Hydiw Carroll Gwrthdon a chrwmhaeg i gynnwys Cymru i ffraith yma yn 2017. Fy efidious wnaeth y dyn nhw'n gyhoeddydd o'r cyfrifol sydd yn per replacement o ddefnyddio cyrwmhaeg i gaur atrach gwan-gweithio ein ddyliad ar gyfer cyflwyngiaeth yn yr yrhyw unig. 1980-1, pan oedd yn cyfrifiwad drin nhw'n cyfrifiwad drin nhw'n cyfrifiwad drin nhw'n cyfrifiwad drin nhw'n cyfrifiwad drin nhw'n cyfrifiwad I. The Committee will take evidence on its inquiry into city region deals, and I welcome Keith Brown, Cabinet Secretary for the Economy, Jobs and Fair Work, and Una Gael, Deputy Director of Enterprising Cities and Morag Watts, head of region and city partnerships team Scottish Government. You are welcome. Lord Duncan of Springbank, Parliamentary Under Secretary of State for Scotland, Neil MacLennan, head of city deals in local government Scotland office, UK Government. You are all most welcome. Just observing before we started this meeting, it can be challenging sometimes to get both Scottish and UK Governments scheduled to appear at committees at the same time. We see this as an encouraging step in relation to our city region deals inquiry. We thank everyone present for making that happen. I understand both the Cabinet Secretary and Lord Duncan. I have some opening statements to make at this point, so we are delighted to hear those now. It is the case that Ian Duncan and I appear on many platforms, together with the Scottish Business Growth Scheme and various conferences, not least those on city deals. I am delighted to be here. Ian reminded me that I danced at his wedding recently, although I cannot remember dancing with him, which is what he said. We are here to talk about the city deals, and we believe that strengthening Scotland's economy so that it benefits everybody in Scotland is the very definition of inclusive growth. For us, it is the front and centre of what we do. City region deals are one of the key economic levers. 83% of Scotland's population is 4.5 million people living in the areas covered by existing or planned city region deals. According to the latest figures from 2015, that same area equates to 86% of Scotland's total GVA and 2.2 million jobs. That is 85% of all Scottish jobs. The Scottish Government is the biggest funder of city and region deals in Scotland with commitments of over £1 billion to date. The investments we are making in city region deals will benefit Scotland as a whole, creating tens of thousands of jobs and upskilling labour markets, but they can do much more than that. They are based on proposals developed by regional partners harnessing local intelligence to identify what is needed to unlock inclusive growth. They can also act to galvanise key partners to come together to drive regional economies in ways that go well beyond the investments that they deliver. Crucially, for us, they focus on delivering inclusive economic growth. Of course, our policy approach should not and is not just about cities and regions, although they are very important as the figures I mentioned show. For our economy and all of our people to flourish, we need inclusive economic growth in all of Scotland, especially outside the traditional growth areas. Inclusive growth by definition is about opportunities for everybody. That is why the Enterprise and Skills Review made it clear that we are expanding our regional economic policy to go beyond city deals to support the creation of regional partnerships right across the country. As I told the economy committee last week, I have agreed to establish a centre for regional inclusive growth. That centre will provide a platform to share local and national data analysis and evaluations. It will also help to support regional partnerships and city and region deals. I am very pleased to be here today and delighted that the committee has taken interest in city deals at this early stage. I look forward to answering any questions that the committee has. Thank you very much, cabinet secretary. Lord Duncan. Thank you very much. It is a pleasure working alongside Keith because the only way we can deliver the city deals is through co-operation. Indeed, it is important that this committee is beginning to examine what is going on because it is not just the two governments that are co-operating, but also the local authorities across Scotland. I think that collaborative form of working at the heart of the city deals is perhaps a model for how we might move in other areas as well. Let me give you some background again. It might be useful for the committee before we begin to delve into the questions. The UK Government launched the city deals programme back in December 2011 with the publication of the Unlocking Growth in Cities White Paper. This set out our ambition to transfer powers and decision making to local leaders and businesses to support economic growth. Behind the city deals, we have a recognition that it is a catalyst, a catalyst for the cities and for the wider hinterland. It is important to stress that although there is often a city at the heart, they are not exclusively a city alone. We are looking at implementing across the UK and certainly south of the board a new governance arrangements, but across the whole of the UK developing economic growth strategies which I believe will dovetail very closely with the Scottish Government's ambition for inclusive growth and increasing capacity to manage devolved funding and spending. The city deal programme in Scotland started in 2014, some three years after the city deals were launched in England. We now have four agreed, three more are in negotiation and we expect progress we made on those in the due course. The UK Government has so far committed just over £1 billion to that programme. Our ambition is a very simple one. It is to support balanced and sustainable economic growth and to improve the health of the local, regional and national economy. Again, it should be, as I said at the beginning, a means by which our governments can cooperate and collaborate because after all we are governing the same people and at heart both governments have the same objective which is to deliver better lives for those in those particular areas. Scotland does have particular challenges and we know that the Scottish Government's own figures reflect upon those and that's why the city deals themselves are so useful I believe in hopefully transforming the landscape as we understand it. As well as that the UK Government has moved forward in a number of other areas which we hope will complement the city deals approach and that will include the industrial strategy and we should hear some more information about that in the next week or so. Now I could explain in greater detail but I think I'll wait and be prompted by the questions. Thank you very much. Thank you to both of you for those opening statements. Perhaps it might be worth opening up because a theme running through the evidence that we've taken so far is trying to establish whether the initial city region deal, which was the Glasgow one, was particularly well managed at the outset in terms of getting the balance right between economic growth and inclusive growth and, indeed, with councillor Susan Aiken, who is now chairing the city region deal cabinet, saying as much when she came to this committee and, indeed, we heard academics at another evidence session talking about the possibility to retrofit some of the first deals to better align in relation to inclusive growth. I have to say that I have to declare an interest, that may benefit my constituency for the Glasgow city region deal for the north of Glasgow in areas such as Hamilton Hill and Druck Hill and the canal network may boost regeneration in an area long since deprived, so a real benefit to my constituency, that kind of retrofitting, but it does lead to the question about what the purpose of city region deals are, is it about inclusive growth but that doesn't necessarily maximise growth, so regenerating communities and getting communities where perhaps there's not a lot of economic activity happening for regeneration and bringing them forward might create less economic activity than, say, giving a boost to an area that already has a significant degree of economic activity in it, so I'm quite keen to understand the balance between maximising economic growth and inclusive growth and where both governments sit in relation to that because that will of course determine what projects proceed in the pipeline of projects for the city region deals, not just the ones that might be retrofitted but the ones that are still in the pipeline coming forward, so inclusive growth maximising economic growth, are there tensions there? On your first part of your question, convener, the Glasgow city deal was unlike the other city deals that we've had. From the Scottish Government's point of view, we were asked at the very last minute essentially to contribute £500 million, that wasn't the prior discussion, and so the ability for us to emphasise or prioritise things like inclusive growth was limited. I think it's also true to say that city deals have, if you like, matured over the period since then, so no longer resembling a straightforward list of infrastructure projects, more involvement with the private sector and more emphasis on transformational growth. In relation to the possibility of, as you've called it, retrofitting the Glasgow city deal, what we have said, and I think it's also true for Ian, but he obviously will want to speak for himself, is that we are willing to listen to that within certain constraints. The constraints would be that one area should not be disadvantaged as a result of changes, so you see two council areas suddenly finding projects moving out of the area with no replacements, so I think that's important. The quantum is not going to change, the £1 billion behind that, that's not from our point of view, that's not going to change and that should be understood, but beyond that, I think it is true that city deals have, to use the overworked phrase, been on a journey, they have matured over time and it's right, I think, that if the councils and partners involved want to look at that again, they should do so, and to the extent they do so, we would like to see, although it's very important, I think, to get this point, that city deals are characterised by the fact that initiative comes from the local authorities and other partners. It's not the Scottish Government's intention, I don't think it's the UK Government's intention, to go behind that and try and be the ones that come up with the ideas or change those, but we would want to see in any changes and we want to see in any city region deals that inclusive growth is prioritised. I think on the tension that you say between growth and inclusive growth, if that's one way of characterising it, that can be the case, so you could have in theory 20% growth and only 20% of people enjoying the benefits of that growth, and then you have to work out what you want to do, and it's not for us, we want to have growth, but we want everybody to have the chance of accessing the benefits of that growth. So that will be a priority for us, it's fundamental to an economic strategy, Scotland is gaining something of an international reputation for this in terms of inclusive growth, and we would want to see inclusive growth recognised and we are seeing it recognised in the city deal proposals that are coming forward, so there is, I think, if not attention, certainly there's a balance to be struck there and we would certainly come down in favour of inclusive growth. Okay, thank you Lord Duncan. Yes, in lots of ways the Glasgow deal benefited in so far as was first in the queue, but there were challenges as well which I think the subsequent city deals have been able to benefit from more significantly, and the recent Edinburgh deal for example was able to benefit from a wider audit which demonstrated again for a particular focus could deliver particular outcomes. I think, and I've met now with Susan Aitken to speak about this, and we do recognise that it can be examined. Keith is exactly right however, what we don't want to find is that of the eight local authorities money begins to move from one to another and then there is disagreement within the consortium, creating I think tension which we wouldn't wish to see, and again it's very important to stress that the projects themselves still must grow organically from the local level. It's not the job of either government to impose projects or to determine those projects but rather to make sure that when they are developed that they deliver against our specific objectives which in the UK government's instance is economic growth and in the Scottish government's it's inclusive growth. Is there a tension between the two of them? Well, Keith rightly points that out. One of the challenges which we have of course is that we must operate in our particular spaces if you like, the notion of the devolved space and the reserved space, and that I think in the first the Glasgow deal was probably less well-defined than it became later and I think that was part of the evolution of these as they have progressed. The key thing we're looking at now is to make sure that there is the right outcome for the Glasgow local authorities in their widest sense, that we get an outcome which is delivering against the government, both government's objectives, which is to see real growth and also that the people of Glasgow should be able to experience and benefit from that growth so that they can actually recognise it as a value that the governments themselves have invested and of course not just the governments but the local authorities themselves and again as these evolve in some of the other growth deals and city deals we've seen more private investment as well. So I think there will be opportunities to re-examine whether we can retrofit will depend much more upon what we are told by the partners than what we would seek to instruct. That's helpful for a set of context I think to this evidence session. I think it's reasonable to say in the Glasgow experience the evidence we have was one of a critical analysis rather than criticism. It's about how you learn from the journey if you like. I was originally MSP at the time of the Glasgow city region deal coming into existence and personally was opposing one of the projects the Cathken relief road which I think came in at 18 or 19 million pounds. Now it's built, it's there, it's working. I still think personally think it was a waste of money, it had nothing to do with inclusive growth, not even much how sure it was to do with growth in the first place but hands up local authorities wished that to be one of the projects. I was representing that area, I disagreed but local democracy prevailed so I would say that wasn't value for money but the project was allowed to proceed. So in terms of value for money or measuring outcomes or auditing the process by which these things are procured and delivered who's doing that kind of work who would do that? If I go first I think we have now a board which comprises both the UK and Scottish governments and that will carry oversight in particular in relation to the Glasgow city deal what was put in place was something called an assurance framework. That wasn't as you've quite rightly said for us to go on and say we don't think this project's value for money in terms of what you could do otherwise if you had a different priority. What we do insist on both governments is that we have a proper business case that has something that stacks up and that the integrity of the project itself is overseen. There's also an element of risk in that so it's in the nature of infrastructure projects sometimes more outwith Scotland than within Scotland I would say for them to overrun. We have around a £245 million