The Scottish Parliament - Finance Committee Report

1. The Scottish Government’s Draft Budget 2010-2011 was published on 17 September 2009.

2. The Local Government and Communities Committee agreed its approach to the Draft Budget at its meeting on 1 September 2009. It agreed to focus its scrutiny on the impact of the Draft Budget on the Communities side of its remit and on housing and poverty in particular.

3. On 30 September 2009, the Committee took oral evidence on the impact of the Draft Budget on housing from representatives of Shelter, the Scottish Federation of Housing Associations and the Chartered Institute of Housing Scotland; and on poverty from the Joseph Rowntree Foundation. It also took oral evidence from Nicola Sturgeon MSP, Cabinet Secretary for Health and Wellbeing on 7 October 2009.

4. Written submissions were received from Shelter, the Scottish Federation of Housing Associations and the Chartered Institute of Housing Scotland.

5. In addition, correspondence was received from the Cabinet Secretary for Health and Wellbeing responding to issues raised by the Committee in its report on the Draft Budget for 2009-10, and in response to questions raised by the Committee at its meeting on 7 October; and from COSLA in relation to the re-profiling of capital expenditure from the 2010-11 Budget to fund an increase in the Affordable Housing Investment Programme in 2008-09 and 2009-10.

7. The Committee would also like to thank its adviser, Professor Ronald McQuaid of Edinburgh Napier University, for his support and advice throughout the budget scrutiny process.

8. The first part of this report considers the impact of the Draft Budget on housing; the second part considers its impact on poverty.

9. The following tables¹ set out the total spend on Housing in both cash and real terms and a comparison between the spending plans in the current Draft Budget and the 2009-10 Draft Budget (in cash terms).

Housing: Comparison of spending plans in the 2009-10 draft budget and Draft Budget 2010-11, Cash terms, £m

10. The Committee notes that the 2010-11 Affordable Housing Investment Programme (AHIP) budget is reduced due to the repayment of £80m accelerated to the 2009-10 Budget and £40m to 2008-09 as part of the Scottish Government’s Economic Recovery Programme. Without this accelerated funding of £120m, there would have been an increase in the AHIP budget in 2010-11 of £27m (or 6%) compared to 2009-10. This is, however, still an £18.5m (or 5%) decrease from the planned expenditure that was set out in the 2009-10 Draft Budget. This reflects the accelerated funding (as part of the total acceleration of £120 million) that took place following the publication of the 2009-10 Draft Budget.

11. The Committee also notes that in March 2009, the Scottish Government published its planned AHIP expenditure for 2009-10 totalling £644 million.² The Draft Budget in 2010-11 shows a total AHIP allocation of £524.9m, however this does not include £119.1m of investment in housing for Edinburgh and Glasgow which is allocated separately from the Central Government Grants to Local Authorities budget.³

12. The Committee notes that over the three years of the Comprehensive Spending Review (2008-09 to 2010-11) the total AHIP budget (in cash terms) has remained constant, although re-profiling has changed the years in which the budget is allocated:

13. The Committee notes that the total budget of £1650m set out in column 1 of the table above includes £3.7m transferred for housing-related surveys and research from AHIP intothe Communities Analytical Services budget.

14. As the overall AHIP budget has not changed, the total numbers of affordable housing units provided over the three years should remain similar to that originally envisaged in 2008. However, the current economic circumstances suggest that the demand for low cost affordable housing is likely to increase as unemployment is expected to rise. Also, there is less private sector building and associated social housing from planning gain, although counter to this land and building costs are likely to fall and houses previously for sale may be put on the rental market. The Committee considers it important therefore for the situation to be constantly monitored.

15. The Committee also believes that it is important for the Scottish Government to consider the way in which the AHIP is spent, for example on the housing association grant,council house building, the low-cost initiative for first time buyers and other grants. Account also needs to be taken of impacts onthe availabilityand type of affordable housingand the effects on construction employment.

16. The Committee notes increases of £0.5 million in the Communities Analytical Services budget or 11.4% and in the Private Housing budget of £8.6 million or 84.3%. There is no change in the remaining budget lines.

17. Whilst there is an increase in cash terms in the Private Housing budget (previously Modernising Private Sector Housing) from the budget for 2009-10, this is a decrease of £6.4m or 25.4% from the planned expenditure for 2010-11 as set out in the 2009-10 Draft Budget. According to the Cabinet Secretary, this is as a consequence of the £5bn of efficiency savings arising from the 2009 UK Budget consequentials. She told the Committee that the Scottish Government has—

18. The Scottish Government committed in its Draft Budget of 2008-09 (following a Comprehensive Spending Review) to spending £1.65 billion on housing over the next 3 years.⁵ This it has been able to maintain. Gavin Corbett, Head of Policy at Shelter called for further investment however in view of the current economic situation—

20. Witnesses also expressed some concern about the recession and its impact on funding for housing infrastructure and the continuing pressure both on housing providers to provide housing, and on the funds available.

21. The Cabinet Secretary acknowledged the concerns and the difficulties in the current climate in securing infrastructure funding. She told the Committee that the issue had been raised and discussed by the Housing Supply Task Force and that the Scottish Government was now considering a range of options to address the issue.⁸

22. The Committee notes the position as set out by the Cabinet Secretary. However, it believes that progress needs to be made quickly in light of the pressures faced by housing providers and the concerns that exist in relation to infrastructure funding in the current financial climate. The Committee recommends therefore that the Scottish Government should publish the outcome of its consideration of the range of options as a matter of urgency.

23. The overall economic context is one of the banking crisis and possibly the deepest recession in construction and housing in at least half a century. Households in mortgage arrears appear to be increasing, house prices remain fairly high relative to historic levels and access to mortgages is difficult, especially for first time buyers due for instance to large deposits being required. This is likely to affect the demand for the Low-cost Initiative for First Time Buyers and the Homeowners Support Fund.

24. AHIP funds both housing for rent and low cost home ownership. The majority of funding is provided to Registered Social Landlords in the form of Housing Association Grant. AHIP is also used to provide assistance for first time buyers through the Low-cost Initiative for First Time Buyers (LIFT) and to homeowners through the Homeowners Support Fund, which includes Mortgage to Rent and Mortgage to Shared Equity.

25. Whilst AHIP funds a number of different housing programmes, the Committee notes that the Draft Budget only provides information on AHIP as a whole.

27. In response to the Committee’s 2009-10 report, the Cabinet Secretary for Health and Wellbeing informed the Committee that—

28. The Minister for Housing and Communities provided the Committee with a copy of the AHIP out-turn for 2008-09 on 10 August.¹¹ However, the Cabinet Secretary for Health and Wellbeing told the Committee that the outturn report on the Programme for 2009-10 would not be published until later in the current financial year.¹²

29. The Committee is concerned that the AHIP outturn report for 2009-10 is not available at this point in the Budget process as it is would have found it helpful to have been able to consider the impact that accelerated funding in particular has had on AHIP and to be able to draw conclusions.

30. In view of the commitment the Scottish Government made in its response to the Committee’s 2009-10 report on the Draft Budget to consider how best to provide more detailed information to the Committee, the Committee recommends that the Scottish Government gives further consideration as to how this might be done to assist the Committee during the Budget process.

31. The Committee further recommends that the Scottish Government provides the Committee with AHIP outturn information for 2009-10 as quickly as possible.

32. Although acknowledging that the AHIP budget has remained stable over the Comprehensive Spending Review period, in looking ahead the Committee is concerned about the potential impact that the reduced AHIP budget in 2010-11 due to reprofilingmay have on the future development programme, particularlyat a timewhen demand forlow cost affordable housing is likely to increase.

33. Andrew Field, Deputy Chief Executive of the Scottish Federation of Housing Associations (SFHA) welcomed the acceleration of funding of £40 million in 2008-09 and £80 million in 2009-10—

34. Nick Fletcher, Head of Policy and Public Affairs at the Chartered Institute of Housing Scotland also supported the accelerated funding—

35. In terms of construction industry jobs, the Cabinet Secretary for Health and Wellbeing told the Committee that—

36. In an e-mail to the Committee following the meeting with the Cabinet Secretary, the Scottish Government confirmed that—

37. The Committee explored how the accelerated funding had been spent in each of the years 2008-09 and 2009-10. In terms of 2008-09 (£40 million), the Cabinet Secretary told the Committee that—

38. The Cabinet Secretary added that some of the remaining £7 million went to the home owners support fund and £2 million went to the Devenha¹⁸ project (a bulk procurement initiative).¹⁹

39. The Committee notes from the information provided that this suggests that 20% was spent directly on immediate construction, and 27.5% on land purchases which assists future construction.

