Unnoticed in December’s news flurry of pandemic panics and Boris blunders was an item of importance. On December 21st, all 32 council leaders signed a joint letter to the First Minister, highlighting their belief that local government had again been short-changed in Kate Forbes’ budget announced on December 9th. (letter is appended)
As they often differ in priorities, Holyrood and Scotland’s councils don’t always agree. But this one was both different and serious. Every leader of Scotland’s councils unanimous over anything is rare; normally loyal SNP-run councils lining up with the rest in criticism is unprecedented.
Such a rift between Holyrood and councils has been brewing for years. Scotland’s a groundswell for devolution in the 20th century led to the Scottish Parliament. Councils had been to the fore in this. They expected the autocracy and neglect suffered under Westminster’s Scottish Office would end. Unfortunately, little changed post-1999.
Eight years of restricting councils under Labour/Lib-Dem saw both Since 80% of council funding coming from Holyrood, they were compelled to comply. With 2007’s financial crash came an SNP government and much promise of a “Parity of Esteem” agreement to weather the fiscal storm of Osborne austerity.
“Under the concordat, we have invested record levels of funding, halted the downward trend in the proportion of the Scottish Government’s overall budget that goes to local government, removed unnecessary and restrictive ring fencing around funding streams, given councils greater freedom and flexibility to do their jobs, and stepped back from micromanaging local government..”
— Budget Statement by John Swinney, Cabinet Secretary for Finance, December 2008
More than a decade of financial squeeze later, councils believe little of this has come to pass. Indeed, most of them believe funding that should have come to them has been diverted to sustain populist social programmes like free tuition, prescriptions, personal care, bus travel, etc. And, by freezing council tax, the ratio of council funding coming from Grant-Aided Expenditure (GAE) has grown even larger—to 85%.
In effect, councils increasingly see themselves as local delivery conduits of government policy. The swathe of devolved powers that came to Holyrood has gone no further. Back in 2008, John Swinney proudly announced an increase in local government settlement to £11.7 bn. Roll forward to today and the equivalent statement is:
“Details of how £11.6 billion of funding from the Scottish Government will be distributed to individual local authorities in 2021-22 have been published. … In total, councils will receive additional revenue funding of almost £600 million to support vital local government services.”
— Budget Statement by Kate Forbes, Cabinet Secretary for Finance, December 2021
Contrast the figures cited as funding for councils some 13 years apart and you might appreciate why councils across Scotland feel short-changed. Even adding in the |extra” £600m (all of it ring-fenced), this amount to 0.5% increase each year over a period when inflation rose 36.4%—effectively a decrease of over 25% in real terms. The population increase of 2.6% alone justifies a larger budget.
But some real world council obligations dwarf that. For example, East Lothian Council Adult Social Care budget was £20m; in 2001; two decades later it had grown to £45m—a 125% increase.
Scottish Government attempts to deny this crippling decline in funding simply do not ring true, such as “
“It is misleading to claim there has been a £371 million real terms cut to the 2022-23 core local government budget. This figure is extremely selective as it ignores almost £1.4 billion of other funding for joint priorities within the overall local government finance settlement of over £12.5 billion.”
—Scottish Government spokesperson, Daily Record, Dec 24th 2021
The devil lies on the detail of “joint priorities:”, which is a euphemism for ring-fencing and compulsion for councils to spend the money where they are told on pain of fiscal penalties.
All this presages a showdown between local and national government. It also highlights a much deeper issue—effective emasculation of local democracy. Fiscal management and initiative skills within councils have been weakened by having little practice in either. Council leadership has been worn down to passivity. Meetings to which the public have access are Potemkin villages of democracy—all façade; no substance. As a result, the public don’t bother attending, which encourages councillors to be passive voting fodder.
Were council passivity counterbalanced by visionary initiative at government level, such centralisation might work. Sadly, this is not the case. Despite former council-leaders-now-MSPs serving as Local Government Ministers, all have acted as policy conduits. None have acted as champion for local government nor shown any encouragement of initiative within councils.
This is evidenced by studying GAE calculations in detail. These determine the bulk of council finance. They are Sir Humphrey McAppleby alive and well at Victoria Quay. (refer to official GAE for details; the relevant tables take up 90 pages of the document’s 106). Each table is a complex matrix of parameters applied to each council. They are shaped by objective factors like population, but also subjective ones like “remoteness” and “social deprivation”. They allocate funds in detail to everything from teachers to school transport.