underspend or saving on the Queensferry crossing but infrastructure projects being what they are they can have cost overruns and time overruns those are carried out at the risks of the local authorities so on any given project if that project you referred to was £18, £19 million if it ended up costing £29 million that is for local authorities to pick up and both governments have made it clear we're not there to bail out overruns or infrastructure projects which don't come in on time and on budget. What we do at the earlier stage through the assurance framework which I've mentioned and through the boards which is there we have a monitoring role and respect of that and over and above that as you know again and you'll see it replicated in subsequent deals but in relation to Glasgow you'll have the Glasgow cabinet city region deal cabinet which has been established for that same purpose. However the quantum is the quantum so if they end up going over on one project then it will be at the expense of either the councils and other partners involved or of the the ability to carry all the projects it'd like to carry out so we do take a close interest in it we do have an assurance framework we have a responsibility in terms of public money being spent so we can do that through through the joint board which I've mentioned and also through the assurance framework. Lord Duncan. One of the challenges and we're living through this right now in the deals which are evolving so if we look at say that the Tay valley deal or the Stirling and Clep manager deal the processes we're going through right now where we have the projects developing from the grassroots up they still need to meet the criteria whereby we can satisfy our respective treasuries that they are delivering against the criteria set out and those criteria are clearly agreed to try and determine what therefore can be the gross value added of a particular project so that we can see that they are going to be fulfilling what we anticipated when we signed off the the heads of terms and the overall deal. I think one of the the challenges is when you look at some of the elements in the Glasgow deal itself based on infrastructure it isn't always easy to see the multiplier or to feel the warmth of the new road or recognise what it delivers to the area and I appreciate that that in in essence can be a challenge and I think the first deal did reflect in some respects not quite a wish list from local authorities but a recognition of where work had not been done and could be done now that money was available and they had a backlog of areas where they would like to see that spent. What we've done is we've refined the city deal approach is recognised that it isn't just meant to be fulfilling existing obligations it's meant to be new investment which delivers against clear objectives which when they are explained are understood by particularly those in the region itself and they're able to welcome that so there's no resentment when they discover in fact that money has been spent on one project or another. In terms of the Glasgow deal again as Keith rightly says we've fixed the budget that we can invest in that area and so any challenges that come thereafter will have to be met from within that particular quantum but that being said we will do all we can through the monitoring process and working closely with the participants to make sure that where there are any issues that begin to develop they are identified early and are addressed to prevent the very suggestion of overrun or money not delivering against expectation. Okay in a moment I'm going to bring Graham Simpson just so he knows he's coming in in a second but a very very brief question for Lord Duncan you mentioned the gross value added in relation to projects just to double check that the UK Government wouldn't say of a city region deal well we don't think the GVA is sufficient enough in this and the local authorities would go well actually we know that another another project would give a greater GVA but we think for the overall inclusive growth of this project this is the one we want even though the UK Government might think it doesn't stack up in GVA in terms of the local democratic decision making what would the UK and we're talking theoretically what would the UK Government's position be on that? We can only operate and have now become much more focused on operating and what would be the reserved space so our key criterion for examining that is the GVA that is the means by which we do so however at no point in our discussions with local authorities have we sought to in our examination move anything other than what we believe we can fund so we're very clear where we believe we can operate and what we believe we can deliver but importantly and again this is where some of the elements have to actually interweave there may be elements of cooperation between the two governments where our spend complements the inclusive growth ambition of the Scottish Government where we actually step into what might be more traditionally devolved areas in order to do that so it's not our ambition in any way to rule out projects on that basis it's we have a suite of criteria that we must fulfil. Duncan that maybe the money should lose its identity once it's put into the pot of cash for city region deal so we shouldn't be talking about a a UK pound or a Scottish Government pound we should be talking about a city region deal pound and the local authorities when the drivers of that locally should determine with a great criteria we should determine what those those projects are because we've heard it before about devolved investment and reserved investment this is strategic city region deal investment should the money not lose its identity and if local authorities want to maximise inclusive growth perhaps expensive GVA is that something you'd be willing to consider tweaking the criteria on a UK level? No that would be unlikely to be tweaked at a UK level on that basis I'm afraid the Treasury sets the criteria that we have to work within and in truth the reason why there is clear division is because the Treasury would argue that they are through various other means through the block grant and so on already supporting the Scottish Government in its investment in the ongoing project so we have to be very careful that the the money itself is assessed according to the criteria that we must work within. Now I want to get an artificial division in relation to that answer but it was very definite it was it was very black and white now that this committee will have to consider all the evidence we get in the in the round in relation to city region deals but is it something that you would consider based on say the recommendations of this report to take back to the UK Government to make that case? I mean the Treasury are there to be to be lobbied and influenced and cajoled to see a bigger picture if it would be for the better management of city region deals so that was a fairly absolutist answer in relation to changing that criteria because you don't think the Treasury would move is it something that you'd be willing to consider yourself? Well I suppose I'd have to flip it around and ask another question I'm being very clear to avoid there being any doubt about that. By all means if you write the report I will happily pass it on to the Treasury I suspect however that their criteria will not be changed on that basis because they do see it as spending in the reserved space which they're able to do versus the Scottish Government spend in the devolved space which they should do and if the UK Government ends up spending in a devolved space would argue it's spending twice so by all means I'm not seeking to in any way influence the report you write and I'm very happy to take that back to the UK Government and to the Treasury but I'm setting up what I suspect will be the outcome of that quite clearly. I am but one person on the committee we'll have to wait and see what the committee recommends but that's very clear Lord Duncan. Graham Simpson Thank you. I just want to follow up on what you were both saying about the Glasgow city deal. Interested Mr Brown that you feel that other deals have learned from shall we say the mistakes of the Glasgow deal? Lord Duncan you mentioned particular projects in the Glasgow city deal that can cause local resentment and that's certainly the case. The convener mentioned one which did cause local resentment. I'm certainly aware of others in that vicinity which will cause local resentment. Road projects which appear to have no obvious case £85 million worth of road projects in East Kilbride which we haven't seen a business case for but I guess they fit the description that you made Lord Duncan of projects that have been sat around for years.  So a couple of questions really do you think either of you do you think that in that Glasgow deal changes can be made? Will the Government's ask for changes to be made and if perhaps Mr Brown if you could be more explicit about what you think the lessons are from the Glasgow deal for other deals? The first lesson is if you're going to have a deal involving the Scottish Government you should talk to the Scottish Government first. I think essentially agreeing a deal and then coming to the Scottish Government the demand for money is not the best way to get the best deal but I think it's also true to say that was a deal done in the earlier stages of city deals generally and it has moved on I'm not saying characterising them as mistakes but I do think it's moved on so you'll have seen an Aberdeen and Inverness more involvement in the private sector in earlier stage Aberdeen in particular a very large contribution from the private sector and also a more rounded approach which can lead to a transformational effect on the local economy so emphasis much more on things like broadband skills and housing in terms of being a factor in economic growth so I think they have matured over time on the point no we'll not be asking for changes in the Glasgow city deal the Scottish Government won't be asking for changes in that we will be receptive to listening to proposals for change as I'd mentioned earlier on if the partners to that deal want to make changes within the constraints which I mentioned earlier on so the quantum making sure that different areas are not disadvantaged by changes we are and I think this is true we've had conversations Ian and myself about this the the governments are agreed that we will be receptive to listening to proposals for change but it's not for us to go in and propose changes that's not how we see it and also had that been the case when the Glasgow city deal was struck that the Scottish Government being if you like coming in at that stage had then said no you're not doing that you're not doing this the local authorities themselves would have said with some justification that's what we're saying that our priorities now we can't fund all the priorities we do pick and choose which ones we can we can support and it has to be done within them obviously a budget and we won't just to go back to the convener's previous point say that's now city deal money in effect it is but we have to have accountability for the money that we spend so that's why we have the continuing role in terms of monitoring but it's true that they are over a long period of time and things can change so I think we're bound to be receptive to that but we shouldn't be the one to initiate that change it should come from within the partners locally. I would certainly echo that if we look at the UK government spend inside the city deal it has focused again on the innovation and growth area and if I just list where it is you'll see why again in response to your earlier point convener moving the money around becomes more problematic so the innovation and growth three particular projects supporting the development of an imaging centre of excellence as part of the 64 million investment in the stratified medicine at the new south Glasgow hospitals campus support the development of a four million medecity Scotland facility support the development of a new four million centre from business incubation and development in the tontine building in Glasgow's merchant city so again in the areas where we put money in that there's a very clear not quite ring fencing with a very clear function so that we can then track the money as it moves through the earlier projects were more difficult as we look back on them now because we've learned lessons and I don't think that would necessarily have been able either governments have been able to dictate to the local authorities what it was that they were to pursue but they had to recognise both governments had a suite of criteria that they had to meet and obligations that they had to fulfil too so the projects which did emerge were those which best fit the criteria several projects didn't make it that far and didn't secure funding in that particular round those that did are those which we collectively believed we could support and did so and continue to want to make sure that they deliver and are on time and are able to deliver as per expectation but there's a failing and we've heard this strongly in evidence that communities fail they're not in but they've not been involved in city deals not just Glasgow things are done to them and not with them not by them so I mean think about the the roads projects that that I've mentioned some of which haven't even been built yet these are projects which people don't want they don't see any value for they're not involved they're pushed on them by by the partners in the city deal that's not the right way to do it surely you should be involving communities right from the start and involving businesses Mr Brown you mentioned involving the private sector that's come through in evidence as well certainly in Glasgow they businesses don't feel involved so perhaps you could pick up on those points involvement of communities which should be right at the start I agree with that and you are seeing much more of that for example in the Stirling-Clackmannanshire deal I think there's been substantial involvement certainly in the early stages from Stirling council matterly from Clackmannanshire council but the fundamental point here is that this is a local government committee we're talking about local government which has its own mandate if local government comes forward and says this is what we want to do in relation to this I don't think it's for the Scottish government or the UK government but it will be their point of view to look beyond that and say no and second guess it I didn't see of course the Scottish government wasn't involved in the early stages but I didn't see howls of protest from one or other partner saying they were being forced to do this by a collective these are ones which were presented to both governments as the priorities and it will be for local government to justify the extent of which they have or have not engaged I think to be fair we are more alive to that and the local authorities involved now in city deals are more alive to the need to have that kind of popular or public engagement I think that's true but it is for those that are coming forward with proposals to make sure that they consult with the public that's where it should happen Lord Duncan yeah the sterling and cut manager city dealers perhaps the best evidence we have now of the wider engagement by the local authorities into the community I mean part of the challenge is such a large sum of money is being spent by all the partners you would hope that the people in the city regions would welcome it and recognise what it's delivering which should be transformative and it is a little disperting of course to then discover that perhaps some of the money of great quantity is not