Hansard

The draft finance order that we are considering today seeks agreement on the allocation of revenue funding to local government for 2014-15 to enable local authorities to maintain and improve the vital services on which communities throughout Scotland depend. In addition, it seeks agreement on the allocation of funding since the 2013 orders were discussed and approved by Parliament. As well as seeking Parliament’s approval on the order, I confirm the laying of legislation on business rates and on the council tax exemption for articulating students.

Next year, 2014-15, is the third of the current three-year settlement, and local authorities were advised of the provisional allocations this time last year. I updated that information as part of the annual consultation process and will summarise the changes that have taken place since.

In 2014-15, the Scottish Government will provide councils with a total funding package that is worth more than £10.6 billion. That includes revenue funding of more than £9.8 billion and support for capital expenditure of more than £773 million. The finance order seeks Parliament’s approval for the distribution and payment of £9.3 billion, out of the revenue total of £9.8 billion. The remainder will be paid out as specific grant funding for which separate legislation already exists, or it will be distributed later.

I will lay a second order before Parliament next month to pay the £70 million to compensate all councils that freeze their council tax again in 2014-15, which will be the seventh consecutive year of the freeze. I am pleased that a number of councils have already declared that they will freeze their council tax and I encourage the remainder to follow suit, thereby providing much-needed financial respite to households throughout Scotland.

I will also use the second order to distribute the majority of the council tax reduction scheme funding and any further agreed changes to discretionary housing payments. As the whole Parliament is aware, and as we discussed during yesterday’s budget debate, the United Kingdom Government’s imposition of the spare-room subsidy rules—or bedroom tax—is having a significant impact on some of the most vulnerable in our society.

Legislation constrains our ability to fully mitigate the effects. However, as I confirmed to Parliament in the debate yesterday, we will make available—subject to approval by the UK Government—a further £12 million, thereby bringing the total direct support from the Scottish Government to almost £35 million for 2014-15, to address the implications of that damaging tax. The Government is clear that our preferred route for the distribution of those resources is through discretionary housing payments, which can be made directly to the individuals who are affected.

The most important change to the figures that I announced in December is the inclusion of second-year funding for the Scottish welfare fund. We are coming to the end of its first year of operation and are working jointly with the Convention of Scottish Local Authorities to ensure that vulnerable applicants are provided with the support that they need this year and in future.

For 2014-15 we will again provide councils with £37.9 million. The remaining changes, which amount to £4.2 million, include £4 million for the one-plus-two language policy and £0.2 million for the business gateway website.

The 2014 order also seeks approval for the changes to the net increase of £20.4 million in 2013-14 funding allocations that was either held back from the 2013 order or has been added to fund a number of agreed spending commitments that have arisen since the 2013 order was approved. Those include £27.5 million for the teachers induction scheme; £20 million for discretionary housing payments; £4 million for the one-plus-two language policy; and £2.5 million towards the national care contract.

The total additional funding of £61.3 million has been partially offset by the recovery of £40.9 million of outstanding committed and uncommitted police reserves that were returned to the Scottish Government after Police Scotland was set up.

I should also explain that the total revenue funding to be paid out to councils in 2014-15 but not included in this order includes £86.5 million to be paid directly to criminal justice authorities; £343 million for the council tax reduction scheme; £70 million to freeze the council tax; £27.6 million for the teachers induction scheme; and £7 million for the council tax reduction scheme administration costs.

The £70 million to fund the council tax freeze will be added to the individual local authority settlement totals when I bring forward the local government amendment order in March for those councils that have budgeted to both freeze the council tax in 2014-15 and maintain teacher numbers in line with pupil numbers and secure places for all probationers under the teachers induction scheme.

Since the order was laid, we have announced a further £15 million in 2014-15 to deliver a phased expansion of eligibility for our childcare offer of 600 hours for the most vulnerable two-year-olds, and we will provide an additional £13 million to fund free school meals for all schoolchildren in primaries 1 to 3 from January 2015. We will be working with our local government partners to implement and distribute those additional resources.

Although not part of today’s order, the overall package for local authorities includes support for capital funding in 2014-15 of over £773 million, delivering on our commitment to maintain local government’s share of the overall capital budget.

I turn now to business rates, which are a key issue for Scotland’s business community. To maintain the competitive advantage that has been enjoyed by Scottish businesses since 2007, last December I announced that we will cap the annual increase in the business rates poundage to 2 per cent in 2014-15. Today, I have provided additional certainty for small businesses across Scotland by legislating for the small business bonus scheme for the next two financial years, meeting our manifesto commitment to maintain the scheme for the lifetime of this parliamentary session. Last December, I announced that I would go even further than that manifesto commitment, and legislation has been laid today that extends the small business bonus scheme to a further 4,000 eligible properties.

The Scottish Government recognises the importance of town centres in supporting local economies. That is why the Minister for Local Government and Planning has today laid legislation to extend the fresh start relief scheme. In addition, he announced on 15 January a summit to discuss payday lending and gambling shops on Scotland’s high streets. Ahead of that summit, I can announce today that legislation has been laid to ensure that, from 1 April, payday lenders will no longer be eligible for business rates reliefs.

By delivering on our manifesto commitments to maintain parity with English poundage rates and confirming the small business bonus scheme thresholds and expanding the scheme, I have underlined the Government’s commitment to maintain Scotland’s position as the best place to do business, with a business rates relief package that is estimated to be worth over £590 million in 2014-15.

In line with our commitment to widen access to higher education by removing potential barriers to participation, I am pleased to announce today, too, that following our recent public consultation we will shortly lay legislation to implement our commitment to exempt articulating students from council tax. That legislation will extend the existing exemption from council tax that is available to those who meet the criteria defining a student for council tax purposes so that it includes articulating students: those progressing from higher national certificate or higher national diploma study at college to second or third year of first degree-level study at university. This support for alternative progression routes will help us to widen access to education for all, increasing opportunities for our young people to develop the learning and skills that will equip them for the future.

In summary, the total funding from the Scottish Government to local government next year amounts to over £10.6 billion. By working constructively with our local government partners, we have agreed an overall funding settlement and package of measures to help maintain and evolve the services on which the people of Scotland and the businesses of Scotland depend.

I move,

That the Parliament agrees that the Local Government Finance (Scotland) Order 2014 [draft] be approved.