40. In terms of actual build starts in 2008-09 as a result of the accelerated funding, the Scottish Government confirmed the following in an e-mail²⁰ to the Committee:

41. The Committee notes the details provided, but seeks further information from the Scottish Government as soon as possible and before the debates on the Draft Budget, on whether any of the projects listed above were already in a state of readiness, for example with approvals in place, which would have allowed projects to have been progressed in a relatively short period of time.

42. In terms of how the accelerated funding for 2009-10 (£80 million) was spent however, the Committee was disappointed to note from the Cabinet Secretary for Health and Wellbeing’s evidence that the Scottish Government is unable to provide a breakdown of this as it was—

43. The Committee notes the commitment given by the Cabinet Secretary to produce an outturn report for the current year so that the distribution of the £80 million in 2009-10 can be seen.²³

44. The Committee would like to have been in a position during its consideration of the Draft Budget to have considered and commented on how the £80 million of accelerated funding in 2009-10 was spent. Given that this information is not available however, it is unable to do so.

45. The Committee welcomed the decision to accelerate funding for 2008-09 and 2009-10 and notes the welcome that has been given by witnesses. It notes that the acceleration was confirmed between the Scottish Government and the UK Government when it was predicted that the current economic downturn would last around 18 months. In addition, the terms of the agreement on acceleration were that money would be accelerated over 2 years but would be repaid over one year. The Committee is concerned therefore about the implications arising from a reduced housing budget in 2010-11 given that the economic difficulties remain.

46. Gavin Corbett from Shelter argued however, that in the midst of a recession, consideration should be given to the further acceleration of funds from future years—

47. The Cabinet Secretary acknowledged that the Scottish Government could not go on accelerating capital indefinitely, but accepted that—

48. As previously indicated, the Committee welcomes the acceleration of £120 million from 2010-11 to 2008-09 and 2009-10 in view of the economic situation prevalent at the time. It also recognises however that continually accelerating money is not a means by which the Scottish Government’s housing programme should be run.

49. The Committee believes however that in light of the continuing economic situation, the Scottish Government should seek from the UK Government the further acceleration of funds for housing for one more year. It agrees with the view expressed by witnesses that housing is a good area for capital investment, and that AHIP should be a core element of the Scottish Government’s economic recovery plan. The Committee considers however that any further acceleration should take into account the impact on the 2010-11 Budget from having to pay back 2 years accelerated monies in 1 year, and that any acceleration should be conditional on the basis that there are clearly defined objectives such as building affordable homes and sustaining jobs.

50. The Committee recognises that the precise impacts of any acceleration or change in AHIP will vary due to the composition of AHIP expenditure, or the Scottish Government’s preference for this; the level of leveraging in the AHIP budget may have from other sources of resources (e.g. local authority land banks, RSL reserves etc.); future developments by the house building industry; and changes in the future demand for affordable housing. However, the overall impact of acceleration would be to increase the supply of affordable housing and construction employment, at least in the short term.

51. In terms of planning, Brian Gegan, Chairman of the SFHA, suggested that when considering accelerating budgets in the future, the Scottish Government and others should be thinking in 3 year timescales, where if funding is to be accelerated in year 1, consideration should also be given then to the impact that this will have in years 2 and 3.²⁶

52. He told the Committee that it needed to be borne in mind that a housing project takes 3 years from inception to completion –

53. The Cabinet Secretary for Health and Wellbeing agreed that the more long-term certainty that there is, the better, adding that she thought the suggestion about 3 year funding was well made. She did point out however the constraint of not having certainty about future budgets.²⁸

54. The Committee acknowledges that benefits have arisen as a result of acceleration in 2008-09. It recognises however that following acceleration there will be a period of deceleration where money is not available, and acknowledges the possible impact that this might have, for example in housing supply not being able to meet demand. The Committee believes therefore that every effort should be made when agreeing further acceleration, to plan ahead for when deceleration arises.

55. In this regard, the Committee believes that the Scottish Government should, with the UK Government, consider the longer term impact of acceleration particularly in those years where money has to be repaid. The Committee agrees with the suggestion made by the SFHA that the Scottish Government should plan in 3 year cycles.

56. The Committee notes that the Scottish Government’s target is to approve (not build) 21,500 new affordable homes between 2008 and 2011. The Cabinet Secretary for Health and Wellbeing acknowledged that meeting the target would be challenging given the current economic climate, however she stated that—

58. Nick Fletcher from the Chartered Institute of Housing Scotland acknowledged the level of investment in affordable housing by the Scottish Government. He said that whilst the £1.65 billion —

59. The Cabinet Secretary for Health and Wellbeing agreed that whilst there is a need to increase the rate of new build there had to be a debate about the target figure for new-build social rented homes required in order to meet need. She added that there was also a need to look at other ways of meeting housing need, for example through more effective use of the private rented sector.³²

60. The Committee considers that the presentation of information on the numbers and types of housing units approved and completed and how this relates to housing need, should be clarified. The Committee notes that the Scottish Government's target of 21,500 affordable homes includes low cost home ownership homes and a mixture of homes for social rent, for mid rent and for purchase through shared equity. The Cabinet Secretary confirmed that the 6,260 completions figure is the total in the AHIP budget and includes a combination of all these types of affordable homes. She added that—

61. The Committee acknowledges that there is a further debate to be had on how many new homes should be for rent and how many should be from, for instance, shared equity or other sources. In this regard, the Cabinet Secretary stated that—

62. The Committeeasks the Scottish Government to provide it withannual approval and completion figuresfrom 2008-09 for the different forms ofhousing supported by AHIP (e.g. housing for social rent plus how many of these were new build or purchased from developers); and its expectations and preferences for future years in order to meet its affordable housing targets.

63. In terms of the cost of building new affordable homes and the level of public subsidy involved, the Committee noted, in its written submission, that the SFHA had indicated that “if all 10,000 homes were to be built for affordable rent, and if they were all built by housing associations, then at current costs, it would require an average public subsidy of £78,000 per unit (at a total cost of £780 million).³⁵

64. The subsidy available to local authorities on the other hand to build these homes would be £25,000 each. The Committee questioned whether on that basis Councils were delivering more for the Scottish Government’s expenditure than housing associations. Brian Gegan from the SFHA urged caution however in relation to the lower figure arguing that—

66. In terms of local authority housing, the Cabinet Secretary for Health and Wellbeing told the Committee that the Scottish Government had approved 1300 council houses this year which was “…achieved at a much lower rate of public subsidy than goes to Registered Social Landlords for example.”³⁸ The Committee recognises however, that in this situation, “public subsidy” means “Government subsidy.”

67. In terms of the sustainability of providing further local authority homes however, the Cabinet Secretary told the Committee that no decisions had yet been taken with regard to future provision. The Scottish Government had allocated around half of the £50 million that had been set aside to kick-start the council house building programme and the Cabinet Secretary indicated that the remainder of the programme would be announced shortly. She added—

68. The Committee notes the debate over the different levels of subsidy that are available to local authorities and to housing associations to build homes and that it has been argued that the level of subsidy cannot be properly compared. It also notes that there are different routes through which subsidies can come for example from central government and also from local government. The Committee therefore asks the Scottish Government to clarify the position with regard to the different levels of public subsidy and the effect of this on council house building. It also seeks clarification of the position with regard to the relative costs of building a housing unit from different providers in different areas. As part of this, the Committee would welcome figures on the full costs of any public or RSL subsidies including, for example, land or specialist services provided at below market prices.

69. The Committee also asks the Scottish Government to provide further information on targets and expectations in relation to council house building over the next 2 years. It notes that the Cabinet Secretary indicated that building more homes might depend on the availability of land and finance. The Committee questions therefore how sustainable the current levels of council house building will be over the next 2 years, when set against a financial climate where there is a tightening squeeze on public finances, and where local authorities may not be able to go into the market place to borrow money due to capital spending constraints.

70. The Cabinet Secretary for Health and Wellbeing was aware that there were substantial amounts of money being held in reserves by Registered Social Landlords but recognised that a lot of this was required for other purposes, such as meeting the housing quality standard. However, she acknowledged—

71. In terms of further investment in house building, the Committee welcomes the news that the European Investment Bank (EIB) will be making £50 million of funding available to Registered Social Landlords in Scotland this year. It notes that the aim is to allocate the funding through the EIB and its partner agency for distributing the funds, the Housing Finance Corporation, before the end of the year.⁴¹

72. The Committee notes that the actual total level of potential leverage (e.g. Housing Association reserves, available local authority land, EIB monies) is unclear. However, it appreciates that this is a potentially significant issue as different levels and types of leverage mean that different numbers of housing units might be constructed or made available for a given level of Scottish Government housing expenditure.

73. The Committee acknowledges that there are different levels of reserves being held by Registered Social Landlords, and that these are used for a variety of purposes such as meeting the housing quality standard and planned maintenance. However, the Committee is interested to see the picture across Scotland with regard to the levels of reserves held by different housing associations and other areas of potential leverage. The Committee therefore asks the Scottish Government to provide it with this information.