being appreciated and I think that is a I don't think either of us are particularly pleased to be hearing that that being said Keith is right to point out that the projects which emerged and were funded by not all projects were funded several fell by the wayside were those which were were pushed and advanced by the the consortium of local authorities and it does become a challenge and I would argue again there is no single one size fits all approach to the city deals they don't look alike the cities themselves are not alike in character if you look at the Aberdeen city deal for example it's very closely allied with I would call it a sector approach which is around the oil and gas sector which was a very clear dovetailing and that worked very well but that wasn't how the Glasgow deal evolved if you look at the the evolution of the Edinburgh deal again much more of the university sectors driving forward elements of that if you look at the emerging elements of the the Tay valley deal again each of them has a particularly different approach our hope would be that the those putting forward the projects have secured the right level of not just commitment from the council although that will ultimately be the determinant of it but that they as local representatives have engaged widely with the communities which are affected to ensure that there is that buy-in the last thing we would want is billions to be spent and nobody to be pleased it would seem to be the worst of all possible worlds yeah do you want to fill up with some of that Mr Simpson? I'll just make a point and then we can move on to other questions and the point is no council is going to deliver what you describe Mr Brown as a howl of protest if you're throwing money at them but the people on the ground might not like it the councils will love it but the people might not do you want to come back on that that's the number the question the question is for local authorities though it's not for I think the governments we would be very quickly accused of centralisation if we were to say this project should not go ahead because we believe you've insufficiently you've got insufficient support I mean your basic point is true if you think about a city deal over say 20 years and if it doesn't enjoy support at the start it's unlikely if it's one of the subsequent projects say 10 years in that's then done and its relevance is not obvious to people and its support is not obvious and that's why I have said and I think Ian agrees with this point we're willing to listen to proposals for change but it's a local authority that has to be the key body here fair just for putting on the public record the specific project that I mentioned I got a reply if I recall from the cabinet secretary for finance back in the day John Swin AMSP in relation to my reservations with that project the reply I got was it's a matter for local authorities to prioritise and bring forward the project so that's just to put that on the record because I had an involvement at the time okay we'll move on now Jenny Gowry thank you very much and good morning to the panel I was interested Lord Duncan in that last part there of where you said that the commitment from the council will ultimately be the determinant of these projects so I want to drill down on a specific constituency question if that's okay and cabinet secretary you'll be aware that leaving my real link is a huge campaign in my own constituency I've spoken about it in Parliament regularly and raised it in a member debate recently with the transport minister and you also said cabinet secretary in your opening comments that we need growth outside the traditional growth areas and you'll know that Glenrothes and leaving fall into those gaps I would argue because Fife is part of that city region deal so with regard to the evidence that our committee of heard previously David Ross who's the co-counsel leader in Fife said in an evidence session I think two weeks ago now that the clear understanding that we got from government officials was that the project the leaving my real link in this instance would not meet the specific criteria they were looking for in the city deal and he has subsequently written to the committee to update his comments and he says that in discussions between Scottish civil servants and council officers it was made clear to us that the full project would not score highly under the criteria on which Scottish Government would consider the bid so I would just like to ask a specific question to which I think I already know the answer but did the Scottish Government or the UK Government at any time block local authorities from specific bids? You mentioned the Government officials in the process which led up to the deal I would say that I was with Councillor Ross at the sign of the deal I have no recollection of any objections being raised to the deal that was proposed and if it had been the case that the leaving mouth rail link and of course I can absolutely guarantee that rail projects are very problematic in trying to judge what the eventual cost and timeline will be the nearest one to leaving mouth where we have a new line I think is the one of own constituency Stirling to Allawa and Concardin started out in 2008 with a bid from myself actually as a local authority leader it was going to cost £6 million for the passenger everyone said it's a small line it won't take much £6 million for the passenger service £30 million for extension to the freight to Concardin it cost £85 million in the end and it wasn't completed for a number of years afterwards so as to the process that wasn't part of the final proposal from five council five council area as you'll know will benefit from two city deals the whole five council area because it'll be in the two cities deal but after the actual process behind your question perhaps the officials who were involved that might want to answer because they're sitting very quietly just now convening. I'd like to give a comment to that particular question. I'm happy to respond thank you Nigel thank you so as the committee are aware and I've heard from a number of people already the process for considering propositions and proposals within a city deal is is one that starts with the local authorities coming together with their key regional partners to bring forward propositions and during that process there are some discussions around exploring the detail the readiness of these proposals and and the constraints that that may exist with each proposition so those discussions continue and the regional partners evolve their asks through that process and that indeed was the case with this particular proposition and I think you've heard about how that evolved and was taken forward. Can I ask a specific point then did the Edinburgh city region deal ask local authorities to prioritise projects because David Ross is insinuating that it was a scoring used by Scottish Government officials and I want to find out if that's the case. Were local authorities asked to rank projects in any priority order? So we always talk to local authorities and invite them to identify the priorities within their deal proposals. You'll be very well aware that the aspirations for regional deals can be extremely large and indeed the Edinburgh proposal grew considerably during the process of discussion with it so throughout those discussions we are inviting the partners to be clear about their collective priorities for the region and to articulate their reasoning behind that including the benefits that they think they will bring across the region and where they will sit with the region deal. I do struggle when I listen to the Edinburgh city region deal to point to things in my own constituency whereby there's going to be a direct benefit so just with regard to that wider benefit and David Ross's letter to the committee later the cabinet secretary this is another specific point for you. I hope that you don't mind my asking you. He says, I believe the funding from the Scottish Government for the Sheriffhall junction is around £120 million representing around 40 per cent of the Scottish Government's investment in the city region deal. It was not a project that was submitted by the local authorities as part of the city region deal and as a consequence of the Scottish Government including this project in the overall funding it may have been that other projects have been prioritised that have been prioritised by local authorities were not funded. Do you think that that's true? I think that the Sheriffhall junction will have been a priority for a number of the local authorities involved in it but to be honest this idea that we can now look back to local authorities that freely and happily signed that city deal agreement and to see them now picking it apart I think is not the way to go. As you know and quite rightly the possibility of funding the leaving mouth rail link has been taken forward through other means you mentioned the debate in parliament and we're trying to work with local authorities but I don't think it is fair to say when everyone sits down as we all did for that city deal agreement and everyone freely signs it and before we got to that stage of course we said well this is what we're thinking of doing what do you think and they all said they want to now go back to it and say actually we didn't like that part of it or didn't like that part of it I don't think is fair to do that. We've tried to act in good faith as you know says the Edinburgh city deal the first initiative from the Edinburgh city deal was actually Edinburgh city council who came to myself in John Swinney and said they didn't want any money that's what they said at the start we don't we're not looking for money we want a city deal we don't want money we can fund it through other things it grew up I think in increments of a quarter of a billion pounds at a time after that just continually went higher and higher as has been a feature of most city deals so we do have to prioritise and it's obvious that local authorities and their partners in putting forward their proposals are going to have to prioritise but five council and the council leader freely signed up to that deal. Okay now I think just for clarity and for the record I should point out that council David Ross who did give evidence last week did write to the committee to myself actually on the 20th of November and that's what that exchange was in relation to and that's a public available letter and it's on the committee page at the Scottish Parliament website. If there's anything in it that any of the witnesses here would like to correspond with us in relation to feel free to do that but it's fair to be fair to Councillor Ross his full reply is on the Scottish Parliament website and those interested in that exchange should go and go and look at the full reply. Okay we'll move on now Alexander Stewart. Thank you convener. Good morning we've touched on this morning already about the potential that these deals can bring to communities and to cities and and also the tensions that have existed and continue to exist but can I specifically ask you about what happens in an area that does not have built into the location a city deal the ones you are who are out with or find themselves between the rock and the hard place that's that's not really meeting for their needs and how can we build a resilient local economy in that area and how are we attempting to do that when they feel that they've been excluded in some way from the process and the support mechanisms that are put in place to provide that location and that community with the support going forward do you believe they are sufficient? Can I say that we the Scottish Government have a commitment that every area every part every community of Scotland should benefit from a deal that's our commitment I think to put it diplomatically we are still working through and it'll be interesting to hear Ian's view on this we have so for example areas like Murray, Argyll, Falkirk, the islands Dumfries and Galloway a number of areas which wouldn't be covered by a city region deal and you're quite right to say that their local economies require support as well so what we've said is we are willing to look at those Ayrshire is a good example of one where we have said now for quite some time that we are supportive of an Ayrshire growth deal and the Ayrshire council's approach both governments and asked for government support now again it's not for me to say what the UK government's current position is but the UK government did not want to commit to a growth deal in that sense I think Andrew Dunlop at the time subsequently said that whatever they might want to do in the Ayrshire space would be done through the industrial strategy rather than through a deal my point would be that the Scottish Government will go ahead and do this we will provide support and we'll look at deals for every part of Scotland it would be useful to know at this stage whether the UK government wants to be part of that with us whether it's their intention that they should also work in the way that we've done in city deals collaboratively together or if we're doing separate things and I think either one is perfectly legitimate but I think we have to know and I think we have to try and get get it worked out in terms of priority as well so for example there's there's a proposal for a border lands deal just now and yet half of the border lands or one of the two local authorities has already had a deal Falkirk's not a deal Argyll's not a deal Murray's not had a deal so I think that this is a good time and it may be that we'll get some clarity even in this week of the budget of the UK government's approach things have changed over the period of city deals so the 50 50 requirement was there first of all that's less of a determinant now the reserved space you know it would be useful to know from the UK government if we're going to work together to maximise the benefit of a deal on a given area what is the basis on what that's taking place so is the reserved thing to be how it's done I think both governments have experienced situations where local authorities and partners seem to find it harder to come up with things in the reserved space and so you get a preponderance of devolved especially infrastructure projects if it is to so I think we'd be really useful to have a common understanding of how if we're both going forward together on this what the basis of that is and if we're not then we can crack on and do it but I accept your fundamental point which is that every part of Scotland deserves to get the support which the city of region deals have had yeah I'm right on board with that the plan is that we should be able I hope again we need to speak a lot more key to you and I about how we take it forward but clearly Scotland is more than its cities and the city centre lands and there are a large number of areas so my team for example this afternoon will be off to Arganon butte to begin just early exploratory discussions to see what is possible there I've had meetings with each of the island local authorities again to see what their world looks like to see how we can begin to understand what the deals look like the budget today may give a shout out to this I can't confirm that because I have no idea if what we've asked is actually going to emerge in that but the point being that we do need to commit into the space beyond the cities themselves and that should therefore mean that the mosaic of Scotland is all coloured in all it should receive benefits irrespective of whether they are in an urban area near an urban area or there's no urban at all in their area so we are very much committed to doing that um there are always the challenges of trying to make sure and in some respects I don't envy Keith the role because