Malcolm calls for Edinburgh's fair share of revenue grant from the Scottish Government
Scotland's Budget for 2010-11: Local Government Revenue Malcolm Chisholm (Edinburgh North and Leith) (Lab):
I will focus on two crucial issues - distribution and priorities - both of which are increasingly important as budgets get tighter. Michael McMahon spoke of that earlier.

On 26 November, I asked the cabinet secretary why Edinburgh was getting a revenue increase of 1.76 per cent when the Scottish average was 2.9 per cent. He gave an impeccably technical answer, as he does. That kind of gap did not matter in years gone by. For example, five or six years ago, if the Scottish average was 6 per cent and Edinburgh got 5 per cent, it did not matter too much. That said, we have to accept that, as budgets get tighter, the floor arrangements for revenue distribution must be looked at again. Before Bob Doris gets to his feet, I say to him that the suggestion would also benefit Glasgow. Edinburgh and Glasgow are the only two mainland local authorities to get an increase of less than 2 per cent. The issue is serious and it will become even more critical as budgets get tighter. The issue is particularly important for Edinburgh, which has the fastest-growing population in Scotland.

Of course, the problem is compounded by the council tax freeze. Edinburgh is getting a cash increase in revenue of 14 million this year, half of which - 7 million - is to cover the council tax freeze. In effect, the cash increase for Edinburgh is less than 1 per cent.

The distributions have to be looked at again in light of the new financial circumstances. That has happened in the health budget. Under the new formula, NHS Lothian is owed many millions of pounds because the Cabinet Secretary for Health and Wellbeing has slowed down distribution to health boards to a crawl. She puts forward reasonable arguments for doing so, but the issue must be looked at again in the area of health and local government.

Within the money that is allocated, the council has choices. I commend the budget that the Labour opposition in Edinburgh will present tomorrow, which is designed to protect schools and other front-line services. Many organisations in my constituency such as North Edinburgh Childcare, the Pilmeny Development Project, Granton Information Centre, the North Edinburgh Trust and others would be protected by the Labour shadow budget; unfortunately, the Labour group is not in control, but it has made its priorities clear.

The Scottish Government should also have a view on its priorities for local government and a mechanism for delivering them. During the budget process, we heard a great deal from the Cabinet Secretary for Finance and Sustainable Growth about protecting front-line services, but talk of protecting such services without a mechanism to do so is meaningless.

I want to focus on education, although that is not the only service that is affected. As all of us know, and as Iain Gray pointed out at First Minister's question time last week, many local authorities in Scotland face real-terms cuts in education spending. There has been a great campaign in Edinburgh, so the threatened cuts to school budgets next year of 2.5 per cent have been reduced to 1 per cent, but over the past few days I have spoken to parents and headteachers in my constituency who believe that those cuts will still have a profound effect on their schools. In fact, there are other hidden costs, such as the devolved budgets for heating, waste and maternity holiday pay, for which there are overspends at city-wide level that schools will have to pick up.

The Government must find a mechanism to ensure that local government prioritises schools because, as I have said several times in the past few months, nothing is more important to the future of Scotland than the education of our young people.
As budgets get tighter, it will become increasingly important for the Government to decide what its priorities are and to find a mechanism for delivering them.

My time is nearly up, so I will make two final points. First, I know that the Scottish Government and the City of Edinburgh Council have discussed tax increment financing. I would welcome an update on those discussions, as such financing would help infrastructure development at the waterfront in my constituency. Secondly, two or three weeks ago, the City of Edinburgh Council raised with me the problem of private sector housing grant coming as capital. That has been resolved for this year, but it would be good if in future years private sector housing grant could come as revenue. It could then be used for the private sector leasing scheme that is essential for Edinburgh to meet its commitments on homelessness...

...John Swinney (The Cabinet Secretary for Finance and Sustainable Growth):

Mr Chisholm made a similar point from a slightly different perspective. On behalf of his constituents, Mr Chisholm expressed his concern about the level of increase for the City of Edinburgh Council that has been generated by the distribution formula. The self-same formula is delivering a revenue increase of 3.41 per cent for Aberdeen City Council and a revenue increase of 3.45 per cent for Aberdeenshire Council, compared with a total increase of 2.93 per cent in Scotland. I advance those facts simply to highlight the fact that, within the distribution formula, there are clearly allocation differences that are driven by the indicators - I refer to the point that I made to Alison McInnes. In some circumstances - for the north-east authorities, for example - it is driving a percentage increase that is higher than the Scottish average. In Mr Chisholm's constituency, the increase is below that.

Malcolm Chisholm:
I thank the cabinet secretary for correctly distinguishing between what the Liberal Democrats and I have said, but does he accept my point that the floor on annual increases should be considered as budgets get tighter? As I have pointed out, that would benefit Glasgow City Council as well as the City of Edinburgh Council, as they are the only mainland authorities with increases of less than 2 per cent this year.

John Swinney (The Cabinet Secretary for Finance and Sustainable Growth):
The floor is revisited as part of each spending review to ensure that we take those circumstances into account. That will certainly be the case in relation to the setting of the floor in the distribution formula for the next spending review...

...Mr Chisholm asked for an update on tax increment finance, or TIF. The discussions between the City of Edinburgh Council and the Scottish Futures Trust are going well. They are constructive, and we hope to be able to advance a scheme. I assure Mr Chisholm that I will be happy to talk to him about that in more detail - it is a project that we are keen to advance.
February 10th 2010, (Column 23679-80, 23693,4)