Scottish Conservative MSP Murdo Fraser also quotes the £327m in a real terms reduction on in local government funding.

Mr Fraser accepts there will be additional funding and that the government disputes the figure.

He asks if Mr Mackay is not guilty of doing to local government exactly what he says the UK government has done to him.

The finance secretary says he does not think that and that the local government settlement is fair.

Labour MSP Neil Bibby raises the impact budget cuts will have on local government modelling and whether this will affect local government jobs.

Mr Mackay says the government have asked for teacher numbers to be maintained but, other than that, it does not do modelling for the local government. 

He says that is the responsibility of local government. 

Image source, bbc

Graham Owenson from the Scottish government says the £327m is not comparing like for like and it is misleading. 

Mr Bibby asks about the impact of the cuts on local authority.

Mr Mackay says the attainment fund is to recieve a large financial boost.

The minister says there is extra support for social care.

He says there is positive movement in local government, but he accepts there is increased pressures on councils. 

Mr Mackay says whether local authorities choose to increase council tax is at their discretion but it represents an increase.

The finance secretary says, in the past, local authorities have had similar reductions to the Scottish government and he will continue to try to offer fair settlements going forward.

He says there are additional resources going into local government which have not been taken into account, for example, the city deals. 

Mr Bibby says there has not been a rejection from Mr Mackay's deal because there is the threat of a reduction in funding if they do so.

The Labour MSP says the minister is getting a real terms increase in his budget, but he is planning a £327m real terms cut to local authorities.

Mr Bibby asks why local government is being cut more than any other area.

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The finance secretary says his offer to local authorities sets out the financial position, calling for teacher numbers to maintained and the position on council tax.

Mr Mackay says it would be a strange kind of a negotiation to say here is an offer and if you don't agree, I'll give you something better.

Labour MSP Neil Bibby says Mr Mackay's approach seems disrespectful to local authorities.

Mr Bibby asks if the minister will withdraw demand to councils to accept or reject the settlement.

Mr Mackay says there is a well established time scale and he is trying to stick to it.

He says it is quite normal to write to councils to ask them to accept proposals.

Mr Crawford says there was a £47.4m reduction in local government spending before other elements were added in.

He asks does that take you to the £240m figure.

Mr Mackay says it does. 

And so to the budget. It depends, as ever, upon definitions. Should we talk about money for local government? Or money for local services?

If we consider cash for councils, then opposition parties can point to figures which indicate that the budget is down.

However, if we consider funding for services in the round, then ministers can point to figures which suggest that the level of financial support is up.

To offer a little more detail. Please turn to Table 9.02 in the Draft Budget document, external. It is on Page 91 in the book version. I know, I know, I sound like that maths teacher you disliked but bear with me.

Image source, Scottish government

This table cites Level 2 expenditure upon local government. Combining local government cash with central government grant support produces a cut of £327m from 2016/17 to 2017/18. That is the figure cited by Labour.

But, says the Scottish government, those are stripped-down stats. More info is available at Level 3 (Table 9.12, Page 101). That includes other funding streams and generates a cut of £182m across the relevant years.

But, says the SG a second time, that neglects other methods of providing funding for local services, albeit not necessarily through local authorities.

According to Finance Secretary Derek Mackay, the entire package added up to "an increase in spending power on local government services" of £240.6m. Note his precise use of language.

All of this, of course, with an eye to next May's local council elections - in addition to the immediate impact. Will voters heed the cry of "council cuts"? Or will they listen to "service delivery"? And which one will they believe?

Committee Convener Bruce Crawford says it is fair to say there has been some confusion over the local government settlement.

Mr Crawford asks the finance secretary for clarity.

Mr Mackay says it is a "very fair settlement" for local government. 

The finance secretary says integration of local services has meant an increase as has the local tax multiplier. 

He says this is how he has arrived at the figure of £240m. 

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Scottish Green MSP Patrick Harvie says there needs to be more than 70% low carbon infrastructure in capital projects, but that there is only 50% at the moment.

Andrew Watson says he will double check the figures and get back to the committee.

SNP MSP and committee convener Bruce Crawford asks what would have happened if the projects had not been reclassified.

Andrew Watson from the Scottish government says there would have been "quite a significant delay" to the projects.

SNP MSP Ivan McKee asks if ESA 10 reclassification redefines what you can put on the balance sheet for the public sector vs the private sector.

He says there is nothing the Scottish government could have done differently and effects have largely been down to ESA 10.

Mr Mackay says this is correct and the government is able to continue with its capital programme.  

SNP MSP Maree Todd says as she understands it this is simply a change to accountancy and it will have little impact on the capital programme.

Mr Mackay says it is very complex but it is to ensure there is cover for the construction costs.

The finance secretary says the actual amounts spent in terms of conventional capital and the draw down of revenue required "will all be actual cash, spent as it is spent."

He says it has all been taken into account and but it is very complex.

Mr Mackay says he hopes there are no more changes to EU rules.

Mr Kelly says nearly £1bn of borrowing powers have been lost due to the ESA 10 reclassification.

The finance secretary says this does not have an impact on projects that have started.

Scottish government official Andrew Watson agrees with the cabinet secretary that it is future plans that must absorb the hit.

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Mr Mackay says that many of the projects underway could not have got underway without NPD.

Mr Kelly asks if the loss of capital borrowing powers was an oversight and accuses the minister of not keeping abreast of accounting changes.

The finance secretary says that is not the case and says he has put forward a very ambitious capital spending plan.

Image source, Getty Images

Proposals in the draft budget include:

• Extra funding for local services via the education and health budgets
• An extra £300m for NHS resource budgets
• £47m to mitigate the "bedroom tax" and a pledge to "abolish" it as soon as possible
• More than £470m of direct capital investment to begin delivery of 50,000 affordable homes
• £140m for energy efficiency programmes
• £100m investment in digital and mobile infrastructure

Labour MSP James Kelly begins with capital issues and NPD.

Mr Kelly raises the issue of the ESA 10 ruling which said public sector projects had to be on the balance sheet.

He says the capital costs had to be included up front.

Mr Mackay says that is correct in terms of construction cost.

Mr Kelly says in 2016-17 there will be £398m in costs and £234m in the next year.

The minister cites the following costs in 2016-17

• AWPR £183 million 
• Royal Hospital for Sick Children £75.1 million
• Dumfries and Galloway Royal Infirmary £104.5 million 
• Scottish Blood Transfusion Centre £8 million 
• Balfour Hospital, Orkney £27 million 

The finance secretary says he is willing to engage with all members of the parliament to build support for his tax and spending plans.

Image source, bbc

Finance Secretary Derek Mackay says the government spending plans are focused on stability and the promotion of economic growth in the long term.

Mr Mackay says the plans are in the context of the Brexit and fiscal constraint from the chancellor.

He outlines some of the spending detail from his budget.

Committee convener Bruce Crawford welcomes Finance Secretary Derek Mackay for this evidence session on the draft budget, focusing on spending.