74. The delivery of more homes will of course have an impact on tackling and preventing homelessness.

75. The Committee notes that the budget line on tackling and preventing homelessness is effectively unchanged in 2009-10 and 2010-11. Although the Draft Budget sees a decrease in 2010-11 of £0.2m (33.3%), this results from the transfer of £0.2m into the local government settlement in the Autumn Budget Revision 2008-09.⁴² It should also be noted that much of the work in this area is carried out through local authorities and their budgets.

79. Andrew Field from the SFHA agreed with this assessment, adding that if fewer homes were to be built as a result of a reduction in the housing budget—

80. He added that whilst housing supply is an important component in helping to meet the 2012 target, other factors would also be critical including advice services, which are not capital funded.⁴⁶

81. The Committee notes that local authorities were required in March 2009 to submit interim progress reports on meeting the 2012 homelessness targets. It further notes that an assessment of the data provided was published by the Scottish Government on 4 September 2009.⁴⁷ The Committee seeks the view of the Scottish Government with regard to how it considers that future AHIP investment reflects the progress of individual local authorities in meeting the 2012 homelessness target.

82. The Cabinet Secretary for Heath and Wellbeing explained the Scottish Government’s position on the allocation of Affordable Housing Investment Programme (AHIP) funding in relation to tackling homelessness—

83. In an e-mail to the Committee, the Scottish Government provided the following statistics in relation to how AHIP allocations for 2009-10 took account of the 2012 homelessness target—

84. On the basis of the Scottish Government’s assessment of the interim progress reports submitted by local authorities on meeting the 2012 homelessness target, the Committee considers that achieving the target will be extremely challenging, especially when set against a backdrop of the current and continuing financial difficulties. The Committee considers however that achieving the target should remain a priority for the Scottish Government.

85. The Cabinet Secretary for Health and Wellbeing told the Committee that in terms of getting the most out of the housing budget, there was a need to continue to drive efficiencies to ensure that the Scottish Government gets as many “bangs for bucks” as possible suggesting—

87. In the Scottish Government Efficiency Delivery Plans for the 2008-11 Efficiency Programme,⁵¹ the efficiencies for AHIP are defined as:

88. The outputs to be measured are the number of new or improved affordable houses grant aided through AHIP.

89. The Committee accepts that while this will provide useful information, it would welcome more detailed information on efficiencies, such as changes due to falling land or construction prices and efficiencies within RSLs’ administration.

90. In oral evidence, the Committee asked Shelter, SFHA and the Chartered Institute for Housing Scotland how more houses could be built within the limits of the existing budget. In discussion, the following suggestions were made:

91. The Committee fully supports the need to drive efficiencies. Also, given the fragility of both the economy and the construction industry, the Committee also supports initiatives to explore other sources of funding and the identification of assets which might help secure further leverage in terms of securing funding.

92. The Committee invites the Scottish Government to consider the suggestion made in evidence for the establishment of a rolling infrastructure fund, and to inform the Committee of the outcome of its consideration.

93. The second part of this report considers the impact of the Draft Budget on tackling poverty.

94. The Committee notes that there is no dedicated Scottish Government budget for tackling poverty. Policies and responsibilities are spread across Scottish Government Departments and Ministerial portfolios. In this report, the Committee considers budgets that include urban regeneration, equalities and social inclusion, and fuel poverty. The Committee considers the issue of tackling and preventing homelessness in the earlier part of this report on housing.

95. The following tables⁵³ set out the total spend on Regeneration, Equalities and Social Housing in both cash and real terms (at Level 2) and the Regeneration budget in Level 3 spend.

Regeneration, Equalities and Social Inclusion: Level 2 Spending in Cash Terms, £m

Regeneration, Equalities and Social Inclusion: Level 2 Spending in Real Terms, £m

96. The Committee notes that the Regeneration budget is forecast to decline in 2010-11 by £84.5m or 71.6% in cash terms (£85m or 72% in real terms). This includes—

97. It further notes that the equalities and social inclusion budget line is planned to increase by 4.2% in cash terms (2.6% in real terms).

98. In terms of the overall budgetary picture relating to poverty in Scotland, Jim McCormick, Scotland Adviser, the Joseph Rowntree Foundation told the Committee that—

99. Jim McCormick told the Committee he believed that, in general terms, there were 3 ways in which poverty could be tackled, by—

100. Although many of these issues are reserved, Jim McCormick felt that the current Draft Budget and future budgets have a part to play in this regard. He considered that there were gaps in policy and practice in Scotland and that addressing those gaps did not necessarily mean spending more or straying into reserved powers, in order to deliver against shared objectives.⁵⁵

101. Jim McCormick considered that it was important to drive down the poverty premium where the poorest households pay a larger a proportion of their income on bills—

102. The Cabinet Secretary for Health and Wellbeing told the Committee that through its Achieving Our Potential: A Framework to Tackle Poverty and Income Inequality in Scotland document, the Scottish Government is—

103. However, Jim McCormick questioned whether investment was being made into programmes which are known to work well. He was concerned that initiatives such as the Working for Families Fund which he felt had added value and where evaluation was shown to be effective, were now—

104. Jim McCormick called for effective evaluation by the Scottish Government in this regard.

105. The Committee considers that it is vital to evaluate the effectiveness of programmes which seek to tackle poverty to ensure that public investment into these programmes adds value. It notes with concern that some schemes which have proved effective in this regard have been rolled into integrated regeneration projects. It believes it is vital therefore that the Scottish Government undertakes a full evaluation to ensure that public money is being invested in the most effective programmes.

106. In explaining to the Committee the reduction in the Regeneration budget for 2010-11 (-71.6%), the Cabinet Secretary for Health and Wellbeing stated—

107. The Committee acknowledges that the funding for the Town Centre Regeneration Fund was for one year only. However, the Committee put it to the Cabinet Secretary that £60 million had still been made available in 2009/10 and now that the Fund had come to an end, the £60 million might have been used to help fund other initiatives to tackle poverty or even provide a further year of funding for town centre regeneration (the Committee is aware of the large demand in 2009-10 where there were bids of around £150 million in the first tranche of the Fund where £40 million was available).

110. The Committee notes that on 25 June 2009 the Cabinet Secretary for Finance and Sustainable Growth stated—

111. The Committee therefore seeks clarity as to whether these End Year Flexibility monies are available and whether the Scottish Government intends to use them.

112. The Committee notes that the announcement of successful bids in the second tranche of the Fund was delayed initially from late September until November. The Committee is concerned that this delay will curtail the ability of successful bidders to realise their plans given that they have to spend the Scottish Government’s share of the allocated funds before the end of the 2009-10 financial year.

113. The Committee therefore recommends that the Scottish Government should make an announcement as soon as possible in relation to successful bids. It also recommends that, given the curtailed timetable and the impact this may have on those who made successful bids, the Scottish Government should consider an extension to the timetable to allow successful bidders to put in place their plans; and that it should inform them of any extension when an announcement is made.

114. The Committee notes that £145m is allocated to Community Planning Partnerships through the FSF to help them achieve economic growth. This is currently ring-fenced within the local government settlement until March 2010, when it will be rolled up into the local government general settlement.

115. The Cabinet Secretary for Health and Wellbeing explained that the rationale for removing the ring fencing of this budget and mainstreaming the money into overall budgets was to—

116. In terms of the allocation methodology behind the FSF, this had been based on the Scottish Index for Multiple Deprivation (SIMD) 2006 with 75% of allocations based on area measures of deprivation and 25% based on individual measures of deprivation based on the income domain of SIMD 2006. It was not clear to the Committee however, how future allocations would be allocated given that the funding would in future be rolled-up into the local government settlement. The Cabinet Secretary explained—

117. The Committee would welcome an update from the Scottish Government once decisions have been taken on the methodology to be used for the future allocation of funds that were previously allocated to the Fairer Scotland Fund.

118. The Committee was concerned about how the use of future allocations would be monitored given that the FSF money would be mainstreamed in the future. The Cabinet Secretary explained—

119. The Cabinet Secretary added that the Scottish Government was looking at the annual reports that have been submitted on Single Outcome Agreements for 2008-09 in order to ascertain what impact the FSF has had.⁶⁶

120. The Committee understands that less than 20 of the 36 SOA annual reports have been submitted to the Scottish Government by local authorities at the time of the Cabinet Secretary providing evidence.

121. The Committee asks the Scottish Government to clarify the position in relation to the number of SOA annual reports that have been received to date; to explain in more detail the analysis it will undertake to assess the impact that the Fairer Scotland Fund has had in 2008-09, and to explain more generally what its analysis will include. The Scottish Government should also provide the Committee with comparative figures for expenditure by Community Planning Partnerships in 2010-11 on those activities that were formerly funded by the Fairer Scotland Fund.

122. The Committee notes an increase of £15m in the home insulation budget in both 2009-10 and 2010-11 as announced as part of the last Budget Bill.

