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25/02/16 14:51

DFM on Local Government Finance (Scotland) Order

Deputy First Minister John Swinney's opening statement

Presiding Officer, today’s Local Government Finance Order seeks agreement to the allocation of revenue funding to local government for 2016-17 to enable local authorities to maintain and increase the pace of reform to improve the vital services on which the people of Scotland depend and value. It also seeks agreement to the allocation of additional funding for 2015-16 that has been identified since the 2015 Orders were discussed and approved this stage last year.

The 2016-17 local government finance settlement we are providing to local government has to be set against the backdrop of the UK Government’s continuing austerity programme and the real terms reduction in the Scottish Budget. This is in line with the challenging settlement being provided to other public bodies, with the exception of the Health Service which this Government is committed to protecting.

In 2016-17, the Scottish Government will provide councils directly with a total funding package worth over £10.3 billion. This includes revenue funding of almost £9.7 billion and support for capital expenditure of almost £607 million.

But this is only part of the picture. In addition to the settlement allocations we are debating in today’s Order, local government also benefit 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 Bill debate, I will double the amount of funding we had planned to allocate to the Attainment Scotland Fund over the next three years, from £80 million to a total of £160 million. This 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.

Today’s 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 would now like to provide a bit of background to the overall 2016‑17 settlement funding package which is firmly focussed 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 these shared priorities which will improve outcomes for local people through health and social care integration and improving educational attainment. To this 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.

  • Invest £250 million in integrating health and social care services – This 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. This will also help to deliver the Living Wage for all social care workers and help meet a range of existing costs faced by local authorities in the delivery of effective and high quality health and social care services.

  • Maintain the pupil/teacher ratio in Scotland’s schools -The Scottish Government has been consistent that the protection of teacher numbers is a central part of our priority to raise attainment. £88 million is included in this settlement to ensure 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 estimated 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 [25/02/16], 16 councils have now formally set their budgets for the coming year which includes 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. These include almost £54 million to deliver Free School Meals to all children in Primary 1 to 3 and over £26 million, being the initial 80 per cent instalment of the money set aside for Discretionary Housing Payments which will enable councils to fully mitigate 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 which have arisen since the 2015 Order was approved. These include:

  • £27.5 million being the previously held back balance of the Teacher’s Induction Scheme funding;

  • £10.0 million for maintaining teacher numbers/pupil teacher ratio’s in 2015-16;

  • £9.7 million funding assistance to enable local authorities to provide support and assistance to their 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 1+2 languages policy;

  • £5.8 million to support local government contribute to the Developing the Young Workforce programme resulting from the Children and Young People Act 2014; and

  • £5.0 million for Kinship Care Allowances.

I should also explain that the total revenue funding to be paid out to Councils in 2016-17, but not covered by this Order 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 today’s Order, the overall package for local authorities includes support for capital funding in 2016-17 of almost £607 million.

Allowing for the re-profiling, this meets our commitment to maintain local government's share (26%) of the Scottish Government’s capital budget.

Presiding Officer, I turn now to business rates – a key issue for local services and economic growth.

Yesterday, at Stage 3 of the Budget Bill, I confirmed we would moderate the proposed adjustment to rates relief for empty industrial properties, and also extend the Fresh Start and New Start reliefs for the duration of 2016-17.

Other proposals I can now confirm are setting the standard poundage rate at 48.4p and the large business supplement at 2.6p for 2016-17.

Our renewable relief scheme will be re-focused, to support schemes with community involvement and new developments 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 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 re-occupation. One measure we are putting in place is a 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 in the Cairngorms to incentivise new mobile mast construction, which could subsequently be rolled out more widely.

Presiding Officer, legislation was laid yesterday for all these changes to come into force on 1 April. They underline this Government’s commitment to maintain Scotland’s position as the best place in the UK to do business, with a rates relief package estimated at over £550 million for 2016-17.

We continue to listen to the views of business, and will shortly announce details of the review of business rates as committed to at the Draft Budget.

In summary, the total funding from the Scottish Government to local government next year amounts to over £10.3 billion.