 Gwaith have you, everyone, been in the meeting to the meeting of the local government communities committee. Can remind everyone present to turn off mobile phones as they can interfere with the sound system and as meeting papers are provided in digital format tablets you might see them being used by members through the course of the meeting. We've got a full house this morning, no apologies have been received, I'm delighted to say, and we move to agenda item one, which is an overview of local government in Scotland in 2016. We will take evidence this morning on the overview of local government Scotland 2016 from members of the Accounts Commission, and we would like to welcome Douglas Sinclair, the chair of the commission. Good morning. Ronnie Hines, the deputy chair. Good morning. Fraser McKinley, controller of audit. Kathy McGregor, from Audit Scotland, who is the audit manager. You are all very welcome, and thank you for coming along with us this morning. I have a note here saying, Douglas, that you are keen to give us an opening statement in relation to the report, and then we will follow it with questions from members, so if you could do that now, that would be great. Thank you very much, chair. Good morning. The commission welcomes the opportunity to discuss our 2016 overview report with the committee. Scotland's councils have continued to balance their budgets each year, but with the revenue funding for the current year falling by another 5% in real terms, and demand for services continuing to grow, they now have to think seriously about greater changes in the way they do things. They are now working with the NHS through the new health and social care integration joint boards, and the community empowerment act requires councils to involve local people and communities much more in local decisions, plans and services. But the scale of the challenge in 2016-17 and beyond has significantly increased. Many councils are reporting a budget shortfall, that is a shortfall between their projected income and their expenditure in future years. Councils have already reduced their spending by making incremental savings to existing services, typically reducing their workforce or increasing charges, but these are neither sufficient or sustainable solutions set against the scale of challenge facing councils. In making more significant changes, they have to have clear priorities for the longer term and make plans for the next five or four years, not just the next two or three, and political pressures from the upcoming local elections may make this all the more difficult. Last year, the commission said that councils had been dealing with reductions in income largely by cutting the number of employees, and this has continued, but employer reductions must be made in the context of effective workforce planning so that councils make sure that they retain or develop the capacity, the skills and the knowledge that will help them to deliver services differently in the future. Despite reducing their spending, indicators for 2014-15 show that councils improve their performance in some areas, including educational attainment, housing quality and waste recycling, although customer satisfaction with some services and notably social care fell, indicators for 2015-16 have yet to be reported. The recommendations in our report are directed at both senior managers and councillors whose role continues to be more complex and demanding. We highlight yet again councillors' need for continuing training and development and good information about finance and services, including long-term financial plans. We also underline the importance of scrutiny and governance that reflects the changes that councils are making in how they deliver services, including health and social care integration. The public needs to have confidence that their councils' scrutiny arrangements are transparent, are independent and effective. If they are not, the public interest is not met. We intend our overview report to be a helpful summary of evidence from the wide range of local government audit work that the commission oversees. This year we will mark our difference in how we report this. We will produce two complementary reports. Firstly, later this autumn we will provide a financial overview based upon annual accounts and secondly, in the spring, we will provide a wider overview drawn upon all audit work. We are, of course, convener, always willing to share our work with the committee to help it to fulfil its responsibilities. My colleagues and I are very happy to answer any questions. Thank you very much, Mr Sinclair. That was very helpful. Just before I moved to colleagues to ask some questions, you mentioned a few times during your presentation this morning about health and social care integration. Just wondering what some of the baseline numbers in relation to council funding should look like, where should we draw that baseline? You rightly acknowledged a 5 per cent reduction if you look at the core revenue grant to local authorities, but you also mentioned the £250 million in relation to health and social care integration, which will, of course, predominantly be spent, however it is spent, in relation to local authority priorities through the health and social care partnerships. The Government would say that that leads to a 1 per cent rather than a 5 per cent fall. I simply do not want to get into debate. It is not for this committee to be over those numbers, and I do not wish to do that. It is more about what monies there are in the local authority domain, whether they direct them or receive them directly, that we should be looking at in terms of meeting the funding requirements for local authority services. Should we be looking at the monies for health and social care integration? Should we be looking at the £100 million in relation to educational attainment? It is where we draw our baseline, if you like, as a committee, to work out the money that is in the system irrespective of whether it comes from that core revenue grant. Otherwise, unmindig, you made the point, Mr Sinclair, about irrespective of where the money comes from. It is where it ends up, but there is scrutiny in that process to save the public interest. That might be a helpful starting point before we look at some of the more specific aspects of the report. Absolutely. The £250 million that you referred to was allocated, as you know, firstly to health boards. I think that we have still got to do audit work to see the extent to which that has actually been transferred to councils. The £100 million that you mentioned in relation to the Government's commitment to allocate that money to headteachers is still again working process. However, our interest is the audit of that to make sure that if that money does go to headteachers, how do you hold headteachers to account for that spending? What is the system that you put in place to make sure that money is spent wisely and carefully? I think that it is not for the commission to get into a debate with the Government. They had a different view on that. All I would simply say is that the way in which we have reported the cut in local government expenditure has been consistent year on year. I would also make the point, to some extent, in the Government's favour, that perhaps they might have made more of the fact that, even if you accept our figure, there has been a 5 per cent cut in local government expenditure. Indeed, since 2010-11, some 11 per cent, in comparison with England, Scottish local government has compared substantially more favourably. Mr Sinclair, you are right. I do not wish to get into debate on the numbers either. This is challenging times for local authorities, irrespective of how we present the numbers. We are actually getting some support from yourself as we go towards our budget scrutiny preparation to look at the monies that are in the system. Are there any other monies in the system that you would draw our attention to? The obvious ones, for myself to note, are the health and social care integration funds and the forthcoming educational attainment fund. Are there any monies in the system that you think, for the sake of scrutiny, that we might begin to look at as a committee? Thank you, convener. The one that I would add to that mix is city deals. We are extremely interested in getting under the skin of how the money that is flowing into the city deal arrangement is working. As you know, that is an even more complex picture, because some of it is local authority money, some of it is Scottish Government money and some of it is UK money. You are absolutely right, convener, in looking at the whole system of funding for public services and local public services is an important part of our work for the commission and for the auditor general and for her interests in the central Government side. That is very helpful. I know that our committee is very conscious that the education committee may be scrutinising the additional attainment fund monies and the health committee may be scrutinising the integration fund monies and another committee may be looking at the city deal. I am sure that we have an interest in that as well, but we want to make sure that the committee has an absolute focus on the monies that are in the system within local authority areas. That was the reason to try to tease out some of the baselines. I have got a couple of bits for supplementary on this from members. Mr Gibson, do you want to come in on this? Not on this specifically. Kenny, can I take Graham Simpson first, then we will come back in yet? I was on city deal. Do you have a concern about the level of scrutiny of the spending on the city deal projects? I think that it is fair to say that it is early days. I think that councils have come together in an area to take forward city deal money. The critical issue for them is to ensure that they develop good governance arrangements so that they can be held to account for the money that they spend and to ensure that the collectivity of that money, if I can put it like that, does add value. Clearly, as Mr McKinlay has indicated, Audit Scotland and the commission will take a close interest to ensure that those governance arrangements are fit for purpose. If you look at experience south of the border, where the scale of something broadly comparable to the city deals is greater, you can see from the work of one of our sister organisations, the National Audit Office, that they have concerns about the point that the church has made the governance arrangements for those. It would be reasonably fair to say, because it is public comment that the arrangements are playing catch-up with the political reality, so the funding has already been committed. There is drive and momentum, which is obviously a good thing behind what they are trying to achieve on the city region type deals, but the governance is still relatively young by comparison and needs to be strengthened. That is to view the annual express, which I think I would endorse. We also, as a commission, had some insight into that from one of the chief executives in one of the councils involved in the Manchester deal, and he was prepared to endorse that comment. Obviously grateful for the money that was going in and the opportunity that it represented for Manchester and the greater area, but a bit concerned about the fact that the oversight of all of this was still being delivered on the hoof, so we would be concerned to look at that as it begins to develop in