123. The Scottish Government’s fuel poverty target is to ensure that by November 2016, so far as is reasonably practicable, people are not living in fuelpoverty in Scotland.

124. Jim McCormick told the Committee that the best way to remain focused on achieving the 2016 target was for this to be become binding in law, in much the same way as the child poverty target that is about to be enshrined in legislation.⁶⁷

125. The Committee notes Jim McCormick’s view in relation to a statutory target and asks the Scottish Government to look at the challenges this would bring and to report back to the Committee on its conclusions.

126. On 6 April 2009, the Scottish Government introduced a new Energy Assistance Package (EAP) to replace the Warm Deal and the Central Heating Programmes. In addition to affecting fuel poverty, such initiatives help Scotland to move towards its anti-global warming targets.

127. The Committee notes that there has been a decrease of £5 million in the Energy Assistance Package budget for 2010-11. This does however return this budget to its previous level, as there was an increase in this budget of £5m in 2009-10.

129. In terms of the impact of the Energy Assistance Package on tackling fuel poverty, the Scottish Government supplied the Committee with the following information which relates to activity up to 30 September 2009⁶⁹—

130. This shows that 429 central heating systems had been installed under Stage 4 of the EAP by 30 September although there had been 3,796 ‘legacy’ installations from the former Central Heating Programme. The Scottish Government points out that the number of installations of central heating and other Stage 4 measures will depend on demand from eligible households. The Committee notes that as recommended by the Fuel Poverty Forum, the EAP is targeted at certain groups using various combinations of qualifying criteria, based on age, benefits, housing tenure, and characteristics of the home's energy performance and heating installation.

131. The Committee noted that it appeared a large proportion of people who had been assessed for Stage 4 support were unsuccessful in their applications. The Cabinet Secretary indicated that it was important to assess the position at the end of the EAP’s first full year.⁷⁰

132. Subsequently, it was announced on 4 November 2009 by the Scottish Government that the definition of an energy inefficient dwelling would be amended for eligible groups to include those with a SAP rating in band E.⁷¹

133. The Committee would welcome the opportunity to examine the Scottish Government on decisions relating to the rejection rates between Stage 3 and Stage 4 at its earliest opportunity.

134. Jim McCormick suggested to the Committee that there are other ways to target investment effectively other than just through the EAP, so that the impact on people in fuel poverty is lessened. He suggested that the Scottish Government should be engaging with the private sector to look at other ways of helping those in fuel poverty to cut their outgoings, for example in relation to pre-payment meters on which, Jim McCormick argues, there is a reliance by those who can least afford it but who ultimately pay much higher tariffs than the best social tariffs available.⁷²

135. In terms of other ways of tackling fuel poverty, Jim McCormick referred to the responsibility that Governments have—

136. The Committee notes that the Cabinet Secretary for Health and Wellbeing confirmed that the Scottish Government “will assess the programme in its entirety at the end of the year”.⁷⁴ The Committee looks forward to considering the outcomes of this assessment and the impact that the programme is having in helping to tackle fuel poverty.

137. The Committee recommends that the Scottish Government should continue to consider ways of maximising its expenditure on tackling fuel poverty in ways that help those most in need.

138. The Committee invites the Scottish Government to explore with OFGEM and the private sector ways in which those in fuel poverty can cut their outgoings, particularly with regard to pre-payment meters. In this regard, the Committee believes that the Scottish Government has a major role to play in helping people move to lower tariffs not only for their energy supplies, and thereby help reduce their poverty, but also to help reduce the carbon footprint through reducing future energy usage and costs.

139. The Committee notes the commitment of the Scottish Government to implement an outcomes approach to budgeting. It notes however that no direct reference is made in the relevant chapter of the Draft Budget to how Scotland Performs⁷⁵ or how the Single Outcome Agreement process impacts upon the budgetary decisions being made by the Scottish Government.

140. The Committee recommended in its report on the Draft Budget 2009-10 that SOAs should be better integrated within the National Performance Framework (of which Scotland Performs is an integral part).⁷⁶

141. During the Finance Committee’s consideration of the Draft Budget 2009-10, the Cabinet Secretary for Finance and Sustainable Growth was asked whether Single Outcome Agreements which include 3,599 targets, outcomes and indicators, has a relationship with Scotland Performs.

143. The Finance Committee, in its report on the Draft Budget 2009-10, indicated that it would examine this relationship as part of its on-going scrutiny of Scotland Performs. The Finance Committee also recommended that further development work should be done on Scotland Performs to show a linkage betweenexpenditure and outcomes, given that the purpose of Scotland Performs is to show progress towards achieving outcomes.

144. The Committee understands from the Finance Committee that it has not yet received further information from the Scottish Government on this issue.

145. The Committee asks the Scottish Government to confirm what work has been done since last year’s Draft Budget report in connection with improving the integration between SOAs and Scotland Performs; and what work has been done more generally to link expenditure to outcomes in Scotland Performs.

146. It was suggested in oral evidence by Jim McCormick from the Joseph Rowntree Foundation that, when the 2010-11 Budget emerges at the end of this process, it would be a positive step to have an even clearer statement of the way in which Ministers believe that the budget will influence the anti-poverty objectives.⁷⁸

147. In its Report on Child Poverty in Scotland,⁷⁹ the Committee recommended that Scottish Government policies should be poverty proofed in the same way that policies are equality proofed. The Committee welcomes the fact that in this year’s Draft Budget, the Scottish Government has produced an equality statement alongside the budget document whose aim is to help demonstrate how the budget contributes to advancing equality in Scotland. The Committee recommends that in future years, the Scottish Government should also produce a similar statement in relation to how the budget helps address poverty in Scotland.

Budget process 2010-11 (Stage 2): The Committee agreed: that the focus of its budget scrutiny should be on the communities side of the Committee's remit on issues such as support for housing, town centre regeneration, child poverty and fuel poverty; to seek to appoint a budget adviser; the remit and person specification for the post; and to consider in private a list of candidates at a future meeting.

Budget process 2010-11 (Stage 2) (in private): The Committee considered a list of candidates for the post of budget adviser to the Committee and agreed a preferred candidate for the post.

Decision on taking business in private: The Committee agreed that its consideration of the evidence heard and draft report on the Draft Budget 2010-11 should be taken in private at future meetings.

Draft Budget Scrutiny 2010-11: The Committee took evidence on the Scottish Government's Draft Budget 2010-11 from—

Draft Budget Scrutiny 2010-11 (in private): The Committee considered the main themes arising from evidence heard.

Draft Budget Scrutiny 2010-11: The Committee took evidence on the Scottish Government's Draft Budget 2010-11 from—

Draft Budget Scrutiny 2010-11 (in private): The Committee considered the main themes arising from evidence heard.

Draft Budget Scrutiny 2010-11 (in private): The Committee considered a draft report to the Finance Committee on the Scottish Government's Draft Budget 2010‑11.

Draft Budget Scrutiny 2010-11 (in private): The Committee considered a draft report to the Finance Committee on the Scottish Government's Draft Budget 2010‑11 and agreed the report subject to certain changes.

1. In this report, the Rural Affairs and Environment Committee comments on those aspects of the Scottish Government Draft Budget 2010-11 that relate to the Committee’s remit i.e the RAE portfolio. In doing so the Committee has picked up on a number of issues raised in its report from the 2009-10 budget process. The Committee has been assisted in its scrutiny by its budget adviser, Professor Ken Thomson.

2. The Committee took evidence on 30 September 2009 from the following Scottish Government officials: Paul Gray, Director General Environment; Peter Russell, Director of Rural Directorate; John Mason, Director of Environmental Quality; Mike Neilson, Director of Marine Directorate, Maggie Gill, Director of Rural and Environment Research and Analysis; David Reid, Deputy Director, Finance Directorate; Gill Tucker, Head of Common Agricultural Policy Payments in the Rural Payments and Inspections Directorate, Scottish Government; and Bob McIntosh, Director of Forestry Commission Scotland.

3. On 7 October 2009 the Committee took evidence from Richard Lochhead MSP, Cabinet Secretary for Rural Affairs and the Environment, together with Paul Gray, Director General Environment; Ross Scott, finance team leader for the Rural Affairs and Environment portfolio; and David Barnes, Deputy Director for Agriculture and Rural Development, Scottish Government.

4. The Committee recognises the unusual circumstances of this year’s budget, which has had to be prepared in a UK context of budgetary stringency and economic uncertainty. It is also conscious that much more difficult conditions of public finance have been forecast in the years beyond 2010-11, as detailed in Professor David Bell, Finance Committee Adviser’s briefing. The Committee notes that budget lines have not increased to the extent projected in last year’s draft budget.

5. The Committee found some new aspects of the budget documentation introduced in this budget process to be useful, such as the carbon assessment.¹ The Committee notes the ongoing work in relation to developing this assessment, which should improve scrutiny of the environmental impact by portfolio in future years.

