Hansard

The Local Government Finance (Scotland) Order 2016 seeks agreement on the allocation of revenue funding to local government for 2016-17 to enable local authorities to maintain and increase the pace of reform in order to improve the vital services on which the people of Scotland depend and which they value. It also seeks agreement on the allocation of additional funding for 2015-16 that has been identified since the 2015 orders were discussed and approved at this stage last year.

The 2016-17 finance settlement that we are providing to local government must be set against the backdrop of the United Kingdom Government’s continuing austerity programme and the real-terms reduction in the Scottish budget. It is in line with the challenging settlement that is being provided to other public bodies, with the exception of the health service, which the Government is committed to protecting.

In 2016-17, the Scottish Government will provide councils directly with a total funding package that is worth over £10.3 billion. That includes revenue funding of almost £9.7 billion and support for capital expenditure of almost £607 million. However, that is only part of the picture. In addition to the settlement allocations in the order, local government benefits from the attainment Scotland fund, which provides support to schools in our poorest neighbourhoods to raise attainment. As I confirmed to Parliament yesterday in the Budget (Scotland) (No 5) Bill debate, I will double the amount of funding that we planned to allocate to the attainment Scotland fund over the next three years, from £80 million to a total of £160 million. That substantial additional investment will support local authorities in our quest to tackle the poverty-related attainment gap and ensure that every child has the opportunity to realise their potential.

The order seeks Parliament’s approval for the distribution and payment of over £9.5 billion out of the revenue total of almost £9.7 billion. The remainder will be paid out as specific grant funding or other funding, which will be distributed later as agreed with local government.

I will provide a bit of background to the overall 2016-17 settlement funding package, which is firmly focused on the delivery of joint priorities: to deliver sustainable economic growth, protect front-line services and support the most vulnerable in our society.

My priority has been to deliver a financial settlement that councils can accept, in order that we can pursue those shared priorities, which will improve outcomes for local people through health and social care integration and improving educational attainment. To that end, the accepted funding package for 2016-17 will protect the council tax freeze for a ninth year. We have, once again, committed £70 million to fully fund the council tax freeze to provide protection for household incomes in what has been a very financially challenging period for many.

We will invest £250 million in integrating health and social care services. That funding will support additional spend on expanding social care to support the objectives of integration, including through making progress on charging thresholds for all non-residential services, to address poverty. That will also help to deliver the living wage for all social care workers and help to meet a range of existing costs faced by local authorities in the delivery of effective and high-quality health and social care services.

Thirdly, we will maintain the pupil teacher ratio in Scotland’s schools. The Scottish Government has been consistent in protecting teacher numbers as a central part of our priority to raise attainment; £88 million is included in the settlement to ensure that schoolchildren continue to receive the same amount of teacher time by ensuring that councils maintain the number of teachers to pupils at current levels, and includes the induction of new teaching staff to replace those leaving the profession. Taking into account the addition of the £250 million to support the integration of health and social care, the overall reduction in funding equates to less than 1 per cent of local government’s estimated total expenditure in 2016-17.

I welcome the agreement of Scotland’s local authorities to this financial settlement, which, when taken together as a package of funding, will enable them to increase the pace of reform and improve essential public services to communities all over the country. I am pleased to note that, to date, 16 councils have formally set their budgets for the coming year and that they include plans to deliver on our package of measures.

The figures for 2016-17 presented for approval today include two significant additions from the provisional distributed figures issued on 16 December. Those include almost £54 million to deliver free school meals to all children in primary 1 to 3 and more than £26 million—the initial 80 per cent instalment of the money set aside for discretionary housing payments—to enable councils to mitigate fully the impact of the UK Government’s discredited bedroom tax.

The 2016 order also seeks approval for changes to the increase in funding allocations for 2015-16 amounting to a total of £72.8 million, which was either held back from the 2015 order or has been added to fund a number of agreed spending commitments that have arisen since the 2015 order was approved. Those include: £27.5 million, being the previously held back balance of the teachers induction scheme funding; £10 million for maintaining teacher numbers and pupil teacher ratios in 2015-16; £9.7 million funding assistance to enable local authorities to provide support and assistance to communities impacted severely by the emergency weather situations experienced at the end of last year and the beginning of this year; £7.2 million to support implementation of the one-plus-two languages policy; £5.8 million to support the local government contribution to the developing the young workforce programme resulting from the Children and Young People (Scotland) Act 2014; and £5 million for kinship care allowances.

I should explain that the total revenue funding to be paid out to councils in 2016-17, but not covered by the order and which will be distributed later, includes: £86.5 million paid directly to criminal justice authorities; £37.5 million for the teachers induction scheme; and £9 million, being the balance of funding for discretionary housing payments.

Although not part of the order, the overall package for local authorities includes support for capital funding in 2016-17 of almost £607 million. Allowing for the reprofiling of £150 million from 2016-17 to 2017 to 2020, that meets our commitment to maintain local government’s share at 26 per cent of the Scottish Government’s capital budget.

I turn to business rates, which is a key issue for local services and economic growth. Yesterday, at stage 3 of the Budget (Scotland) (No 5) Bill, I confirmed that we would moderate the proposed adjustment to rates relief for empty industrial properties and extend the fresh start and new start reliefs for the duration of 2016-17. Other proposals that I can now confirm are to set the standard poundage rate at 48.4p and the large business supplement at 2.6p for 2016-17.

Our renewables relief scheme will be refocused to support schemes with community involvement and on new developments that are coming on stream in 2016-17. The small business bonus scheme will continue unchanged for 2016-17, benefiting around 100,000 business properties.

We are extending for a further four years, to 2019-20, the current business rates incentives for enterprise areas and are creating a new life sciences enterprise area at Biocity in North Lanarkshire.

The closure of the two Tata Steel sites is a national concern, and our task force has been interrogating ways to support reoccupation. One measure that we are putting in place is new rates relief for steel production on the sites.

Given the importance of rural digital connectivity, we are piloting a new rates relief scheme in Arran and the Cairngorms to incentivise new mobile mast construction, which could subsequently be rolled out more widely.

Presiding Officer, legislation was laid yesterday for all those changes to come into force on 1 April. They underline the Government’s commitment to maintain Scotland’s position as the best place in the United Kingdom to do business, with a rates relief package that is estimated at over £550 million for 2016-17. We continue to listen to the views of business and we will shortly announce details of the review of business rates, as we committed to do at the draft budget.

In summary, the total funding from the Scottish Government to local government next year amounts to over £10.3 billion. With that in mind, I move,

That the Parliament agrees that the Local Government Finance (Scotland) Order 2016 [draft] be approved.