Chamber and committees

I thank the committee for inviting me to today. I, too, will be brief.

To reiterate what Kate Forbes has said, I say that developing the 2022-23 budget has been challenging and has involved making difficult decisions and choices, but the ones that we have made should help to lift children out of poverty, provide investment in social care and help to tackle the climate emergency.

Our budget for next year will increase funding for affordable housing by £174 million, so we can continue with the important work that was started back in 2007 to ensure that everyone in Scotland has a warm, safe and affordable place in which to live. We are allocating £831 million to delivery of 110,000 affordable homes by 2032, of which at least 70 per cent will be available for social rent, and 10 per cent will be in our remote, rural and island communities. More than £80 million will be allocated to discretionary housing payments for housing support and to mitigate fully the UK Government’s bedroom tax. We are making a further £10 million available for our ending homelessness together fund, as part of our investment of £100 million in transformation funding between 2018-19 and 2025-26.

The 2022-23 budget provides our local authorities with a fair but affordable settlement of more than £12.5 billion under the most challenging of circumstances. That will provide £554 million extra for health and social care, £145 million for additional teachers and support staff and £94 million to support the expansion of free school meals. It gives local authorities a number of fiscal flexibilities, including full autonomy on council tax rate setting, as they requested, and a commitment to collaborate on a fiscal framework for local government.

I look forward to your questions.

The first thing to say is that, thankfully, council tax is lower in Scotland than elsewhere, which is helpful. Further, and importantly, the council tax reduction scheme is there to ensure that no one has to pay a council tax liability that they cannot be expected to afford. Presently, about 480,000 households—nearly one in five—benefit from a council tax reduction, and that is important. The local government budget includes £351 million to compensate councils for the reduction in council tax receipts that derives from the operation of the council tax reduction scheme.

Taken in the round, the basket of measures that support families—including discretionary housing payments, the Scottish welfare fund and the benefits and supports that are paid through Social Security Scotland—demonstrate that the Government has a good track record in this area. The Scottish child payment is critical, and we have committed to doubling it. Those measures are available in Scotland and nowhere else in these islands.

All Governments have to look at the cost-of-living issue—for example, we have been calling on the UK Government to be far more proactive in tackling rising food and energy costs. The cost-of-living pressures are being felt across the whole of household income and expenditure. Of course, the Scottish Government has a responsibility to support families as best we can. I outlined in my previous answer some of the ways in which we are doing that, including through the welfare fund, discretionary housing payments and the Scottish child payment.

We announced a winter package of £41 million to support families with food and fuel costs and other household income pressures. Our Government has a good track record on supporting families, but we need to look at what more we can do. I am always open to discussions about how we can support families. The next few months will be really challenging, particularly in relation to energy costs, and it cannot be just the Scottish Government that responds to that. We need more from the UK Government to support families and household incomes.

To reiterate what Kate Forbes said, a huge amount in the budget is aimed at Covid recovery, supporting household budgets and tackling poverty. That has meant that difficult decisions have been made because we cannot fund everything.

The budget provides for a continuation of child bridging payments in advance of the doubling of the Scottish child payment by the end of the year. Other measures help low-income families, such as the scrapping of core curriculum charges and music tuition fees, the expansion of the school clothing grant and the extra £64 million of revenue funding and £30 million of capital funding to support the expansion of free school meals.

As I said in my opening remarks, more than £80 million is being allocated to discretionary housing payments for housing support. That is to fully mitigate the UK Government’s bedroom tax. If we did not have to use that money to mitigate the bedroom tax—if the bedroom tax was scrapped at source, which we have urged the UK Government to do—we could divert it to other anti-poverty measures but, meanwhile, we have to maintain that funding.

We are making a further £10 million available for our ending homelessness strategy. The housing budget is an anti-poverty measure in itself. Affordable good-quality housing is a key anti-poverty driver and being able to increase funding by £174 million against the backdrop of a really tough budget has been extremely important. That budget is also an important economic lever, as it ensures that we can support local economies through the house building programme.

In the round, the budget tries to focus on supporting household incomes and families on low incomes at a very difficult time.

I will start, then hand over to Kate. We obviously want to avoid strike action and hope that the unions, local government and COSLA will continue to discuss pay so that strike action will be avoided.

Mark Griffin mentioned local authority pay. Although it was difficult to do so, I was able to find in my budget a one-off payment of £30 million to support COSLA in its pay negotiations for this financial year. That is not baselined into next year.

I appreciate what Mark Griffin has said. I hope that we can avoid strike action, and that pay discussions will continue and come to an amicable resolution.

As Kate Forbes said, there is a good and very close working relationship with COSLA. As she does, I meet COSLA’s leadership regularly and, as she has done, I have met a number of individual local authority leaders and chief executives. That was really useful in getting into the detail under some of the priorities. Affordable housing is a key priority for nearly all local authorities; we managed to discuss it in those individual meetings. A number of projects and examples of potential collaborative working have emerged from those meetings, which is helpful.

There will, clearly, be a number of major pieces of work on the fiscal framework, on Covid recovery—which is key—and on tackling child poverty. We take a collaborative approach with COSLA; I know that local government is committed to working with us to tackle child poverty. The debates that we have on the quantum and the figures sometimes do not tell the full story about the work that goes on behind the scenes between the Government and local government on shared joint priorities.

As I set out in my opening remarks, the affordable housing budget is increasing by £174 million, which breaks down to a £40 million increase on the previous published capital spending review figure and an increase of £134 million in financial transactions. That brings the total that is available for affordable housing across the parliamentary session from £3.444 billion to £3.618 billion, which is a 21 per cent increase compared with the previous five years. That will be phased across the five years, and the figures will differ from year to year, but what is important is the quantum across the five years.

We are well aware of some of the pressures that are on that. We know that the construction industry faces on-going market condition pressures, which is why there will be a targeted review of the Scottish Government’s capital spending review in early 2022, alongside the resource spending review. That will be important. We need to ensure that the investment delivers the affordable housing that is badly needed across Scotland, and we know that it will go a long way towards doing so.

My first response to Meghan Gallacher is to say that the Scottish Government’s budget comes, by and large, from the block grant that we receive from the UK Government. We have had years of austerity, and difficult decisions have followed the settlement.

If we compare the funding situations north and south of the border, it is clear that the challenges that Scottish local authorities face are in a different ballpark from the challenges and cuts to local government funding that local authorities south of the border have faced.

Meghan Gallacher talked about funding above the core settlement. We have many key joint priorities with local government, including tackling child poverty and ensuring that we support education and social care. The money going into social care has increased considerably. I hope that those priorities are shared across the Parliament.

Difficult decisions have to be made. As part of the budget discussions, it is open to parties to come forward with amendments to the budget, but a party wanting more money to be spent in an area of government requires that the party say where the money should come from. I am sure that we will get into such detailed discussions over the next few weeks.

I do not have much to add to what Kate Forbes has said, other than my comments on the record that we appreciate and recognise the extraordinary efforts of council workers and the role that they and many others across the public sector have played in the fight against the pandemic. As Kate Forbes has said, we are not a member of the SJC, and pay negotiations are a matter for local authorities.

Extensive consultation has taken place. Work has been done on the provisions and substantial changes have been made. It is right to go ahead with this across Scotland. We want everyone in Scotland who uses short-term lets to have the same basic protections and assurances and we want a level playing field for hosts, too. It is not fair that some hosts have put in place all the measures that they should have when others have not done so. That is not fair to hosts who have done the right thing. It is important to create a level playing field across Scotland.