7. The Committee notes that the Draft Budget chapter on the Rural Affairs and Environment portfolio records the transfers of £26.3m from Zero Waste³ (£25.3m in 2009-10), £3.6m from SNH (as in 2009-10), and £0.3m from Animal Health (also as in 2009-10) to local government. However, the Local Government chapter (page 138), only records a “change” of “£20.9m for the Zero Waste Fund”⁴ (£5.4m less than the figure transferred out of the RAE Zero Waste line), and does not note the other two smaller transfers. The Committee is therefore not assured that all transfers are being clearly identified in draft budget documents.

8. On a wider point, the Committee has the increasing difficulty of scrutinising some of the responsibilities within the RAE portfolio, such as “protecting the air, land and water environment”, “protecting communities from pollution, flooding, noise and nuisance”, and “moving towards a “zero waste” society”⁵ (page 106 of Draft Budget), when much of the relevant funding is channelled through local government, either directly or through allocations made from the RAE budget. In these circumstances, it is becoming unclear which Cabinet Secretary is ultimately responsible for such areas, and how failures, or future financial stringencies, will be dealt with. The Committee raised this issue of accountability within its report on the 2009-10 budget.

9. The Committee reiterates that the implementation of the Concordat between the Scottish Government and local government has made it more difficult than before to trace budget links between a Government RAE budget allocation to a local authority for a particular policy and the total funding which local authorities then target at implementation of that policy. As a result it is more difficult to hold ministers to account for some RAE policies. The Committee urges the Finance Committee to consider issues of principle arising from implementation of the Concordat as it relates to the accountability of ministers and proper scrutiny by committees.

Overview of RAE Budget 2010-11 (projected figures from 2009-10 budget document in parentheses)

10. The RAE Draft Budget total is £628.6m (£626.9m)⁶ (RAE chapter of the Draft Budget Table 6.01) or £619.4m in real terms, i.e. at 2009-10 prices⁷ (RAE chapter of the Draft Budget Table 6.02). This is a slight rise in cash terms since 2009-10 but a fall of £7.6m or 1.2% in real terms.

11. As regards the split between Capital and Resource expenditure, RAE Capital spend falls to £69.6m (£73.9m) , i.e. by 5.8% in cash terms or 7.2% in real terms⁸ (SPICe Briefing, Tables 11 and 12). This is comparable with the fall of 15.5% (cash) or 16.6% (real) in the total Scottish budget DEL Capital, which is due to the “re-profiling” of £347m capital from 2010-11 to 2009-10.

12. The equivalent figures for RAE Resource expenditure (SPICe Briefing Tables 13 and 14) are a rise of 1.1% (cash) or fall of 0.4% (real), comparable to the total Scottish changes (both rises) of 2.9% (cash) and 1.4% (real).⁹

13. The decisions of the Government over the last twelve months to bring forward a number of items of capital spend from the 2010-11 budget into the 2009-10 budget has led to some apparent decreases in future spending at Level 3. Also, transfers of some funding to local government, and one or two other changes in accounting have occurred. While these changes are explained in the “Budget Changes” notes accompanying the tables, direct comparison of 2009-10 and 2010-11 figures is therefore liable to be misleading.

14. The Committee notes unchanged figures for schemes fully funded from EU Income, as well as the significant increase (about 15%) in the sterling value of Euro payments under the Single Farm Payment Scheme and some other schemes (as announced on 1 October for the current year). It is estimated¹⁰ that this will add some £88 million to the £433.6 million figure reported in the Draft Budget.

15. The Committee raised the issue of uncertainty amongst Scotland Rural Development Programme applicants over scheme budgets for this year and next. Evidence from officials was that thresholds for successful applications were varied to meet the budget available, in the context of “a steep increase in applications”¹¹ in 2009-10 to date. The Cabinet Secretary seemed aware of possible problems of this type, at least in the short run—

16. The Committee appreciates the desirability of a greater degree of certainty amongst potential SRDP applicants as to the budgets available for the various SRDP schemes, and the likely “points” thresholds for a successful SRDP application. However it also acknowledges the financial liability on the Government should it elect to set such thresholds.

17. For next year and the longer term, the Committee was interested in the disclosure (footnote 2 to Table 6.03) that negotiations were underway over altering the co-financing ratio agreed between the SG and the EU for schemes under the SRDP, from 68% SG: 32% EU for 2009-10 to approximately 50%:50% for 2010-11.¹³ In evidence, officials explained that this was being done to give “higher spending power in next year's programme”¹⁴ and that, more generally, the aim was “a sensible curve across the whole of the programme so that we do not get an exaggerated spike in one year”.¹⁵ The Committee welcomes the statement that “we hope to spend an extra £50 million in next year's budget”¹⁶for the SRDP.

18. The Committee welcomes assurances that the adjustment in the co-financing ratio did not reflect any reduction in funding from the Scottish Government for the SRDP. Given the importance of the Programme and its EU funding, it urges the Government to keep a close eye on prospects for 2013 and beyond, despite the considerable uncertainties involved.

19. The Committee inquired into aspects of the RAE budget where there may be concerns with equality, including the effects of requiring all SRDP applications to be made online. Officials pointed to the “wide” take-up of the SRDP, which they regarded as “hugely successful, …[i]n fact, it has been more successful than any previous scheme”.¹⁷ Members nevertheless questioned whether the Government had assessed the extent to which the requirement to apply online may disadvantage certain groups of potential applicants.

20. The Committee was pleased to receive additional written evidence from the Cabinet Secretary on the efforts being made to overcome the difficulties presented by the new requirement for online application for SRDP Rural Priorities funding. It appreciates the efficiency and environmental arguments involved, but considers it unfortunate that the new system was introduced without a sufficient transitional period in 2008, and that some of these improvement efforts are only now being made. In due course, the Committee will be interested to see whether the result of these efforts satisfy the recommendations in the SRDP First Stage Review Report (the Cook report).¹⁸

21. In its report on the 2009-10 Draft Budget, the Committee noted its intention “to keep a watching brief on the level of funding available to support the New Entrants Scheme”¹⁹, and this year it questioned both officials and the Cabinet Secretary about this Scheme (which is not identified in the Level 3 figures in the Draft Budget itself). Members were concerned to learn that the number of successful applicants to date was only 15²⁰, with about £2.5m of funding to new entrants across all the SRDP schemes, and about £500,000 under the interest rate scheme.

22. It was explained that this low rate of uptake was probably due to a number of factors, including the current economic climate of low interest rates, the difficulty of identifying actual dates of “new entry” (when, for example, children succeed parents), house availability, and the desirability of allowing neighbouring farms to expand for their viability and resilience.²¹ However, it became apparent from officials’ evidence that no information is collected on the number of unsuccessful applications or on why potential applicants do not apply in the first place.

23. The Committee appreciates that a number of problems with the New Entrants Scheme are the result of criteria set at a European level. However, the Committee seeks further action from the Scottish Government in relation to the current operation of the New Entrants Scheme, both in achieving a more effective scheme, and in investigating the reasons for low entry, or indeed whether this is a widespread and serious problem at the present time.

“in assessing the Scottish Government’s approach to achieving efficiencies, [it should] compare its definition against those used by other UK administrations and further ... consider whether all matters now described as efficiencies can reasonably be described as such”.²²

25. This year Committee asked about the efficiency delivery plans from April 2009, when £40.2 million was set against voluntary modulation. Officials explained that this did not release any cash, and had been reported under standard Government rules; it simply moved CAP funds from Pillar 1 to Pillar 2.²³ It was asserted by officials that this did not mean any loss in public good outputs from Pillar 1 funding (presumably because it was not felt that farmers reduced such outputs in response to lower SFP rates), but that further public goods could be purchased with Pillar 2 funds within the SRDP.²⁴

26. The Committee reiterates its concern that Government rules allow for such non-cash-releasing switching to be counted as efficiency savings.

27. The Committee raised the ongoing issue of the electronic identification (EID) of sheep with the Cabinet Secretary. The Cabinet Secretary said that “there is always flexibility in our budget to respond to such issues”²⁵, and reminded the Committee that Scotland's response to sheep EID was currently out to consultation, shortly after which it would be decided how best to implement the controversial regulation. He added that, although there were “major reservations about the net benefits of sheep EID for Scotland's livestock sector and its sheep sector in particular”²⁶, non-implementation would risk Single Farm Payments and other penalties.

28. In response to questions about a centrally held database recording the movement of sheep and the Scottish Animal Movement Unit (SAMU), the Cabinet Secretary was unwilling to make specific commitments at this stage, other than to say that the “Scottish Government will need to support the sheep sector in some shape or form and…to find ways of doing that”²⁷.

