Local Authority Funding Debate

Friday October 4th 2019


Written by Midlothian View Editor, Phil Bowen

Following an exchange on the Eskbank and Newbattle Community Council (ENCC) Facebook page between Colin Beattie SNP MSP and Midlothian Labour Councillor John Hackett on the finances of Midlothian Council, the two men agreed to a public debate.

As a result, ENCC in partnership with Midlothian View organised the debate last night at the Dalkeith Arts Centre. It was attended by 55 local residents.

In order to ensure all Midlothian political parties were involved Councillor Peter Smaill was also invited.

The format was similar to Question Time to allow audience participation but with the three questions being advertised in advance so that the debate was about Local Authority Funding, as originally intended.

Colin Beattie subsequently decided that he would withdraw from the debate as he felt it was not appropriate for an MSP to debate a ward councillor. The ENCC requested a replacement from the Midlothian SNP group but they decided not to take up the offer.

This meant that the SNP view, and thus the Scottish Government’s view, would not be represented. Cancelling the event was discussed but it was decided that as the invites had already been sent out and that there was widespread interest then the debate would go ahead.

The first question asked was:

How has Local Authority Financing for Midlothian changed over the last five years and what are the reasons for this?

By virtue of a coin toss, Councillor Hackett was the first to speak. He said that there were multiple reasons why it has changed over the last five years.

Firstly he said that there had been a steady reduction in the block grant paid from Westminster to Scotland as a result of Austerity. But that there had also been a steady reduction in the percentage of the money passed from the Scottish Government to Councils. This he said had fallen from 34% to 30%.

Midlothian, Councillor Hackett said, that the county’s population growth was forecast to be 13% and with only 25% of income coming from council tax this was causing a gap to open in the budget.

Cosla, Convention of Scottish Local Authorities which is the national association of Scottish councils, decides the distribution of money from Scottish Government he said. The distribution formula no longer works as it was not designed for the rapid increase in population that Midlothian is seeing.

Councillor Hackett also said that the last budget of the previous SNP administration, before the 2017 local elections at which Labour had won control of the council, had decided to use £4 million of a reserve fund of £8 million to shore up the budget and that a further £2.5 million had also been earmarked leaving only £1.5 million in reserve.

All of this has led to cuts across the council such as in education, roads, facilities and staff, but that finally the council has been able to get to grips with the budget and deliver a balanced budget.

Councillor Smaill then spoke. He also cited that there had been a reduction of 3.5% of money from the UK Government to the Scottish Government but that there had been a 7% deduction of money from Scottish Government to Scottish councils.

On top of this he said, the money that had been given to councils was ringfenced by the Scottish Government i.e. the Scottish Government was mandating what the money had to be spent on.

For example, the Scottish Government has asked all councils to increase funded early learning and childcare by August 2020. This will increase early learning and childcare hours for every 3 and 4-year old and eligible 2-year old from 600 hrs to 1,140 hours.

Councillor Smaill said, that whilst the headline figure of the total amount of money given to Midlothian council had increased, as the council was now expected to do so much more with the money, such as fund the early years programme, then in reality the council’s budget had been cut.

He went on to say that demographics were also playing a part in the pressure on finances with an increase in the aged population but a significant decrease in the working population.

The increase in children in Midlothian was driving an increase in the need for schools but as the cost of a new school is approximately £100,000 per child then this was impacting on the council budget too.

Councillor Smaill agreed that the “Cosla Crazy funding formula” was not working and as result Midlothian is missing out annually on £5 million which should be due to it given its population.

Councillor Smaill said that as recently announced by the Chancellor Sajid Javid, the Scottish Government would receive an extra £1.1 billion but the councillor said that it remains to be seen how much of that funding will come to councils.

An audience member asked whether the Cosla formula should be reviewed.

Councillor Hackett said that Labour were calling for an independent review of the formula.

Councillor Smaill said that as the majority of Scottish councils are shrinking in population it is not in their interest to revise the formula and so these councils would not vote for a change to it.

The second set question of the night was:

What can Midlothian Council do and what can the Scottish Government do to improve the situation?

John Hackett said that the council had been righty criticised in not reaching its targets. He thought it had previously taken its eye off the ball and had set targets that were too high and thus not achievable.

