Chamber and committees

I raised that at the finance interministerial standing committee—FISC. Whatever we thought about the levelling-up funding—we would all have our views on funding a roundabout, for example—there is now a collective view that that money needs to be spent more strategically and efficiently. However, I made it very clear that money that had been promised had to be delivered, because, as you have pointed out, projects have been scoped, plans had been made, and what communities, towns and cities expected to receive needs to be delivered. After that, there is a need for a more strategic and efficient use of our collective resources.

Again, all the devolved nations made it very clear that things such as shared prosperity funding need to be routed through the devolved Administrations, because that will make sure that the money is spent in the most efficient, effective and strategic way rather than in little bits here and there.

There was no real pushback on that. However, there is still a question about what happens to what has happened so far. It would not be fair to remove that funding. The sooner that there is clarity and certainty, the better. We can then move on to a better way of working together on those strategic issues.

Part of that is about building the right number of houses of the right size in the right places. There are lots of issues around the size of homes and making sure that they are correct for larger families, and around accessible housing. Having the right plan is absolutely critical. Part of it is about building but, as you know, some of it is about bringing homes back into use. We are having lots of detailed discussions with local government about what it will take to get voids turned around more quickly. I think that there are 1,800 voids in the city of Edinburgh alone, or maybe it is 2,000—

That is where we get into the territory of what is appropriate. The Verity house agreement is about both spheres of government recognising each other’s roles; it is also a move away from ring fencing, as we talked about earlier. That does not mean that the expectation of reform and transformation goes away. There is a question about how we collectively hold each other to account for progress. The best way to do so is probably to highlight and champion best practice, and perhaps also to ask other authorities when they will use it.

There are also the external stakeholders who will say, “This is good practice; why is it not in place?”, and they will bring their own influence to bear. It is not in the spirit of the Verity house agreement to say, “If you don’t do this, we’re not going to give you your social work money”—that is just not where we are. However, if you are asking me whether I would like the pace to be picked up a bit, the answer is yes.

There might be ways of incentivising. The work that is done around the—I am going to get the name wrong.

I am mindful of that issue. In the past, for example, we have done a transformation fund and things that involve councils bidding in or partnering up, but I am not sure whether COSLA would be terribly welcoming of that approach. Its view would probably be, “Give us the money”.

We can agree on the key priorities and that we need to incentivise reform and more spending on prevention because—as we know—it is cheaper in the long run. However, it is hard to do that while authorities are also spending money on services in the here and now. It is a question of how they move beyond the here and now. Glasgow did that with its social work service. We supported some of the collaboration and we helped it to reshape its service while keeping the show on the road. It can be done. That did not cost huge amounts of money—it was a bit of money, but not a huge amount—and it was jointly agreed.

Dundee has done some work around the no-wrong-door approach, whereby all the agencies take off their badge and instead are in communities, asking families how they can be supported. It is not always a question of spending shedloads of money; sometimes, it is about doing things a bit differently.

We do not have in mind reaching a certain figure within 10 years or anything like that. It is more about evolution than a revolution.

Evolution includes the work around the levies and decriminalised parking enforcement regimes. There is a desire to move forward on the cruise ship levy, and there are also a lot of discussions around fees and charges. It is a case of taking it step by step.

There is a broader discussion to be had about local government’s desire for the power of general competence, which I mentioned earlier. I will bring in Ian Storrie or Ellen Leaver to talk about that. There has to be balance between what that means and what the framework around it is. There is a desire to look at what European local authorities have in place. Some have developed quite strong fiscal powers on land value, for example. I am open minded, but the detail is always more complex than the high-level aspiration.

Ellen or Ian, would you like to speak about that?

Has the issue been raised on a number of occasions? Yes—particularly at the time. On the desire from local government for no further freeze in 2025-26, I have said clearly that it is part of the budget discussions. It is about a package.

In the big picture of all the things that we are getting on with in the agreement space with local government, there is sometimes a lot of focus on the relatively small number of things—some of which might be significant—where there is disagreement. I hope that, through the budget process, we can move beyond some of those issues, because a lot is being delivered, and there is a lot that we can deliver jointly.

I see Katie Hagmann at least once a week—perhaps more often than that—and my officials see their counterparts in COSLA regularly. Perhaps this is not always understood, but a lot of joint engagement and detailed work goes on.

First and foremost, let me recognise that the negotiation is between COSLA and the unions, and it is really important to abide by that principle. Although we have supported local government pay this year and in previous years, it is important to reiterate that the negotiation is between those two parties.

I would very much like to get to a position in which we can move beyond what you have described. Clearly, it has been quite a difficult year, but we have provided additional funding, which was very difficult to identify. Collectively with COSLA, we had to make some very difficult decisions about what would be paused and what funding would need to be utilised for pay. The upside is that two of the three unions have now accepted the offer, and what happens with Unison remains to be seen.

The solution is multiyear funding. One of the better things that the new UK Labour Government has announced is a spring spending review of resource and capital funding, which will trigger multiyear funding, with three-year funding being reviewed every two years. That is how the system used to work, but that has not happened for many years.

Multiyear funding is important because it can help us with so many things, including reform and the ability to reach agreements on productivity and efficiency. A multiyear envelope also helps with pay, because we can then support multiyear pay deals and, in turn, local government. We cannot give out multiyear funding unless we have multiyear funding, but if we get multiyear settlements, we can provide local government with multiyear settlements, which will enable it to get to a more productive space in relation to multiyear pay deals and all the things that come with that, such as reform and doing things differently. It is hard—almost impossible, to be honest—to do all that with single-year budgets. That is the way forward.

The last year with single-year funding will be 2025-26, and we will have to do our best to minimise the chances of industrial action, which is costly to public services. We all want to avoid that, and the longer-term solution is to provide multiyear deals.

I cannot see the UK Government reining back from what has been a clear commitment, and I think that work is already under way on the UK spending review. What remains to be seen is what that looks like. I am sure that we will touch on capital today. We have had a cut to our capital budget, which will, unfortunately, reduce our ability to spend in that area.

The spending review, which covers resource and capital, gives the UK Government an opportunity to look a bit differently at the fiscal rules, particularly in relation to capital and borrowing, which could give us a different trajectory on capital availability. I would like nothing more than that. I can assure you that, at the meetings with the Chancellor of the Exchequer, we have raised that issue and that of financial transactions. Along with Welsh and Northern Irish counterparts, I met the Chief Secretary to the Treasury in Belfast last week. We were really clear about the need for a change in direction with more resource to sustain public services and more capital to invest in infrastructure.

We need to wait and see. I do not think that there will be any change to the principle of doing the review. The uncertainty is about what pops out the other end. We will be trying to influence and engage with all that as much as we possibly can.

I raised the importance of city deals and growth deals with the Chief Secretary to the Treasury. A couple of deals in Northern Ireland are also in that position. Clearly, there is a lot of anxiety locally about the deals. It is really a matter of timing. The deals that had already been signed were fine, and those that were in the process of being signed—which, in Scotland, captures Argyll and Bute—have been put on hold due to the budget and the spending review. We have said that it was really important that we give certainty to communities. We have already said that our share, which I think is £25 million, is there for the growth deal. Our call to the Chief Secretary to the Treasury was for the deal to be expedited as a matter of priority, because it needs to be resolved and certainty needs to be given. We have made our position clear and we will continue to pursue the matter.