FINANCE COMMITTEE Monday 20 November 2000 £5.00 Parliamentary copyright. Scottish Parliamentary Corporate Body 2000. Applications for reproduction should be made in writing to the Copyright Unit, Her Majesty’s Stationery Office, St Clements House, 2-16 Colegate, Norwich NR3 1BQ Fax 01603 723000, which is administering the copyright on behalf of the Scottish Parliamentary Corporate Body. Produced and published in Scotland on behalf of the Scottish Parliamentary Corporate Body by The Stationery Office Ltd. Her Majesty’s Stationery Office is independent of and separate from the company no w trading as The Stationery Office Ltd, which is responsible for printing and publishing Scottish Parliamentary Corporate Body publications. CONTENTS Monday 20 November 2000 Col. BUDGET PROCESS................................................................................................................................. 839 BUDGET (SCOTLAND) ACT 2000 (AMENDMENT) (NO 2) ORDER 2000 (SSI 2000/DRAFT) .............................................................................................................................. 919 FINANCE COMMITTEE 26th Meeting 2000, Session 1 CONVENER *Mike Watson (Glasgow Cathcart) (Lab) DEPU TY CONVENER *Elaine Thomson (Aberdeen North) (Lab) COMMI TTEE MEMBERS *Mr David Dav idson (North-East Scotland) (Con) *Rhoda Grant (Highlands and Islands) (Lab) *Mr Adam Ingram (South of Scotland) (SNP) George Lyon (Argyll and Bute) (LD) *Mr Kenneth Macintosh (Eastw ood) (Lab) Alex Neil (Central Scotland) (SNP) Mr Keith Raffan (Mid Scotland and Fife) (LD) *Dr Richard Simpson (Ochil) (Lab) *Andrew Wilson (Central Scotland) (SNP) *attended THE FOLLOWING ALSO ATTENDED : Charles Armstrong (Aberdeenshire Counc il) Councillor Ray mond Bisset (Aberdeenshire Council) Bill Boyes (Grampian Health Board) Alan Campbell (Aberdeenshire Council) Dr Peter Collings (Scottish Executive Finance Department) Graeme Dickson (Scottish Executive Finance Department) Colin Donald (Scottish Enterprise Grampian) Ed Gillespie (Scottish Enterprise Grampian) Dr Adrian Graves (Robert Gordon University) Amanda Harvie (Aberdeen Chamber of Commerce) William How ie (Voluntary Service Aberdeen) Councillor Len Ironside (Aberdeen City Council) Ken Ledingham (Voluntary Service Aberdeen) Richard Lochhead (North-East Scotland) (SNP) Lew is Macdonald (Aberdeen Central) (Lab) Professor Frank McIntosh (Robert Gordon University) Angus MacKay (Minister for Finance and Local Government) Mr Mike Ord (University of Aberdeen) Dav id Palmer (Scottish Executive Finance Department) Douglas Paterson (Aberdeen City Council) Barry Richards (Voluntary Service Aberdeen) CLERK TO THE COMMITTE E Callum Thomson SENIOR ASSISTANT CLERK Anne Peat ASSISTANT CLERK Graeme Elliot LOC ATION Aberdeen Counc il Chamber 841 20 NOVEMBER 2000 842 Scottish Parliament more stability and transparency, and takes account of need. Our director of finance, Gordon Edwards, was a member of the Convention of Finance Committee Scottish Local Authorities -Scottish Executive strategic issues working group that considered Monday 20 November 2000 those issues. We note that the grant distribution figure for [THE CONVENER opened the meeting at 09:51] each council will be published in early December. Given that nearly all councils will take advantage of the change in regulations that will allow council Budget Process taxes to be collected a month earlier than usual, budgets will have to be set in mid-February. As a The Convener (Mike Watson): I welcome result, there is a tight time scale between the everyone to the 26th meeting of the Finance announcement of the three-year grant figures and Committee. As I always say at the start of our the finalisation of budgets. meetings in Edinburgh, please ensure that mobile The city council welcomes the overall increase phones are switched off and that pagers are set to in funding allocated to local authorities over the silent. three-year period. However, the Scottish It is a great pleasure to be in Aberdeen. This is Executive needs to be open and transparent about the first time that the Finance Committee has met the assumptions that it has made in the three-year outwith Edinburgh. It is not the first time that a figures for salary and wage increases. We also Scottish Parliament committee has done so, but it want full and transparent funding of the is the first time that a Scottish Parliament recommendations of the McCrone report. committee has taken evidence from a minister at a There must be clear analysis of the proportion of meeting outwith Edinburgh. grant increase that is hypothecated or ring-fenced The Finance Committee regards today’s for specific service improvements. How much is meeting as the start of a process within the annual available for improving