whenever you speak to a local authority they want pretty much everything that Keith's got and very little the UK government would normally spend into and that can be a big challenge because it isn't easy therefore to have a local authority say well we want 100 spending in the devolved area but we can't think of anything to ask the UK government for and that can be one of our challenges to try and encourage them to see where some of these areas can be developed that would allow us the UK government to act and to spend and trying to find the 50-50 in some of those areas again where broadly 100% of the ask is all devolved is not that straightforward and it has caused tangos in the past I think going forward though Keith and I want to sit down and work out how to do it because we don't want to be tangling each other up in complexities and we don't want to over promise because we are working within budgets which are ever tightening but equally we want to make sure that no part of Scotland is left behind and that all can see prospects coming albeit that little bit further away and I think that Keith identified that we are a nation of cities but we're also a nation of towns and we have we have different aspects and they have different aspirations as to what they want to try and achieve and the role of the Scottish government is vitally important here but the role of the UK government is also vitally important to ensure that everybody feels that they are being supported now we've touched on before where communities have felt that they've not always been included and and you've indicated camp secretary that it's local government that should do that but some of that involvement has meant that they really have been left outside and really felt that they've been left outside because the bigger more ambitious more prospect projects that the council may have identified are the ones that they want to see happen and the ones that are in the hinterlands or they're not quite quite other or may come later on in the 20-year programme maybe what seems to happen but at the moment as I say you need to identify that so I would encourage and I hope that we do see convener a joined up process going forward to ensure that we do have that balance so that we don't end up with people feeling that they are excluded or left behind in this whole process I think that that might be more of a comment Mr Gibson I'm going to bring in just a second but just briefly clarify something you said Lord Duncan you did say we'll have to wait to see what the Chancellor says today whether your asks have been delivered does does that mean you have had a key ask in relation to city region deals in relation to Scotland for the budget today well what we've done is we're hoping to see priorities set we have at the moment the quantum to take forward the the city deals that we've outlined we're hoping now to see ourselves being able to move forward and we have in order to deliver against the growth deals in Ayrshire in Murray and indeed in Falkirk and elsewhere we are always asking to get money it's a question of when we get it which is a challenge and I would like to be able to tell you the answer to that question in a more declarative way but I can't that's a very eloquent way of just saying yes to my question Lord Duncan you might well say that and can I just check you mentioned issues with local authorities been able to find that 50 50 split between Scotland and UK government in relation to reserve devolved and getting maximising the financial opportunities from both Governments would that not strengthen the case should you be prepared to make it along with this committee if that's what we decide that at some point money should not lose its traceability but should lose its identity and have a more kind of collective holistic view on how we invest in city region deals rather than devolved and reserved because you've identified I think yourself in your evidence that there are issues sometimes with local authorities identifying what the UK Government investment would look like in that area so still the same as it was before when we identify projects in the reserved space they are very clear and very clearly delineated and we are therefore able to justify the spend when we approach the treasury to deliver against that what we are unable to do however is to commit spending into what in effect would be the devolved space the treasury would argue that through the block grant they are already funding that and will not double fund it now that might seem a very unhelpful statement to me but at the same time it is the breakdown of how we spend the money and how we account for it it's not unhelpful it's accurate in relation to treasury position but of course the Scotland office might have a position which is maximising spend in Scotland for the benefit of Scotland which might be different from the current treasury criteria by which the Scotland office is applying city deal spend so i'm just trying to create that space where some of this could change i think the cabinet secretary wanted to come in on that just to say that we don't agree on everything the UK government does double spend if you look at one and a half billion pounds going to northern island if you look at the fact that there's no requirement for match funding for city deals for northern island if you look at the fact that that one and a half billion pounds is nearly entirely in the devolved space of course the UK government double spends and so i think the scope for the ask from the Scotland office of the treasury is pretty substantial many of these projects we could do far more if we were to have a pro rata equivalent of one and a half billion pounds to spend on devolved issues so it is possible to do that but i think that the point about reserved issues is a really important one i personally don't find it that difficult to think of things in the reserve space which will be very useful for local authorities it should not be beyond them to come forward with those ideas and the extent to which they don't means the quantum they get is reduced because if it's to e-50-50 and you only have a certain number of reserve projects and you only get so much there is so much that can be done in terms of broadband in terms of social security a number of other issues so local authorities and the point that was made earlier on i might be in yourself convener that the process of city deals itself should lead to a dynamic which has not come to there which leads people to think about transformational change not all of which has to be funded by governments and others that can lead to transformative change so is that mindset that makes them think more broadly about it thank you the challenges i think is when you go to a local authority or a local authority is exploring projects inevitably they tend to be more around traditional spend by local authorities and that then tends to fall into Keith space less in line but once you can break through that mold and recognise where the UK government can spend then you can see substantial benefits so when we look at the Aberdeen example when we look at the on and gas technology centre where both governments recognise the value in that we're able to commit to that very quickly and indeed i think that's of all the city deals that's the one which has perhaps hit the ground running and really going to move very quickly further forward the important thing again in the northern Ireland question there are definitely challenges which we'll have to face going forward but none of them are centred around how the money itself will ultimately be spent it's not our ambition here to place ourselves in a comparable situation we will be spending outside the Barnett consequentials certainly at the moment one billion pounds will be spending considerably more to deliver against each of the existing city deals and we will continue to spend more as we move from city deals to growth deals so there will be a substantial amount of money being spent there but the situation in northern Ireland is different i think that's a significant political debate which we will leave from this committee for the moment and we'll move on we're laying a questioning Kenneth Gibson thank you conveyor good morning panel Lord Duncan just said a few minutes ago that you believe that no part of Scotland should be left behind but representing one of the five air sure constituencies are feel that we are being left behind certainly in terms of economic growth per capita income etc airshire is already behind and yet there appears to be nothing on the horizon i'll just quote from Patrick Wiggins the director of the airshire growth deal and is it from his evidence last week which i'm sure you'll have seen that he says and i quote there's a commitment from the Scottish government but we are still pursuing formal commitment from the United Kingdom government we're making good progress to the Scottish government and quite a lot of engagement with UK government officials but we really need a green light from the treasury so i'm just wondering why there's been such a delay in terms of airshire because Edinburgh which is much more prosperous has got a deal and from my perspective looks as if it'll go the regard between for example airshire and the Lothians and airshire will only grow and i'm just wondering what the impact you feel this delay is going to have on a place like airshire there isn't a delay in that sense because the commitment in the first instance between the two governments was to the city deals and that is moving forward and we will deliver each of those within the the chengyl we set i would hope i would hope by the end of today you would be in a better place than you are right now well i think i'm very pleased to hear that i certainly hope we are because the chancellor made a lot of good noises about this in january of this year and there was an expectation that was an announcement going to be made and no announcement was actually made and i think if there has to be a successful implementation of airshire growth they would really need to know when it's going to commence what it's going to consist of and how it's actually going to be delivered and i think there's real concerns that that's not actually going to happen now just wondering how you feel areas whether it's airshire or somewhere else in scotland what the impact is in terms of displacement while other deals are going ahead we've already heard that that glasgo it started in july 2014 even if airshire is given the green light it may be a number of months before it starts on the ground and there is real concern that perhaps skilled workers have been drawn into other areas of scotland where the deals are investment is being drawn into places like glasgo and embrat might otherwise go to airshire murray galloware whatever so what are what concerns do you and indeed the the cabinet secretary have with regard to this uneven development of deals i suspect that the deals themselves are not short term so if you look at the glasgo city deal we're not expecting the deal to be completed in all its elements even in the first 15 years we're looking at a much longer timescale so i would have thought that within five years if we're able to move forward from the city deals to the growth deals again over the same sort of time period they will all be developing across scotland some faster than others because certain things can be delivered more quickly than others but actually you will begin to see all of them moving forward over that same 15 20 year period so there shouldn't be quite the displacement and looking at for example the the glasgo deal so that the uk commitment there was half a billion pounds the spend is still on schedule but actually the spend so far is actually quite modest from our side it's only around about 40 million pounds so again there isn't quite the distorting element of that which i think might be what you're fearful of but what i would hope is if we're able to move forward and the deals and again this will be through collaboration with the Scottish Government and local authorities for us to move forward we would hope that within let's say within the next 10 years you would see all of the deals delivering albeit at their own pace determined by the consortium which pulled it together so and that's why i think the deals should be almost the gift that keeps on giving if that doesn't sound an odd way of putting it because it should be over such that such a lengthy period of time i think captain's right we can't stand still and wait for a deal to be done so we have been active in the space and perhaps not in the way that you would be if you had joined up growth deal in the way we've described but for example i think it's 800 modern apprenticeships we've seen created in i think it's north north Ayrshire alone over the past four years we have supported spirit aerosystems near the preswick airport again with investment there to try and de investment to try and bolster employment there and the most recent announcement would be the 5.3 million pounds that you put into the halo project in Kilmarnock now that actually is a very good example of just what's been asked about that project could have been one where the two governments worked together in relation to that and said we saw well we saw we saw so an early announcement from the UK government subject to due diligence haven't seen an announcement like that before and we announced the 5.3 million pounds if we approach that together and i'm encouraged by what Ian's saying if he's saying that if we were to get better news or more confirmation of the UK government's approach later on today that will be a collaborative joint approach with the Scottish government then that i think is encouraging we have asked for that approach we asked i think was last year when the councils collectively came to me from Ayrshire making the ask of me and i said yes we will do a a growth deal we'll do it jointly with the UK government if they want to do that and they've been asking and i've been asking the UK government ever since nevertheless so i think in direct response to Kenneth Gibson's question yes we have to support the Ayrshers as best we can but we should crack on and do a growth deal if both governments can agree we'll probably maximise the benefit we can get from that and achieve something for the whole of the Ayrshire and in the meantime it's worth pointing out that the councils in this regard have really taken the initiative by forming the Ayrshire economic partnership which is unique so far in Scotland and a very encouraging sign of seeing how councils can work together and overcome some of the traditional demarcations for their mutual benefit. Yeah i mean one of the things you've touched on a couple of times cabinet secretary about deals being imposed for example rather than being agreed what impact do you think that actually has i mean if you're suddenly just told that there's a deal you know like for example the initial one Glasgow and now and of course things like the halo project what impact do you have does that have a distorted effect in terms of the way the Scottish government looks at these projects and deals and how it spends its capital. I don't think in relation to Ayrshire that is a case because there was quite a lot of discussion both with ourselves and the UK government about the things which the Ayrshire councils wanted to see developed so the earliest discussion i think of a growth deal included the halo project as part of it so i don't think that's being imposed i think it's being done in a disjointed way which undermines perhaps a full potential that we could realise if we did it in a more coordinated way. Now it may be notwithstanding what's being said that the UK government decides it wants to provide