Chamber and committees

It is fair to say that, in the past six months, there has been a big focus on things such as the cost of living crisis, the pay deals and the budget. We now want to turbocharge the focus on the new deal.

A number of discussions are taking place. A number took place towards the end of the year, and there are a number at the ministerial level this month to try to move things forward.

COSLA and the Society of Local Authority Chief Executives and Senior Managers have been clear that they want to get it right and that they would rather not rush. They want to take the time to get it right and, on balance, that is probably the right judgment. If a deal is going to stand the test of time, even if it takes a few more months to get it right, that is probably the right call, to be honest.

You are right. There are very few—indeed, I cannot think of any—that are not shared priorities. There are some sensible changes that need to be made—not just for local government, incidentally, but for the third sector. We sometimes require quite onerous reporting for relatively small amounts of money, and that is not in anybody’s interest. We need a sensible set of arrangements that strikes the right balance and allows the movement of money where that needs to happen. There may be times when there is underspend for a variety of good reasons. We need to be aware of that. I hope that we can make progress.

Yes. I certainly recognise the point. Local authorities are tied into a long-term financial commitment in that respect, and some of the deals that were done, particularly in the early days, were very poor value for money for the public purse. The longevity of some of those deals is quite eye-watering. I am happy to write to the committee with that figure. I do not have it to hand. I recall it being used in the chamber recently, but I cannot recall what it was, so I will write with the latest available figure.

I recognise your interest in the issue. We have certainly had a number of discussions about the importance of the delivery and development of affordable housing, not just in urban Scotland but in remote, rural and island Scotland.

You will be aware of the developing remote, rural and islands housing action plan, which I see as a really important milestone in getting an understanding of the blockages, some of which you have just articulated, and—more important—how we can overcome them. We expect to have the full plan in the spring. The important consideration in that is the role of the community housing trust movement. We have given a commitment to look at how it can be supported in the work that it does.

One of the areas that have been identified is the early-stage development phase. That is not an easy one to resolve. The plan needs to look at how that can be addressed. The community housing trusts have a really important role there, not least in very small developments, in resolving community differences, keeping people on board, and working through some quite tricky issues. Quite often, they are well placed to be able to help and lead that work.

I very much recognise the point that you have made, convener, and I hope that the contents of the plan will help to move those issues forward.

Definitely, but that will take time. Sometimes things sound very simple and straightforward, but nothing ever is, and it always takes a bit longer to put things in place and get them right. However, on the principle, I absolutely agree.

We would welcome dialogue with local government on ideas that it might have beyond what is already on the table and what has been agreed on different ways of raising revenue. The ideas of the city authorities might well be different from those of the rural authorities. There has to be a recognition of the fact that the 32 local authorities are all quite different in nature and have quite different priorities and populations, but I do not see why we should not support the principle.

I mentioned earlier that there is £100 million in the budget for health and social care to support the increase in the real living wage, as well as more funding in the deal for social care in the round. At the moment, it is still local government that is delivering social care. That is important.

As we move forward, we absolutely are committed to the principle of delivering a national care service. We would like to work with COSLA and local government to do that, but we hear and understand their reservations, and we need to work through those. Part of doing that will involve trying to work with those local authorities that are keen to make progress to demonstrate how things can be done in a different way.

I do not think that anybody could say that the current arrangements are ideal. I was a big advocate of integration, and I had high hopes and expectations of it. As a former home-care organiser, I probably know far more than I ever wanted to about the interaction between health and social care and some of the blockages in the system. Integration was an attempt to overcome some of those barriers, and everybody had a lot of hope for that, but it has not delivered in the way in which all of us had hoped that it would. Doing nothing and making no change is not an option.

The national care service, if it is delivered correctly—it will take time to get that right—can deliver a better deal for people who receive care. When you hear what they have to say, it is clear that there are very strong views in favour of reform and change.

Yes—and the fiscal framework is key. It intended to establish a new fiscal relationship, with not just multiyear budgets but established, agreed ways of working, including in how local government engages in the budget process—that might offset some of the issues that we talked about earlier—greater flexibility, and improved accountability. We absolutely should have them where we can, not just for local government. Earlier, we mentioned the third sector. Giving certainty to the third sector with multiyear funding would be a major step forward. Discussions about how that could work are going on.

The agreement is a joint agreement. It has been negotiated very much with the sector and not done to the sector, and that is important. The certainty will do two things. First, it will enable the sector to plan and get on with the new-build developments and improvement programmes for existing homes, as well as the important support services that it provides for tenants.

The second thing, though, is that, when I speak to housing associations—I am sure that it is the same for members of the committee—they always put affordability at the heart of their rent setting. The average rent increases that are proposed and which have been agreed are well below forecast inflation rates, which means that rents will be reduced in real terms.

It is important to say that the voice of tenants is critical in deciding this, and housing associations are using the rent consultations, as they always do, to get the right balance between setting rents that are reasonable and proportionate, and allowing for on-going investment in services and homes.

A big percentage of housing association and council tenants receive housing benefit. We recognise that and the sector recognises it, but it also recognises that there are people in low-income jobs who would struggle with inflation or above-inflation rent rises. The sector has had to take all that into account.

One of the pledges that the sector has made—we want to work with it on this—is to look at how we can provide additional support for tenants who are struggling with their rent. I am particularly thinking about those low-income households that do not receive housing benefit.

The agreement gives the sector what it was looking for, and it means that the sector now has that certainty going forward.

I guess that you could say that any public service will want to ask for the maximum, but I think that directors of finance realise that difficult decisions will have to be made across the public sector. What the Accounts Commission has said is interesting. First, it recognised the £570 million figure, which was helpful. It also said that there would need to be reform, building on the Covid recovery strategy and doing things differently, and it pointed to perhaps needing to review the use of reserves. I hasten to add that I totally accept that some of those reserves have already been committed, but it is always good to keep those things under review. The health service would also say that, in an ideal world, it would want X but, if X is not available, it is then about the art of the possible within the constraints on funding across the board.

Ultimately, those are decisions for councils to make. I totally accept that, once reserves are spent, they are spent: they can be spent only once. I also accept that some reserves are earmarked for things, and they may have been earmarked for quite some time. However, we would expect local authorities or any other public organisations that have reserves to hand to keep their current priorities under review. Reserves might be earmarked for something that was a priority five years ago. Those things should always be kept under review to consider what is the most important use of reserves in the current financial climate or in competing priorities.

That is my main point. Money is money, and judgments have to be made about the appropriate use of reserves. Reserves can play an important role in a cost of living crisis, and I know that some local authorities are already using them to support people through the most difficult of times.

Earlier, we talked about reform. Sometimes the impediment to reform is trying to keep the existing show on the road while trying to do things differently and reforming services. Reserves can be very useful in that context, as well, because there can be a twin-track approach to reforming services, making improvements, and getting better value for money.

Ultimately, those are decisions for councils to make. I am sure that discussions are being had about them.