 Good morning and welcome to the 23rd meeting of 2015. Everyone present is asked to switch off mobile phones and other electronic equipment as they affect the broadcasting system. Some committee members may consult tablets during the meeting. This is because we provide meeting papers in a digital format. Agenda item 1 is a decision whether to consider two items in private at this morning's meeting. Item 3 is a discussion about the evidence that is taken as part of our scrutiny of the draft budget 2016-17, and item 4 relates to our future work programme. Our members agree that we take these items in private. Agenda item 2 is our substantive item for today. It is evidence in the draft budget 2016-17. The committee has been focusing its budget scrutiny on issues around investment of local government pension funds and capital infrastructure projects and also city deals and the opportunities for investment. Today's evidence session will also extend beyond those areas to other local government finance matters. I welcome John Swinney MSP, Deputy First Minister and Cabinet Secretary for Finance, Constitution and Economy, Stephen Gallagher, Deputy Director and Director for Local Government and Communities, Head of Local Government and Analytical Services division and Bill Stitt, Assistant Team Leader, Local Government Finance and Local Taxation Unit. Mr Swinney, do you wish to make an opening statement, please? I welcome the opportunity to meet with the committee this morning and to address the issues in connection with the forthcoming Scottish Government budget. In your own introductory remarks, you mentioned the fact that the committee is focused on issues in relation to the utilisation of local authority pension funds in Scotland's infrastructure. The Scottish Government is keen to encourage greater investment by pension funds in Scotland's infrastructure. In June of this year, my colleague, the Cabinet Secretary for Social Justice, Communities and Pension Rights welcomed the decision by Falkirk local government pension scheme to do just that by investing £30 million in affordable housing. Ministers have already asked the newly formed local government pension scheme advisory board to look at this question. The Scottish Government expects the scheme advisory board's work to help influence and create the conditions for spreading innovative practice so that more opportunities for funds to invest in infrastructure may be developed. Scottish Government officials are also committed to changing scheme regulations to ensure that they are not a barrier to local government pension scheme investment in infrastructure and are working with the scheme advisory board to achieve that. However, a careful balance needs to be struck between encouraging that approach and paying due regard to the responsibility of scheme managers to invest pension fund monies in accordance with the scheme managers fiduciary duty. Our role is to work with our partners in local government to remove any barriers within our control and to identify any opportunities to optimise such investment, always respecting the fiduciary duties of the scheme managers. This discussion of pension scheme investment takes place in a wider context, which includes activity centres around the cities and a major programme of infrastructure investment. The regions are the engines of our economy. The Scottish Government is committed to working with all of our cities to unlock investment, whether that is individually or collectively, or whether that is through a city deal. One of the Scottish Government's devolved initiatives to stimulate growth and deliver infrastructure investment or a combination of all or some of those measures. Through the Scottish City's Alliance, we are exploring opportunities for all of Scotland's cities. Opportunities arise within the context of a long-term plan, the Scottish Government's infrastructure investment plan, which was published on 6 December 2011, sets out priorities for investment and long-term strategy for the development of public infrastructure. The plan sets out why we invest, how we invest and what we will invest in from now until 2030. It also provides certainty and transparency to the construction industry by outlining a clear pipeline of major projects. We will be publishing an updated infrastructure investment plan later this year. In conclusion, the Scottish ministers are committed to ensuring that local government pension scheme delivers appropriate returns for its scheme members, whilst also recognising the potential for those funds to be invested in Scotland's infrastructure. We look forward to the committee's deliberations on those issues and will take those into account as we seek to remove barriers and optimise opportunities for such investment. Thank you, Mr Swinney. During the course of our deliberations on the issue, a number of us went to Manchester, where we heard about the cuts to local government there, which are far more substantial than we have had to face here in Scotland. We heard about the innovative ways that they were managing to fund investment, including new housing through matrix homes, a company that has been established to deal with pension fund investment. It would be fair to say that the pension fund team that we met was pretty dynamic and were keen to ensure that investment in the local infrastructure took place, while sticking to their fiduciary duties. However, in taking evidence from certain folks from pension funds here, it seems that they are rather more risk averse in making those investments. You talked about removing any barriers and I think that that is welcome, but how do we deal with the risk averseness that seems to be there amongst many of the pension fund managers here in Scotland? The issue comes down to an assessment of the exercise of the fiduciary duty. I am going to struggle with that word all morning. I fear the fiduciary duty of pension scheme managers in exercising their responsibilities. Ultimately, pension fund assets are being invested on behalf of pensioners within the scheme, and they must be able to deliver satisfactory returns. The question that has to be addressed is whether the necessary and acceptable returns can be delivered within