Scotland. Okay, thank you very much, Mr Hines. I know that Elaine Smith wants a supplementary as well, but Mr Simpson, do you want to follow up on that before we move on? Well, just to thank you for the answer, and I think I would share your concerns about the level of scrutiny that there is, or lack of it, and indeed public accountability over these vast sums of money. The matter of our committee will be keen to return to you as well, Elaine Smith. Thanks for coming and for your report that we have. In the chair's introduction, Mr Sinclair mentioned that the scale of the challenges significantly increased in cuts can only be part of the solution, so you then go on to talk about more strategic approaches, longer-term planning, greater openness to alternative forms of service delivery, which some of my colleagues are going to come back to. However, what you do not seem to talk about at all in the report, and please correct me if I am wrong, I have read it and looked at raising revenue. For example, if councils were to consider increases in the council tax, how might that impact? Is there a reason for that, or if you were tasked with a different approach? No, clearly that is an opportunity that will be open to councils. However, irrespective of that, the issue for councils is to ensure that they can demonstrate that every pound that they do spend is a pound that represents best value, if you want. The danger is that if they have a funding gap, they will simply say, well, we will just raise the council tax. You are with me to fill that gap. I think that what we are saying in the report is that councils, to some extent, got by what we call salami slicing, by cutting services a little bit, by reducing employee numbers or by increasing charges. If you look at the duty in terms of best value, the duty is to look with an open mind and to say it with an open mind, what is the best way to deliver this service? Is there a need for this service? How can we demonstrate to the public that the way we do it is the best way, is the most efficient way, is the one that can achieve that combination of quality and cost? There should not be a presumption in favour of one form of service delivery over another. Just to take the point that Ronnie Hines has made, there is much more evidence in England of councils being more open to looking to alternative forms of service delivery. That may be as a consequence of the much more serious financial pressures that councils are under. However, there is an obligation that councils have to their communities to demonstrate that they are delivering the best value in the services that they provide, that they are open to alternative forms of service delivery. They can say that they have looked at the number of options and that they have decided that this is the best way to do it and to be held accountable to the electorate for the choice that they make. Thank you, Mr Sinclair. Just a couple of points on what you touched on is reform and reserves. First, in terms of reform, you have talked about councils on health boards through health and social care partnerships. I have drawn to the responsibility to make a significant start on the shift from hospital care to care at home in the community. That is the most far-reaching public service reform since the establishment of the Scottish Parliament. Again, you talked about councils should be valuating options for more significant changes to delivering key services. I am just wondering what further reform you think we should be looking at. For example, if you look at Orkney, they have a local authority, community planning partnerships, joint integration boards. Is there not an issue about perhaps further integration of some of those services? Mr Gibson, you are tempting me to get into territory that none of the commission's business. You mentioned it here. You should look at reform. Those are issues for Government. It is for Government to decide the structure of public services. The commission will work within the set of decisions that Government makes. Our job is to ensure that whatever decisions the Government makes, there are clear systems of governance, clear systems of accountability. I am not trying to duck your question, but that is really an issue for Government to decide what the shape and form of public services should be in Scotland. More reform, you think, would be helpful. The word reform does not just mean restructuring, so I was quite sure what the intent of the question was. If I take a broader interpretation of it, the commission has already made comment in a number of areas about the speed of reform in that wider sense, some of which could relate to the integration of services. To pick an example, since we produced this report, we reported over the summer on the state of roads maintenance in Scotland. One of the points that we make in that report is that, frustratingly, after some five years that we have been commenting on this, there is very little progress in Scottish councils or a little appetite, it seems, to broaden out the delivery vehicle, if you like, for roads maintenance. By and large, we still have 32 councils doing their own thing. There are one or two exceptions to that, but that is largely the picture. One of the things that we said five years ago was why do not you join up and integrate services on a bigger scale in order to get some economies of scale and perhaps other benefits of delivery? That has not really happened yet. We make comment on areas like that, and I am just using that as an example. We would see that as quite a transformational kind of reform, and I am not underplaying the difficulties of it. I have been there, I know how hard this can be to do, but if you want to save money without necessarily impacting on the quality of service, that is one option that is open to you. That report points out that, in fact, the service has not improved over that period, while the money has been, I think, per force that we have used. The opportunity and the need is there to do that kind of thing. I could say the same thing for other aspects of local government service, but roads have made the case. I am actually thinking about both that type of reform and indeed structural reform, but we will move on to one of the comments that you specifically made. Apologies, and I will let you back in. I know, but I am on the same subject as reform. It was on shared services, so we will come back to shared services with Ruth in a moment. Did you want to continue with that? Just now we will bring Ruth in in a moment then, okay? Sorry, I asked a question or not? I am not really sure. I asked a question, but we will come back to shared services in a moment, because I know that Ruth McGuire has got a supplementary on that. When your recommendations say that councils are now leading complex organisations increasing the challenging circumstances and you talk about need to regularly review their personal training development needs that should work with council staff and others to create opportunities to update their knowledge and skills in increasingly important areas such as financial planning, management options, appraisal commissioning services, partnership working scrutiny. How appropriate is it to expect those level of skills from councils for £16,893 a year? How concerned are you that we are going to be unable to attract the people who require to effectively run our local authorities, giving them the demands? You will be aware very much that there is a disproportionate number of retired people, professionals, that it is very difficult to attract people of either gender who are young and perhaps have families standing for local authorities, despite the time that is out there. How important do you think it is to look at that specific aspect if we are going to improve delivery of services in Scotland? You make a number of very fair points. It is fundamentally important that the public have confidence and trust in the ability of councillors to discharge their duty on their behalf. You are right to make the point that councils generally are not representative of the community. They tend to be often retired people, people who have the time to do it, and often people have to make very difficult choices between their career and participating in local government work. As you know, the act provides that people are entitled to reasonable time off, which is as broad as it is long and it is difficult. The point that we are trying to make is that, given the increasing complexity of local government, we have moved away from the idea of the council being a holistic organisation that is now involved in a much wider series of partnerships. You mentioned integrated joint boards. You look at the development of alias, which did not exist when the commission was established 40 years ago. The world has become much more complex, so the demands on councillors, whether we like it or not, are much greater. We have moved to a system whereby coalitions are the order of the day. It is quite likely that, following next year's local government elections, there will be no single party in control of any council. That is a world away from local government of 50 years ago. In that context, things such as scrutiny become even more important. The commission's view is quite clear that, if you are going to go on a scrutiny or audit committee, you should have proper training to enable you to discharge that job. If you sit in an audit committee of the health board, you will not get on to that committee unless you have undergone some training to do it. I think that the public has a reasonable expectation to expect that people dealing with huge amounts of money, £20 billion a year, on key committees such as scrutiny and audit, do have some training in order to discharge on their behalf their responsibilities. I am not saying that in any way you want to reduce councillors to technocrats. People make choices to get involved for very good reasons to get involved in serving the community through their council, but, in key areas such as scrutiny and audit, the commission is very clear that, given the increasing complexity, it is important that councillors have a reasonable degree of training. One of the things that we have found, to add to the point in our best value audits, is that the take-up of training is very valuable. There is nothing in the code of conduct for councillors that require councillors to participate in training. There is no job description for councillors and there is no job description for MSPs, and we are not suggesting that there should be. We are simply saying that, in a number of key areas such as scrutiny and audit, given the increasing complexity of local government, it is a reasonable public expectation that councillors have a set of skills to enable them to undertake their job, to hold the executive of a council to account on behalf of the public. I thank you. Fraser, do you want to come in there? No, thank you. I thank you. I thank you. I thank you. I thank you. Kenny, do you want to go on to reserves now? No, we will be doing shared services and we will come back to that. I thank you. I want to expand on the second key message that you had about incremental savings no longer being sustainable. I would be interested to hear your opinion on what the main blockers' two shared services are. I guess that it feels like it would be very sensible that there might be savings on scales of economy and things like that, but what we are ultimately