29. The Committee welcomes the suggestion that the Government is considering ways of providing support to farmers required to implement the Regulation on sheep identification in the New Year. The Committee recommends that the Government urgently investigates the costs and benefits of publicly funded arrangements, within the SRDP or otherwise, to reduce or offset the costs of the EID scheme.

30. The Committee heard evidence from officials that the Directorate was “working to a five-year research strategy that began in 2006 and runs to March 2011”²⁸,while a contract research fund enables it “to be more flexible and reactive to policies”²⁹. The Committee was left uncertain from oral evidence as to how this activity related to Scottish Government priorities, policy statements and performance monitoring. Supplementary information from the Government attempted to address this point, but noted that individual budget lines often contributed to more than one indicator/target, and to different degrees, so that “it is difficult to attribute outcomes and indicators/target to individual budget lines”.³⁰ This situation clearly weakens the effectiveness of budget scrutiny in terms of performance assessment.

31. The Committee received additional written evidence from the Cabinet Secretary on the links between the RAE Research Strategy, the National Performance Framework, and the Government Economic Strategy (GES). This additional evidence identified 6 (out of a total of 15) “National Outcomes” and their specific “links with Research Programmes”. However, these “links” comprise a mixture of specific research findings (e.g. new blackcurrant varieties), whole programmes (e.g. “Land Use and Rural Stewardship”), self-generated economic assessments (e.g. “MRPs [Main Research Providers] employ 1059 staff”) and rather general assertions (“produce knowledge for evidence-based policy-making ..”). For a number of reasons (not all based on the research structure itself), it is therefore not clear that the current programmes of Strategic Research” are closely aligned with Scottish Government policies and priorities and show clear relevance to GES”.³¹

32. The Committee heard at the session on 30 September that a policy-needs workshop with a number of stakeholders and scientists would be held later that day with a view to developing the strategy that will come into action from 1 April 2011, after being put out to tender by the main research providers in January 2010.³² The research stemming from the strategy is intended to develop knowledge that will come into use in five to 10 years and to be linked into the needs of the agencies that will take forward implementation. In this respect, the Committee was surprised that the evidence offered to it did not explicitly mention the Consultation on Science in Support of Marine, Environment, Rural Affairs and Related Policies of the Scottish Government: A Coordinated Agenda for Marine, Environment and Rural Affairs Science (CAMERAS) (2011-2016), which was completed in autumn 2008 and published on 23 January 2009³³.

33. In relation to climate change research, the Committee was told of the cross-cutting theme in the current research strategy, and of links into UK-wide and international research programmes. An additional £2m a year was being received under the contract research fund to link with the Natural Environment Research Council, Living with Environmental Change research programme. In future, plans were afoot for a centre of expertise for adaptation to climate change, drawing on the broader academic community in Scotland and not just the main research providers, to avoid “look[ing] at a small part of the picture and go the wrong way on greenhouse gas emissions”³⁴.

34. The Committee notes the statement by the Cabinet Secretary that research and analysis was—

35. The Committee recommends that, in planning its research strategy the Government should consider how the strategy’s climate change component relates to implementing its commitments across all its portfolios.

36. The Committee heard evidence on the establishment on 1 April 2009 of Marine Scotland, combining the functions of the Fisheries Research Services, the Scottish Fisheries Protection Agency (SFPA) and the previous Marine Directorate.³⁶ Various complexities surround its Level 3 budget, which reduces from £75.5m in 2009-10 to £65.3m in 2010-11, including: capital acceleration of £3.6m for the Fish Veterinary Aquaria in Aberdeen, transfer of administrative resources (£3.2m), transfer of £1.3m Food Industry Support to Natural Heritage and Rural Services, and the level of EU income expected (£6.0m in 2009-10 and £7.2m in 2010-11) given exchange-rate and co-financing uncertainties mentioned above. Other uncertainties included the level of pay increases, efficiency savings due to the new Directorate, and one-off costs, such as the compensation scheme this year for the infectious salmon anaemia events in Shetland. Overall, the Committee was assured by officials that “the underlying picture is that the overall scientific activity this year and next year is in line with the spending plans in the 2007 spending review”.³⁷

37. With most of its major investment in infrastructure already made, Marine Scotland is operating using its current fleet, but it was recognized by officials that “there is a big compliance issue, which needs to be scoped, as we move from fisheries enforcement and compliance to a broader marine role.”³⁸

38. The Committee also raised with officials its previous concerns about the scientific underpinning of policy in the run-up to the Fisheries Council last December, particularly in relation to the west coast, and noted that this did not seem central to the stated budget objectives in the coming year.³⁹ In response, it was said that one of the priorities has been to improve the science base on the west coast, where there has been additional observer activity, and additional scientific trips. Officials also noted that a clearer picture could not be established overnight, and getting an understanding of exactly what is happening on the west coast is not straightforward. It was also suggested that “the primary reason for the stock difficulties does not appear to be fishing”.⁴⁰

39. In light of the Marine Bill, and other likely changes in fisheries policy, the Committee requests that the Research and as appropriate other Level 3 budget lines identify more clearly what efforts are going into establishing a better scientific basis for policy-making and implementation in the marine area.

40. During discussion on the scope to fund support measures for the fishing industry, which would sit alongside 2010 quotas, the Cabinet Secretary stated that he believed that there would be available funds within the European Fisheries Fund (EFF), but was understandably unable to suggest a suitable level of funding in advance of the fisheries negotiations⁴¹.

41. When asked whether the Government would consider, if necessary, using the EFF to support a paid tie-up scheme, the Cabinet Secretary confirmed that this was a possibility along with other support measures: “We will be looking at all potential measures that are available under the EFF”.⁴²

42. The Committee welcomes reassurances from the Cabinet Secretary that EFF funding will be available to fund support measures for the Scottish fishing industry and notes that there may be potential for a paid tie-up scheme if required.

43. The Committee noted concerns surrounding the increase from £67.9m to £69.0m in the Level 3 budget line for Scottish Natural Heritage (SNH) and the Deer Commission for Scotland (DCS), which the Government proposes to merge shortly. These include a transfer of £3.7m to local government in both years for ranger and other services, and one-off efficiency gains from the DCS sharing offices with SNH in Inverness.

44. The Committee was interested in planned expenditure on veterinary surveillance, which is shown in the Draft Budget⁴³ (Table 6.06) to rise slightly by £100,000 from £4.7m to £4.8m, the same rise as in last year’s Draft Budget although from a lower base. It was not made entirely clear where the “missing” amount (of some £500,000) had “gone to”, but officials explained that there had been “value from the spend in unexpected ways”⁴⁴, e.g. related to bluetongue, and that there might well be further efficiency gains to be made once the new Chief Veterinary Officer had become established in his post.

45. The Committee questioned officials on plans for the future strategic network for veterinary surveillance in Scotland, “not just for bluetongue but for a range of exotic animal diseases”.⁴⁵ Concern was expressed that actions on the ground by the Scottish Agricultural College (SAC), such as a reduction of activity at Thurso, were pre-empting a possible future review of the network issue.⁴⁶ The Cabinet Secretary was unwilling to commit to such a review, citing ongoing negotiations with the SAC over the contract.⁴⁷ However, he did deprecate any attempt to downgrade the level of services in areas where they are required.⁴⁸

46. The Committee urges the Government to undertake a review of future veterinary surveillance network, in order to establish a robust strategic framework for efficient working.

47. Further Committee concerns centred on the transfer to Scotland of DEFRA budgets for veterinary surveillance, and the impact of cost-sharing initiatives. Officials explained that they hoped the transfer of animal health budgets to devolved administrations would start in April 2010, in a phased way, but that “big choices” were involved, e.g. to avoid diseconomies of scale.⁴⁹ The mere transfer of these budgets to Scotland would not, of itself, involve extra cost burdens for the industry; these would depend on the progress of an agenda currently being driven by DEFRA.⁵⁰ Officials went on to suggest that, if costs had been transferred to industry before a budget transfer, then we would “not be able to recover the position quickly”.⁵¹

48. The Cabinet Secretary pointed to uncertainties in this process, e.g. the timing of UK legislation over cost-sharing, and, importantly, access to the UK contingency fund in case of a large disease outbreak.⁵²

49. The Committee records its concerns in this area, and requests that the Government seek clarification as regards the position over responsibilities, budgets and cost-sharing as and when transfers take place, whether for “routine” veterinary surveillance, or in the case of large-scale crises.

50. The Committee asked about future funding by the Government for local authorities in respect of Zero Waste⁵³, for which the RAE budget is shown as rising slightly from £27.4m to £27.9m in the Draft Budget. Officials explained that, “at the highest level, there is a discussion about the whole Grant Aided Expenditure settlement and how it will proceed in the next spending review.”⁵⁴ The Government is using the existing GAE formula for waste, and was awaiting a COSLA proposal for next year. The position was similar for flooding, for which £126m (unchanged in the Draft Budget) is being allocated to local authorities over three years, with longer-term discussions taking place for future years. These will take into account additional commitments likely to be required under the Climate Change (Scotland) Act 2009 for waste management and the Flood Risk Management (Scotland) Act 2009 in relation to flooding.