the approach to supporting infrastructure investment projects, which is at the heart of your question. I certainly think that there is a need for fund managers to become much more engaged in the opportunities for long-term strategic investment in infrastructure than has been the case to date. The Falkirk example is a very good example of how scheme managers have begun that process. I invite the scheme advisory board to consider this issue and to advise me of any particular obstacles that they believe are there. Essentially, the design of the process that will enable scheme managers to take the type of proactive stance that you have highlighted. The final point is about choice of investments. There are parameters and limits to the choice of investments that should be undertaken by scheme managers. The questions around the ethics of investments are very important. There are substantive ethical questions raised about some of the investments that might be made by fund managers, which will directly contradict the fiduciary duties of scheme managers, because one investment might deliver a greater return, but the ethics of that investment might be unacceptable to the scheme in question. That, to me, is a legitimate parameter to be applied on the exercise of fiduciary duties to ensure that the ethical choices that are made about investments are fully and completely respected by the actions of pension fund managers. In terms of those parameters, we talked to someone from Strathclyde pension fund the other week who did not seem to have a difficulty in that pension fund investing in arms companies, for example, which is maybe one of those areas in which pension funds should not. The excuse that is often given there is that, in order to obtain the best bang for their buck to conform to their fiduciary duties, they have no option but to invest in arms, tobacco or alcohol. Do you think that they have the ability to disinvest from those kinds of areas? I think that that option exists for the pension policy priorities to be set and the investment priorities to be set by those responsible for pension schemes, which can set appropriate parameters which are entirely consistent with the fiduciary duty, but which respect the ethical choices made by those charged with exercising responsibility for those particular pension funds? We have seen some changes from the UK Government to pension rules. What impact will that have on local government in Scotland? In which particular respect? There have been some changes that I understand to UK pension rules, which may impact costs and may have a major impact on local government pensions. Have you got any comment on that? The reforms of the local government pension scheme are consistent with the legislation passed by the United Kingdom Parliament in relation to pension reform following the Hutton review. We have gone through a successful process of renegotiation of the pension scheme, which was done in a commendable fashion by all interested parties, to ensure that the local government pension scheme complied with the legislation passed by the United Kingdom Parliament. I know that there has been some concern raised about some of the investments that have taken place, not only in the local government pension portfolio, but also in other pension portfolios in the public sector. Can you give us any indication whether the advisory board under your guidance would be given any indication what would be seen as ethical investments in the future? The scheme managers have a responsibility to formulate the policy decisions that they consider to be appropriate. The Government does not direct those choices, and a lot of issues are raised about the Government exercising that power of direction. The choices are essentially up to the fund managers and the guidance from scheme boards to make the appropriate choices consistent with the policy directions that are arrived up by those boards. The role of Government is not to direct those points. We do not run the local government pension scheme, it would be inappropriate for ministers to be involved in directing those questions. The point that I made to convene in my earlier answer was the fact that it is internal legitimate for those issues to be considered by scheme boards and for decisions to be taken accordingly that set the parameters within which fund managers operate as a consequence. Can you, First Minister, outline what the role of the Scottish Government would be in guiding or advising the Scottish Public Pensions Agency and the board? We have a note provided for us for today's meeting, and as part of that note, it indicates that the draft work plan for the scheme advisory board has been drawn up, and the draft was shared, and I am quoting from the document, on how accurate it is, that you can correct or otherwise. The draft was shared with the Scottish ministers for their approval. That is not about guidance on ethical investment, but it is about operational matters and the work plan of what the scheme advisory boards are actually doing at what I would describe as routine operational pensions management issues and procedural questions, but not on questions of that nature. Thank you, Deputy First Minister, for that clarification, because I think that it is useful to get that on the record so that there is no confusion in relation to the role of the Government in terms of the advisory board. Going back to ethical investments, what we did here, when we were the committee visited Manchester, was that some of the fund managers felt that they were in responsibility for the administration of those funds, and they felt that they had to have autonomy in making decisions regarding the investments, particularly around the investment returns. We heard that some of those pension fund managers had set targets of 11 per cent returns on their investments, and they felt that those level of returns could only be matched by investing in what could be seen as some of the least ethical investment processes. Some of the returns from the public building programme that we would like to see pension funds investing in would not give that level of return. Therefore, the investments that they were claiming to be carrying out were in the