asking I suppose that the council officers to do is to all get together and perhaps organise themselves out of a job. Some of them, if you have, if you just spoke about roads, if we have five heads of roads and we all get together then we no longer need five heads of that service, so I would just be interested to hear if you had an opinion on a way forward and what you thought of that. You put it very well. If you think that prior to 1995 on the mainland there were nine roads authorities, there are now 29 blockages. There is a kind of I've been principle. We have always done it that way. It is difficult and it is not easy for either senior managers or for counsellors to say, well, I want to give up control. I actually think that this is a better way to provide a service. As you rightly pointed out, there are often issues about jobs at the bottom line in relation to that. You might think, for example, that four or five councils might say, well, okay, let's come together and we'll put benefits in one council, but if that meant shifting jobs from A to B, that's quite an issue. Particularly in rural councils, where the public sector and particularly the council are often the major employer, but that does not detract from the need to deliver best value. I think that there is also an interesting issue about how you bring about change in public services in Scotland and just make the analogy with the reforming police. It is interesting that the chief constable said, we are absolutely committed to co-operation, co-operation between the eight forces. The evidence was not there to support that. I think that what happened is that the Government got frustrated and decided, no, we are going to pull a lever and make this happen. I think that there is an issue for Government to decide when does it come at a point in time when levers need to be pulled to make those changes happen. That is not an easy decision, but I do not think that the commission believes that shared services are a panacea. It is one option, but it is an option if you look at these things historically to ask the question. If we managed before the nine roads authorities that Ronnie referred to, why do we need 29 now? The objective is always to say that it does not really matter who is in control of the service. The issue is to ensure that you are providing the best quality services and maximising the use of that money. That should always be the driver. I appreciate that it is easier said than done, but that is what good local government is about, focusing absolutely on how we make sure that every pound represents good value for money. Mr Haynes, do you want to add to that? That is just a supplementary comment, if I may. If I were to offer some kind of explanation as to why there has been so little traction on shared services despite the repeated injunctions over years, it is probably because I would see those options on a spectrum. I think that the actual sharing of services with all the reorganisation and the aspects that you do attention to, namely where there were several and now there is only one, so who would voluntarily go that way? We have started at the most difficult point in the spectrum. If you consider, for example, low, not low level, but more easier issues to contemplate, just the sharing of information is a good start. Why does it cost something here and something a lot less there to deliver what is ostensibly the same quality of service? There is plenty of data around that shows that that is indeed the case. For a range of services, I am pleased to say that local government has now recognised that and has seized that particular initiative. There are active forums for sharing that kind of information. You would hope that, as a consequence of that, some of the conversations that are taking place at local level would be why is it that you continue to do better than we do, despite the fact that we are trying to learn from you? Maybe the easy option or the right option now is for us to just make common cause with you and to take a further step in that direction, so we either hand the service over to you or we come together in some fashion. There have been examples where that has happened. It happened, for example, between Clickman and Sterling in relation to education and social work. Unfortunately, that did not stay the course because I think that they had not done the groundwork to begin with, and it was a politically led initiative that did not survive a change of leadership or administration. Those are the hazards. However, if you start from the bottom and build up from there, I would be hopeful that, under the pressure that councils are under, sooner or later they will come to the recognition that you have to make common cause, as I put it. You have to share those services, not just the information, but the information by itself can lead to efficiencies and I think that there is evidence that that is happening. I thank the gentlemen for their answers. I think that there is a bit there about the tension that the political cycle brings, because all those are big bits of work, they are big projects to bring these large organisations together and working together, and I think that there is a definite tension there. Maybe I will bring Ronnie in because he knows a lot more about this than I do. You do not have to share services to reduce costs. There is a huge amount of work that the local government benchmarking framework has been doing for a number of years, which enables councils to drill down and look at their costs in comparison with similar councils and to say, if they can collect the council tax for that and it is costing us that, how come they can do it for that and we can't? If there is a willingness in councils to be open and to think that we can do this better and ask the question, we can do it better, then I think that there are real opportunities. Ronnie, do you want to add to that a very interesting example on libraries that I think we will share in with the committee? I want to start with it sitting in the report. In the report that is in front of you, we looked at one aspect of the benchmarking framework that Douglas has referred to, which was absence management. We posed the question, what if all councils performed at the level of the best of the average and we were able to figure on the headcount that we might save if everybody was able to do that. That was the first venture into that area for us in the overview report. I suspect we will be following up in the next iteration of this. Douglas referred to one case that might be worth looking at because local governments are doing it themselves and that is important to distress. That is where the information is coming from. They have sat down in what they call their family groups and have said, of all of us who are broadly like each other, so we are not comparing Glasgow with Angus here. We are choosing councils that have chosen to see themselves as similar, and if we all delivered library services in the same way as even the average of us, we could save something like 10 per cent of the cost of library services, and that is on top of quite significant savings that have already been made in library services. We are not starting with low-hanging fruit, if you like. The power of doing it is manifest when you look at that, and the good news is that that is exactly what local government is doing for themselves. Our role, I think, is to encourage that, to promote it and to report on it so that we foment good practice. Elaine O'Brengan, a second bad supplement on that also. I just double-check the name of it, The Clyde Valley Shared Services Review, 2010-2011. It was in for Clyde King, North Lanarkshire, South Lanarkshire, Renfrew, Glasgow and East Dunbartonshire. It is just a quote from one of the summary reports. There is a compelling business case for shared and support services, finance, payroll, revenues and benefits, human resources and IT across the Clyde Valley. Any progress in any of that? Not so much, convener. No, I think that the answer. I think that when the question was asked about what are the barriers to shared services, the Clyde Valley experience, which came from the report that John Arborthnut did, I think is an interesting case study in why it is so difficult. For me, I think that Ronnie touched on it in terms of the scale and the complexity and the ambition of that exercise, with that many councils, with that many different interests, with that many different political positions and everything else that comes with it. That was always going to be a hard sell. I think that people have probably learned some lessons from that exercise and what we are seeing now is a smaller scale, but it is still very worthwhile exercises and collaborations. A recent one with Highland Aberdeen City and Aberdeenshire collaborating around the procurement service. My guess is that that is the kind of model that we are looking at into the future rather than the big-scale shared services, where we put everything together in a warehouse in the middle of somewhere. I think that the nature of shared services, as we knew it 10 years ago, has probably moved on a bit. I am focusing specifically on that, because that was an example of a number of local authorities where, by and large, there were similar political hues, which perhaps made it a little bit easier for local authorities to talk to each other. There was ideal determination to drive this forward, and then almost nothing. I think that Mr Sinclair also pointed out about what point does Government sit there and go, well, you keep talking about doing this, and at what point do we rather than enable them to do it, do we, does Government dictate or drive some of this themselves? What are the barriers that you think the Government could help to remove? Where is the cultural resistance in this that you think maybe this is a committee that we could explore a little bit more ourselves in relation to local authorities in question? On the Clyde Valley thing, I think that it is briefly to say that, while not much was delivered as intended through the Clyde Valley partnership, I think that what is interesting is that there have been lots of smaller things that have come out of that process. Rather than the five or six councils doing things together, two or three councils are doing things together, and I think that they would probably argue that the process and the discussions and, to some extent, the trust that was established through that Clyde Valley process allowed them to do other things. As the chair said earlier, it is a judgment call for the Government as to what and when and how they pull a lever around some of this stuff. My sense is that local government themselves are recognising the need to do more of that. The financial pressure is clearly a driver for that, but so is the need to deliver better services and better outcomes for communities. As I say, you can see across the country, particularly around areas of health and social care and other things where people are now becoming, are getting together and looking to do things differently. Also more recently, some straws in the wind, the Ayrshire roads aligns the Inverclyde East Dunbartonshire. We have made a commitment to share services, and it may be, we have mentioned city deals earlier on, it may be out of city deals that there will be a willingness to look at shared services again. However, as I said earlier on, it is one option, but it is not the only option. It is