Chamber
Plenary, 19 Jun 2002
19 Jun 2002 · S1 · Plenary
Item of business
Local Government Finance
I will come to ring fencing in a moment.
The Local Government Committee became sidelined into discussing restructuring of council tax bands. To do that was merely to tinker around the edges of local government finance instead of making the root-and-branch reform that is required.
As I said, the notion of restoring business rates to local government control should be opposed. The business community firmly opposes such a move and the SNP will not sanction penalisation of local businesses in order to overcome the inadequacies of central funding to councils.
The Executive should consider a local income tax that is based on ability to pay, which the SNP has advocated in the past. The introduction of a local income tax would bring accountability and fairness to local funding. That proposal is supported by various organisations and it is recommended in the Local Government Committee's report. I agree with Trish Godman that the proposal for local income tax is radical and I am extremely disappointed that the Executive has not accepted the committee's recommendation to consider local income tax in the short and medium-term. There is agreement throughout the chamber that there should be examination of how we raise the money for local government. The proposal for a local income tax has much to commend it. I, along with the members of the Local Government Committee, commend that proposal to the Executive; I hope that the Executive will reconsider its rejection of that proposal.
Ring fencing of funding erodes the financial responsibility and freedom of local authorities. It is rigid and bureaucratic and it weakens co-ordination of services. It creates pressure to ring fence other services and can sometimes generate an almost perverse outcome. No one denies that, in some circumstances, ring fencing should be accepted; however, the problem is that neither COSLA nor the Executive can agree about the level of local government finance that is ring fenced. Until that is sorted out, we will find it difficult to track the amount of local government spending that is available for core services and the amount that is available for ring fencing. Council services are no longer being addressed by core services. COSLA believes that almost 30 per cent of local authority funding is either ring fenced or centrally directed. If that is the case, such a situation is untenable.
Andy Kerr shakes his head. That is precisely the problem: the Executive and COSLA—
The Local Government Committee became sidelined into discussing restructuring of council tax bands. To do that was merely to tinker around the edges of local government finance instead of making the root-and-branch reform that is required.
As I said, the notion of restoring business rates to local government control should be opposed. The business community firmly opposes such a move and the SNP will not sanction penalisation of local businesses in order to overcome the inadequacies of central funding to councils.
The Executive should consider a local income tax that is based on ability to pay, which the SNP has advocated in the past. The introduction of a local income tax would bring accountability and fairness to local funding. That proposal is supported by various organisations and it is recommended in the Local Government Committee's report. I agree with Trish Godman that the proposal for local income tax is radical and I am extremely disappointed that the Executive has not accepted the committee's recommendation to consider local income tax in the short and medium-term. There is agreement throughout the chamber that there should be examination of how we raise the money for local government. The proposal for a local income tax has much to commend it. I, along with the members of the Local Government Committee, commend that proposal to the Executive; I hope that the Executive will reconsider its rejection of that proposal.
Ring fencing of funding erodes the financial responsibility and freedom of local authorities. It is rigid and bureaucratic and it weakens co-ordination of services. It creates pressure to ring fence other services and can sometimes generate an almost perverse outcome. No one denies that, in some circumstances, ring fencing should be accepted; however, the problem is that neither COSLA nor the Executive can agree about the level of local government finance that is ring fenced. Until that is sorted out, we will find it difficult to track the amount of local government spending that is available for core services and the amount that is available for ring fencing. Council services are no longer being addressed by core services. COSLA believes that almost 30 per cent of local authority funding is either ring fenced or centrally directed. If that is the case, such a situation is untenable.
Andy Kerr shakes his head. That is precisely the problem: the Executive and COSLA—
In the same item of business
The Presiding Officer (Sir David Steel):
NPA
Our main item of business this afternoon is the debate on motion S1M-3206, in the name of Trish Godman, on behalf of the Local Government Committee, on the L...
Trish Godman (West Renfrewshire) (Lab):
Lab
One of my favourite songs, "The Long and Winding Road", was written by Paul McCartney. On the long road to producing our report, I have often thought that, e...