best interests of the fund and not in the best interests of the wider population and the best interests of the public sector as a whole. I think that that comes back to one of the points that I made in my mockering remarks. There is a balance to be struck between encouraging this type of infrastructure investment and securing the necessary fiduciary duty of scheme managers. It is perfectly permissible for scheme managers to be directed by the relevant boards to secure a particular level of return. There is a necessity to ensure that that return is sufficient to ensure that the local government pension schemes can provide the necessary financial return for their members. We should not lose sight of the fact that, through all of this, there are local government pensioners who require to get a return on the investments that they have made. There may well be a satisfactory return that can be achieved in that process by investing in an infrastructure project. It does not have to be the very best return that could be delivered, because that could be by investing in some vehicle that was deemed to be inappropriate. There are always choices in there, but in exercising those choices, I do not think that any of the scheme managers or boards can do so without paying due regard to the need to deliver on their fiduciary duty, but the fiduciary duty is not an absolute requirement. It can be a relative requirement. A return of one level may be perfectly acceptable for a fund. It does not have to be the very highest return, because securing the very highest return could involve you in securing investments that are judged and deemed to be inappropriate. Good morning, Deputy First Minister. I would like to ask you about some of the pressures that you might see coming to local councils in the future. I am thinking particularly of the change in the pension rules by the UK Government, which, because of what I have estimated, might be a cost of £125 million. Has there been any progress in negotiating with the UK Government about possible compensation that they have talked about doing for English and Welsh local authorities that are going to be particularly affected by that change? Slightly disadvantaged position in that we are having this conversation in advance of the outcome of the spending review on 25 November, where, essentially, any question of that nature would be resolved. I am not in possession of what are the budget numbers prospectively beyond those for the current financial year, and we will get those as a consequence of the announcement of the spending review on 25 November. What I can say is that my expectation is that the changes that Claire Anne has referred to will be significant factors with which we will have to wrestle. We will wrestle with them right across the public sector within Scotland because the decisions that have been taken on employers, national insurance contributions and pension contributions will have to be met by employers. There are other factors as well. For example, the apprenticeship levy. We do not know any detail other than the fact that there is going to be an apprenticeship levy, and that is going to be applied to what has been described as large employers, although we cannot get a definition of what a large employer is. There are a range of factors that I can identify as having an effect on the strength of public sector budgets. What I cannot do today is quantify what effect those will be because of the fact that I do not have a final position from the UK Government on what the financial setting will look like beyond 2015-16. I have a final question. Some councils have yet to completely settle on equal pay and on job evaluation situations. Does that cause you some concern going forward because there is this unknown liability there for some of the councils in Scotland? It causes me concern for two reasons. Yes, because of the unknown liability, although I suspect that liability is understood by all concerns. My greater concern is about the members of the public who are not having the settlement to which they are entitled. I have been appearing before the committee for eight and a half years as a minister and I suspect that the first committee that I appeared before asked me about urgency and about equal pay. I suspect that I said at that time that the issue should be resolved speedily by local government. There is no new ground being covered about that. It is all pretty well established over the last number of years, but it is a matter for individual local authorities to resolve. I did see some media coverage this morning, which I think that Fife Council has made significant progress in its question, which I welcome. Obviously, Mr Swinney, we are here to scrutinise the budget, but that has been a little bit difficult considering the lateness of the autumn statement. Obviously, that causes you difficulty in the fact that, in terms of some of the questioning, you are going to be unable to answer because Mr Osborne has not made the announcements that we were expecting. Does the lateness of the autumn statement actually cause you a huge amount of grief and will that grief be felt by local government as well, who, of course, will not know what the settlement will be for them until much later as well? There is never any grief cost to me. I will just glide past it all. The timing is not ideal, and I would not begin to suggest that it is anything other than inconvenient. We have had spending reviews before in October. Normally, I would have presented a budget to Parliament by September 20. My agreement with the French Committee revolves around that date. We have had previous spending reviews, which have been in October. If my member says that we had one in early November, I think that this is the very latest that we have had in my tenure in office. It is much later. I am hoping to make as swift progress as I possibly can do in settling the Government's budget and in making that clear to Parliament and to making the local government's France implications clear to local authorities as quickly as I possibly can do after the spending review has been announced. On that, First Minister, we are hearing a spate of announcements by local authorities throughout