In principle, if applied objectively and rigorously such a scheme has merits. However, it is wide open to “pork barrel” manipulation by people well hidden from public view. Its effectiveness and objectivity comes into question. Who decides how much should be spent on school transport in the first place is mot in council control.
Because of the foregoing, Scotland stands on the cusp of open hostility between local and national government. The antidote is an acceptance that devolution cannot stop at Holyrood.
Despite warm words, micromanagement is laid bare in the GAE tables. A simpler method of GAE distribution which trusts councils to deploy funds as their residents require must be found. Then councillors be forced to be real partners, to engage with how their allocation is spent, accountable as common democracy. Councillors unable to make the transition may—rightly—lose their jobs as the public becomes engaged.
Radical change required will take time. But a clear start to the process must be evident before the next council election, due in May. Were the present Scottish government were to ignore CoSLA’s letter, a major shift in Scottish politics as unprecedented hostility from councils grows. For the government to continue holding all the cards and claiming the resulting credit will condemn most of our 1,200+ councillors to vent their accumulated frustration through outright opposition.
A ground-breaking initiative is required…and soon. Hard though it may be to contemplate, a reversal of the 85%-to-15% imbalance of income sources is essential to restore fiscal flexibility nearer the people and thereby reviving skills within councils to manage their own affairs and operate as a true partner.
A sketch of how such an option might be initiated was made in an earlier blog.
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Appendix
Letter to the First Minister and Cabinet Secretary for Finance, December 21st 2021
“We have already written to the First Minister and Cabinet Secretary for Finance and the Economy in relation to the settlement, but last night there was a real strength of feeling that we need to press for a meeting at the highest possible level of Government in a bid to make Government understand what this budget will really mean in our communities, and the detrimental impact it will have on core services.”
COSLA President Councillor Alison Evison said: “Many in the meeting described this settlement for Local Government as the worst they had seen. Council Leaders were clear last night that we could not sit back and simply accept this and there was a real strength of feeling that enough is enough.
“Not only do Leaders consider that we have been given a real- terms cut of £371 million, the Local Government settlement makes no provision for pay, inflation or increased demand for services nor for the increased burden of National Insurance Contributions;
“Leaders instructed COSLA to seek an urgent meeting with the First Minister and the COSLA leadership team including political group leaders and that is what we will be pushing for as a matter of urgency.”
(signed)
Councillor Jenny Laing (Aberdeen City Council); Councillor Andy Kille (Aberdeenshire Council); Councillor David Fairweather (Angus Council); Councillor Robin Currie (Argyll and Bute Council); Councillor Adam McVey (City of Edinburgh Council); Councillor Ellen Forson (Clackmannanshire Council); Councillor Roddie Mackay (Comhairle nan Eilean Siar); Councillor Elaine Murray (Dumfries and Galloway Council); Councillor John Alexander (Dundee City Council); Councillor Douglas Reid (East Ayrshire Council); Councillor Andrew Polson and Councillor Vaughan Moody (East Dunbartonshire Council); Councillor Norman Hampshire (East Lothian Council); Councillor Tony Buchanan (East Renfrewshire Council); Councillor Cecil Meiklejohn (Falkirk Council); Councillor David Ross (Fife Council); Councillor Susan Aitken (Glasgow City Council); Councillor Margaret Davidson (Highland Council ); Councillor Stephen McCabe (Inverclyde Council); Councillor Derek Milligan (Midlothian Council); Councillor Joe Cullinane (North Ayrshire Council); Councillor Jim Logue (North Lanarkshire Council); Councillor Graham Leadbitter (Moray Council); Councillor James Stockan (Orkney Islands Council); Councillor Murray Lyle (Perth and Kinross Council); Councillor Iain Nicolson (Renfrewshire Council); Councillor Mark Rooney (Scottish Borders Council); Councillor Peter Henderson (South Ayrshire Council); Councillor John Ross (South Lanarkshire Council); Councillor Steven Coutts (Shetland Islands Council); Councillor Scott Farmer (Stirling Council); Councillor Jonathan McColl (West Dunbartonshire Council); Councillor Lawrence Fitzpatrick (West Lothian Council).
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