important to say that it is not the only option to reduce costs. I hope that Mr McKinley or Mr Sinclair, if you could give us, maybe, right to us examples of where lessons have been learned from that particular review, and smaller examples of shared services have been teased out, maybe even just right to the committee. I think that you have raised a very interesting point, because certainly we have had some discussions in terms of whether we should do a piece of work as to following shared services. Given the enthusiasm, why that enthusiasm was not translated into delivery? I think that there is an interesting audit study to be done in there. When you talk about issues and problems with shared services, and you have also mentioned allios in part two of your key messages on delivering services, would you consider that part of the problem might be public accountability? The example that I would give is that, if North and South Lanarkshire decided to share education services, for example, as it happened in another area where it did not work out, as a resident of North Lanarkshire, I might be concerned that it was councils in South Lanarkshire who were making decisions that I had not elected. As part of that, in listening to your evidence, I hear you saying several times about the previous nine councils that delivered roads, for example. Are we in terms of public accountability and you also talked about central direction? Is that leading us to consider that, in the 90s, when local government was reorganised, that was a political decision in the early 90s to remove regions and districts and totally reorganise? Is that argument about shared services, different ways of delivery, allios, et cetera? Is that an argument for a total reform of local government to make it more accountable to the public who elect councillors but to look at shared services in a far more structured way, i.e. districts and regions, once more? As I said earlier, those are issues for Government. It is important that, whenever councils set up a shared services model, there are clear lines of accountability to local communities. For example, if you look at councils in Ayrshire who have come together in terms of roads authorities, there should be a clear line of accountability, a clear line of reporting back to each individual council as to how that service is performing in relation to the needs of the separate councils. What I am trying to say is that it is in the design of that that is absolutely critically important to get that right. I do understand the point that you are making. To some extent, that was an issue with the Clackmann and Stirling model of education that, in a sense, people felt as though the thing was being driven by one council rather than the other. I think that the critical issue is to get that design right. It does not mean that shared services are wrong in principle, but there needs to be absolute clarity from the beginning in terms of the shared services. What is that shared services model set up to deliver, and how do we ensure accountability to each individual council and, in turn, to the local communities? That is the key issue. It is difficult. I am not suggesting that it is not difficult, but I think that it can be done. In terms of alloys, which I mentioned, is there less public accountability with alloys? I do not think that there has to be. There are some councils that have very extensive alloys and a very effective system of monitoring the performance of their alloys. Again, it is the issue that if councillors set up an alloys, they need to ensure that the responsibility for the quality of the service and the money that is often invested in the alloys remains with the council. They are still accountable for that. The key challenge for the council is how do they monitor the performance of the alloys, how do they assure their communities that the alloys that they have set up are delivering on the objectives that are said by the council, how do they ensure that the representatives that they have appointed to the alloys are reporting back regularly to the council on how the alloys are performing. There is nothing in principle wrong with alloys. The arrangements for ensuring their accountability are the key issues. If you look across the border in England, in many cases, alloys have delivered quite interesting forms of service innovation. In Scotland, to a large extent, they have been set up to save money and non-domestic rates. There is still a bit to go to ensure that alloys, with the space on the time, can be an innovative way of service delivery. However, there is only one opportunity. As I mentioned earlier, when the commission was established 40 years ago, alloys were not part of a firmament. They are now. They are a big part of the firmament. They employ a lot of people and they spend a lot of money. Certainly, looking forward, as a commission to the next iteration of best value, we will be looking very closely at the relationship between councils and alloys and ensuring that councils hold the alloys that they have established that are held to account on behalf of their constituents. I thank you very much for your presentation so far today. It has covered many issues, but the one area that I want to focus on is that councils have extensively balanced their budgets and managed things as they move forward. The medium-term and the long-term financial planning that they now have to face under the current financial pressures makes life very difficult, and we understand that. However, they have the added extra with council debt. That council debt can have a huge implication about the financial stability and sustainability of the council going forward. I would like to tease out from you how that is managed, because if it is not managed effectively, it could tip them over the balance as we go forward. We know that times as we go forward over the next few years are going to be even more demanding and there will be more pressures, and that debt will grow and add even more pressure to the whole process. I will make a comment and then I will ask Fraser and Ronnie if they want to add anything. Debt is okay as long as it is affordable. That is the key issue. I will bring Fraser in on this one. I think that that is the key issue, Mr Stewart. I think that what is really important and, as we mentioned, the commission reported a while back on borrowing and treasury management specifically in a separate report that we did last year. I think that one of the key findings in there was ensuring that, when councillors are being asked to make some quite significant decisions around borrowing, they understand the implications of that, because the borrowing needs to be repaid. In particular, what they need to understand is that the proportion of the revenue spend—the day-to-day spend—is servicing the debt. That is a hugely important question. As we see in the report, there are big variations across the country. It is not for the commission or Audit Scotland to come up with a magic figure that says that this is safe and this is not safe. What is absolutely key is that they are making those decisions in the context of a medium and long-term financial strategy that is underpinned by strong financial plans, and that councillors are given the right kind of information to help them to take those decisions in the full knowledge of the implications, not just next year, but five, ten, fifteen, in some cases, twenty, thirty years down the line. In a sense, it comes back to the conversation that Mr Gibson in the chair had about the training for councillors who are involved in making those kinds of decisions. We are asking them to make some pretty sophisticated calls on some pretty sophisticated things. If anything, with new forms of innovative financing coming in, there is tax incremental financing and all sorts of stuff, it seems like every week we come up with a new acronym for a new way of borrowing money—very complicated stuff. I think that our role is to keep—I will use the phrase bang and on, because that is probably how it feels—to keep bang and on about the importance of the financial strategy and the solid information. I would put that in a more subtle way, but never mind, yes. Just to sketch out the chair's point about affordability, the first thing to offer is an assurance to the committee that the commission is on the case. You see that it is in the report, the overview report, but we also did quite a detailed piece of bespoke work recently on council borrowing and all the complexities that go with that. It is a very complex area, Treasury management in its entirety, so we keep a close eye on that. We are conscious of the importance of debt against the background of declining resources, because that is the issue. The debt is fixed by and large for a longer term, whereas the resources are declining over a shorter term, so when do we get to a pinch point with affordability? I think that I am safe in saying right now that we do not think that local government as a whole is in that position, and we have not identified for any individual council that they are in that position, but we are keeping an eye on it. It is also worth being in mind that some of that debt, well, all of that debt, one hopes is incurred for a very good reason, and one of the good reasons might be that it allows the opportunity for other aspects of expenditure to be managed downwards, so councils are borrowing money, for example, to build new schools. One would expect those new schools to be cheaper to maintain than the ones that they are replacing. If they are doing it to put new IT in place, there should be some productivity gains associated with that, so other aspects of the revenue costs should come down, so we cannot look at the debt in isolation, but, back to my opening comment, we do just the same, just to make sure that it is being well managed because of the size of it and the importance over the long term. It is just in terms of our next iteration of best value when we will be looking at all 32 councils over the next five years. One of the key issues that we will be looking at in terms of the audit of those councils will be financial sustainability. Just following on from that and some of the things that you have said earlier, they are linked. The ability of councillors to scrutinise these very complex issues, and I should declare that I am an existing councillor. I should have said that at the start, but it is relevant. I think that it is lacking. You mentioned having training for councillors. I wonder whether that training should be provided not by councils but by somebody else. I just think that bringing it outside us is probably better. I have to confess that councillors' eyes often glaze over when they see complex reports, particularly financial reports. The level of scrutiny is not really there. I wonder if you could comment on that. Going back to Alexander's point, you mentioned in your report about the use of reserves by councils. I think that that is becoming quite an issue. Are they starting to dip into reserves, and are we in danger of getting to a danger point? That is very helpful. The first question that you asked about bringing an external report, is it making the point that senior councillor officials capacity building councillors to scrutinise senior councillor officials? I am just wondering in relation to some clarity around that. I am quite keen to hear the answer. It just occurred to me when you were speaking. I thought