Scotland on the budget savings that they have to make. One authority in central Scotland has indicated that 1,100 workers or employees will have to go as part of the budget cuts. How can local authorities at the present moment give that indication that there will be redundancies or people leaving the local government if we do not know what the budget settlement is going to look like until later in the year? They can only be doing it by making a range of assumptions about the budget, which has not been informed by decisions that I have taken. That is the only way that local authorities can be making predictions of that nature. I have been around long enough and I have heard various rounds of all those over the past few years. I simply offer that as some context for the committee to consider. I have heard many of those doom-laden predictions that have not been materialised. As the convener said at the outset, we have worked very hard in Scotland to try to protect local authority finances in very challenging financial circumstances. I think that that has been acknowledged by local government. It is certainly acknowledged by local government in England that there has been a very different settlement here compared to south of the border. However, the basis of the numbers that have been put out into the public domain by individual local authorities can only be on the basis of a range of assumptions that they have arrived at. Based on the understanding of the financial commitments that you entered into a decade ago? Those will be factors that will be relevant. The PFI burden will be a particular strain on local authorities that have committed to that approach. Cabinet Secretary, we went to Manchester and have been to Inverclyde in taking evidence on city deals. I was at the launch of the Aberdeen city deal bid in Parliament last night. Can I ask whether the Scottish Government is supportive of the UK's city deal programme? Do you think that it offers value for money? We are supportive. You were at the Aberdeen city deal launch in Edinburgh last night, where I was in Aberdeen with a business audience discussing that very question last night. I would say that there is a general enthusiasm for the exercise of city deals. I think that there is a particular opportunity in city deals to provide some of the integrated focus that would be beneficial in setting a clear agenda and direction for development in particular localities. To see those issues in a much wider context, if I just look at the examples in your own locality convener, there is such an inextricable link of interest between the needs of Aberdeen city and Aberdeen shire in economic development to look at them separately or to look at them without looking at the wider context would be to miss an essential requirement about the necessary linked focus that is required. Yes, I do think that there are many strengths in the opportunities that come from city deals. I would say, however, that they need to be genuinely arrived at by collaborative working between the local authorities concerned, the Scottish Government and the United Kingdom Government, and, crucially, with the stakeholders in localities, whether that is the business community or community organisations or the wider stakeholder community. If they are arrived at outwith that collaborative environment and infrastructure, I do not think that they will be as effective as they could be. I think that the necessity to make sure that we operate within that collaborative environment is a crucial question in relation to their success. Finally, convener, you asked me about value for money. I think that the assessment of value for money must be applied rigorously and continuously through the city deal. The city deal of itself cannot be, I could not say to you today, every city deal is going to be value for money, that would be an imprinciple commitment for which I would not have the evidence. However, the value for money test must be applied on all of the developments that are implicit in city deals and the steps that are taken. My principal view is that they are likely to be value for money because they will be driven by the values of collaboration and co-operation, shared interest and the breaking down of boundaries between public authorities, which generally, in my view, are good things in relation to the exercise of policy decision making and, therefore, in pursuing a value for money assessment as a consequence. In terms of that collaboration that we certainly saw last night, the business community buying into the Aberdeen city andshire bid, do you think that other public sector partners need to be involved in the formulation and shaping of any bid to ensure that it is successful? When we were in Manchester, we saw the effectiveness of greater Manchester city deal because they will work together and collaborate. I was going to ask you what your involvement in the governance and management of a city deal should be, if you think about how the Scottish Government is planning to, I would not say, interfere with how it is going to be communicated. Certainly, we would want to be closely involved in the setting of the direction of the city deal. Obviously, in the city deal arrangement that has been approved so far in relation to Glasgow, we are funders within that and we have a funding commitment. In terms of that funding, I have a duty of value for money to Parliament in relation to that investment that is undertaken, and I have to be satisfied with that, so the Government will want to be closely involved in the direction of the city deals. I think that the overriding question is perhaps the point that Mr Buchanan made in his question to me, which is that the success of those ventures will be driven more by the collaboration amongst the interested parties than by the degree of Government direction and intervention in the process. The creation of a shared agenda among those parties, which is viewed by the Government to be credible, acceptable, value for money, delivering on the purpose of the city deal, that would be the model of governance that I would see as being relevant in this process. Is it your idea that you would fund all the city deals that should all be funded by the