support but not do it in conjunction with the Scottish government that's fine as long as we know that i don't think it's optimal but that's fine as long as we know that but i don't think thus far that Ayrshire has suffered from that it's not been imposed these things have been done well the spirit air systems was done at request obviously spirit air systems for the wider benefit of the economy and the apprenticeships as part of our larger program but the halo project was something which all the councils spoke up for in relation to a growth deal so i don't think anything's been imposed Glasgow deal was a different kettle of fish as you know that it is worth stressing that the Scottish government will of course have obligations outside the city deals as part of their on-going relationship with local government so there will be rightly elements of spend and collaboration which sit outside i think we can move forward and the ambition that i was able to set out today is that we see the whole of scotland covered by extensive city deals or indeed local deals or indeed island deals depending on how they fit together in terms of the halo project again we the UK government moved quickly because they were seeking to secure private investment which was again incumbent upon early movement but the important thing again will be there will be no imposition of a deal on Ayrshire that's not in the gift of either government to achieve that nor would it work it will have to emerge as with all of the other deals from organic development of initiatives buying from local communities determination by the local authorities that the outcome is exactly what the people and the local authorities in that area want so there will all we can look at at this point is to make sure that the green light can be given to the initiative so that we can then begin the process of determining our commitment levels to that where we see we've got funding in place we're able to move forward just just one final point convener and one of the things about the deals obviously which makes them so attractive is the ability to leave it in private funding and the Glasgow deal for example is looking to leave it in some 3.3 billion over 20 years and so far although it will still early stages only three years in are we seeing that leverage in the kind of you know we're seeing more less of than we expected or is it on track? I think in relation to Glasgow they estimates a contribution from the private sector of I think 3.3 billion pounds I think was their estimate but I think it is probably too early to say I do know that in relation to the Aberdeen city deal we're talking about 400 million pounds of investment just in terms of the Aberdeen harbour and that is on track it's following a process and that's on track to do that I think though it is worth just addressing the point about private sector investment this is something that we have struggled with Edinburgh both governments had to go back and say you're going to have to do more work in terms of engagement with the private sector and it is the case and I know it sounds a little bit less substantial than saying here's a check if they do think about these things in a generally transformative way and if you do think sorry I should say that Tay cities and Stirling have done this quite effectively I think as well talking to different partners in the private sector and some in the third sector the ability to make it much more than it would otherwise be is dependent upon things like the private sector getting involved so I don't know if the officials want to add to any early indications that we've got in terms of the Glasgow deal and private sector contribution they have made a very substantial claim in terms of 3.3 billion pounds but again that was a deal that we were only involved in towards the end and if there's anything else you want to say but just a comment that appointing the committee has already considered is around the kind of monitoring and reporting on on city deals and that's something that the the group that the current sector referred to earlier is is certainly looking at it is quite early days in terms of demonstrating the commitment and delivery from private sector partners across the city deals but there is certainly evidence that that's forthcoming across the deals perhaps most evident in the Aberdeen Aberdeenshire city deal where the private sector are clear partners around the table and it's something that we will certainly be continuing to investigate and report on as we move forward. That's fine. I want to make sure that I'm not always good at identifying when people want to come in and add some things they just wanted to check. Yes Lord Duncan. Aberdeen is a useful area to see where beyond where the UK and Scottish Governments have committed you've seen significant commitments from other partners so obviously the local authorities themselves have put in money but you see substantial investment from the universities Robert Gordon University and from Aberdeen University and we've seen that or are seen that in the early stages again looking at the Stirling and Clapmaninshire deal we're seeing that again in the Tate Valley deal and beyond that there is a hope then that more monies will be unlocked as the wider private sector see the benefit of the particular initiatives and this comes back again to how the how the deals themselves that how they are generated the genesis itself needs to have at the earliest possible stages how then shall we in putting forward projects unlock the monies that might potentially be out there from the private sector and that won't always be possible because in some instances certain areas will not have that level of private centre investment available but where it can be done the multiplier effect is very very significant and the output of that is useful to see because it actually then brings together a certain coherence to the overall the overall drive behind the initiatives time is catching up with his look at two colleagues still working in okay thanks mr Gibson Elaine Smith MSP thanks convener um could i specifically ask lord Duncan about what might be viewed as unintended consequences just to explore a bit further what we've been talking about and um obviously the the whole policy was originally introduced to create a northern powerhouse and to balance england's economy so i want to look at how that works exactly in scotland and how there might be unintended consequences specifically alexander stewart mentioned town centres because scotland is obviously a country of towns and so at the moment we have decline in some of our town centres for example in lannister co-bridging energy have been in decline for a number of years the town centres so i just wonder if you're confident that there is no risk that the city economies are going to expand to the detriment and displacement of town economies and therefore cause further damage to these town centres well i think i can answer that i'm fairly confident it won't because if for example we took the money in glasgo which is you know substantial sums of money if that money was to be spent in one year then i would argue you're absolutely right the bonanza of that spend in one year would be such that you would see a distorting effect but if you spend that money over 25 years whilst at the same time in the areas that we're talking about there are further growth deals as well all overlapping against their own particular time frame then i think the risk of distortion is cancelled out now there will always be elements where a significant spend may draw in depending upon what the spend is in so there's no question for example if the development in the oil and gas sector in Aberdeen will draw in people from that particular sector in that area that that will certainly be a distorting element as that begins to evolve but at the same time as the Tay valley deal becomes a real delivered prospect and it evolves over a 10 and 15 year period then you'll see that although they didn't start at the same time within five years they will both be moving forward against their overall ambitions or you would be quite confident Lord Duncan that there isn't any fundamental flaw in the the whole project and policy because of the way it was created there's no fundamental flaw in that and over the longer time frame you would be confident that there wouldn't be detriment to the hinterland as you call it well i'm being very careful in the words i use when i talk about the cities often the city deals themselves have a city and region element so that is their hinterland no i would be fairly confident that there shouldn't be a distortion i think there would be if both governments spent a vast sum of money very very quickly but we're not proposing to do that it will be over a generation or longer in some instances and you will see that spend therefore begin to be married up now some particular projects will move faster we saw the island oil and gas technology centre in Aberdeen city don't move very very quickly other elements will be by their nature determined to be on a slower spend levels as a number of the projects within the Glasgow city deal are actually paced over a much longer timescale so i think both governments are conscious of these elements so it would be unfair for me to dismiss them as without worthy of consideration but i don't think they are a fundamental flaw i think they are just a recognised element of the evolving city deal landscape and as mr stewart points out again we can leave behind none of the the non urban hearted areas and they will move forward at a pace which again will be quite distinct as well importantly we would hope that by the end of the decade we will see all of the parts of scotland and one would argue northern england also experiencing exactly the same approach so that there is a city landscape and an evolving growth landscape that should be transformative cabinet secretary do you want don't feel the need to add some to do you want to add any of that just very briefly to say i think aileen smith hits on an important point here and it's worth pointing out that the city region deals well themselves cover quite a large number of towns as well as cities but we think it's right that all parts of scotland should benefit from this and i think there is a fear if and we just don't have clarity on this yet if the uk government proposes to take this forward in the context of the industrial strategy that i think was born of the northern powerhouse idea this is mentioned and the northern powerhouse idea was about the imbalance in the uk economy especially in relation to northern england a very important thing some of the early signs that we are seeing with the first wave and second wave of funding for those is it seems to be reinforcing that inequality because it's easier sometimes i point me a denlyr on to fund things where there's very dynamic economic activity always already happening and i've made the point recently last week to Greg Clark the secretary of state that if it's going to succeed the industrial strategy has to tackle that it can't just reflect it so we've seen a lower percentage of bids coming forward or being approved from scotland from northern island from wales and from northern england if it simply reinforces current inequality it is not going to have served its purpose i don't think that's the uk government's purpose and to be fair to Greg Clark he said it absolutely is not but if that's to be achieved then it means the pursuit of the industrial strategy if that's the means by which the uk government proceeds it's going to have to actively help those areas to come forward with bids and make sure that economic activity takes place okay that's very helpful Lord Duncan i just just before you answer this i apologize that i'm going to ask for brevity but i understand you might want to outline in more detail how industrial strategy may be set beside inclusive growth and all those things the cabinet secretary is talking about which you can perhaps correspond with us in relation to you Lord Duncan oh i can be very very brief um the industrial strategy is not driving forward the uh the growth deals so that's actually quite a simple answer and in truth um when you look at some of the the deals which are emerging in england for example the the the cornish deal is not in any way determined by the growth strategy so there is no there will be overlap inevitably just as there will be with some of the existing city deals but they're not they're not linked and it's not a driven out force okay that's very helpful we'll leave this now thanks very much convener um i've got a substantial question but just a brief um for clarity uh mr Duncan you talked about a move from city deals to growth deals do you mean by that that the ones that are filling in the current gaps are going to be called growth deals because there's no cities in them or do you mean that growth deals is a a new way of doing business which may well come forward in some kind of phase two on in areas that already have city deals no i'm i'm being very clear broadly as we've run out of cities we've hardly run out of cities so um we need to then allow the same sorry no i wasn't trying to be clever i just mean that we will have completed broadly all of the bits of scotland which have in them an urban conurbation and we if we're moving forward with the same initiative the same idea then we we really need to call them something different so it's filling a miniature perhaps more than it is um that is anything else so we're not we're not trying to be clever i'm just trying to and so the point about this is where Keith and I hope we'll sit down again is to try and see how because in the initial approach it was to look at city deals that was the original plan um but clearly when that's evolved and we do need to recognise and it has been confirmed i think from a number of the participants of scotland is not just about cities so um we need to find the way of taking the initiative and the idea and recognising that these growth deals by their nature will be different because they will not have at their heart a large urban conurbation they will that's helpful thanks um on the substantive point um Glasgow's obviously the first one is as i understand it has a five-year gateway review which is shortly coming up given that these city region deals are for 20 or 25 years you talk about them being generational during which governments change um during which big things will happen like leaving the european union and new policies will emerge like industrial strategies and and whatever i mean how can this be monitored in a sensible way when in 10 15 years time we'll be in a very very different place with possibly very very different governance arrangements in the UK so that um the deals themselves are designed to have at their heart governance structures which is part of the the tripartite agreement if you like so irrespective of whether indeed one political party is in office north of the border south of the border indeed if a local authority changes hands the the the means by which we are able to measure are agreed and the governance structures and the review structures are all part of the ongoing process and part of the commitment so i suppose it's not impossible that one partner might have different views as we're seeing already in in the Glasgow deal about how they might be refined or how they might be adjusted but the structures in place for monitoring and oversight and so on they're not really up for adjustment they broadly are the fixed elements that the quantum itself is also fixed it's the um in the case of the Glasgow situation if there is indeed from the local authority level a determination to re-examine elements then i think both Keith and i would be responsive to that