Accounts Commission Public Session - January 2026

Jo Armstrong   0:00
…which is being held both online and at the Edinburgh office.
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OK, that takes me then to item 1, apologies for absence, Sarah. 

Sarah Watters   1:20
We have apologies noted from Derek Yule, and Malcolm Bell will be joining the meeting later.

Jo Armstrong   1:32
Two, then, declarations of connections. Can I ask any Members who have any connections or interest regarding any items on today's agenda, to please state the connection or interest, and whether they consider it material enough to need to recuse themselves.
I see no hands… Carol.

Carol Evans   1:50
I work for bodies that some of the private firms also audit. So I don't see any material need for me to leave. But just to make that, that connection.

 Jo Armstrong   2:02
Thank you.
Takes us then to orders of business, item 3. As normal. I'd like to seek the Commission's approval for the order of business today. I propose that we consider items 8 to 14 in private for the reasons set out on the agenda. Are Members agreed?
Item 4, minutes and matters arising from the previous meeting. Sarah.

Sarah Watters   2:30
Thanks Chair. There were two actions from the last minute. One was to circulate the summary of the partnership working framework to all Commission members.
And the other was to circulate Audit Scotland's presentation that they made in December to the Scottish Commission for Public Audit. And both of these were sent out pre-Christmas in a round-up to the Commission members, I'm happy to take any other questions or comments on the Minutes.

Jo Armstrong   2:59
Any comments for Sarah on the minute, or are we content to approve the minute as provided?
And content to accept the matters arising outcome.
[Happy to approve.]
Good, good.
Thank you, Sarah. 
That takes us to item 5, local government policy update.
Again, another really good summary of all that's going to be going on in local government. I hand over to Joe to talk us through any key items you want to raise before I open to questions.

Joe Chapman   3:33
Thanks very much, chair. 
It would be remiss of me, I guess, not to do some kind of update on the Scottish budget announcement on Tuesday. 
But I would emphasise that far more detailed kind of considered analysis of the budget in the local government context is going to be provided by two upcoming resources. 
One is a briefing on the budget for members, which will be part of the agenda at the February Commission meeting, as we do each year. 
And the other is a supplement to the financial bulletin, local government financial bulletin, which will be published around about the same time as the February Commission meeting. And that will provide the sorts of information about the budget that would normally be in the financial bulletin itself, but that wasn't possible because of the timing of the budget this year.
But there's a couple of kind of head, a few headline points. The Scottish government says that overall funding for local government in this budget will increase by 2% in real terms across revenue and capital, compared to the budget that was announced at the equivalent point last year for 25/26.
That's an increase from 15 billion to 15.7 billion. The budget documents largely make a different comparison, which is between the sort of latest position which is following the Autumn revision to the 25/26 budget,
 and compare that to the budget announcement. Because in-year transfers are made between, you know, across the course of the year, that makes for a much lesser comparison. The Institute for Fiscal Studies has put that figure at around about 0.3%
real terms increase. 
There is some debate about which is the most appropriate comparison to make. So either way percentage changes should be viewed with caution. 
Of that 15.7 billion figure, 15 billion is revenue, the remainder is capital. The 15 billion revenue is less than the 16 billion that was requested by COSLA for revenue funding. They included within that a call for 750 million of immediate funding for social care. And that wasn't specifically provided in the budget.
COSLA’s initial analysis that they call budget reality suggests that the budget provides an additional 235 million of uncommitted revenue funding. So they look at the additional fundings provided and then look at what is allocated, what's committed, what's directed.
And that 235 million is around a 1.6% cash terms increase so that's less than inflation.
Capital also falls short of what COSLA asked for, and they put a figure of 98 million on the reduction in cash terms in capital from last, from current year to 26/27. That is reflected in sort of reductions and tightening of capital spending by the Scottish Government across the board. 
Alongside the budget there was also the spending review announcement. And analysis on that has been slower to come through, there's been a large focus on the budget for 26/27 understandably. But total funding for government in the period covered by the spending review is set to fall slightly in cash terms in 27/28, by about 11 million and then be almost unchanged from that in 28/29. So in other words, around about flat cash, which would obviously be a cut in real terms, that's roughly in line with the level of inflation.
Taking revenue and the non-domestic rates income together because they do fluctuate, that is effectively stable in cash terms and capital funding is effectively stable in cash terms. So the effect is spread across the two.
As I say, much more analysis to come on that and I'm happy to clarify any points that I can as far as possible but I would very much defer to the analysis that's forthcoming. And happy to take any other questions on any aspect of the policy update report itself.

Jo Armstrong   7:43
Thanks. Thanks Joe. I do find your summary of all the items really helpful. And the links at the back to key areas that you think are important for us to be looking at, I find that really, really helpful. 
Comments from other Commission members. Joe.
Mike.

Michael Neilson   8:03
As ever a very useful report, and I must say, a very, very good summary of the budgetary decisions yesterday from what I could see. 
Just one, I was struck by just how big the reduction is in capital.
And I think it probably means we need to think quite carefully about what the signal being sent there is to local government in terms of the use of their borrowing, given that we're doing work in that area.
I had one, I was very interested by the financial incentives on housing and homelessness, by the way. So thank you for bringing that up and will be good to follow how far these incentives are actually helping in tackling issues of sort of misallocation of housing resources.