He also said that the council needed to be open to entrepreneurial endeavours and to have faith in them, such as Hillend and Vogrie Country Park.

He said that otherwise if the current trend continues then the council will have to stop all but the essential services.

He also said that he would look to increase council tax as much as possible to raise the funds to pay for vital local services.

Councillor Hackett said that Shared Services, where neighbouring councils collaborate to deliver services, is an easy thing to say but that in practice they are very hard to deliver. He said that there are currently 12 partnerships with East Lothian Council and that they he would like to see these grow as that was a more manageable way to do things.

Having resisted the temptation to make political points against the absent Colin Beattie, on the subject of ring fenced funding, Councillor Hackett said that a leaflet distributed to houses in Midlothian by Colin Beattie had claimed that council funding had increased, when in fact it meant a decrease of £1.5 million for Midlothian’s budget.

In his answer to the question Councillor Smaill said that in previous budgets the savings target had not been ambitious enough, being only £1.5million in a budget of £200 million and that of that only half had actually been achieved.

He also said that he had witnessed poor auditing practices, for example, 23 different petty cash accounts and taxi drivers being paid with no receipts. He said that a poor culture of accounting for monies had previously in place but this was beginning to improve.

The Provost also made mention of the council losing £10 million when the newly built Newbyres houses had to be demolished due to suspected carbon dioxide poisoning after a leak from mothballed coal mines. He said that council officers had lost a subsequent legal battle which cost £300,000 which the councillors had had no say in. He said that sometimes councillors have a lack of power to control officers.

Councillor Smaill said that as Provost he had had the casting vote on the previous budget and thus had had to vote for a budget that had the highest council tax increase in Scotland, which as a Conservative was against his inclination but it was necessary to deliver a balanced budget.

Councillor Smaill sounded a cautious note on the council being entrepreneurial as he said as an organisation it was not in their skill set or nature. For instance, he was concerned that the Hillend project did not take into account the need for an eventual replacement and thus the expected profit would turn out to be less

An audience member then made the point that she did not have confidence in the council officers understanding the detail contained in the proposed savings.

As a former council employee in the Active Schools department, she said that their small department of 9 staff which previously had been cost neutral had been told that they now had to make a profit of £79,000 which amounted to 25% of their department’s budget. She said that the figures in the subsequent proposed savings were wildly inaccurate and that she had raised this higher and higher in the organisation but had been told to be quiet.

She said that if this was what was happening in one small department then she could see it being far worse in larger departments.

The final set question of the night was:

Why does Midlothian have to accept such high increases in housing development, without the infrastructure financing needed to support it?

Councillor Hackett said that Midlothian Council were entitled to ask for developer contributions but that they could only be spent on specific things.

The lack of Health Care provision were not grounds for rejecting a development he said, such that if the council knew that a new development would result in a local GP practice being overwhelmed then they cannot use that as a reason to reject the developers application. Should they try then the developer would simply appeal to the Scottish Government reporter who would be highly likely to overturn the council’s decision. And in that situation the council would then likely lose out on developer contributions.

John Hackett said that the Local Development Plan (LDP) which is agreed very 5 years defines what areas can be developed on and the council are obliged by the Scottish Government to provide land for development. He said that the LDP was vitally important as it helps the council defend decisions and reject applications.

He also made the point that the Council’s Learning Estate Strategy, which defines the need for school places in Midlothian in either existing or new schools, is also very important to enable the council to reject developer applications.

Councillor Smaill backed up Councillor Hackett’s points and agreed that there was a real risk of losing out on developer contributions altogether if the councillors simply reject applications without a very good reason for doing so.

The councillors said that they had recently agreed to set up a committee whose role is to decide the level of developer contributions for a site and what those contributions would be spent on.

ENCC and Midlothian View would like to thank the many residents and visitors from other Wards who joined in the debate on Local Authority Funding and made it such an informative and interesting evening.

A special thanks also to Councillors John Hackett and Peter Smaill, for bringing such a wealth of information, in a spirit of real cooperation, to help us understand the issues Midlothian faces.

The high numbers showing interest in the debate encourages us to offer to host more discussions on topics suggested by the community. Let us know what topics you want to see featured at our next debate.

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