that to be trained by your own council to scrutinise your own council is maybe not the best way of doing it. There are some very interesting points there, both about training and about reserves. Quite a lot of training is provided by the improvement service, rather than by councils themselves. That is a resource that councils can access. I think that, generally speaking, councillors are pretty good at doing induction training. When you start off as a councillor, you will get training in terms of what the monitoring officer does, what is the role of councillors and the role of officers. I think that what it fails down is what I call continuous professional development. If you look at other professions, such as a lawyer or an accountant, then there is an obligation to take up training. Where training is not provided, things can go badly wrong. I think that one of the most powerful examples is Rotherham Council, where there is child exploitation on a very significant scale, and the failure of the scrutiny committee was palpable. You could put that down to the lack of confidence in members and being able to challenge officers or a lack of training, but it does underline the importance of councillors having the confidence and the skills to scrutinise officers effectively. I understand the point that you make about making reports accessible. The report should be written in a language that is accessible to councillors. In a number of audit reports, we have made that comment. It is not for officers to pull the wool over the eyes of members. Those are complex issues. Officers have a duty to ensure that members understand the issues in front of them. I think that there is also a big issue of much greater involvement in councillors in the design of training. There is an assumption that councillors, when they join the council, do not know anything. They do know a lot about some things. I think that the training is much more designed to fill the gaps that they need. I think that there is the outstanding issue that I mentioned earlier about how to ensure a better take-up of training. We have a report coming out quite soon on roles and relationships, and one of the things that we suggest, as I mentioned earlier, is that in some critical areas, particularly in scrutiny and audit, that training should be mandatory. In the same way that, if you sit on a planning committee or the licensing board, you will not get on that committee unless you have undergone some training. The other point that you make about reserves—I will ask Fraser and Ronnie if they want to come in. The commission's golden rule is that they can only be used once. You can only use your reserves once. There is certainly evidence of a number of councils who have filled the funding gap with me by just saying, oh well, we use the reserves. That is not a sustainable long-term solution. You are ducking the questions a bit like the issue of, well, if we have a funding gap, we will simply raise the council tax. You come back to the point of ensuring that, instead of cutting services, you cut costs first of all. Ronnie, you want to add to that? Just briefly on the point about training, can I make a plug for external auditors in that context, particularly around audit committees and financial sustainability and those things? The commission appointed independently auditors of all 32 councils, and they are always very happy to do that kind of independent training for audit members, and we are delighted to do that when we can. On the use of reserves, the Exhibit 7 in the report, page 18, is the bit that we are always most interested in. Again, it is legitimate, and councils would argue that the reason they have been building up reserves is for a rainy day, and it is now raining, so that is why they are doing it. I think that our problem with that a little bit is that when you look at the numbers that we have tried to capture there in Exhibit 7, half of them have not planned to do what they ended up doing. It is absolutely legitimate to use reserves as part of a planned financial strategy going ahead, but, as you can see, both up and down, a good number of councils did not use reserves in the way that they had planned at the start of the year, so that would be our concern about the use of reserves, and, as the chair says, any sense that year on year councils are relying on reserves to plug a gap, because that is not sustainable. On the specific question of who trains the counsellors on things such as treasury management, we did touch on this in the report that I referred to on treasury management. I would point out that there is a distinction between training that is intended to give an understanding of the subject matter, and it is a very technical area. Frankly, local Government directors of finance are the experts on that, on the one hand and, on the other hand, training on how to hold people to account, whether it is on that or something else. With that distinction, I could see the point about someone other than the council officers, being the ones who helped to impart the skills on how to ask the right questions, how to be dissatisfied with not the best answer on how to follow it through, as opposed to understanding the technicalities of short-long term borrowing. There is maybe just something to think about in that regard. On the question of reserves, the only thing that I would add to what Douglass and Fraser have already said, is that, in point of fact, the level of reserves has been increasing over the last few years. What we are interested in is the deployment of them. Douglass's point is the fundamental one. You can only use them once, but how effectively are they being used? We see plenty of examples where money is set aside in order to fund some innovation, so that there is a long-term benefit. What we are really interested in is a meat on the bones there. What actually happened was that money was really used for that purpose, where the evidence that it has had that result, as opposed to being used as a temporary gap between a budget this year and a budget next year, which is always a temptation if you put additional money in someone's hands. We want to see councils providing evidence that reserves have been used for that purpose, and they can show that that is exactly what happened. Okay, thank you. I'll take Kenneth Gibson a second for a supplemental on this, but Graham Simpson, do you want to follow up? Just to say, I think we've touched on some interesting issues that you're absolutely right about. If you sit on the licensing board, as I do, you have to pass an exam to sit on that board. So I actually passed, incredibly. Smiling, because there's not multiple choice. So why not in other areas? If you could give all the councillors on this committee here today marks out a 10 for the level of scrutiny, that would be helpful as well. Thank you. Maybe not. Do you want to reply to that comment? No, we'll leave it as it is. No takers will leave that hanging. Go off with that one, Mr Gibson. Okay, well thank you very much for your convenience. I mean, it's so, but six is quite interesting because the variation of the 30 councils that you've outlined is between three and 23 per cent in terms of the level of reserve. Of course, you've added a caveat about Orkney and Shetland because of the vast reserves they have, and you have said that reserves do not be a support day-to-day spending because it's unsustainable, but while you go on in a paragraph 20 to say the level of reserves that a council holds is a local decision but should be clearly fought by an annual reviewed reserves policy. Surely a council commission must have some kind of view as to what the average level of reserves should be, particularly given the fact that local authorities, as Mr McKinlay has pointed out, don't even seem to follow their own reserve policy and 50 per cent of cases on an annualised basis. We've always resisted the temptation to quote a number, Mr Gibson, because as soon as the commission does that, people begin to construe that as a target and you end up getting into discussions about whether you're above or below and whether that's a good thing or a bad thing. Clearly, and we have said this in some councils, going back a bit, if a council is operating with close to no reserves at all, our auditors absolutely would raise a concern about financial sustainability because if that's the case, then if something unexpected were to happen, they wouldn't have the funds to meet that. Beyond that principle, we haven't quoted a number because the thing that we're more interested in is the qualitative nature of the plans that underpin those reserves. As Ronnie Hine said, what the plan to do with it, the experience from the commission having done this work now over a number of years, and this is a good thing, we now have much more transparency over what reserves look like in councils. Going back 10 years, we couldn't have produced Exhibit 6, and partly I think it's because the commission has been encouraging councils to be more transparent about not just the totality of reserves but what they're actually planning to do with them. Then they're rated to Exhibit 6 as well as the variation Exhibit 7 and the extent to which the use is as planned is the thing that we are very interested in. I do think, though surely that's a bit of a copper, there has to be some guidance. I mean, surely if Glasgow is at 3 per cent, I mean is that, you know, for example, slightly more than you think would be a minimum, slightly less, I would have thought there has to be some kind of benchmark here, surely. I mean, people have ever clied, for example, not getting the services they perhaps should because it's at 23 per cent. You've also mentioned in paragraph 18 the fact that the reserves that, despite all the reductions in local government expenditure are 39 per cent higher than they were in 2010-11, so the tornback are any days now arrived, but for some councils it always seems to be next year or the year after. It seems contradicted that reserves are going up while budgets are going down, but it's just a huge disparity and you could perhaps advise us what Shetland Island Council's oil-based reserve actually is in relative to its annual expenditure. We can come back on the second one. I don't have the up-to-date number in front of Mr Gibson, but we can certainly write to the committee with that. Do you want me to take the other point? Again, without doing the work that we do across 32 councils, Mr Gibson, to look at the nature of the plans that underpin those levels of reserves, I'm not in a position to sit here today and to say that the Glasgow numbers are good, bad or indifferent, or equally that the Amber Clyde ones are good, bad or indifferent. Your point about it feeling counterintuitive, I would absolutely agree with, and it's a challenge that we've laid at the door of councils a number of times, not least in this report, where, on one hand, we recognise that financial pressures are mounting, that services are being cut and, at the same time, reserves are being replenished. Again, if that's part of a planned approach, particularly to take Ronnie's point, to investing particularly in investing for innovation and invest to save, that's absolutely fine. The reason I mentioned Exhibit 7 is that the eight councils that we report who did not plan to increase their reserves but did, is as concerning for us as the ones who did the other way round. Just because they ended up on the right side of the line