The minister said that the notional budget was based on this year's actual budgets for Grampian RC and the three districts within the region. He said that many of those who were responsible for making decisions about those budgets were now members of the new council.
Mr Kynoch was replying to a letter from Malcolm Bruce MP. The full text of Mr Kynoch's letter is:
'Thank you for your letter of 1 February about Aberdeenshire Council. Let me start by dealing with your claim that I am hostile to the new council. Nothing could be further from the truth. I very much welcome the fact that the government's reorganisation of Scottish local government has led to the creation of the council and I certainly want to work with it constructively - both in my capacity as a local MP and a Scottish Office minister. But equally I have a responsibility to criticise the council where it is taking or contemplating action which I think is unjustified or inappropriate.
My claim is, in fact, entirely valid. It is based on a comparison between the council's notional 1995-96 budget of £201.628 million and its Grant Aided Expenditure (GAE) assessment of £211.891 million. I, therefore, adhere to the view that, provided the council maintain current expenditure levels, there would be scope for a council tax reduction of the above order.
I note that you take the view that the Council's notional budget is 'wholly unrealistic'. Given that the budget is based on the actual 1995-96 budgets of Grampian Regional Council and the three district councils within the Region, what you are really saying is that those budgets were unrealistic. I find this quite astonishing, especially as many of those who were responsible for making the budgetary decisions in particularly Grampian Region now form part of the Administration on the new council.
I simply cannot accept that the 1995-96 Grampian RC budget, which obviously is the main factor influencing Aberdeenshire's notional budget, can be discounted in this way. I think that, as in the case of every one of the other 28 new mainland councils, the notional budget has to be the appropriate baseline against which the Council's spending proposals for next year should be compared.
I find it equally astonishing that the council is maintaining that it needs to increase expenditure by up to no less than 19 per cent as compared with the level of planned expenditure by the outgoing local authorities in the current year. I note that you appear to support the council in making no attempt to fund pay increases from efficiency savings, despite the fact that this is what the rest of the public sector is doing.
Reorganisation has given Aberdeenshire the choice of either holding down council tax levels or increasing expenditure. It will be for the council to answer if it chooses the latter option and deprives council taxpayers of the opportunity of lower bills which reorganisation presents.
While I accept that the mismatch transitional scheme will mean a transfer of GAE and AEF from Aberdeenshire to the other two new councils in Grampian during the next two years, I must correct your statement that 'the Government insisted on a three year transition to adjust the mismatch'. We did no such thing.
The three year self- financed transitional scheme was proposed by COSLA and we were told supported by 26 of the 29 new councils including Aberdeenshire. We decided to accept the COSLA proposal not least because of this clear consensus in favour of it amongst councils themselves. I know it is argued that Aberdeenshire's preferred option was a government funded scheme, but COSLA were well aware that there was not any prospect of that and I cannot believe that Aberdeenshire did not fully recognise that when they voted for the Convention's proposal.
At the end of your letter you ask me to support a 'fair and realistic settlement' for local government. That is precisely what the overall settlement is. The level of Government Supported Expenditure has been increased by 2.3 per cent and Aggregate External Finance by 2.9 per cent. The increase in AEF is 148 million, no less than 26.5 million more than the Scottish Block formula consequences of the English settlement. Aberdeenshire has the additional advantages which are presented by reorganisation. There is scope for the council to both maintain services and hold down council tax levels and I very much hope that they will do so.
In view of the fact that you published your letter to me and in view of the public interest in this matter, I am also releasing the text of this letter to the media.