Official Report 939KB pdf
The next item of business is a statement by Shona Robison on the Scottish Government pre-budget fiscal update. The cabinet secretary will take questions at the end of her statement, therefore there should be no interventions or interruptions.
15:04
This Government has consistently warned of the significance of the financial challenge ahead. Prolonged Westminster austerity, the economic damage of Brexit, a global pandemic, the war in Ukraine and the cost of living crisis have all placed enormous and growing pressure on the public finances.
In the past three years alone, cumulative consumer prices index inflation has seen prices increase by 18.9 per cent, diminishing how far money will go for households and Governments alike.
In the face of those challenges, the Scottish Government has stepped in to support people and services where that has been needed most—social security, health and public services.
As was set out in our 2024-25 budget, we have delivered a real-terms uplift for the national health service. We have continued to tackle inequality by committing £6.1 billion in social security benefits and payments, including increasing the Scottish child payment to £26.70 a week, thereby helping the families of the more than 325,000 under-16s who currently receive it.
However, we have done so without equivalent United Kingdom Government action and despite its repeated failure to properly review the adequacy of funding settlements. That issue has been acutely felt across the four nations. Just last year, the Welsh Government had to introduce emergency savings measures in order to balance its budget and, in 2022-23, the Northern Ireland Executive needed to draw down from the UK reserve.
The new Labour UK Government has since confirmed the failures of the past Administration, and the new Chancellor of the Exchequer, Rachel Reeves, outlined that the previous UK Government
“never fully reflected the impact of inflation in departmental budgets”.
The Treasury’s audit has estimated that this year’s departmental spending budgets are at least £15 billion lower in real terms, when compared with 2021 spending review plans.
The chancellor has set out the £22 billion funding gap that was inherited from the previous Administration. The Prime Minster confirmed that the forthcoming UK budget will be “painful”, as his Government seeks to address the fiscal position. Although we welcome the new UK Government’s acceptance of the diagnosis that we have given for years on the UK’s public finances, its solution looks, sadly, like an extension of the folly of austerity.
In last year’s medium-term financial strategy, I made it clear that there was a difficult financial outlook. I set out the projected—and growing—gap between forecast funding and planned spending in Scotland. At the time, that was forecast to be £1 billion in 2024-25, rising to £1.9 billion by 2027-28. I made it clear that that was not sustainable, and I called on the UK Government to act.
At the same time, with the powers that we have at our own hand, I announced a range of measures in the 2024-25 budget to support the delivery of a balanced position while protecting public services.
However, given the circumstances, the uncertainty about additional funding and further in-year pressures, I must take further and more urgent action now to ensure that we can balance the Scottish budget in 2024-25.
Pay continues to be a significant driver of in-year pressures, with expected additional costs of up to £0.8 billion in this financial year alone.
Although I welcome the UK Government’s acceptance of the pay review body recommendations, it remains to be seen whether the UK Government will fully fund them. Put simply, if it does not fully fund the pay deals, that will leave a substantial gap between the expectations of the workforce and the available funding.
In addition, we must recognise that, relative to the rest of the UK, we have a larger public sector in Scotland. Our public sector workforce will need to evolve to ensure the delivery of high-quality public services within continued Westminster austerity and, in the budget, I will set out more detail on our approach.
Alongside pay, of course, other pressures arise in-year, which we must ensure are funded. Costs emerge due to natural demand-led changes, such as changes to legal aid and police and fire pensions, as well as the costs of accommodation for Ukrainian displaced people.
More widely, the budget must still be managed for wider operational pressures. Most notably, NHS boards are having to address the significant health and social care backlog that arose during the Covid pandemic and a recent further surge in Covid and respiratory cases.
While the Scottish Government has to operate within a largely fixed budget, which is determined by Westminster, this Government will do everything that we can to protect people and the public.
Of course, were Scotland an independent country, we would not be paying the price for bad decisions that are taken at Westminster, whether those be years of austerity cuts, Brexit, or reckless mini-budgets, all of which have taken money out of the economy and funding from public services. However, within the current devolution settlement, the fact remains that our main lever to remove those pressures in-year is to reduce spending to achieve balance.
That is why I am today setting out a range of measures totalling almost £1 billion to support the 2024-25 budget, of which up to £500 million will be direct savings. Up to £60 million of those savings will be realised through the implementation of emergency spend controls, particularly targeting recruitment, overtime, travel and marketing. As was previously announced, we will not progress the removal of peak rail fares or the pilot of an extension of concessionary fares to asylum seekers. We have also agreed with local government that it can draw on specific existing programmes to fund its pay deal. Collectively, those decisions amount to a further £65 million of savings.
We will make a further £188 million of additional specific savings across all portfolios. That includes a reduction in resource spending on sustainable and active travel and increased interest income on Scottish Water loan balances. Full details are being shared with the Finance and Public Administration Committee and are being published alongside this statement.
Those savings should also be considered in the context of the recent and regrettable Scottish Government decision to mirror the UK Government decision not to retain universality in the winter fuel payment, which would have cost up to £160 million.
At present, I am also reluctantly planning on the basis of utilising up to £460 million of additional ScotWind revenue funding. In the past, that has allowed me to protect budgets from cuts that would otherwise have been made, and has enabled us to continue supporting net zero expenditure. As the financial year progresses, and through our emergency spend controls and continued robust forecasting, I am seeking to protect that ScotWind revenue as far as possible, just as I was able to do in 2023-24.