doesn't mean that it's all right. From that point of view, I would absolutely agree, but that says more about their financial planning and their financial management than it does the absolute level of reserves, whether they're in the right place or not. Just a final comment, convener, but surely that is a real issue. If half of them are even falling their own plans, how can you have any faith in the fact that those proposals that they're putting forward in terms of their reserves are appropriate in any way at all? It could be, for example, how do we know that Inverclyde's isn't even lower than it perhaps should be? One could even suggest, because if plans are not being followed, it almost seems to be a meaningless exercise, a year-to-year thing that local authorities are doing, lack of forward planning. It must give serious consideration and it must surely make you want to drill much further down into the whole aspect of reserves and planning for reserves and how those are ultimately drawn down by the local authorities. Do you draw them down? Volunteer, do you want to make a comment on that? Just to give Fraser some relief, I suppose. For me, the key thing is that the reserves are just one aspect, albeit an important one, of the point that you're really making, I think, about overall financial planning. It will be part of what a good council does to plan for a given outcome for the financial year and an aspect of that will be what we expect the reserves to be, compared to what they were at the beginning. However, the key point is that it's in that wider context and it's that area of financial planning that this report, in a lot of the work that we do, tries to be clearer about. What we say is that we see quite significant variation in practice between the 32 councils. Some work on a shorter term basis, some work on a longer term basis, some cope better with the uncertainties and the slings and arrows out there, even though, for example, in the current year, everybody was confined to a one-year horizon so far as Scottish Government funding was concerned. Nevertheless, some councils are able to look beyond that and say, we've got a longer term strategy, we'll do some scenario planning and we'll work our way through that uncertainty until things change. That, for me, is the right context for this. The reserves are almost a consequence of that. To whom and on those, we'll probably get us into relatively unproductive territory, which is why Fraser says we've always taken a self-denying ordinance about that. I want you to rest assured that, when the auditors do their work annually, one of the things that they will look at is that financial planning and one of the consequences being the level of reserves. We'll attract comment if we think that it's moved significantly one way or the other. The local audit work that's done on the ground, which supports all of this that you see reported here, is an important part of how councils themselves are held to account. We would expect councillors to be asking the kind of question that you're asking now. I thought that we were going to see a reduction in reserves this year. The director of finance went up. Why is that? That seems to me to be the right area to follow that through. Can I just check before we move on to Mr Wightman? The way reserves are presented across all local authorities in accounting terms and how they're audited for, is that the same across all 32 local authorities? Are local authorities bound to give projections the same way in what the reserves will look like from one year to the next? Is there a set procedure in audit terms or accounting terms on how they would have to explain the way they're rationale for fluctuations in reserves? Are we speaking apples with apples so that councils can effectively scrutinise their officials? Yes and no is the answer to that question. Yes and no is the answer to that question. When we do the audit of the financial statements, that's done the same way 32 times over and councils have to present the financial information in the same way in terms of the totality of the general fund reserves and other reserves too. Where there is more local flexibility, if you want to call it that, is for example in Exhibits 6 we talk about allocated and unallocated. The definitions of allocated and unallocated will inevitably vary from council to council, which is why, as well as if you like the really important but narrow audit of the financial statements to give the true and fair opinion, which our guys do, what we talk about in public audit terms is the wider scope, so how is that governed? What's financial management like the financial sustainability, which is where we get into more of the qualitative assessment about the nature of the plans that underpin those things? Year on year, and the chair mentioned our refresh to best value, an important part of that story is the extent to which councils are delivering as planned. If you have a council that is continually and serially underspending its budget, even though it's not meaning to, then that would raise almost as big a flag for us as it would councils that are overspending, because I think that Mr Gibson suggested, presumably, that money was due to be spent on something and it hasn't been, so that's how we would actually go about that and we do that in all 32 councils. I think that we've given a reasonable explanation of the commission's position why we don't have a target or a benchmark. There may be mileage in the point about us being clearer about allocated and unallocated, so there is more consistency across the council. I think that we'll take that point away and have a think about it. I think that there's something in that. Just in terms of public transparency and accountability, I think that that's important that councils adopt in a similar definition. I want to pick up on message 5 in part 1 where you talk about the challenging financial environment and the need for effective medium and longer term financial planning being critical for councils. You say that it is more challenging for councils when they don't know what their future funding and income will be. I'm wondering if you've got any comment on what role greater fiscal autonomy might play in enabling councils to achieve that better ability to long-term plan. And whether you think that there's any merit in exploring what the UK Government and the Scottish Government have arrived at, which is a fiscal framework, whether there's any merit in exploring a fiscal framework between Scottish Government and local authorities. Perhaps a good example of that might be what's happened to the council tax and your report on the council tax freeze. Of course, that will be being lifted, but because the overall compensation that's been provided is built up cumulatively will not be being replaced, as it were, that's a one-off reduction on the floor of council tax receipts, which has never been part of any agreement or whatever. Who would like to answer that? I'm happy to. Mr McKinley again, yes. Shall I go first? It's a difficult question, so I'll get a phrase out of the answer. That's why I can't. I'll do my best, Mr Wightman. It's a fascinating question and certainly now that councils have the ability to vary council tax, it will be very interesting to the extent to which they choose to do that. As you know, council tax makes up a relatively small proportion of their overall funding, so for it to be meaningful, I think that the sense is that the council tax increases would need to be fairly substantial to really make a difference, if you like, in terms of the overall pot. We can certainly see in some medium-long-term financial planning that is happening that councils are beginning to factor that into their thinking. No decisions having been made yet, because obviously that will be for the budget round coming up, but there are definitely moves out there that people are saying that, if we were to increase council tax by 2 per cent, it would provide x million pounds. The thing about the fiscal framework and, more immediately, the budget cycle, we recognise and accept does make it difficult. An ideal world council would know how much money they're going to have for the next three, five years. However, to be fair, the Scottish Government doesn't know that either, so we live in a world in which they need to figure that out. Our contention, I think that the commission has been very clear that, if anything, that kind of medium-to-long-term financial planning is even more important in those circumstances, because you need to have scenarios, you need to think about the options of a best case, a worst case and what that might mean, otherwise you're going from one year to the next and trying to figure out as you go. You'll be aware, I'm sure, that there's a review of the budget process underway involving Parliament and others and the order of generals involved in that. It will be interesting to see what that brings out for the budget cycle next year, but my sense is that this year, in particular, we are going to be in a similar kind of place, which is why we will continue to encourage councils to do better scenario planning and to think more long-term, even though they don't know for sure how much money they're going to get. Just two comments on the specific point about the council tax freeze. When that unfreezes after nearly 10 years, it will be interesting to see how that is handled in local government and we'll be keeping a brief on that. One reason that we would do that is because the majority of directors of finance will never have experienced the setting of a council budget where a variation in the level of council tax was a genuine option. The freeze has meant that it's a given. It's effectively a part of the Scottish Government's support, the funding arrangement, whereas the calibration that accompanied the status quo before that was always an important part of the local democratic process and directors of finance had to advise councillors on the option of raising council tax by a given amount or reducing expenditure by a given amount. That trade-off hasn't happened, meaningfully, for a decade, so we will be looking carefully to see how that's handled at budget setting processes and, obviously, after that, as we look retrospectively at the accounts. An associated point that I might offer in relation to that and contained in the report that exhibit 2 shows that the council tax, as it stood at the time of this report, was just over 10 per cent. It was 11 per cent or so of the total income that councils were spending. It also says in the report that roughly half a billion pounds is what's now in the Scottish Government funding to local government to compensate for the council tax freeze. So, rough and ready, if you take that half billion and add it to the 2 billion that's mentioned in here, you would increase the proportion of overall income from 11 per cent to something like 14 per cent. That doesn't mean that you've got real fiscal autonomy, but it is a small step in that direction and that's what's going to happen after the council tax unfreezes. As people get on to that path again, we will have to look carefully at what that means for the level of local taxation. There was an example that you remember last year where one council, because of what the Scottish Government proposed for the funding settlement, intended to ask its local population how they would feel about a council tax increase of something around 20 per