Government, apart from the Scottish Government? That invites me on a Wednesday morning to make a spending commitment in front of the local Government and the German nation committee. I think that Mr Buchanan knows me well enough to know that that is not a general habit of mine to behave in such a fashion. We are very supportive, we are keen to be helpful, but our degree of support and the level of support will be determined by the quality of the propositions that come forward. The direction of those city deals, do you think that those city deals are really necessary? Why are they necessary in particular? Is there a rather more general question? There is a benefit in them, because if I take the example of since we have been talking about the north-east about Aberdeen City and Aberdeen Shire, we are jointly with the local authorities funding the Aberdeen western peripheral route, which is now taking its course around the city at long last. That, in the convener, will correct me on the geography, but the overwhelming majority of that route is in Aberdeen Shire area, but it will have a profound effect on both Aberdeen Shire and Aberdeen City, both in terms of implications on the traffic system, but also in terms of the opening up of opportunity. We need to have a mechanism to focus on that joint agenda, and I think that the city deal gives us that opportunity to do so. The city deal has the potential to recognise that. Some of the changes that have taken place in our society in recent years, where cities have become ever more fundamental to the operation and the exercise of an economic agenda, so the drive of cities such as Aberdeen, Edinburgh, Dundee, Glasgow, Perth, Stirling or Inverness, are now much more central to economic development in our localities. The city deal has essentially recognised that need for us to be much more focused on our policy-making at that level. Having said that, it is also important that we have sufficient policy interventions to support the development of the larger towns of Scotland, because the larger towns of Scotland face many, many challenges around the country. We cannot put all our eggs into the city deal basket. We have got to have policy interventions that properly and effectively deal with the requirements and the needs of some of the larger towns in Scotland that face acute challenges at this time. We saw how effective in Manchester the city deals were because it was greater Manchester, i.e., the surrounding of the periphery. You mentioned that the surrounding areas of Aberdeen, Edinburgh and Glasgow are important. Is it not getting more important in those surrounding areas as they gather more and more areas, as they get wider and wider? If you take the city deal that has been talked about around Edinburgh, it is a wide geography. It is east, mid, west, low, in the city and also Fife. For what I can deduce, and the members representing the wider Fife area around the table who can contradict me if I am getting this wrong, I pick up a very beneficial sense that those discussions are providing meaningful value for the localities outwith the city of Edinburgh. That has been welcomed by the localities outwith the city of Edinburgh. That is one of the key characteristics of the potential success of city deals, is whether or not the outlying localities feel that there is some benefit and advantage of being part. Of course, when we look at some of the wider questions around connectivity, those are crucial questions in relation to the heart of the city deals that will relate to the involvement and the impact on some of the outlying areas. Clare Adamson, please. I think that you have possibly partially answered my question already. Obviously, I represent Central Scotland, so seven of the nine constituencies there are linked into the Glasgow and Clyde Valley city deal. However, I do have a concern that there may be pockets of areas, but the Falkirk Council, which includes the Grangemouth area, is usually important to Scotland's economic future. Do you have a concern that we might end up with pockets of considerable importance to Scotland that are not linked into those deals? We have to be mindful of that. I think that it is an entirely reasonable point that has been raised and one that we have to be very careful about. In terms of the city deal areas, Glasgow and Clyde Valley and the City of Edinburgh deal are covering really quite wide geographies, and that is welcome. However, if I have all my geography correct, Falkirk is probably the bit that is out of both. If you look at some of the other interventions that we have made on tax incremental finance, for example, the Grangemouth area, particularly within the Falkirk Council area, is a very good example of an imaginative project that has come forward and has been supported by the Government. City deals are not the only tool in the box. We have tax incremental finance, which has been discussed in parliamentary questions just a few weeks ago. The Ravenskig tax incremental finance pilot is now being reconsidered by the interested parties because the original propositions are not forming in the way that was originally envisaged. Those things will happen and we just have to be open to try to pragmatically and supportively address those questions. There will be a range of interventions such as that. We have the growth accelerator model in the city of Edinburgh, which is designed to help to fund the redevelopment of the St James's quarter and St James's centre and a very significant strategic development in the east end of the city. There will be a range of different interventions that will be deployed to try to support individual localities. How I reassure the committee about how we are approaching that is through some of our thinking about inclusive growth, where we are determined to try to ensure that we have a much more effective way of tackling regional inequity. That has been a fact of life in Scotland for many years, but it is becoming a more acute fact of life in some localities in Scotland. We have to address those factors in the interventions that we make. Deputy First Minister, it has been alleged that some of the bids for the city deal funding are effectively old off-the-shelf projects. What