now are looking at a substantial landlord in the city Glasgow Housing Association who run the housing for half the tenants in the city. So we are now in a discussion with a serious joint venture development to try and maximise the resources which also has a social benefit in terms of the apprenticeship programme that we've articulated for a long time and combined with the real opportunity for the supported workplace to be one of the best if it is not already one of the best in the UK. So by putting together two big institutions, the in-house building repairs team and the GHA, knowing that the GHA has got access to bonds and other things for capital investment but then maximising opportunities to share expertise and knowledge we're actually growing something that is of benefit to the public sector. So the massive challenge I'll conclude on this point in terms of the integrated joint boards, it will take a long time to work through both the cultural differences between local government and health boards which we all have encountered as elected members over the years but equally you know the kind of challenges that local governments had to face about how to make savings is of a different style and proportion than perhaps has always been the case in health. So health is going to have to put back on the table that my opinion part of your debate is about where do you find those savings and how do you find those savings is not just about exiting from a delivery of certain services is sometimes going to be the case. It's actually about demonstrating if you invest in early intervention strategies, which is clearly a priority of the Government, how do we actually pull that together via the partnerships to the public and quasi-private sector. Okay, thank you. Anything want to fill up on Mr Gibson before we move on to the next slide? I'm glad that the council might have touched on prevention because I think that it's very important. I think it's something we can't take our eyes off, you know, if we're going to be able to deliver. And I'll resist the temptation of listing other social housing providers in the north of the city that I know you are working in partnership to deliver real, hopefully real progress. Andy Wightman. Thank you, convener. I just want to ask a broad question about the balance of funding. Clearly one or two of you have made reference to the fact that you'd like more flexibility about how much revenue councils can raise themselves and I think we're coming off the back of a historic low on that about 12 per cent. Last year the council tax multipliers will change the caps now 3 per cent so there'll be a little bit of an increase. But I'm just wondering whether in the context of all of this, whether there's any argument for the equivalent of the fiscal framework that the UK Government and the Scottish Government have negotiated whereby you have a devolved administration with limited tax powers, which are being expanded of course, but the relationship between how it deploys those tax powers and the impact that that has on the block grant is subject to a set of rules that have been negotiated now, regardless of whether you agree with those rules or whatever. There is a framework in which both parties understand the implications of the actions of the other. Would there be any benefit in having a similar framework for local governments so that whether you agree or disagree with the actions of government and how much money it gives you or whatever, at least you know what the implications will be in the future? On that particular question, I know that our council colleagues have brought experts with them in relation to helping with that. That one, isn't it? Perhaps not on that issue though. Obviously, for part of the theatre of debate, we used to have parity of esteem debates in the Parliament between local government and national government and also we had a historic record of that, which was often a feature of the First Minister's question debates when I was here in a previous role. I think that the key element for us as councils is that my personal view on this, in terms of the experience that I have had both at local government and ministerial positions, is that when we had the Ardborthnot review on health spend, that was capable of being done, even though there was some anguish about some of it because it was broadly within growth criteria in terms of the resources were broadly given up. The challenge for us right now is because of the nature of public spending and the likely figures that we have identified already in the submissions. There is a real shift on that and it can be given to the levels of the partnership where there is a level of figures of accountability that councils have a greater capacity raise at their local level compared to the direction of the national government. That is a good discussion for tutorials and seminars. I do not know if it is shifting much in terms of the actual political process because it seems to me quite glacial in the last few years in terms of how we actually shift those things. My view would be that I would much prefer to have, as we were talking about earlier, a much clearer picture around indicative figures because we are all big boys and girls. We can cope with hard decisions and hard realities but just give us a bit of time and space to work with you. Any recommendation that could come from here from the committee would be to explore and find a territory to have that rather than shouting over the garden fence to each