cent—I think it was quite high—so that didn't happen. However, the point is that we have to recognise that, when the freeze unfreezes, those kinds of options become viable. Whether they're palatable at the local level is another issue, but all that stasis for 10 years means that, when it starts to unpack, I wouldn't necessarily expect that there's going to be a slow gradual process everywhere, the temptation to do something other than that will be a real one, and a valid one. The reason why I raised the question of the fiscal framework is because, Fraser says that the council tax freeze will end and I'll have the ability to set the rate of council tax. Of course, I've always had that ability. It's been a political pressure that will continue in the future. The reason why I raised the question of the fiscal framework and the greater autonomy, perhaps, is that, in the case of Edinburgh, for example, there have been discussions about a tourism tax to deal with the additional costs that the city faces during the summer months and the festival, etc. This place has resisted that. There's an argument for councils having more autonomy, and the decision as to whether to apply one is a political decision for the council itself in consultation with the chamber of commerce, tourism industry and hotels and the citizens and all the rest of it, and whether changing the extent to which councils have flexibility and autonomy in what tax base they have, how it's designed, how it might apply, whether one place might want to increase council tax on holiday homes, another one might want to reduce it, etc. How that greater flexibility might help in medium and long-term planning. I don't expect a definitive answer, just some indication, because you are raising in your audit here obviously some serious concerns about the future. You're not just restricting yourself to strict audit on an annual basis and very helpfully providing us with pointers of the challenges, and our job in committee, both in the Parliament here, is to actually to grapple with these questions and see how we can help to make it easier to do medium and long-term planning. Given that we'll get to 10 minutes left of this session, I think you'll be pleased that we're not looking for a definitive answer in all of that, but when you do answer it, it might be worth while viewing it in the context as well of the Scottish Government's aspiration to assign income tax revenues from local areas into local government funds. No more clear on how that's going to operate, but I suspect that that would sit within any new fiscal or financial framework. I'll just kick off on this one. I think that you raised some interesting issues that are in a sense beyond the commission's remit, but there's a long outstanding issue about if you want local government to be truly accountable to its communities, then it should raise at least 50 per cent of its income. That's a position that COSLA has always taken, and local government has always taken, so there's a debate in there which goes beyond the council tax in terms of a variety of taxes, in terms of how you ensure that it makes that happen. It's a perennial debate. It goes back years after years and the number of rail commissions that have looked at this issue over the year and made the point that if you want local government to be truly accountable, then you need to change the balance of control between central government and local government. Having said that, because central government is always one of the key funders of local government, it's natural that they all want to have a degree of input in relation to that to ensure that there's always this balance between local discretion in terms of the services that you provide as opposed to the Government's desire to see a degree of uniformity across standards. It's a continuing debate and a debate that is far from resolution. I think that the debate then was an interesting one in terms of looking at how you widen the tax base and all those things of consequences, but I'm sure that it's a debate that will continue in one in which the commission will watch with interest. Once we leave here, the three of us are going up to ponder our strategy for the Accounts Commission over the next few years, so I'll take that point on board. That's a helpful comment. I could see some useful joint consideration between the Auditor General and the Accounts Commission in the wider context that I think you're drawing our attention to, not just local government funding and taxation but against that bigger background for what's happening with the Scottish Government's funding and taxation. Is there a piece of work perhaps that looks at that in the round over the next few years as the situation evolves? I think that's a helpful comment. Okay, thank you very much. Any further bids from committee members for questions? Mr Simpson puts his hand up before you, Mr Gibson. Sorry, I'll take you in, we've got time. I must have been quick. Can I ask you about pension deficits? You referred to them in your report. You say that they're not a concern but they are growing and at the time that you looked at them they were at the level of £10 billion, which strikes me as a rather a lot of money. If they're increasing, at what point do we get to the stage where they are a concern? Would you be prepared to say what limit, how far we should go before we say enough's enough? In the report there is a gap but I think that the people in control of the pension funds believe that they're manageable. It's obviously something that we do keep a close eye on. Just a slight diversion on that. There was a piece of work that COSAL commissioned a few years ago in terms of shared services, which asked the question as to whether we needed eight pension funds in Scotland? More than that. 11 pension funds as to whether you could drive efficiencies by reducing the number of pension funds, which is what has happened in England, but that work didn't proceed. I don't know whether Fraser or Kathy have anything to add to that, but it's clearly something that we'll keep a watch in eye on. There are plans to reduce the deficit and the reason for not being immediately concerned is that there are 20 years to do that, but obviously as auditors we'll be keeping an eye on that. What you don't say is what those plans are. I don't have the detail of all the plans at the moment. I think also just to say that, as the chair mentioned right at the start, we're producing a separate and specific report this year. In November is the plan around the finances of local government. This report combines the two things, finance and performance, and we're kind of separating those out this year. Again, pensions will get a good dose of coverage in that report and we'd be very happy to come back and talk to you at that point. Just to spit out a quick reassurance, this is complex, but one of the factors that is relevant here is that there's now a ceiling on the employer's contributions into the pension fund scheme, so it's not a runaway truck, if you like. That's partly a reflection of the trends over a number of years now, which this report picks up on. There are cost control mechanisms in place there, and that's part of what we'll be keeping an eye on. Yes, it's just about the local government benchmarking framework. I mean, what I was fascinated to look at those figures, I noticed, for example, that despite the reductions in local government funding, if you look at housing, for example, the percentage of dwellings meeting the Scottish housing quality standard has increased from 53.6 to 90.4 per cent, a phenomenal improvement in only four years. If you look at energy efficiency, that's went up from 74.9 per cent to 96.5 per cent. That again is first class, but I'm just wondering whether there is consistency across all 32 local authorities, or if there are local authorities that significantly digress from some of the significant progress that is being made. What we talked about earlier, and Mr Hynes touched on this, was looking at, for example, best practice and how local authorities can share best practice in terms of reducing costs, but the ability to deliver continuously improved services. I'm just wondering if that's something that the Accounts Commissioner is looking at, and speaking to particular local authorities who perhaps are not improving as rapidly as some others. Two points that I've asked Ronnie to come in, certainly in terms of the next generation of best value, looking at the performance of a council in comparison to its family of councils, will be something that we'll highlight much more. Secondly, you're absolutely right to mention the issue of consistency. I mean, I can remember my time local government, the issue of payment of invoices within 30 days. Some councils used to play games at that because they used to exclude the education invoices that came in the school holidays. For me, the more important thing is not whether you pay the invoices within 30 days, much more relevant is what's the cost of paying that invoice between your council and a comparable council, but I know directors of finance have been doing a huge amount of work trying to get a greater degree of consistency. For me, the benchmarking framework, which is what you're drawing your attention to, should be more about improvement than consistency. If everybody was consistently bad, there'd be small comfort in that. So what it's designed to do is to accelerate the rate of improvement. Part of that is looking across the border and learning what's going on around you, and some of that will be some consistency because it will be, hopefully, levelling up as a consequence. I want to use that as a prelude to make a point in favour of local government. I think it's to the credit that they've got this thing going. It's their initiative, they're running with it, we're keeping a watching eye on it, but it's their baby, and it is beginning to demonstrate that it's actually leading to some improvement. You've given examples quoting from the report. There's a real variety in there. You drew your attention, for example, to the Scottish Housing Quality Standard. One of the reasons why there is improvement there is because there is a Scottish Housing Quality Standard, so everybody is working to the same script. There's also funding for it, so there's the resources to do it, and that gets you the kind of stellar improvement that you see there. That's not the case in every instance, and I'm not saying it should be, so I take comfort from the fact that some of the others who don't have that kind of fillip are nevertheless demonstrating improvement, even though they've had to do just the amount of money that goes into some of those services. The key thing for us as a commission, I think, as we look at this and provide whatever assurance we can on it, is to encourage councils to drill right into what it is that's leading to those variations in spend and practice and performance, and some of that is difficult because you're washing your not-so-clean linen in public when you do it, so let's be careful about that and not invite people just to go into a shell. But I think that the fact that this information isn't the public domain that we're prepared to put in a report like this is itself a good thing, and where I think we want to go next more, said this local government, is that as they begin to analyse what lies behind these figures, they can say things like, and I'll use a different example, educational