and maintaining services budget process. At stages 1 and 2, we plan to visit will become clearer, and it is important that the parts of the country to take evidence on the Scottish Executive and local authorities have a budget proposals. It is important that the people of shared understanding of that. In the past five Scotland connect with their parliament and with financial years, Aberdeen City Council has faced the budget process that will affect all their lives in budget reductions in real terms of around £75 due course. million. There is a huge backlog of work to be done, in particular repairs and maintenance of the I thank Aberdeen City Council for making us council’s infrastructure, which has suffered more very welcome today. We have a heavy than its fair share of budget reductions. programme this morning and the Minister for Finance and Local Government will be with us in The city council welcomes the recent the afternoon. I am sure that we will have a announcement of the abolition of the expenditure productive day. guideline figures, as long as local authorities set council taxes for three years and increases are not We have had apologies from committee excessive. The Scottish Executive needs to issue members Keith Raffan, Alex Neil and George clear guidance in advance on what it regards as Lyon. excessive council tax increases so that local We will get down to business by hearing from authorities do not fall into the trap of setting what our witnesses from Aberdeen City Council. I they consider to be reasonable increases, understand that Councillor Len Ironside will say a supported by the local community through a few words. consultation process, only to find that the Scottish Executive considers the increase to be excessive Councillor Len Ironside (Aberdeen City and imposes retrospective capping. If the local Council): Thank you. I welcome the committee to authorities must work in partnership with the Aberdeen. We are delighted that the Scottish Scottish Executive, both parties must know the Parliament is reaching out to places such as ground rules in advance. Aberdeen. That is tremendous for democracy. I will hand over to the chief executive of We welcome the opportunity to comment on the Aberdeen City Council, Douglas Paterson, who spending plans for Scotland for the next three will outline the situation in Aberdeen. years. We support, in principle, the key priorities for local government, in particular the The Convener: We have allowed five minutes modernisation of the local government finance for opening statements from the three system to achieve grant distribution that provides organisations. 843 20 NOVEMBER 2000 844 Douglas Paterson (Aberdeen City Council): I with which it is approaching the process. understand the convener’s point about keeping the presentations brief. Our presentation is in three parts. We have circulated notes to support it. I will 10:00 highlight the main points, which will allow us to Councillor Ironside mentioned the stay within the committee’s timetable. implementation costs of the McCrone recommendations. Our concerns about arts and The first part of the presentation highlights the sports are linked back to our inability to access key issues for the local council in Aberdeen. One money from some of the major funds for the future issue is the financial pressure that all public sector of arts and culture in the city, and we would like to agencies in Aberdeen and the north-east are see that area being developed. On enterprise and under because of the way in which funds are lifelong learning, there is clearly a buoyant distributed. Within Aberdeen City Council, the economy in the north-east, and all parties want to issue is the net income per head of population, ensure the long-term future of that economy. which we derive primarily from grant-aided There are questions about whether we are geared expenditure and also from council tax. That is set up nationally to support success, as opposed to out in the figures in the notes. The closest responding to failures, in the economy. comparison among other cities is Edinburgh. If we had the same level of income as Edinburgh, we Housing stock transfer is a major issue for us at would have a net increase in our budget of £11 the moment. There are distinct differences million. The increase goes up in comparison with between the situation in this area and that in the other cities. central belt; members may want to explore those differences with us. We support the processes that Aberdeen does relatively badly compared with are under way to encourage social inclusion and other cities on other sources of income. We have to protect the environment, although the costs of set out the main charitable organisations on page greener methods of