other about who has left some stuff in their garden compared to anybody else? I think that it is a good question about how you might get greater proportionality and less arbitrariness in terms of the decision making and how the system currently works. For example, in terms of the commission on strengthening local democracy, which was something that COSLA commissioned, it had a look at the trajectory of local government revenue-raising and expenditure over the course of time. There is a clear picture in Scotland historically, which accelerated after the Second World War. I know that you will be aware of that but, quite simply, the level of revenue spent by local authorities, which they themselves raised, has dropped massively. The most recent commission in relation to local taxation set up by Scottish Government clearly looked at the vexed issue of council tax. Council tax provides around about 11 per cent, or that was the position, certainly, at the time that commission reported 11 per cent of the revenue spent by local authorities. The aspiration in the commission on strengthening local democracy was actually to see much greater financial autonomy on the part of local government, recognising its democratic mandate, and its aspiration was to see something moving much more closely to a 50-50 balance in terms of grant revenue and raised revenue in terms of local authorities having the autonomy to do that. In answer, quite simply to the question, would some kind of framework help here? I think it would. It would certainly assist, as Frank has intimated, with things like parity of esteem. The simple reality—this will sound slightly cheeky—but the simple reality is matters stand. All of the things that we are currently looking at are matters of decision, essentially by others, in which we are simply the respondent. That is true for the most part. I think that the view of the commission on strengthening local democracy, which embraced more than simply local government—obviously, it embraced a range of stakeholders across civic Scotland—was to say, actually, we need to look at this, we need a much better balance in relation to these things, and that democratic mandate at local level is important, but it needs to be accountable, and it needs to be autonomous to some extent. There will always need to be some balance in the system afforded by Central Grant to take out some of the obvious inequalities, but that is something where we can create a much better model to approach these issues. As you know, there was a broad proposal by the Scottish Government to assign a proportion of income tax revenues to local government based on the tax take. If that proposal was to be taken forward, it would seem to me that it is important that local authorities are given the powers to stimulate economic growth in their area to increase the tax take. At the moment, some of those powers will lie with agencies such as Scottish Enterprise and Skills Development Scotland. If there was to be a proposal as outlined by the Scottish Government, I think that there are implications as to whether some of the powers held by those organisations should flow down, not necessarily to individual authorities, but perhaps to groups of authorities, because a lot of the economic development initiatives will not be peculiar or unique to one council geographical area, but will be wider—for example, the Clyde valley—so that it might be more appropriate to look at the powers being organised on that basis. I am going to give Mr White an opportunity to come back if he wishes. I do need to move on, because Ruth Davidson has been very patient. Ruth Davidson, why don't you finish? Okay, thank you, convener. We have received written evidence on reserves, and I am just keen to hear a little bit more from the panel about what appropriate levels of reserves would be for local authorities—obviously, they vary greatly—and also how those reserves could be utilised to support whether it is savings or changes. Okay, who would like to? If it is appropriate, the director of finance could be. I have a view of what you do with reserves, but I might take the call answer on that, which is quite useful. We did not like to speak, Mr Johnson, because we were trying to give due place to the elected representatives at Morag Johnson. Thank you, chair. A couple of points on reserves. Certainly in Glasgow's history, we have tried to avoid using reserves as a way to meet our revenue expenditure, for reasons that I am sure are obvious to the committee on sustainability. I think that what has happened, though most recently, and certainly in the 16-17 budget, was that the scale of reduction, which I think was unexpected at the level that was received, did result in the council having to look to its reserves because it is statuulately obliged to set a budget before 8 March. Therefore, to try and extend our transformation programme and our savings in such a short period of time just meant that that was not possible, and we actually had to use some one-offs in 16-17 in order to allow us to set our budget and allow our transformation programme to catch up. The second thing around reserves is just simply the scale of transformation that we are having to undertake. It was in Mr Black's paper that we recognised that those things do not happen quickly. They can take two to three years, and there can be some uncertainty. Reserves are much more important now in terms of underpinning those levels of transformation. We know that there can be risks in delivering