attainment because it's current, they can say that the improvement that they can show over the last five years across all 32 councils in educational attainment, some of that can be explained because of the kind of socioeconomic circumstances that are obtained to all councils and again they vary, levels of deprivation are a key factor in play if you're trying to improve educational attainment, but they can actually analyse this data now and strip that out and say that that accounts for less than half of the variation between the 32 councils. So once you take things like deprivation out of the mixture left with a real question, why is there still a significant variation of more than 50 per cent between the best and the worst performing council? That's where this needs to go now and what we want to do is put our shoulder to the wheel. It would be fine if we did it, but I think it's better if councils do it. They've got ownership, they've got drive, they've got the means of control, so our role is to encourage it, support it and where necessary hold them to account for not doing it quickly enough. Just to say it'd be interesting to see these figures on a local authority by a local authority basis, I know the caveat that you've put in because I think it would be good to actually see the huge improvements in some local authorities and then look at why maybe others are not doing so well against their underlying cost base as well because I'm sure that some of the ones that are performing best are not necessarily those that are the most expensive in terms of delivering that service. I'm conscious of time, so if you don't mind, I'll ask you two points together. First one would be if you could comment on council's readiness for implementation of the Community Empowerment Act and secondly your opinion on the effectiveness of community planning partnerships? Readiness, Community Empowerment Act. I think that they have an act, there's guidance coming out, I think that we'll be doing a piece of work to look to how well they are prepared and looking at the commitment by councils to ensuring that they do engage effectively with communities. There's a whole bit in there in relation to much greater involvement of communities in participation in relation to their budgets, so absolutely it's on our to-do work. In terms of community planning, as you know, the commission jointly with the Auditor General has done a series of reports on community planning. We have no intention to do further work in relation to that, but it's a subject that we will keep under review. I think that it's interesting to make the comparison, if you want, and I'll be quick on that, between how effective community planning has been as a voluntary partnership, as opposed to what the expectation is in relation to integrated joint boards, which are statutory partnerships, where there's a clear accountability to ministers if things don't work effectively, so I think that there'll be an interesting comparison between the two. I think that, having said that, a key to the effectiveness of IJBs is something that we highlighted on more than one occasion in relation to community planning, the importance of building a culture of trust between the council and the partners around the table, and that's a particular issue in relation to health and local government, which comes from very different cultures. The council's background is quite different from an executive on the health board, and it's really important that the IJBs spend time and effort in building that culture of trust to make sure that there's a common understanding around the table, that they're not here for the council, they're not here for the health board, they're here for what's in the best interests of the integrated joint board and the challenge of getting people out of acute hospital beds into care in the community or care at home. There are lessons for IJBs to learn and draw up on from studying the experience of community planning. Thank you. We look forward to your report and due course. We just wanted to make sure that, as a committee, we cover as much of the content and range of the report as possible. I hope that we've done much of that in what's been a long evidence session this morning. We're very grateful for the time and effort here this morning. There's a brief, I suppose, opportunity to give the fact that we're overrunning for something. Mr Sinclair, if one of your team would maybe want to put on the record before we formally closed this particular evidence session, now would be an opportunity to do that? No, I'd simply say that we've enjoyed the opportunity to discuss the overview report with you. I think that there may be other opportunities. I think that we'd certainly welcome the opportunity to discuss with you the development of best value going forward, the next iteration of best value and the fact that that will apply to all 32 councils and not simply to councils that are performing well and making sure that we can provide assurance to the public on the performance of every council in Scotland. That, I'm sure, would be an issue of considerable interest to the committee. I thank you, Mr Sinclair, on the entire team for your time this morning. That completes agenda item 1. I want to move to agenda item 2. We'll give a few minutes just to allow witnesses to leave and then we'll go to agenda item 2. Apologies just for clarity and suspensions for a couple of moments for a comfort break. Thank you. So we now move to agenda item 2, which is consideration of petition PE1534. At agenda item 2 this afternoon, we are invited to consider petition PE1534 by Claire Simmons on behalf of planning democracy on equal rights of appeal in the planning system. We discussed this petition at last week's meeting when we heard from the independent panel and minister on the review of the planning system. In thinking what we do with this petition, I would note that both the independent review of the planning system and the Scottish Government do not support equal rights of appeal. That said, the Scottish Government has announced that a planning bill will be brought forward in autumn next year, which would provide any member with an opportunity, not just in this committee but across the Parliament, to seek to amend that bill to include an equal right of appeal. The petitioner has also confirmed that it will sit on the working groups that will be looking into recommendations from the recent review of the planning system that has been established by the Scottish Government. Given all that activity, I would be minded to close the petition but I will, of course, be keen to hear members' views. On the issues that remain pertinent, we had evidence on them as you mentioned last week, so it is not that the issue is going away and there are other ways to take it forward. However, I think that the terms of the petition are quite clear. It is urgent that the Scottish Government review the current rights of appeal and, clearly, that is not going to happen. It is not in the way that the petitioners have urged it with the petition that goes back to 2014. Given that, whether or not members have sympathy or that the issue is something that they would be keen to pursue, in terms of the actual petition, there has to be other ways of pursuing it. Therefore, I would not go against closing the petition. I have a lot of sympathy with one of the bits of evidence that was submitted on the petition relating to a case in my constituency where the Ombudsman had made it quite plain that the council had not taken into account—in fact, not sought—a transport impact assessment for development. There was no way that the community could appeal or whatever the decision there. I think that a lot of the demand and a lot of the arguments for this come out of a frustration with the ability of communities and others to properly hold what they consider to be defective decisions or whatever to account in the same way that the applicant can. I agree with Elaine that the petition is urging the Scottish Parliament to urge the Government to review the current rights of appeal, and they have clearly indicated that they are not minded to do so. The evidence that we heard last week about equalising the rights of appeal, the idea that the arguments for a third party right of appeal for their not being one, may well apply to the existing rights of appeal that the applicant has. In that context, I would be happy to close the petition given that this is a debate that is going to continue for some time and that the substantive point that the petitioner is making will not go away, I do not think, but it is also mindful of the fact that the Scottish Government has made absolutely clear what its answer to us would be if we were to urge the Scottish Government to review the rights of appeal. I agree with both my colleagues on the committee, because we do not have an opportunity to take it any further in this process, but what opportunity would we have to continue to investigate something of this nature, convener, as we go forward? It is still very pertinent, and there will be the possible opportunity for us to examine again in some way, but not necessarily this petition. I will come back to my thoughts on that at the end, Mr Gibson. Yes, thank you, convener. I think that we should remain ourselves with independent review of the Scottish planning system set in paragraph 46, which was, and I quote, the evidence shows that a third party right of appeal would add time, complexity and conflict to the process and have the unintended consequence of centralising decisions, undermining confidence and deterring investment. We believe that using time and resources to focus on improving their engagement would provide much greater benefits. I believe that, given the view of the Scottish Government and the independent review itself, that is the way in which we should move forward when the legislation comes to us next year. Can I just briefly reflect on some of them and perhaps make the obvious point that, last week's evidence session, the matter got quite a significant airing within the committee, and I have no doubt that, as we look at the legislative process with the Scottish Government's planning bill, it will again get a significant airing as part of that wider process. The fact that four members have given fairly specific comments today, I think, should hopefully reassure planning democracy and clear summons that that will be the case. Of course, we are not deciding whether we are sympathetic or not towards the equal right of appeal, but whether we should close the petition or not. Given that members who have intimated a sympathy towards the equal right of appeal are still content with the caveats that I gave at the outset for the petition to be closed, can I seek agreement from members to close the petition? We now move to agenda item 3, the appointment of a European reporter, and I will invite volunteers or nominations for that role. Andy, have you been nominated? Are there any other? Maybe there are no other nominations, Mr White. I know that he indicated interest before the session started, but, for clarity, can I ask for any other nominations? Mr White, would you be content to take on that role? Thank you very much. I congratulate you on assuming that role as the committee's European reporter. That ends agenda item 3, and we will move on to agenda item 4, consideration of evidence, which we previously could need to take in private in a suspend.