51. The Committee asked about the fall from £8.2m to £5.0M in the funding for Private Water supplies (Table 6.08). Officials confirmed that there had been significant underspend within this budget despite efforts at publicising the Private Water Supply Grant Scheme, and that the Draft Budget reduction reflected this, although a further increase in applications was hoped for.

52. The Committee suggests that, if underspend continues into 2010, this scheme should be re-examined as to need and implementation.

53. Officials confirmed that FCS planting targets would not be met this year, but were hopeful of meeting them next year, partly as a result of an increased level of incentive for woodland creation. They were confident of being “back on track” as regards commitments made under the Climate Change (Scotland) Act 2009. The Cabinet Secretary also pointed to the opportunities offered by forestry for carbon sequestration, and to the streamlining of the application process for SRDP forestry grants.

54. The Committee would like to see further evidence of actual or potential efficiency gains within the RAE forestry budgets, and of efforts being made to determine how forestry can play its part in meeting climate change commitments, including the need to catch up on previous planting shortfalls.

Decision on taking business in private: The Committee agreed to take item 4 in private.

Budget process 2010-11 (Stage 2) (in private): The Committee agreed a ranked list of candidates for appointment as adviser in connection with its Stage 2 scrutiny of the Scottish Government’s 2010-11 budget.

Decision on taking business in private: The Committee agreed to take item 3, and future reviews of evidence and consideration of draft reports on the Budget Process 2010-11, in private.

Draft Budget scrutiny 2010-11: The Committee took evidence on the Scottish Government's budget proposals 2010-11 from—

Scottish Government officials agreed to provide the Committee with supplementary information.

Draft Budget scrutiny 2010-11 (in private): The Committee reviewed the evidence heard earlier in the meeting.

Draft Budget scrutiny 2010-11: The Committee took evidence on the Scottish Government's budget proposals 2010-11 from—

The Cabinet Secretary agreed to provide the Committee with supplementary information.

John Scott MSP declared that he is a farmer.

Draft Budget scrutiny 2010-11 (in private): The Committee reviewed the evidence heard earlier in the meeting.

Draft Budget scrutiny 2010-11 (in private): The Committee considered a draft report to the Finance Committee on the Scottish Government's budget proposals 2010-11.

Draft Budget scrutiny 2010-11 (in private): The Committee considered a draft report to the Finance Committee on the Scottish Government's Budget 2010-11. Subject to a number of minor changes, the report was agreed to.

¹ Scottish Parliament Information Centre. (2009) Draft Budget 2010-11: Local Government and Communities Committee. SPICe Briefing 09/68. Available at: http://www.scottish.parliament.uk/business/research/briefings-09/SB09-68.pdf [Accessed 4 November 2009]

² Scottish Government. (2009) Affordable Housing Investment Programme - 2009-10. Scottish Government. Available at: http://www.scotland.gov.uk/Topics/Built-Environment/Housing/investment/ahip/ahip-2009-10/ [Accessed 4 November 2009]

³ Scottish Government. (2009) Draft Budget 2010-11, p.73. Scottish Government. Available at: http://www.scotland.gov.uk/Publications/2009/09/17093831/0 [Accessed 4 November 2009]

⁴ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2474.

⁵ Scottish Government. (2007) Scottish Budget Spending Review 2007. Scottish Government. Available at: http://www.scotland.gov.uk/Publications/2007/11/13092240/0 [Accessed 4 November 2009]

⁶ Scottish Parliament Local Government and Communities Committee. Official Report, 30 September 2009, Col 2398.

⁷ Shelter. Written submission to the Local Government and Communities Committee

⁸ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2454.

⁹ Scottish Parliament Local Government and Communities. 2008 (Session 3) Report to the Finance Committee on Stage 2 of the 2009-10 Budget Process. Available at: http://www.scottish.parliament.uk/s3/committees/finance/reports-08/fir08-07-vol2-05.htm#annI [Accessed 4 November 2009]

¹⁰ Scottish Government. (2008) Response to Local Government and Communities report to the Finance Committee report on Stage 2 of the 2008-09 Budget Process. Available at: http://www.scottish.parliament.uk/s3/committees/lgc/inquiries/ScottishBudget/GovernmentResponseNS.pdf
[Accessed 4 November 2009]

¹¹ Scottish Government. (2009) Affordable Housing Investment Programme 2008-09 Out-turn Report. Scottish Government. Available at: http://www.scotland.gov.uk/Topics/Statistics/Browse/Housing-Regeneration/HSfS/AHIP0809Report [Accessed 13 November 2009]

¹² Scottish Government. Letter from the Cabinet Secretary for Health and Wellbeing to the Convener of the Local Government and Communities Committee dated 20 September 2009. available at: http://www.scottish.parliament.uk/s3/committees/lgc/inquiries/ScotBudget10-11/CabSecHandW.pdf
[Accessed 13 November 2009]

¹³ Scottish Parliament Local Government and Communities Committee. Official Report, 30 September 2009, Col.2391.

¹⁴ Scottish Parliament Local Government and Communities Committee. Official Report, 30 September 2009, Col 2391.

¹⁵ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2455.

¹⁶ Scottish Government. E-mail from Scottish Government officials dated 15 October 2009.

¹⁷ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2455.

¹⁸ DTZ Pieda Consulting and the School of the Built Environment, Heriot Watt University. (2006) Evaluation of Devanha Bulk Procurement Initiative. Available at: http://www.scotland.gov.uk/Resource/Doc/1125/0086313.pdf
[Accessed 4 November 2009]

¹⁹ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2459.

²⁰ Scottish Government. E-mail from Scottish Government officials dated 15 October 2009.

²¹ Scottish Government. (2009) Affordable Housing Investment Programme 2008-09 Out-turn Report. Scottish Government. Available at:http://www.scotland.gov.uk/Topics/Statistics/Browse/HousingRegeneration/HSfS/AHIP0809Report
[Accessed 16 November 2009]

²² Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2459.

²³ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2459.

²⁴ Scottish Parliament Local Government and Communities Committee. Official Report, 30 September 2009, Col 2390.

²⁵ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2453.

²⁶ Scottish Parliament Local Government and Communities Committee. Official Report, 30 September 2009, Col 2402.

²⁷ Scottish Parliament Local Government and Communities Committee. Official Report, 30 September 2009, Col 2392.

²⁸ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2461.

²⁹ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2466.

³⁰ Scottish Federation of Housing Associations. Written submission to the Local Government and Communities Committee

³¹ Scottish Parliament Local Government and Communities Committee. Official Report, 30 September 2009, Col 2396.

³² Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2466.

³³ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2466.

³⁴ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2466.

³⁵ Scottish Federation of Housing Associations. Written submission to the Local Government and Communities Committee.

³⁶ Scottish Parliament Local Government and Communities Committee. Official Report, 30 September 2009, Col 2413.

³⁷ Scottish Parliament Local Government and Communities Committee. Official Report, 30 September 2009, Col 2414.

³⁸ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2462.

³⁹ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2464.

⁴⁰ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2464.

⁴¹ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2474.

⁴² Scottish Government. (2008) Scotland's Budget Documents: The 2008-09 Autumn Budget Revision to the Budget (Scotland) Act for the year ending 31 March 2009. Scottish Government. Available at: http://www.scotland.gov.uk/Publications/2008/10/22093436/1 [Accessed 4 November 2009]

⁴³ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2469.

⁴⁴ Scottish Parliament Local Government and Communities Committee. Official Report, 30 September 2009, Col 2397.

⁴⁵ Scottish Parliament Local Government and Communities Committee. Official Report, 30 September 2009, Col 2396.

⁴⁶ Scottish Parliament Local Government and Communities Committee. Official Report, 30 September 2009, Col 2396.

⁴⁷ Scottish Government. (2009) Operation of the Homeless Persons Legislation in Scotland: 2008-09. Scottish Government. Available at: http://www.scotland.gov.uk/Publications/2009/09/03122620/0 [Accessed 16 November 2009]

⁴⁸ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2469.

⁴⁹ Scottish Government. E-mail from Scottish Government officials dated 15 October 2009.

⁵⁰ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2453.

⁵¹ Scottish Government. (2008) Efficiency Delivery Plans - March 2008, for the 2008-11 Efficiency Programme. Scottish Government. Available at: http://www.scotland.gov.uk/Publications/2008/03/EDPMarch2008 [Accessed 16 November 2009]

⁵² Scottish Parliament Local Government and Communities Committee. Official Report, 30 September 2009, Col 2409.