those things, and our reserves are important to us just to allow us to bridge that gap if things such as technology take longer than anticipated to implement. That is helpful. Mr Russell? I would just echo what Morag has just said. We have a financial planning principle of not relying on reserves, if at all possible, to underpin our budget. Clearly, it is not a sustainable position over the medium term. However, it is an important financial planning tool. Over the medium term, to support change, to support the delivery of projects, to span a number of years in terms of being able to earmark resources, to support the delivery of those projects and initiatives over a medium term period. I think that there are often difficulties in messaging that with the public and the media and how that is played out in relation to the level of reserves that councils sometimes hold, certainly in terms of the unallocated reserves, if you like, which are there to help to manage risks and unforeseen risks that may emerge or retain at less than 2 per cent of the council's budget, so that they are held at a prudent but minimal level. It is important to recognise that role of reserves in terms of supporting budget and supporting addressing the financial challenge on a sustainable basis. Reserves are certainly not the answer. Do you want to add anything in relation to the use of reserves? Again, I think that it is an echo of what has already been said. The Scottish Borders Council is my council exactly the same kind of process as has been described. Essentially, the use of reserves in order or as part of a pre-planned programme of trying to deliver transformation in certain areas. In terms of how we construct a reserve, possibly a slight difference from some other councils in relation to that, which it is maybe worth remarking on in part, previously we used to do it on the basis of 2 per cent of a revenue spend. We have moved to a position that is basically an assessment of total risk and the likelihood of risk accrual and then worked out how much resource we need to set aside in order to deal with that. It is a slightly different approach, but as everybody has said, the underlying proposition here is that you can use that stuff and the recent rise in reserve positions is indicative of that, but it is not ultimately sustainable. You can only spend the money once. Kirsty Flanagan and Kirsty McAfee have indicated that they wish to add to this, and Ruth will take you back in to follow up on some of that, if you want. Like others have indicated, we would not advocate the use of reserves to support savings or on-going expenditure, because it can only be used once. It is worth pointing out that we have had to use it to support the savings in terms of paying for redundancy costs, and that is depleting our use of reserves. We also have set aside our reserves to support the economy, and Argyll and Bute are our main priorities in trying to boost the economy. We have put significant investment into regenerating our area, and we also use it for transformation. However, the levels of reserves generally are reducing, and as we are moving into a time of continued decline in the Scottish Government funding, it is becoming more and more difficult to use reserves for that, because you may want to keep it for risk purposes. Last year, we increased our reserves from 1.5 per cent to 2 per cent, and that was based on the risk. However, like other authorities, we set it based on our own criteria in our own area. The essential theme that we would have is that this is a structural issue, and reserves are there for crisis situations or periods of uncertainty. We should not confuse the two now. I am only saying that because Morag is absolutely rigorous whenever politicians are asking about most of the reserve figure at the moment. I want to speak there earlier because she is absolutely scrupulous at reminding you of that, and she learned at the altar of George Black in respect to that about making sure that the city council understands the reality of financial frameworks. Two things I would say is that my mother used to say to me, you want to run a minodge like this, so we really do not want to do a situation around reserves. It is about the structural debate that we need to have with you in partnership to address how we actually get a level of resources in and meet the demand. What has not been overstated yet is that there are emerging demands in terms of the nature of our society that has an impact on what we do. There are expectations in terms of wages and the commitment that we have all made to the living wage that will be the expected norm in the public sector, and all those have consequences in terms of what we spend the money on. Can Councillor McAfee say, just for those watching proceedings that might not know Mr Black's former job as chief executive of Glasgow City Council, I am not sure if he does or does not have an alter, perhaps he could turn a laugh after today's meeting, but do you put that on the record of those watching? Ruth Maguire. I know that Mr Gibson wanted to follow up on some of that. George is a bit like Clark Kent, where he takes off his moustache. You do not realise it is George Black. Obviously, the reserves are now about £1.89 billion in Scotland. It is counterintuitive that a time in council budgets are reducing reserves have increased by 50 per cent in the last five years, and Kirsty Flanagan talked about increasing her gael and buttes. It almost seems as if the more pressure on local