The bitter dispute between local authorities and Swinney escalated when councillors said the Finance Secretary was acting against legal advice issued by the Scottish Government in consultation with the European Commission.
With Swinney’s relationship with councils degenerating into open warfare, councillors warned the Finance Secretary that his funding package could be challenged through the courts as Scotland’s 32 local authorities rebel against him.
Last week the Convention of Scottish Local Authorities (CoSLA) rejected Swinney’s proposal, which will impose punitive financial penalties on councils unless they sign up to it.
Swinney has said local authorities will be denied their share of the £408 million he has set aside to fund the package unless they accept his demands.
In order to receive the cash, councils must agree to freeze council tax for the ninth successive year.
They must also agree to maintain teacher/pupil ratios and accept a legally contentious demand to merge health and social care.
Last night the leader of Glasgow City Council Frank McAveety said: “There are strong indications that John Swinney may have stepped over the mark. He has been laying down diktats, but his legal position on the amalgamation of social care and health care services is definitely questionable.”
Failure to deliver on any of Swinney’s demands will see councils lose cash. Edinburgh City Council has calculated it would lose out on £33 million, while Glasgow City Council would stand to lose £45 million.
Scotland on Sunday has learned that legal officials working for Aberdeen City Council have examined Swinney’s proposal to integrate health and social care.
In particular, Aberdeen City Council lawyers looked at Swinney’s insistence that integration of care must include a commitment to pay social care workers the living wage of £8.25 per hour, regardless of whether they are employed by the local authority or not.
Although councils are in favour of alleviating low pay, they question whether they can force private contractors or the voluntary sector who provide care services to them to pay the living wage.
In a letter sent to council leaders last week, Swinney outlined the conditions councils would have to sign up to receive their share of money that is to be transferred from the health budget to local government for social care.
In his letter, Swinney said the cash would enable councils “to ensure that all social care workers including in the independent and third sectors are paid £8.25 an hour – this assumes that private and third sectors will meet their share of the costs”.
He later warns that councils who do not sign up to the whole package will not receive their share of cash.
Scotland on Sunday understands that council lawyers have referred to new guidance issued by the Scottish Government at the end of last year under the Procurement Reform (Scotland) Act 2014.
The guidance was issued by the Scottish Government after it sought clarification of the issue from the European Commission.
The Scottish Government document “Statutory Guidance of the Selection of Tenderers and Award of Contracts” says contracting authorities are “unable to make payment of the living wage a mandatory requirement as part of a competitive procurement process where the living wage is greater than any minimum wage set by or in accordance with law”.
This would apply in the UK, where the living wage is set higher than the national minimum wage. The document goes on to say that the legal position has been reinforced by various European rulings.
Last night Willie Young, convener of the finance, policy and resources committee of Aberdeen City Council, said “In respect of the financial settlement offered by John Swinney we sought legal opinion on his proposals. Our officers have confirmed that the Scottish Government has already sought legal advice from the European Commission around paying the living wage as part of the procurement process and that advice confirms contracting authorities are unable to make payment of the living wage a mandatory requirement as part of a competitive procurement process where the living wage is greater than any minimum wage set by, or in accordance with law. In the UK, this is the national minimum wage.
“Mr Swinney really needs to speak to his legal officers because local government monitoring officers will not allow councils to sign up to something that is in effect illegal.”
Young added: “Mr Swinney has made one error after another in trying to dictate terms to local government and unless he rectifies matters he will find himself fighting 32 local authorities as we all challenge him through the Scottish Courts on European Legislation.”
Yesterday First Minister Nicola Sturgeon attempted to put more pressure on councils to accept Swinney’s package.
At the SNP’s first annual SNP disabled members’ conference, she said: “From October this year we’ll deliver a living wage of £8.25 for 40,000 social care workers across Scotland.
“Delivering this landmark policy is a challenge for local government in the current financial circumstances – no one is pretending otherwise. But the offer from the Scottish Government will help meet that challenge. By accepting the Local Government Finance Settlement, the SNP and Labour can work together to take a huge leap forward in tackling low pay in Scotland.”
Last night a Scottish Government spokeswoman said: “Ministers have acted legally at every stage. We accept that a requirement on contractors to pay their employees a living wage set at a higher rate than the UK’s national minimum wage is unlikely to be compatible with EU law, but recently published statutory guidance makes clear councils are able to address workforce matters including the living wage in the procurement process.
“The Scottish Government regards the payment of the living wage to be one of the clearest ways in which a bidder can demonstrate it takes a positive attitude to its workforce. As in previous years, we are supporting councils by making the resource available so they are able to pay above the minimum wage.”