Joe Chapman   9:10
On the incentives.
Yeah, the different measures that councils are obviously taking to try and tackle that shortage of available housing. I guess it's, they're trying to bring sort of fairly what they might consider innovative approaches to doing that to tackling that, that issue in terms of the housing emergency.
I don't know about misallocation of resources, but I think it's looking at, looking at tackling the issues from sort of different directions, from a supply direction and demand aspect.
Rather than focusing on, I guess trying to just get more houses built, which is obviously another part of the solution.

Michael Neilson   9:53
I just meant misallocation of housing resources by having one person in large, in a large house, sort of thing.

Joe Chapman   10:03
I guess that's…
So I guess the councils are trying to make a shift in the market. I guess it's, it's you, it would be unreasonable to be I guess any more forceful in trying to make that correction.
And it's an issue that we've seen different approaches to tackling at national level and local level in recent years.
Yeah, I don't know if there’s more I can say on that, to be honest.

Jo Armstrong   10:43
I mean there’s clearly short term measures and longer term measures and that's one of the shorter term measures.

Angela Leitch   10:48
Thanks Joe. 
Can I just and again thank you very much Joe for this. It's really comprehensive. I noticed you’d put it on social media as well which I think is really useful. 
A couple of points on the briefing for February if I could. And I know that we always
 get a really comprehensive briefing. I wonder if we could also include something about the changes to ring-fenced budgets because I see that as part of the fiscal framework, COSLA had welcomed some of the relaxations there. I just wondered whether or not we could have sight of just the extent of that or where the ring-fencing is still in place. 
And in relation to that, the totality of the budget and the comparisons with next year are really useful, but it would also be really useful just to see some of the inflationary pressures not by council but just across the board.
Because we know that there was the NI increase and also the pay award, particularly the teachers’ pay award which will have a big impact on council budgets. I just wondered if we could have sight of some of those figures as well. Thank you. 
My question was on paragraph 14. And I just wondered, Joe, if you could expand on or if you've got any further information on the delay in setting or pursuing the general power of competence. And I think this was requested by COSLA as well as agreed with the government.
Is there any further information on that?

Joe Chapman   12:25
I‘ll take those in reverse order, so no further information on that. So they were measures that the government had previously announced they intended to try and take before the election or at least initiate before the election.
COSLA have requested that they would like more time to consider and discuss those.
So there's two measures and I think there was an intention for that to really just be the starting point. But the government's response to the general power of competence consultation responses was to say that there was no clear consensus on support or opposition to putting in a general power. So, they were looking at taking a bit more of an iterative I guess approach and doing…
Making changes in certain areas to, to progress things more quickly, but as I say at COSLA’s request those two particular measures which were announced have been…
Given more time to consider. 
And on the points around things to look at in terms of the budget briefings, I know that PABV colleagues are on the call and will have heard that request, so I'msure they'll consider whether, how they can potentially address those points in the, both in the, in the supplement and in the briefing for Commission next week, next month.

Jo Armstrong   13:38
Thanks. Nichola.

Angela Leitch   13:39
Thank you.

Nichola Brown   13:42
Thank you, Joe. Yeah, thank you, Joe, for the update. Really helpful as ever. 
I was, I don't so much of a question as I was so struck by the sort of myriad of issues flagged in the education policy update item at para 15.
And I suppose it's just a comment around. I think we've all had a growing concern about the kind of complex interplay of issues that are affecting education in the country.
And it's what can we do? What more can we do? It's maybe not a question for now, but for strategy seminar about amplifying these issues. And you know what is our response to that? Where do we go in terms of… because we can report on individual aspects of, of what's in the policy update, for example, around the ASN agenda or the teacher numbers, but there's so much behind all of that and I just feel that this is an issue that probably touches on a majority of households in the country. If you think about who's got kids at school, who's got teachers in their family.
So I'd be really interested in others' views, but also in us giving some thought to how we can most impactfully be reporting on some of this going forward. That was all. Thank you.

Jo Armstrong   15:16
Yeah, I'll jump in there, Joe. Clearly that's one of our key items in our work programme, Nichola, so definitely be picked up in, in that space, if not anywhere else. And PABV colleagues will have also picked that up too.
I had a hand up somewhere… 
OK. Any other comments for Joe? And again, it's a useful update, it really does trigger thoughts and questions.
Thank you again Joe, for that. That then takes us to Chairs update, my update.
We’ve got the relatively short summary of the things I did prior to this meeting, principally the holidays took place. So, covered quite a lot of the period between the last meeting and this one. I wanted to pick up 3 or 4 items specifically in this public session.
I'm looking forward to going to the Western Isles as our follow up from the best value that we did back end of last year. Andrew and I will be going, and we’ll be going to not just speak to the council on the best value but also try and pick up a few insights into what's happening on the single island authority model work.
I'm also looking at a regular or engagement strategy and what my elements of that will be, so Sarah’s pulling together a plan for 2026. 
So ensuring Andrew and I continue to build relationships with key stakeholders across our local government work area and the role of the Commission in helping develop work in that area or to help promote widely what's going on.
And I now have a rescheduled time to meet with Ariana Burgess, the local government committee convener, which is now confirmed, I believe, for the 28th of January. So, I think again, a way of us getting involved in the debate at the committee session, which we've not necessarily been as proactive as we could have been up until now.
I'm happy to take any comments on any of that from Commission members.
No. OK. 
Rattling through this. That takes us to item 7, which is any other public business that anybody wishes to raise today.
Nothing, so I will therefore ask for the recording to be stopped.