government, the more the reserves seem to increase, and that just seems a bit odd. Also, when you are arguing for additional resources from the Scottish Government, it gives the Scottish Government a lever to say, but look at the size of the reserves. What is interesting is that if every council had the same proportional reserves, it would understand the argument. However, we have seen figures that are huge differential across the Scottish local government. One might say that one local authority has 25 per cent reserves and another may have 9 per cent reserves. It becomes a difficult one, from your perspective, to argue when you realise that there is no consensus on the optimum level of reserves and in what circumstances those might be drawn down in our any day. We will take Moray Johnson back in to clarify some of the matters around reserves. If it is helpful, I can speak about Glasgow's position, because we made quite a big contribution to our reserves in 2015-16, but that was absolutely in recognition that we started some of our transformation programmes earlier than this time last year, in anticipation of what the settlement would be in 2016-17. We had some unanticipated benefits when we set our budget for 2015-16, and that is certainly why in Glasgow's case the level of reserves increased, as I have indicated, they will be getting used from now on. The only other point that I would make is that, sometimes, when reserves are reported, it is the difference between ear-march reserves and onion-march reserves, and certainly in Glasgow's case, for example, in the lead-up to the Commonwealth Games, and now in the lead-up to the European Championships, we use reserves as a way to hold the money that we are contributing to those types of events, and sometimes that can skew the figures. Thank you very much. Essentially, what I was going to say is that there is a big difference between ear-marked reserves and unallocated reserves. My local authority, I cannot remember the figures off-hand, I do not have the financial plan with me, but if you look at the total reserve, it is significantly greater than the unallocated element. The unallocated element is something like £67 million, but, of course, even in terms of what local authorities include within the overall reserve head, it may be slightly different in terms of what they batch up as all of those propositions. With an hour reserve, you will have things like the capital fund, you will have a fund that deals with early retirement, voluntary severance, redundancy, things of that nature. All of those things are bracketed up. If some of the general information is put out, what you see is a headline figure, you think, my God, that has gone up astronomically, but in terms of underlying unallocated reserves that are there to deal with shocks and contingencies, I think that we are in a slightly different position. It is true, however, that local authorities are planning ahead. Part of the thought process, which I am sure underpins some of the increase that you are looking at, is that they are thinking about reduction in headcount. How are you going to fund that? You need to set aside monies to do that. Where are you going to place that? It might sit in the reserve. They are looking at other shocks to the system, and they may be planning, as we have described earlier, in relation to the careful use of some reserved tunderpin elements of revenue until they can create greater turnaround in their skin. There is a whole series of things here, and I think that it is a much more complex picture than simply looking at headline reserves. Reserves are very much a part of the financial and strategic planning that any local authority goes into. However, the whole aspect of the way that local government is treated by national government can sometimes create that confusion and disruption that you have to then think about putting more aside. Without having that, there is an uncertainty that continues to grow. Would that be another reason that would be used and could be moved forward because of that uncertainty and because of that disruption that might be created? I think that there are two things that I would say to that. It is clearly matters of unpredictability or unheralded decision making or late decision making impacts on the abilities of local authorities to plan ahead. Not being able to plan ahead is injurious to service provision and supporting those communities who are important to Scottish Government and to us. I think that there are a series of challenges in relation to that. What is the other aspect of your question? I will let me think a bit further about the question. I will let someone else come in. Would anyone else like to come in? It is not a bigotry, but you know... If you want to come back in later, councillor Cook, that is fine, but perhaps we will... I had another thought in my head, but it will come back to me. It happens to me all the time, do not worry about that. It is a sign of age. Mr Simpson. Thank you. We heard earlier that South Lanarkshire Council is going to freeze council tax. They are not choosing to use the option of increasing it by up to 3%. Do we have any feeling on what other councils are going to do? I am looking at you, councillor Macavita. You lead a council, but we have representatives from both the main council groups here. Is an MSP for Glasgow, if you want to give it exclusive to... No, no, I have a very detailed discussion with members of the administration before I arrive at that conclusion. I