but we're not seeking to change it the structures need to be trustworthy so everyone within it is able to operate on that uh fair and level playing field it's fair to say there are not many structures in governance in areas like this that extend for 20 years that is very unusual that are not for example underpinned by primary statutes i mean i'm just i mean how confident are you that if we see problems arising in an edinburgh or Aberdeen deal of whatever in in 10 years time that the governance structure will will be adequate to dealing with it when the original players have long gone when the policy context may be very different i would argue that if we put in place the right structures that should be able to weather the the political changes that come along there are of course entirely unknown unknowns which could change the entire landscape i'm aware of that but i think we can only work on the basis of constructing robust governance robust auditing that's all we can do at the outset and that's what we have i think done through each of the deals so far they are underpinned by the commitments of our respective governments and by the local authorities recognising of course that the parties in power and any of those particular tiers need not be the same but the commitment should remain the same going forward because that is how large scale projects are built over long periods of time Secretary speculating on the unknown unknowns are you confident that the structures will prevail irrespective of political change or the new thinking in relation to economic industrial strategies? I'm not sure that the assurance sought by Andy Wightman can be achieved by putting in structural or infrastructure which allows that i think it's much more to do with how they're baked in at the start so the points that be made by other members in terms of popular support for them engagement with communities i think also within local authorities that they have an inclusive approach amongst all the different parties and that would help to can't guarantee it but it would help to obviate swifts and swings in policy and priorities that would then make a previously agreed project non-sustainable so i think nothing certain in life i think local authorities do change hands governments change i think from both government's point of view we put in to our long-term budget projections a commitment to these city deals it's not done on a on a whim that'll be changed in that way it's it's a long-term commitment we made but things things can change things will change and sometimes it's good that we can reflect those changes in the priorities that we have but the more in which there's agreement at the start and consensus and inclusion involvement in it then the more chance it's got of sustaining some unforeseen events even such as brexit. Andy Wightman against we're now out of time but just i want to make sure we have a balance of evidence here and there's one or two things i'd like to kind of mop up on before we close the evidence session so perhaps even there might be substantive questions some brief observations and perhaps correspond with the committee clerks for more information would be would be very helpful if our debate community and Elaine Smith made a very interesting point in relation to how town's fair in relation to this which we did have a question we're hoping to ask around eh how the city region deals or growth deals take account of equalities and sustainability and i thought that that was relevant at that point as well so that's not just equalities and terms geographical but you know different sections of the community so what checks and balances are there within these these projects that go through city region deals like equality impact assessments that kind of thing what due diligence in relation to that kind of area happens with city region deals the officials can confirm but we are undertaking equality impact assessments on the city region deals that we're taking forward now that wasn't true in the early days i mentioned the circumstances for example in relation to Glasgow i think the one thing i would say in relation to this we do want to we have our priorities inclusive growth and increasing equality is very important but we don't want to continually overlay our criteria on top of what local authorities are coming forward with so it's an important forum this to put the message out there that for those seeking to do city deals things which reflect those priorities in terms of inclusive growth improving equality are things which are we are going to prioritise but local authorities also have got a role to play in this okay well Duncan don't add anything to that yes i mean broadly speaking we would be in a comparable situation we have as a government a number of determining factors and around the equality's agenda in terms of fairness in terms of dignity and so forth but we also recognise that much of the responsibility there is for the constructors of the projects themselves to be building in with the bricks these elements and we seek throughout the process assurances that that is indeed the case and that's not to say we solely rely upon that we need to also audit that to make sure that they are delivering against both government's expectations in this wider this wider area thank you another thing members have kind of hinted at it we're lines of questioning this is funding over a long period of time we know Glasgow city region deal will have a gateway review though but other forums of monitoring of the other deals in relation to meeting outcomes in relation to an agreed framework what happens if if they fail what happens to that guaranteed long-term funding is it no longer guaranteed what's plan b cabinet secretary we could just go back to our second if i could quickly convene to the point about qualities you'll be aware of course that local authorities have got statutory responsibilities in relation to that as well so that has to be something that they factor that's probably how we would ensure what's coming forward meets those equality impact assessments in relation to if something fails and i think that's a pretty big message about people should pause and take stock of where they're going and i think if we haven't had a failure in relation to the Glasgow city deal but we have had it seems a demand to have things looked at again and it seems to me right to be able to do that so the process has to allow for that and if it's something that fails a gateway the gateways are there for a purpose to make sure that the the project if it's a project is sustainable and it meets objective criteria for that so i think it's right that that process is there and it will force a rethink so whether it's got to change the nature of the project the extent of the project or some other change and it's right we should have that check and that balance in there Lord Duncan taking a little second on that should local authorities be building risk assessments into their city region deals on the basis for what their contingency would be if they didn't meet a gateway review or they didn't meet an outcome but wished to proceed with a project nevertheless just briefly cabinet secretary this apologies Lord Duncan will take you in after that well i think that everybody involved in the process should be undertaking their own risk assessments and in local authorities be no different okay thank you Lord Duncan no thanks absolutely the what we're seeing just now is that we we should be waiting five years to discover that something has gone wrong so the point is that the ongoing auditing and the ongoing assessment should be enough to safeguard against failure that that has to be at its heart and again if that can be anticipated if there is indeed a problem which is emerging then it's incumbent on those who are leading the projects to work very carefully to avoid failure because there's no point does either government wish to be in a situation in which significant investment is lost because a project could not fulfil its initial obligations that being said all participants must look at the risk register that they have to make sure that they are prepared for any event any eventuality in that regard and that needs to be built in with the same elements as we touch on a moment ago in terms of equality they need to be the component parts of the the overarching projects and they need to be monitored carefully to ensure that they don't drift from that i think what we're seeing in Glasgow and this perhaps comes back to what mr white was talking about there is an evolution in this situation and we're seeing it in Glasgow already that um there is some views from the the local authorities that some of these areas should be re-examined and we are not deaf to that it's a question of how we do so in a sensitive way that doesn't cause by trying to solve one part of an equation we end up contorting the other part okay now final question probably more relevant to cabinet secretary it's one of these things where you ask a substantive question at the very end of an evidence session so maybe a brief comment and if you can come back to us with a more detailed answer if you think it's required cabinet secretary there's a scotland's like a big jigsaw at the moment we're plugging in city region deals growth deals with the questions about bits that have been missed out and late to the table with their displacement we've asked all those kind of questions but given the fact that um there's a focus in regional partnerships within the forth coming enterprise and skills review it's time now right for a more coordinated Scottish-wide regional economic strategy and monitoring programmes is the opportunity around all this to better plug in different parts of Scotland to feed in from local authorities up to what that national economic and skill strategy might be and how would the Scottish government maybe see that going forward? I think it's a very good question which it would be useful to follow up in writing but my immediate thoughts on it are that we have sought to establish just that through the enterprise and skills review with the establishment of the strategic board if you look so you've got that at a national level if you look at a local level to what Ayrshire are doing in terms of the economic partnership they've established that reflects I think their priorities and a way of working with the other players in the Scottish area so we are open to the idea for example in relation to skills and some local economic development to see if we can try and bring that together in just the way that you described so that's a process we're involved in it probably had to be done with the enterprise and skills review happening first and just another point on the nature of the city region deals they have happened relatively organically and I don't think that's a bad thing but it is the case as a number of panel committee members have said that there's a you called it a jigsaw approach I think we've had a little bit more clarity today from the UK government this is used to me that the industrial strategy is not to be used as part of the growth deals and the only reason they're called growth deals is because Ayrshire tend itself as a growth deal and Murray has done the same we are not insisting on this this terminology at something which has come from the local authorities and that's a really important point there is something organic in city deals which I think makes them sustainable if they are properly reflective of local communities so whilst we do want to co-ordinate just in relation to the question you asked convener to co-ordinate and make sure that each part of the jigsaw puzzle knows what's happening elsewhere I think we also have to allow you for some element of dynamism and organic growth and local initiative as well. Keith that's helpful Lord Duncan I think it's reasonable to bring in at this point yes just a very brief comment just again helpful clarification for for Keith the industrial strategy will overlap with elements of the the growth deals and the city deals but to be very clear it will not be the driver of them okay thank you well time is upon us can I thank all our witnesses today for for their efforts efforts we're delighted to hear that there would appear to be movement today by the chancellor in relation to city region or growth deals like to think that the chancellor is of course watching the work of this committee Lord Duncan in relation to that and Lord Duncan and the chancellor will remain open minded to the reporting and recommendations of this committee indeed the Scottish government also so thank you very much everyone and we'll suspend briefly thank you okay welcome back when I moved to agenda item two which is draft budget scrutiny 2018-19 so the committee will take evidence in the Scottish government's draft budget for the said year and can I welcome counsel Gail McGregor spokesperson for resources in Vicky Bibby chief officer local government finance cosla and Paul Dowie director shared services the improvement service kind of thank you all for for coming along we've got a couple of open statements like the first is from councillor. Thank you very much Bob well Graham assured me that you were a kind bunch and you would be gentle with me on my first time giving evidence so I will hold him to that later but thank you very much for inviting me along to give evidence in the run up to the forthcoming budget obviously it's very difficult time for local authorities and this issue is of great importance not only to me in my role as cosla resources spokesperson but also as a councillor and most importantly as a citizen as a member of the public. It's absolutely essential that we recognise the essential services that local government provides to communities right across Scotland and I'm aware that many of you in this room have been councillors before so you've been at the hard end you understand the challenges that we do face now we have produced a document for your funding for essential services and the key message that we set out in the written evidence which I think you have a copy of is wider lobbying around this year spending review we're here to to champion local services and hopefully gain some support from you and work together with local government and the Scottish government. I very much welcome the discussion today and offer any information and evidence that I can I'm quite new to this role so I may defer to Vicky on occasion when it gets very technical but she'll keep me right now we obviously recognise the type financial environment that we're in and we'll get the details of the Scottish budget later on today what once the Chancellor has made his statement however if we're really serious about tackling inequalities in Scotland and promoting inclusive growth then we must have a properly resourced local government to deliver the essential services we have set out in our document. Lastly there are big challenges ahead as I say we must all work together but we're facing pay inflation and ever-increasing demand for services. Reduced funding is a reality we know that restrictions on local taxation is still an issue for local government and how we tackle that and remain sustainable is going to be a massive challenge. It's exacerbated in the short term with one year budgeting gone are the good old days of two and three year budgeting and I think that one of the big challenges that we have now is working from year to year so I welcome today's discussions in the hope that 2018-19 can address some of the issues that I've raised. Thank you for the welcome, thank you for the opportunity to participate. In terms of the written evidence that we provided I think we've set out a lot of what has been echoed in what other councils and calls will have said in their submission. I