Leader responds to ‘draconian’ budget settlement

Inverclyde Council Leader has issued a formal response to the Scottish Government on what has been described as a ‘draconian’ settlement.

Council Leaders were asked to respond the Scottish Government by the deadline of 9 February 2016 indicating their acceptance or otherwise of the budget ‘offer’.

And, Councillor Stephen McCabe has confirmed in the council’s response that he is in discussion with other Council Leaders about a judicial review of the sanctions proposed by the Scottish Government.

In his response, Councillor McCabe, outlines that he does not intend to propose a council tax increase in 2016/17.  Inverclyde’s Council Tax is expected to be set on 18 February.

He has also indicated that he will not propose that the Council contribute to an increase in the national pupil teacher ratio in 2016 and will propose that the council offer a place to all probationer teachers under the ‘Teachers Inductions Scheme’.

Inverclyde Council has, for the first time in its history, decided to delay the setting of its budget until 10 March due to uncertainty over the budget settlement from the Scottish Government. It is at this Council meeting where the final Council budget decisions are expected to be made.

In his letter to Deputy First Minister John Swinney MSP, Councillor McCabe highlights support for the principle of paying £8.25 per hour Living Wage to all social care sector workers. But, the Council Leader called for confirmation and reassurance from the Scottish Government of the legal position for Councils in implementing it.

In signing off his letter, Councillor McCabe, highlighted that he is in discussion with other Council Leaders on seeking a judicial review of the sanctions.

He said: “In all my years in Local Government I cannot recall such a draconian settlement both financially and in terms of the penalties threatened. You should be aware that I am in discussion with colleagues in other Councils about the possibility of seeking a judicial review of your draconian sanctions.

“I find it totally baffling that a Government which portrays itself at every turn as being anti-austerity would support a settlement that will undoubtedly have a devastating impact on local communities, services and jobs in the years to come when it had other levers at its disposal to avoid such an outcome,” he added.

Full text of letter:

Mr John Swinney MSP
Deputy First Minister
The Scottish Government
St Andrew’s House
Regent Road
EdinburghEH1 3DG

         
Dear John

2016/17 Local Government Finance Settlement

I refer to your letter dated the 27th January 2016 to Councillor David O’Neill the COSLA President, which was copied to the Leaders of all Scottish Local Authorities, where you advised that you require those Council Leaders who intend to take up the “Offer” contained in your letter to write to you to set out their position no later than Tuesday 9th February 2016.

I would initially state that I find both the terms of the “Offer” and the manner in which it has been conveyed by the Scottish Government to be extremely disappointing.  You demonstrate no recognition of either the legitimate role of Local Government to make its own decisions or the very significant financial pressures which Local Authorities now face directly as a result of the actions of the Scottish Government. If you want to communicate with me in future please do so directly rather than through a copy of a letter to a third party.  That is only common courtesy. Please also remember that Council Leaders do not exercise executive authority and that any correspondence should more correctly request a response from the Council.

I have written to you twice previously on the 24th December and 12th January and have had no responses to the matters I raised. This is extremely discourteous on your part.  For your ease, I repeat my previous requests within this letter.

Firstly I requested that consideration be given to an average cash reduction in the floor calculation of 3.9% rather than the range of -1.5% to -4.5% outlined in your latest circular.  This would provide a modicum of protection for those Local Authorities who have been hit the hardest financially which invariably are those with higher levels of inequality and deprivation, the reduction of which is a stated aim of the current Scottish Government.

Secondly I raised the issue about the Scottish Welfare Fund where Inverclyde Council is receiving a 7% cut in 2016/17 and a further 14% cut over 2017/19 as part of a redistribution exercise.  Given that Inverclyde Council is expected to overspend its Scottish Welfare Fund allocation by almost £100,000 this financial year then a cut in the Council’s share can only lead to further hardship for some of the most vulnerable within Inverclyde.  I asked how this approach squares with the Government’s often repeated statement of using its resources to mitigate the impact of UK Government Welfare Reform and would again ask for increased funding for this area.

In my letter dated the 12th January I highlighted that on top of the cash reduction applied by the Scottish Government of £6.6 million between 2015/16 and 2016/17, other unavoidable cost increases arising from inflation, changes to the National Insurance contracting out rate, demographic pressures and other increases in demands result in the Council having to find £12 million savings in 2016/17 simply to stand still.  Your offer effectively increases the savings required within Inverclyde by a further £2.28 million were we not to comply with the terms of the offer in respect of Council Tax, teacher numbers and probationers.  This equates to a 7.1% reduction in the Council’s budget which would have a significant impact on the services provided and the community which we serve.  I am therefore bemused as to how you can portray this as a 2% cut, a claim you made again when giving evidence on the 3rd February to the Local Government & Regeneration Committee.

In the above analysis I have deliberately excluded the issue of the £250 million “Health & Social Care” funding as the actual impact which this aspect of the offer has on our budget is still unclear.  Whilst it is welcome that demographic pressures can be met from the first £125 million, the other aspects around reviewing charging thresholds and additional services will have no direct impact on closing the 2016/17 budget gap.  In a similar vein the passporting of a significant proportion of the second £125 million to external providers of Social Care services to enable them to pay the £8.25 per hour living wage does nothing to alleviate the pressure on Councils budgets as this was not a cost factored into the 2016/17 budget planning.  Therefore there is only limited benefit in terms of closing the 2016/17 funding gap deriving from the £250 million, rather than your claim that this sum effectively reduces the £350 million Grant cut to £100 million.

In fact what the stipulations outlined in your “Offer” regarding the use of the £250 million has done is effectively ring-fence the Council Social Care Budget and limited the extent to which it can contribute to the extremely challenging financial position faced by the Council.

In terms of your “Offer” therefore I would respond as follows:

  1. It is not my intention to propose that the Council increase Council Tax in 2016/17, although this will not be formally decided until the 18th February.
  2. It is not my intention to propose that the Council contribute to an increase in the national pupil teacher ratio in 2016, although this will not be formally decided until 10 March. I am bemused however as to how there can be a national agreement when the national body representing 28 of Scotland’s 32 Councils has rejected a voluntary agreement on the terms of your over all “Offer”.
  3. It is my intention to propose that the Council offer a place for all probationers who require one under the Teachers Induction Scheme. Again this will not be formally decided until 10 March.

In respect of the commitment to pay the £8.25 Living Wage to all Social Care Sector workers, while I am supportive in principle, before this can be implemented, I believe I need the Scottish Government to:

  • provide all 32 local authorities with a legally compliant implementation route both in relation to (i) all different types of service provision and (ii) the differing positions of existing and new providers;
  • confirm how to “ensure all social care workers are paid £8.25 per hour” when it is not legally possible to make payment of the Living Wage a mandatory requirement as part of a competitive tender process as detailed in SPPN 1/2015;
  • provide confirmation to local authorities that the chosen implementation route is state aid compliant;
  • confirm that local authorities face no risk of legal challenge from providers should the allocation be insufficient to pay all social care workers £8.25 per hour; and
  • confirm how this hourly rate is to be sustained in future years.

In all my years in Local Government I cannot recall such a draconian settlement both financially and in terms of the penalties threatened. You should be aware that I am in discussion with colleagues in other Councils about the possibility of seeking a judicial review of your draconian sanctions.

I find it totally baffling that a Government which portrays itself at every turn as being anti-austerity would support a settlement that will undoubtedly have a devastating impact on local communities, services and jobs in the years to come when it had other levers at its disposal to avoid such an outcome.

I require your response by no later than Friday 26 February.

Yours sincerely

Stephen McCabe
Council Leader
Inverclyde Council