also think that the safe answer to that is really to say that councils are waiting to see what the settlement is before they make an ultimate judgment in relation to that. I think that the slightly challenging proposition rhetorically is if we are saying that the financial context is challenging, not exploiting even that marginal opportunity that we have afforded by the additional 3% does seem slightly curious, but these things need to be looked in the round. What I would absolutely defend to the Hilt is the ability of all local authorities to make the judgment themselves based on the considerations that they regard as appropriate. I would not denigrate any council for deciding that it is going to freeze council tax, it makes that judgment, it will then be measured by that judgment ultimately, and that is how it should be. If someone else chooses to increase it, that is a matter that they can put to the democratic vote and they can get a response back in relation to that. I think that the important aspect of that is having the freedom locally to make the decision and then being accountable for it. Before I ask the other question, colleagues, am I right to come in? I will go very briefly, Mr Gibson. No, I am just thinking out loud here. Is it curious that South Lanarkshire has actually done this before the indication of the settlement? Scottish ministers might think, well, maybe a local government is not doing so badly for a decision that can be made, I do not think that it has been very helpful to the process personally. I think that the leader of South Lanarkshire could quite rightly say that he is only fulfilling a manifesto commitment, which is maybe something that members of the Government would consider us sometimes as well. I suspect that, without going down that road, we might have come full circle counter-marcovite. We started off the question where we were probing information in relation to the £250 million health and social care integration fund, which will help pressures in terms of wages at a local authority level and it will help pressures in social work. We were trying to track some of that because it is not reflected in the revenue settlement. I will take you in, councillor Cook. We also wanted to track the flexibility that local authorities had, which is why we asked you about the £140 million underspend in three years in relation to money that is given to you by the Scottish Government in relation to fill your commitments on childcare that you held on to and then used elsewhere within local government, and we were asking you about increasing reserves. We know that, despite all that, we still know that times are challenging for local authorities. Of course we do, but there is always a feeling—I was sitting in this committee back in 2007, back in the day, a long time ago now—that local authorities put the worst-case scenario to committees like this, and Governments perhaps put the best-case scenario to committees like this. What we are trying to do is get beneath some of the numbers to scrutinise the numbers irrespective of what the budget settlement is, so my appeal for you to be would be when we are looking to scrutinise the budget settlement, yes, that revenue grant, yes, the challenges for local authorities, but also those other moneys that are coming into the system but not in control of local authorities that you think we should be looking at. Of course we might want to say that local authorities should or should not have those, but we need to know where those pots of cash are. The £100 million attainment fund was cited by Councillor Cook. I have mentioned the £250 million health and social integration fund, which will meet needs in local authority areas but not in control of local authority, so I would ask you whether there are other pots of cash out there that you think we should be looking at. We should be examining and scrutinising as part of our budget scrutiny. Yes, a couple of points I wanted to come back in. Remembering the other point that I was going to make because it is now relevant again is that local authorities are really good at this stuff. We say constantly that the situation is seriously calamitous, but local authorities are extremely good at eking out a position in relation to the most challenging circumstances, and I think that you need to understand that. I am sure that you do understand that. The number of times I have seen a rhetorical approach from local authorities saying that it was challenging ever budget, and then actually because local authorities have done their damnedest to mitigate the effects of that on their communities, the public reaction has been comparatively light. That applies in relation to a whole series of circumstances, I think, not least in relation to job losses. There is an assessment, certainly by the trade union since 2011, that if the 50,000 jobs lost in the public sector in Scotland, 40,000 of those have gone out of local government. There is obviously a sharp contrast there with the situation in the Scottish Government-controlled health service, where different rules apply in relation to compulsory redundancy. However, I am sure that across the country, every one of those 32 local authorities is absolutely determined, as far as they possibly can, to guard against effects like the loss of headcount, as far as they reasonably can, particularly where that is going to have a negative socioeconomic impact in relation to that local area. The other thing that I wanted to come on to was just what