Mr Mike Rumbles (West Aberdeenshire and Kincardine) (LD):
LD
Does the member agree that a property tax such as the council tax is unfair? Many retired people are on incomes that are far less than what they earned when ...
Trish Godman:
Lab
I agree that taxes should be related to people's ability to pay.The committee also considered second homes. We believe that, in the interests of equity, the ...
The Minister for Finance and Public Services (Mr Andy Kerr):
Lab
I, too, travel the long and winding road of local government finance—it seems that I travel it every day.I congratulate the Local Government Committee on its...
Mr Andrew Welsh (Angus) (SNP):
SNP
Does the minister agree that housing receipts that have been set aside by councils that have very low historic housing debt would be better used to create an...
Mr Kerr:
Lab
As Andrew Welsh knows, we have consulted on the non-housing aspects of local government capital spend and we are considering that policy. Several things are ...
Fiona Hyslop (Lothians) (SNP):
SNP
Will the minister give way?
Mr Kerr:
Lab
I would like to proceed, because I have a lot of ground to cover, although I will try to take more interventions.We need to learn the language of the so-call...
Brian Adam (North-East Scotland) (SNP):
SNP
Grant distribution takes account of deprivation, population dispersion, island costs and diseconomies of scale, but it does not take account of growth. The c...
Mr Kerr:
Lab
Growth in many ways determines population, which is taken into consideration as part of the grant-aided expenditure process. I caution members against playin...
Phil Gallie (South of Scotland) (Con):
Con
The minister suggests that the business rate in Scotland compares well with the situation in the UK. It did five years ago, but currently it exceeds the UK r...
Mr Kerr:
Lab
We compare well because revaluation took place down south, which we have taken account of, therefore there is a nil effect in Scotland. There is no lack of c...
Johann Lamont (Glasgow Pollok) (Lab):
Lab
Will the minister give way?
Mr Kerr:
Lab
I have not taken an intervention from my colleague, therefore I will do so.
Johann Lamont:
Lab
Does the minister agree that the key issue in relation to business rates is not the setting of the rate, but the fact that in a city such as Glasgow we see p...
Mr Kerr:
Lab
The role that deprivation plays in the indicators is agreed with local authorities and the distribution formula is agreed throughout Scotland. Our difficulty...
Brian Adam:
SNP
Will the minister give way?
Mr Kerr:
Lab
I am afraid that I need to close. We will pick up further interventions in Peter Peacock's closing speech.We have made provision to deal with local authority...
Tricia Marwick (Mid Scotland and Fife) (SNP):
SNP
I congratulate the members of the Local Government Committee and the committee's clerks on their work in compiling the report. I pay particular tribute to Tr...
Phil Gallie:
Con
The Scottish Executive made a substantial sum available recently to local authorities for urgent repairs to local road systems. Does Tricia Marwick disapprov...
Tricia Marwick:
SNP
I will come to ring fencing in a moment.The Local Government Committee became sidelined into discussing restructuring of council tax bands. To do that was me...
Mr Kerr:
Lab
I tried to intervene earlier on the subject.
Tricia Marwick:
SNP
Oh, go on then.
Mr Kerr:
Lab
I should point out that I continue to meet COSLA to discuss ring fencing. However, will the member confirm that, during the care homes crisis, her front-benc...
Tricia Marwick:
SNP
I said that I am not opposed to ring fencing. The problem is that there is no agreement between COSLA, which represents most of the local authorities, and th...
The Presiding Officer:
NPA
Before I call the next speaker, it might help members to know that we are quite relaxed about timing this afternoon. Many members have indicated that they ha...
Mr Keith Harding (Mid Scotland and Fife) (Con):
Con
I pay tribute to Eugene Windsor, the Local Government Committee clerk, and his staff, who guided us through the long but interesting investigation into local...
Iain Smith (North-East Fife) (LD):
LD
Will Keith Harding give way?
Mr Harding:
Con
Iain Smith will have plenty of time.Increasing the number of bands and reducing the amount paid at the lower end will result only in Scotland giving a windfa...