would be your response to that? They are not exactly innovative or strategic in their outlook. They are basically just projects that have been lying around for a number of years that local authorities have decided to pull off the shelf and throw into the city deal port in the hope to get funding for it. They would have to be projects that would provide enhancement to the economic infrastructure and the competitiveness of localities for them to be able to be advanced as part of the city deals. It is part of my point of answer to Mr Buchanan's question where the Government does not want to micromanage the city deals, but we want to be assured that they are emphatic, that there is good thinking behind them, that there is a strong assessment of value for money at their heart. There will be assurance mechanisms within the arrangements and city deals that provide us with confidence that the decisions that have been taken are decisions around projects that will deliver enhanced value for that locality and, as a consequence, benefit for the Scottish economy and the bargain. Taking on board that, Deputy First Minister, the value for money and a time of tight financial constraints for local authorities and how they use that available money to invest is interesting. I will not go into detail about your project, but one of the city deal bids that I am aware of is a bid that has come from a local authority where there is a private sector commitment to deliver infrastructure as part of a development that has now been submitted as part of the council's city deal bid. While you are correct, you would not want to micromanage that, but surely we should be looking at best value and we should be ensuring that we are not taking any responsibility away from the private sector and their investment programme, particularly when it comes to infrastructure, to be paid for by the public purse. Without knowing the specific circumstances that Mr Wilson is referring to, I would say that it would be a odd decision for a local authority to, if they have a financial commitment from the private sector to pay for a piece of infrastructure, to say, no, no, do not you pay for it, we will pay for it, I just find that to be a bit odd. I certainly would contradict everything that local authorities tell me about the challenges that they face about public finance, but it is certainly not a decision that I would take. I will pass the details on to you. I listen with interest to your comments about city deals offering value for money, and I am a big believer in collaboration and shared agenda, so I am very pleased to note your comments on that. It seems to me that there are two complementary agendas going forward at the same time. One is the community empowerment agenda and the other is the planning review, which I know is in its very early stages. Do you think that those other agendas will help city deals to give powers to communities? Do you think that there are links across the three agendas or are they separate aims? I think that they are all part of the same nature of policy, or the same area of policy, which is about greater local discretion. It just happens to be in different forms. The community empowerment agenda has relevance to absolutely every community in the land, and that will manifest itself in different ways in different parts of the country. You will have certain communities that wish to do certain things, and the community empowerment agenda is proving very beneficial in parts of rural Scotland in relation to land ownership. In some parts of urban Scotland, community empowerment is bringing forward a real appetite on the part of communities to take over facilities that have become redundant in their current form, but communities have sufficient views about how they might be developed and taken forward and can make more of a success of them under their ownership and their countless examples of those around the country. The consistency of the policy framework is that the emphasis is placed on to localities to take the initiative, whether that is at a village level, perhaps more ideally through community empowerment, or a city level through a city deal, where a city region is taking more initiative for development in their locality. You could argue that the same test is being achieved by the village taking greater responsibility for the village hall through the community empowerment agenda. Thank you, convener. Where do you think that the ultimate accountability and responsibility will sit then for those decisions being effective for those communities? Where do you see that sitting, the community council or the council or the city deal partnership? How will they agree? It will sit at different levels. If I take my two examples there, of a city deal or a village hall acquisition by a community organisation, ultimately, the acquisition of the village hall and its operation by a community organisation, the accountability will be to the locality and to the members of the public by whatever device. I am a member of a number of community organisations in my constituency who run village halls, village facilities and all the rest of it. Their accountability is to those who use the facilities into their locality. On the city deal, accountability will be to the members of the component authorities and to the Scottish and United Kingdom Governments if we are funders of those propositions. That will be done through a governance structure, which will be some form of governance board that will exercise that responsibility. I have just returned to the city deal issue in relation to the regional inequity that you mentioned. Some of my colleagues have mentioned that potential concern, and I would have that to represent in command of Nervon Valley, which is the last time I look, there aren't any cities in that particular region. First, what is the criteria that would enable an area or region to participate in the city deal process? How might the impact on an area, like command of Nervon Valley, be assessed if, for example, Glasgow and Clyde Valley city deal were able to set a new course of direction for economic development that might have an impact on us? How could we influence that or be protected from something