⁵³ Scottish Parliament Information Centre. (2009) Draft Budget 2010-11: Local Government and Communities Committee. SPICe Briefing 09/68. Available at: http://www.scottish.parliament.uk/business/research/briefings-09/SB09-68.pdf [Accessed 4 November 2009]

⁵⁴ Scottish Parliament Local Government and Communities Committee. Official Report, 30 September 2009, Col 2431.

⁵⁵ Scottish Parliament Local Government and Communities Committee. Official Report, 30 September 2009, Col 2432.

⁵⁶ Scottish Parliament Local Government and Communities Committee. Official Report, 30 September 2009, Col 2432.

⁵⁷Scottish Government. (2008) Achieving Our Potential: A Framework to Tackle Poverty and Income Inequality in Scotland. Scottish Government. Available at: http://www.scotland.gov.uk/Publications/2008/11/20103815/0 [Accessed 4 November 2009]

⁵⁸ Scottish Parliament Local Government and Communities Committee. Official Report, 30 September 2009, Col 2433.

⁵⁹ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2458.

⁶⁰ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2474.

⁶¹ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2475.

⁶² Scottish Parliament. Official Report, 25 June 2009, Col.18948.

⁶³ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2478.

⁶⁴ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2484.

⁶⁵ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2478.

⁶⁶ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2478.

⁶⁷ Scottish Parliament Local Government and Communities Committee. Official Report, 30 September 2009, Col 2437.

⁶⁸ Scottish Parliament Local Government and Communities Committee. Official Report, 30 September 2009, Col 2435.

⁶⁹ Scottish Government. E-mail from Scottish Government officials dated 15 October 2009.

⁷⁰ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2480.

⁷¹ Scottish Government. Letter from Minister for Housing and Communities to the Convener of the Local Government and Communities Committee dated 3 November 2009

⁷²Scottish Parliament Local Government and Communities Committee. Official Report, 30 September 2009, Col 2436.

⁷³ Scottish Parliament Local Government and Communities Committee. Official Report, 30 September 2009, Col 2437.

⁷⁴ Scottish Parliament Local Government and Communities Committee. Official Report, 7 October 2009, Col 2481.

⁷⁵ Scottish Government. Technical Notes for Scotland Performs Indicators and Targets. Scottish Government. Available at: http://www.scotland.gov.uk/Topics/Statistics/About/NotesSP [Accessed 16 November 2009]

⁷⁶ Scottish Parliament Local Government and Communities. 2008 (Session 3) Report to the Finance Committee on Stage 2 of the 2009-10 Budget Process. Available at: http://www.scottish.parliament.uk/s3/committees/finance/reports-08/fir08-07-vol2-05.htm#annI (para. 45) [Accessed 4 November 2009]

⁷⁷ Scottish Parliament Finance Committee. Official Report, 7 October 2008, Col 728.

⁷⁸ Scottish Parliament Local Government and Communities Committee. Official Report, 30 September 2009, Col 2444.

⁷⁹ Scottish Parliament Local Government and Communities. 2008 (Session 3) Report on Child Poverty in Scotland. Availble at http://www.scottish.parliament.uk/s3/committees/lgc/reports-09/lgr09-10-vol1.htm [Accessed 16 November 2009]

¹ Scottish Government (2009). Carbon Assessment of the 2010-11 Draft Budget. Available at: Carbon Assessment of the 2010-11 Draft Budget [Accessed 27 October 2009]

² Scottish Parliament Finance Committee. 7th Report, 2008 (Session 3). Report on the Scottish Government’s Draft Budget 2009-10, Volume 2 Annexe J Report from the Rural Affairs and Environment Committee (SPP 179) Paragraph 18

³ Scottish Government (2009). Scottish Budget Draft Budget 2010-11, page 111. Available at Scottish Budget: Draft Budget 2010-11 [Accessed 26 October 2009]

⁴ Scottish Government (2009). Scottish Budget Draft Budget 2010-11, page 138. Available at Scottish Budget: Draft Budget 2010-11 [Accessed 26 October 2009]

⁵ Scottish Government (2009). Scottish Budget Draft Budget 2010-11, page 106. Available at Scottish Budget: Draft Budget 2010-11 [Accessed 26 October 2009]

⁶ Scottish Government (2009). Scottish Budget Draft Budget 2010-11, page 109 Table 6.01. Available at Scottish Budget: Draft Budget 2010-11 [Accessed 26 October 2009]

⁷ Scottish Government (2009). Scottish Budget Draft Budget 2010-11, page 109 Table 6.02. Available at Scottish Budget: Draft Budget 2010-11 [Accessed 26 October 2009]

⁸ Scottish Parliament Information Centre. (2009) Draft Budget 2010-11, tables 11 and 12. SPICe Briefing 09/66. Available at http://www.scottish.parliament.uk/business/research/briefings-09/SB09-66.pdf [Accessed 26 October 2009]

⁹ Scottish Parliament Information Centre. (2009) Draft Budget 2010-11, tables 13 and 14. SPICe Briefing 09/66. Available at http://www.scottish.parliament.uk/business/research/briefings-09/SB09-66.pdf [Accessed 26 October 2009]

¹⁰ Scottish Government News Release, 30 September 2009. http://www.scotland.gov.uk/News/Releases/2009/09/30165919 [Accessed 3 November 2009]

¹¹ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 30 September 2009, Col 1958

¹² Scottish Parliament Rural Affairs and Environment Committee. Official Report, 7 October 2009, Col 1987

¹³ Scottish Government (2009). Scottish Budget Draft Budget 2010-11, page 112 Table 6.03. Available at Scottish Budget: Draft Budget 2010-11 [Accessed 26 October 2009]

¹⁴ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 30 September 2009, Col 1959

¹⁵ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 30 September 2009, Col 1959

¹⁶ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 7 October 2009, Col 1987

¹⁷ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 30 September 2009, Col 1975

¹⁸ Scottish Government (2009). SRDP First Stage Review Report. Available at: http://www.scotland.gov.uk/Topics/farmingrural/SRDP/SRDPReviews/FirstStageReview/ReviewReport [Accessed 4 November 2009]

¹⁹ Scottish Parliament Finance Committee. 7th Report, 2008 (Session 3). Report on the Scottish Government’s Draft Budget 2009-10, Volume 2, Annexe J, Report from the Rural Affairs and Environment Committee (SPP 179) Paragraph 32.

²⁰ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 7 October 2009, Cols 1981-82.

²¹ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 30 September 2009, Col 1955.

²² Finance Committee Report autumn 2008 Annexe J: Rural Affairs and Environment Committee Report on the Scottish Government's Draft Budget 2009-10, paragraph 26.

²³ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 30 September 2009, Col 1974.

²⁴ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 30 September 2009, Col 1974.

²⁵ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 7 October 2009, Col 1980.

²⁶ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 7 October 2009, Col 1980.

²⁷ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 7 October 2009, Col 1980.

²⁸ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 30 September 2009, Col 1962.

²⁹ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 30 September 2009, Col 1962.

³⁰ Scottish Government. Supplementary written submission to the Rural Affairs and Environment Committee [date].

³¹ Scottish Government. Supplementary written submission to the Rural Affairs and Environment Committee, 27 October 2009.

³² Scottish Parliament Rural Affairs and Environment Committee. Official Report, 30 September 2009, Col 1962.

³³ http://www.scotland.gov.uk/Publications/2009/01/21125048/14

³⁴ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 30 september 2009, Col 1963

³⁵ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 7 October 2009, Col 1978

³⁶ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 30 September 2009, Col 1964

³⁷ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 30 September 2009, Col 1964

³⁸ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 30 September 2009, Col 1965

³⁹ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 30 September 2009, Col 1965

⁴⁰ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 30 September 2009, Col 1965

⁴¹ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 7 October 2009, Col 1993-4.

⁴² Scottish Parliament Rural Affairs and Environment Committee. Official Report, 7 October 2009, Col 1994.

⁴³ Scottish Government (2009). Scottish Budget Draft Budget 2010-11, page 118 Table 6.06. Available at Scottish Budget: Draft Budget 2010-11 [Accessed 26 October 2009]

⁴⁴ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 30 september 2009, Col 1966

⁴⁵ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 30 September 2009, Col 1967.

⁴⁶ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 7 October 2009, Col 1990.

⁴⁷ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 7 October 2009, Col 1990.

⁴⁸ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 7 October 2009, Col 1990.

⁴⁹ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 30 September 2009, Col 1968.

⁵⁰ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 30 September 2009, Col 1969.

⁵¹ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 30 September 2009, Col 1969.

⁵² Scottish Parliament Rural Affairs and Environment Committee. Official Report, 7 October 2009, Col 1989.

⁵³ A Parliamentary Question on the same area in relation to Single Outcome Agreements was recently asked by Elaine Murray (Dumfries) (Labour) (col. 20448), and answered, in part, on 8 October by John Swinney (Cabinet Secretary for Finance and Sustainable Growth)

⁵⁴ Scottish Parliament Rural Affairs and Environment Committee. Official Report, 30 september 2009, Col 1970

Contents