suppose what I want to draw on as part of this conversation is a whole range of resources that are showing how local government is responding, the types of things that they're doing and I suppose there is still scope for further improvement, innovation and a number of the councils particularly highlighted their work on the digital side and how we might prosper in a digital world both in terms of internal and external self-service but also how we engage with communities differently and also how we make best use of the assets that we have. I suppose what that really begins to highlight is that in the submissions people refer to high sustainable are those approaches and for us I suppose as the improvement services that was we do believe yes there is opportunity with service redesign and transformation but that requires leadership it requires capacity in people and it requires investment and the last five years have seen a significant flattening of structures broadening of management portfolios and therefore that does give issues around sustainability and resilience particularly in unprotected and corporate services as highlighted in a number of submissions and local government has done things like for example collaborating around creating some shared capacity like the digital office work on the roads collaboration the northern alliance and things like that but again all of those take time to to lead to put in place and require upfront investment and that can be hard when short-term deficits have to be met and budgets have to be balanced now and then finally I think we highlighted that alongside the scope for improvement and the scope for innovation that really trying to get to a position where local government has true flexibility and the ability as highlighted in the commission for strengthening local democracy the opportunity to bring fiscal capacity and a range of additional fiscal capabilities to local governments so that we can have truly local choices so thank you thank you very much for those opening statements we'll move to our first question from Graham Simpson thanks for coming so local government has for many years complained that it hasn't got enough money from central government and this year you're arguing that you'd need a revenue increase of £545 million just to stand still um can you perhaps explain to us um what that figure is based on I think the reality is that as you know local government does feel that it's been the sort of poor cousin of the of the public sector arena and certainly as we've moved over the past few years and we've reached a stage with budget cuts um we've reached a pressure point I think the reality of the half a billion pounds that's required just to stand still is is sort of encapsulated within your inflation rate at 3% and then your additional demand led services which we're finding increasingly difficult to deliver with the budget that we have and the pressures that come with that there may be a more technical answer that vicki might want to bring in but I think certainly inflation is the you know the main factor and then secondly the demand led services such as care at home um childcare and the such like that that we're having to deal with and if we don't get additional funding for that then we are going to be in a very difficult position thank you vicki did you want to add to that um yeah just to um highlight how the 545 million is made up and as council McGregor says yes um half of it well sort of just under 300 million is based around inflation um but 250 million is based on demand we've worked very closely with the improvement service and the economists and the statisticians to look at trend data and build up quite a um substantial um forecasting piece of work that we've worked with Direct to Finance and this model's been in place since 2012 when COSLA did their work around the SFRG model that produced the gap and we've been updating that every year to really highlight the demand for services continuing um I don't think it's explicitly we're calling for an extra half a billion I think that the purpose or in the submission was to highlight just to continue what we're doing at the moment to deliver services the way local government is delivering at the moment would require an extra half a billion and I think it's in recognition that that just as a starting point is a budget gap for local authorities to look at through um to address through efficiencies transformation just at the starting point for a year. Paul Dowdy, do you wish to add anything? Yeah I'm a little bit confused by that um you're you're saying you want no more cuts to the revenue settlement but in order to have no more cuts i.e. to stand still you need an increase and you've just said you're not calling for that so which is it? I think we're calling for a fair settlement um for the revenue settlement um for local government and um I think what we're trying to say is that before any cuts in the settlement local government is wrestling with a half a billion funding gap. So what would you regard as a fair settlement? A fully funded budget. Is that half a billion pounds extra? I would say in the perfect world yes and we'll come to the other challenges that that we're going to face that if we don't have additional funding within the budget um it's going to cause massive pressures in other areas but we'll maybe come to that later on in the session. Yeah okay um in both submissions um you both refer to the restrictions on spending cosly you say 58% of councils budgets cannot be reduced um I think the improvement service has the figure at over 60% um but you're making the same point that there are restrictions on what councils can spend um so in cosly submission you say that just 42% of the budget has to absorb cuts which means an 8% cut in resources results in a 20% cut in services um do you think there should be fewer restrictions on spending? I think there needs to be a greater trust between local government and the Scottish government um I've been involved in some very good discussions with Derek Mackay recently and I thank him for that and we've had some very frank and open conversations about trust and and what they will allow local government to take a little bit more control over um I think historically the issue has been that we've ended up with an awful lot of over and above initiatives that aren't contained within the core and that's led to the imbalance with your 58% being controlled now with sanctions or other stipulations um I think there are many things within the budget that could have catch removed or sanctions removed and a little bit more trust with local authorities we're all in it for the same thing we're not here to cut services we don't want to lose staff we want to empower staff we want to provide better services for the public and I believe that the Scottish government wants that as well but while we have the sanctions in place and and priorities of the government which doesn't allow us to play with our budget a little bit more then I feel that we have sort of reached a level where they they no longer trust us to deliver what we know we should be delivering and I think I think that's a fairly important message to get across that discussions are there and they're very positive but actions are going to speak louder than words and I think that they need to give us just a wee bit more autonomy back to allow us to manage our budgets because as you say it's 42% of the entire budget it's almost you know that we can play with it's only a third with an education and that leaves you really really strapped with the decisions that you can make when you're starting to look for efficiencies as we said earlier so I think it's a reality that great for bbc headline grabbing initiatives to be announced and absolutely fantastic but it's us that has to be the brunt of actually delivering that at the other end I think it's linked to the transparency point that I think the committee has picked up in the past and I think then the Glasgow submission it also talks about some of the less explicit impacts of of the some of the constraints for example around teachers and pay and things like that so it's not just about major initiatives new initiatives and come in how their fund is actually about numbers of teachers and things like that have an impact on the flexibility that councils have okay thank you just just a final question from myself Mr Dowie and your submission you say that the total current spending by scotch councils has reduced by 11% in real terms over six years now last last year when we're doing this exercise one of our conclusions was that there should be much greater transparency around the local government settlement you know we we struggled frankly to get straight answers from any you know from anyone the picture was confused so you know what would you do to to make things clearer well for us you and the general public in terms of general settlement and what's happening with the budgets aside from what individual councils are doing in terms of presenting their budgets and what's in their budgets and how they've been formed as part of consultation exercise that they undertake at the moment that I think there's a lot of work that's going on in that area and I think there's also the work that we do at a national level which is actually about a greater collaboration and sharing around how we construct the profiles that are being used as part of the discussions we have today and use that as common sets of assumptions that we use across the partners in local government i think local councils are actually very good at consulting with their local people now I think we've improved remarkably over the last five seven years at local level consultation goes out usually pre christmas or pre december I think the difficulty that we have at the moment particularly in respect of transparency for people like yourselves is that we now have a late autumn statement from the UK government which then impacts on the statement from the Scottish government and where we were at perhaps three four or five years ago where we were able to start to set budgets in december and almost have it tied down by February we're now looking at that sort of trailing into the following year and I think that that will cause a bit of a challenge for us in regards to transparency with yourselves but I think certainly at local level we're very very good at consulting with the general public we're just going to have to do it a little bit later and in a slightly tied to timeframe than I think we've previously had to do. Okay, Vicky Bibby, did you want to add to that? Really just that we're variations in the budget it's whether you use the draft budget the actual budget but also the key thing for local governments and its core funding is the local government finance circular and it is not easy to tally all of these things together but I think we're working closely with SPICE speaking with Scottish government officials to try and come up with a common set of presentation that will help everybody really understand the true picture. Mr Simpson? No, I mean that's exactly what we were calling for last year so let's hope that happens. And I won't, Kenneth Gibson, can I just set the £545 million for because one of the issues we had last year when we were trying to scrutinise budgets some people were including moneys, transfer via health and social care integration which was £250 million, a support for local government, half of which was for care sector wage pressures and delivery wage and other politicians were not counting that. Some politicians were counting support to local government to include PEF moneys for example others were not and what we found was the numbers changed very quickly depending on what moneys we were looking at so the £545 million gap that COSLAW would assert and I'm not trying to undermine it in the slightest I'm just trying to understand whether that would take into account moneys via health and social care integration, moneys via PEF, council tax increases that kind of thing or is this a standstill £545 million based solely on the revenue grant? My understanding is that it's based on the entire budget and on the assumption that everything that we are already doing requires to continue whether it be social care or PEF or you know any of these things that we've had to implement over the last two years assuming that they are going to continue as they are this is simply an inflationary and a demand led increase. Okay so the £500 million. So no it's this is not including any additional this is just to continue to deliver what we're doing. Right so if you get every penny you got last year you would need £545 million on top of that just to do the same again irrespective of where it comes from just that that's what you would need does that include giving a view terms wage rise to all your staff would that be part of the 545? It includes the inflation rate so that that's taken into consideration the uplift in the living wage and I mean obviously we're going through some fairly extensive negotiations in respect of public sector pay cat being lifted and where we're going to go with that but I would say that most authorities have contingencies for a wage uplift at the 1% that we're at at the moment and then as we move forward we'll have to look at additional funding for a higher percentage. So it's £545 million based on a 1% pay increase for all your employees? At this stage. It's based on a general inflation rate of 3% to me. Right so the 545 million is based on giving every worker in the local authority a 3% wage increase. Okay as you've tried to draw down some of these figures that's helpful. We're giving the 1% at the moment to the assumption is that that will maintain but going forward we're aware that through negotiations and certainly with my employer's hat on that we're looking at an inflationary uplift but that's not agreed yet but that has been factored in. And have you factored in the baselining of the health and social care integration monies you've got last year?  