you were saying about the living wage and the attenuation of wage pressures I take it this is understood, but obviously the attenuation provided by the 125 million is only in relation to adult social work staff. It is not across the board, so that is where that money was directed and I think it is important to recognise that. We have got cost pressures, we have got wage inflation, we have got pension pressures in relation to teaching, we have got national insurance changes, we have got things like the apprenticeship levy bowling down the track to us. Those are general pressures across the board, not simply in relation to one discreet element of the cake. I am delighted that you remembered the point that you were going to make earlier on. You had the chance to put that on the record. Was a genuine appeal, because we are about to close this particular evidence session? Are there any other monies that you think we should be looking at that are swirling about within your local authority areas that you do not have control or direction necessary over as much as you want to, that we should be looking at as part of the budget scrutiny? You can perhaps write to us later and let us know in relation to that, because one of the key themes of our budget scrutiny is to look at the overall expenditure in a local authority area and who directs that. That may lead to the local authority signal that we should have that cash, we should be directing it, who knows where it will lead, but we want to scrutinise it, because that is our job as a committee. Mr Cooke, do you want to? I trust that I am not drawing the wrong inference here, but I think that the message from us today is loud and clear. Yes, there may be advantages to be derived from certain funds that are allocated that are not sucked up by the total cost associated with delivering those services, but that is a marginal part of the picture that we are dealing with. The picture, broadly speaking, is one of a significant financial challenge, and even that is euphemistic. As far as we are concerned, yes, you have heard the rhetoric before, but this is certainly the most challenging set of circumstances that we are going into. If you think that there are lots of efficiencies to be derived from local government services as currently configured, I do not challenge the proposition that there are efficiencies there, but the level of efficiency that we can eek out of the system is not commensurate with the level of challenge that we face, and I think that we want the committee to hear that. I think that we have heard it loud and clear, and I think that you have put it on the record earlier. That is good that you have reinforced that. Please do, councillor McVita, do you want to come in here? Obviously, in the short to medium term, that central argument is what both SLGP and COSLA wish to indicate. That is, for tournament elephants, that there is a structural issue of the allocation of budget, which you need to interrogate as members of the Parliament. The second issue, for example, is that there was a review being undertaken on the skills agenda. I was then inspecting that that would have a genuine, serious engagement with local government. I am surprised that it seems to me that we have not been in that situation as it started to unravel, but I will give a good example where I think that the medium to long-term is real potential is that if we are developing city deals where the economy is wider than the city deal that we have with our seven other partner authorities, the real capacity then to have this proliferation of skills strategies that are all over the public sector and the private sector utilising the relationship via city region, we should be looking at almost like city regional approaches to skills development that then tie in essentially to the differences in the Scottish economy, because the challenges in the west of Scotland, whereas there are a lot of similarities across the whole country, there are very distinctive characteristics, so in terms of SLGP, clearly Aberdeen, one of our partner authorities, is having to face up to the challenge of what is happening to the carbon industry in the north-east of Scotland, and therefore they need to try and have a new way of looking at their wider economy because they have had an economy that has been framed and shaped by the benefits of oil and gas, and equally in terms of the greater Glasgow in the west of Scotland member authorities and the city deal of which Renfrewshire and South Lancer are part of, that we genuinely see a kind of willingness to open up that debate that might help the public expenditure issue in the future, but also make sure we're maximising the opportunities through the kind of partnerships we're going to have to help that, so I think those are the kind of areas around that. If there are other issues that can come to mind over the next period, we'll take the invitation up, and we'll certainly respond back to you. I think that that's very helpful. It's also a very helpful place to end at Council and Macavity because the city deal clearly has various tiers of government working and partnership to deliver that, and that's a good point. Please do contact us after this meeting and write to us with any additional information that you want to provide us with. So can I thank all the witnesses for the session this morning? That concludes agenda item 1. We now move to agenda item 2, consideration of evidence, and that will be in private, so thank you everyone. Thank you.