that might not be in our interests in that part of the issue? What we have to do here—this is why I answered the very first question on this series of questions from members—by setting out the Government's firm commitment to city deals, but also to recognising that there are other localities in Scotland that are required to be assisted and supported in a focused way. We may support a city deal, but that does not necessarily mean that most expressly it does not mean that we are then closed for other ways in which we can support developments in individual localities. As we look at our agenda on tackling regional inequity, we will have particular areas of the country where we think that there are particular challenges that have to be overcome that might not be touched by a city deal proposition and which we have to find other mechanisms to support in that way. I have stressed a number of different areas or a number of different initiatives that the Government takes to try to support that agenda. There will be ways in which we can engage with localities on those points. The three Asher councils, for example, are discussing collaboration around a growth proposition in Asher, and we would be very interested in that. The Asher economy is an economy as part of Scotland that causes me some significant concerns. I have discussed some of those questions on previous occasions. A proposition like that is an interesting proposition for the Government to look at. It has all the attributes of the city deal at heart, which are collaboration between different public authorities and the creation of a shared agenda with the objective of delivering some dynamic growth as a consequence. In a sense, our agenda is not restricted to city deals. Our objective is to make sure that all parts of Scotland have the opportunity to flourish through the Government's agenda. The UK Government talks about growth deals. Is that what you mean by that? You do not have to be a city to be a part of this process. For example, in Asher, you mentioned perhaps the towns of Kamala, Aire and Irvine, in the core principal towns in that area. Could you propose some kind of direction for economic growth in Asher? That would be sufficient, is that what you are saying, to qualify in terms of a growth deal? The proposition that the Asher councils are looking at is that the councils are engaging with the Scottish Government and our officials are in regular discussion with the councils about those points. In Asher, I know that it is not relevant to Mr Coffey's constituency, but some of our decisions on enterprise area status have given particular opportunities to areas of Asher. That is another of the tools in the box that we deploy to try to support economic development in individual localities. However, the emergence of an agenda from the three Asher councils that could be a combined and cohesive agenda that supports the agenda of growth would be what we are engaging with already, and we would be happy to continue to do so. In terms of the delay to the autumn statement, I imagine that that causes you some difficulty in the discussions that you would normally have with COSLA at this time about budget allocations. Can you assure the committee that, as per usual, COSLA will be consulted on the budget as it becomes more apparent? Those discussions have been under way for some time, and the Cabinet Secretary for Social Justice and I have had a number of meetings with COSLA on the issues around the spending view. Local government are our partners, so we need to understand the issues and the challenges that they face and to try to work as collaboratively and co-operatively as we can to address those issues. One of the elements of the approach to the spending view is that we are looking at not just in terms of the traditional portfolio allocations that get made, but we are looking at some of the themes that capture some of the broader areas of public expenditure. Employability is a theme, a focus of government expenditure, but it is not contained in one neat little compartment within a portfolio budget that is spread across a range. Innovation is another. The learning journey is a third. Health and social care integration is a fourth. The justice agenda is a fifth. In all those areas, we are having substantive discussions with local government about how we proceed on those questions so that local government have the opportunity to be fully part of the developing thinking within the Government on the spending view. Given the fact that local government will be in all those five examples that I cited there of employability, innovation, health and social care, justice and the learning journey, all areas where local government are central partners. We are having those discussions frequently with local government as part of developing our thinking on those questions. A further breaking down of the silos when it comes to more innovative thought in terms of budget allocation? Once the numbers are clear on 20 November, there is a much more sharply focused discussion around what the numbers look like and what they mean and how they are allocated. However, the wider questions that I have cited are examples of how we are trying to create greater cohesion in the way in which we use public expenditure and as a consequence to maximise its effectiveness. Greater cohesion and possibly less duplication? Well, duplication is the enemy. Obviously, when money is tighter, which is going to be tighter, part of my focus is to remove duplication from the way in which public expenditure is deployed. That might mean changes in the way in which we undertake particular approaches, but what I am trying to do is to avoid duplication and maximise the maintenance of outcomes for members of the public in Scotland where money becomes ever more difficult to secure. Can you update the committee on the progress that is being made by the commission on local tax reform and when it is likely to report? The commission is pursuing its work programme. It is doing that to timescale, and we expect the commission to report before the end of November. Cabinet Secretary, can I thank you for giving us the time today? I now suspend the meeting and move on to private session.