I think what this model is trying to illustrate is what it's doing is taking the current funding and saying if you apply inflation to that and the demand that we know from the modelling work this is how much money you would need just to deliver what you're doing. So the 940 million it doesn't include that health and social care money but what you would do is if you included that health and social care money your starting point would be bigger so your 3% applying and your 2.5% on demand would be bigger as well so your end product would be bigger. I think it's an illustrative model to show actually the impact of inflation and demand pressures on the budget. I know you're being patient hearing your champion a bit to come in but if it doesn't include the health and social care integration money that integrated joint boards are spending pretty much on social service provision and wage pressures then what you would do is you would tip £250 million off that £545 million wouldn't you if that money was back into the system again which you've taken out? No you would add the £250 million onto the 1718 figure so you would inflate that £250 million by 5.6% and add that 5.6% of £250 million onto your 1819 figure so your £545 million would actually be bigger. But that's baselined. We'll come back and we'll clarify that my understanding is that that is now baselined into the settlement for local authorities irrespective of the fact that it's transferred via the NHS. Well but we have taken the local government finance circular so that figure for the £9 billion, £640 million so that figure we've not included so we've not inflated what would be required for inflation on that figure. Right I think this gets to the nub of the need for all the figures to be available at the same time for transparency because I'm sitting here going I want to ask more questions but I'm not sure if I'm right or wrong Vicky Bibby so I'm not going to ask anymore. Andy Wightman. Thanks very much convener. I'm glad in response to Graham Simpson's question about transparency that you're having productive discussions with the Scottish Government and spice about this because I think it's absolutely vital it's really really important for the public to understand there is a settlement, local government settlement, what that is and then there's health and social care money etc etc so I'm very encouraged by that and I really really hope we can make progress this year. Numbers of standard questions but on the actual £545 million I mean just a question of fact your inflation rate of 3% would that 3% come from because normally you'd use a GDP deflator for broad costs in the economy and that's 1.8% and I haven't looked at them but they're less than well less than 3 so what's 3? CPI at the moment. CPI so CPI is a consumer price index cost to consumers that's not normally what's used to calculate the increased costs for public sector bodies it's usually GDP deflators. The GDP deflators will look at RPI as well RPI has historically been used but recently over the last few years there's been a shift in public calculations to use CPI more. Okay let's get that clarified that's for CPI. In the improvement service paper you referred to the fact that the accounts commission were forecasting 18% cut in real terms to local government over the next four years and the evidence from COSLA I think wishing Aberdeenshire council and others putting forward five-year projections in terms of their funding over the next five years that's against the backdrop of not having any formal multi-year funding settlement but presumably that's based on accounts commission projections as I've just indicated Fraser Valander projections this kind of thing. Is there not a danger that we get into a kind of self-reinforcing cycle where we're forecasting on the basis of declining budgets so government cuts budgets? I think that was hard. Yeah no no that's fine but I think it is reflected in the Aberdeenshire and I think partly links to the discussion we just had is about how do you get to a sharing of assumptions and having some common assumptions that everybody's working to would be good. I think in terms of how then this process and scrutiny process works in times of making sure that we don't start accepting those assumptions and challenging the assumptions so that actually the debate would hopefully move to actually about those assumptions in the long-term planning will be as much as about what the individual year budget is. Okay I mean Cozzler you'd like multi-year? I do. Yes I mean we've just had a session on city region deals where being money's been put on the table modest sums of money in the bigger scheme of things but modest sums of money for 20 years and I think we heard from the cabinet secretary that that is factored into some kind of long-term budgeting commitments that bind future Governments which is quite interesting. I mean how important is that for local government in terms of planning and designing its services and changing its services, creating fish and etc to deliver against projected demand increase against an uncertainty about how much resource is going to be there? I mean how important is that multi-year for you? It's enormously important I don't think it can be stressed how important it is. I think we would love to be in the position where we were guaranteed some form of funding for big capital projects over a 25-year period. I think the reality with local government is that due to the nature of services that we deliver and they're very much revenue-based, we've seen the pinch, we've had our efficiencies over the last 10 years, we're reaching a stage where I don't think efficiencies are going to be able to go much further. Audit Scotland has come down quite hard on us in the recent past on our planning assumptions and I think they're absolutely right to do so. In the ideal world, from a revenue and a capital perspective, I think we have to start and again it's collaborative. It has to be working with the Scottish Government and the UK Parliament to start to look at a better long-term vision, particularly in respect of things like social care, delivery of child care. These are long-term projects and we're working year on year on year simply trying to just keep our shoes clean. I think it's incredibly important for us but it's absolutely right that we look to Fraser Rallander Institute to get good independent external advice to assist us. It's equally right that Audit Scotland comes down on us when we don't do it right but we have to make it better. That has to be done collaboratively. I think it's not just infrastructure in that roads and bridges sense. The key point is to do with that the medium to longer term is going to shift to prevention. If we're going to do that, that just requires investment and there's an upfront cost in managing services as efficiently as we can today whilst actually thinking about new approaches. Again, with shared services, if we want to collaborate more, if you want to change the nature of structures, that requires time and investment. At the moment, without a longer term plan, how do you sensibly plan that you're going to get the return on those and be able to pay back the investments that you make whether to make up reserves or whether to actually plug gaps in revenue and capital budgets in the future? So I think it is a broader approach that's required that looks at the full range of possibilities. Just further to that, I think a good example would be something like the people equity fund which was given to us last year and at that point was a sort of one year system. We don't always look at the outcomes and what we're trying to deliver at the end. We have initiatives like that. We're not guaranteed that that funding will stay with us forever. I think we all want to look for better outcomes for pupils in schools that are struggling. I'm not convinced that perhaps that model was the best one but that's the big discussion we have to have because if we're going to improve pupil attainment, if we're going to bring kids out of situations which are very, very difficult for them, it has to be part of a wider family approach, not just a targeted fund like that, there may be better ways to do it. That's the discussion we have to have but it can't be one year. Those kids aren't going to suddenly miraculously in a year's time have fantastic outcomes. It's a really good initiative. It's a good idea but it needs to have a five year or a 10 year plan for it to actually work and I think that's just a tiny, tiny little one that I would use as an example. Okay and finally I'm aware that our colleagues want to know a lot of questions but very briefly I mean would you find it helpful to have a fiscal framework for local government that provides in the sense that the UK Scottish have a, governments have a fiscal framework that there's rules about the impact of spending so we can't at least know what happens when each party does something. I mean would that be helpful and how important is more fiscal autonomy? Answer to the first question yes absolutely I think that would be very useful and I think fiscal autonomy it's a very difficult one obviously we believe that what we do at local level you know that we're the the best people to determine what how to do that but that has to be done within a larger framework I completely understand that and this is why I say that we have to work with the Scottish government and the UK government so I think autonomy is great but it has to be under a wider and much I'm not entirely sure that local government has been given the credence that it deserves at times either so as I say we do feel like the poor cousin and perhaps we need to bolster our structures and and as you say a fiscal framework would certainly assist with that. Can I just check with the pupil equity fund? There's nodding heads when I was making this comment to Collier understanding it as a multi-year agreement it's not one year it'll run for the lifetime of this parliament. For the lifetime of this parliament yes. So I mean you could contend that any government is only really in control for as long as they're but the local government's settlement isn't for the length of this parliament. So the point I suppose the point I was making yeah you're absolutely right but perhaps peff moneys was not the best example of that because peff is guaranteed for the lifetime of this parliament I'm just wondering if the cosler position might be that I think peff is so significant that this parliament should lock in peff moneys for a decade or beyond and guarantee those money straight to head teachers was that something that cosler would be supportive of? No no I'm using it as an example of something that's been introduced in the recent past and that we're very much in the early stages of as you say it's the life of the parliament but our local government settlements go from year to year as well and if we're looking at longer term outcomes and targeting funding which is absolutely essential to the most vulnerable people that we have in our communities I think we have to look at a longer term approach because these kids aren't in school for for two or three years they're in school for six years if they're in a secondary in seven years if they're in a primary their outcomes suddenly aren't going to turn overnight so I think I mean that that that was just one example of funding which it is looking for a specific outcome but how we get to that outcome I think there needs to be wider discussion and I think we have to have a discussion about whether it's working under this structure or whether we can be doing that one better. I know that was just supposed to be an illustrative example but I'm just trying to infer from your answer whether or not you're supportive of the fact that that's a multi-year commitment from Scottish Government or not PEF is it something causal of support as a multi-year commitment from Scottish Government? Well it's only within the life of this parliament at the moment. But any government only exists well let's not get to the realms of elections so would you welcome therefore PEF being locked in for future parliaments and a cross-party agreement in this place to lock that in for a decade say? Money to head teachers to be deployed to tackle the poverty-related attainment gap? Not necessarily but I do think that what we do need is confirmation of future funding for these projects you know they get put in and then they're not necessarily baseline for the following year and the year after that. But you've got it for PEF council McGregor that the point I'm going to do it I will move on but you've got it for PEF council McGregor I think that's the point that I was making. It was just one example. Okay that's how we'll move on. Alexander Stewart. Thank you convener. There's no doubt that as you've indicated local government has seen themselves as the poor relation over the last decade or so in the funding that they've not received or they've asked. So when we sit and look at where we're going at present we really are now looking at choices that are unavoidable in making service facilities reduced and doing that. But every council has a plan a financial plan a short term medium long term plan. Audit Scotland have then looked at some of those financial managements and still within councils a large number of them don't get the strong financial management tick from Audit Scotland as you've indicated sometimes they come down hard and I think that's the reality that we face ourselves in at the present moment in time. So how can a council think about improving services rather than just maintaining services if they don't have that strong financial management internally? I think there is very strong financial management within councils. I don't think that's what Audit Scotland are asserting I think in their overview reports of late and there's one coming out very shortly on local government. They've actually been very commendable of the management and of local authorities. What they have commented on is that there should be better longer term financial forecasting and I think that's accepted but I think it is difficult to do as highlighted by Councillor McGregor in the one-year budgeting and Audit Scotland are asking us asking local authority to plan on a range of assumptions and to go out to budget consultation and a range of assumptions and councils are increasingly doing that but you can understand there's a whole host of scenarios and they all need to be resourced but I think that's the focus of what Audit Scotland are saying in terms of improvement of it's more around long term financial forecasting I think they're very commendable of the financial management of local authorities and how they've managed to balance budgets in very difficult circumstances. And following on from that the whole idea of contingency and reserves within councils as to how they manage that going forward because in the past that was what they tapped into to try and to alleviate some of the situations they found themselves that is now being eroded and they're left with very little manoeuvrement. So where do you see this whole process going when there is no longer that manoeuvrement and they're attempting to look at a long-term financial plan management situation but they're not able to do that because they don't have the resource to manage it. No I'm just defer to Councillor McGregor. I think that's the case. I know that reserves have been the subject of quite a lot of discussion with the committee in the past and councils have used reserves to smooth budgets and invest in transformation programmes in recognition of where public finances on the whole have been going but I think that's what we're trying to highlight in the submission that local government has done a lot and managed with the finances as they are but the sustainability of that is very much diminished and there's not as much scope to go and I think from the upcoming overview the report filed at Scotland which we published it will be showing reserves going down. Okay thank you. I always want to come in. At some point we're going to move on to look at the housing budget but I want to kind of mop up all the various other things first. I'm at finances. Mr Gibson now. Okay thanks convener. I mean one of the reasons why we don't have multi-year budgets is because the Scottish Government doesn't really know for a year to year what its own budget is going to be. I think that's a significant part but I want to kick off just a quote from the improvement services that I think is important to get in the record which is that councils have achieved substantial improvements in efficiency, innovation and productivity while service output and outcomes have been maintained and improved so I think there is a recognition that councils are doing a lot with less but the conclusions of the improvement service are that they're insufficient resources and the whole system to maintain current services and entitlements in line with demand. The Scottish budget is declined in real terms across the last five years and it's currently projected to fall further. Given that consideration I mean how realistic is it to actually suggest at a sum you know as high as £545 million when we all know that the pressures on the NHS are actually growing faster than the pressures on local government for example? I think you make a very good point. I'm not going to get into any discussion over local government versus Scottish government versus UK government. We are where we are and I think this goes back to my