As we look ahead, it is clear that further significant action will be needed to reset the public finances on a sustainable path. The chancellor has made it clear that UK Government funding will continue to be tightly constrained. The Prime Minister has also made clear the difficult decisions to come. Ahead of its autumn budget, we call again on the UK Government to ensure that it prioritises investment in public services and infrastructure. We know from bitter experience that yet more Westminster austerity is not the answer and that public services must be protected.
However, if the Scottish Government does not act, spending will continue to outstrip the available funding. That is not sustainable. Tough decisions will be required and annual savings alone will not address that. All members of Parliament must face up to that challenge when they make demands during the coming budget process.
On public spending, our approach to the forthcoming budget will focus on action in areas that are key to addressing spending pressures, some of which I will highlight today.
I turn first to health. We will take forward our vision for health and social care reform. This Government will always prioritise funding for our NHS and the 2025-26 budget will build on the record funding that we have allocated in the current financial year. We will take the twin approach of investment in and reform of our health services, because that approach rightly tackles the population health challenges that we face. Where necessary, that must mean realigning spend to ensure that it reaches those who need it most.
Beyond health, we will also continue identifying and implementing opportunities to deprioritise lower-impact spending and programmes across the whole of Government. I will use the forthcoming budget to highlight how we will double down on reform opportunities and maximise efficiencies, with a particular focus on the operation of public bodies and on driving further savings through efficiency. That will include opportunities regarding estates, procurement, fund management, digital shared services and revenue raising.
On workforce, we have recruitment freezes in place across the Scottish Government for all but the most essential roles and, where appropriate, I am looking to extend that across public bodies while ensuring that front-line services in the likes of our NHS, police and fire service can recruit the staff that they need.
We also face significant pressures on our capital budget. The sustained high level of inflation that has been experienced in the construction sector has permanently increased the cost of delivering infrastructure. That coincides with an expected real-terms reduction to our UK capital funding of 8.7 per cent over five years. That equates to a cumulative loss of over £1.3 billion between 2023-24 and 2027-28. As has been indicated previously, our financial transactions allocation from the UK Government has dropped by £290 million, or 62 per cent, since 2022-23, which is adding to the challenge that we already face.
Those factors combined have reduced our spending power and we cannot afford all our capital commitments. We will need to continue to make difficult decisions to ensure that our capital programme is affordable and deliverable. In line with our investment hierarchy, we are focusing spend on essential maintenance of our infrastructure so that we can continue to deliver high-quality public services.
Although these will be difficult choices, this Government remains committed to protecting the most vulnerable people in society. Our approach to equality budgeting will be strengthened further for the 2025-26 budget by publication of the results of our gender budgeting pilot with the Organisation for Economic Co-operation and Development.
On tax, I confirm that we will publish our tax strategy alongside the 2025-26 Scottish budget, where we will set out our medium-term ambitions for the Scottish tax system. Our cumulative decisions on income tax since the devolution of powers are estimated to have raised around £1.5 billion more in 2024-25, compared with the position if we had UK rates and bands. That is additional revenue that has been used to support our vital public services. Of course, anyone who would advocate removing the progressive changes to income tax in Scotland will need to set out where the £1.5 billion of cuts would fall as a consequence.
On the application of taxation, we can only go so far, given the scope of our devolved tax powers. Raising significant further revenue would require substantial reform to the tax system or further devolution of powers. Those will take time and they rely on the UK Government. It is therefore essential that we aim to grow the economy and the tax base to support a sustained flow of revenues over time.
Since 2007, Scotland’s economy has grown more quickly than that of the UK as a whole after accounting for population growth, and productivity has grown twice as quickly. That has supported growth in Scottish tax revenues. Boosting economic growth is a top priority for our Government because it is key both to raising Scotland’s living standards and to funding the public services that we all rely on. That is even more important given that Brexit has been estimated to have left the UK economy at least £69 billion worse off when compared with EU membership. That is why, tomorrow, our programme for government will set out in detail the steps that we will take this year to boost fair, green economic growth.
As members will be aware, I wrote to the Finance and Public Administration Committee recently to provide an update on the timing of the Scottish budget. I also stated that I intend to publish the medium-term financial strategy after the UK Government’s multiyear spending review has concluded in the spring. I am giving careful consideration to the timing of a spending review in Scotland and to establishing a regular rhythm of reviews. I confirm to Parliament that I have proposed that the next Scottish budget will take place on 4 December. I am continuing to discuss the budget date with the Finance and Public Administration Committee and the Scottish Fiscal Commission and I will finalise it in due course.
We cannot ignore the severe financial challenges that we face. We will continue to be a fiscally responsible Government and to balance the budget each year. We have done that every year for 17 years and we will do so again this year. However, that will mean that, unfortunately, we must take difficult decisions along the way. I believe that we can all agree on the importance of putting the public first in all that we do. I call on members across the chamber to work together to navigate the challenges ahead in the best interests of all the people whom we have the privilege to serve.
The cabinet secretary will now take questions on the issues that were raised in her statement. I intend to allow around 30 minutes for that, after which we will move on to the next item of business. It would be helpful if those members who wish to ask questions pressed their request-to-speak button.
The Scottish Fiscal Commission has made it abundantly clear that much of the pressure that is faced by the country’s finances is down to the Scottish Government’s own decisions. For example, it cited the above-inflation pay settlements for public sector workers, the extent of the gap between the spending on devolved social security and the associated block grant adjustment funding, and the fact that—as Professor Graeme Roy said again this morning—the Scottish economy has not been growing at the same rate as the UK economy since income tax was devolved, which means that the Scottish Government is missing out on £624 million, which just happens to be very close to the total sum of the swingeing expenditure cuts that the finance secretary is announcing today.
I therefore ask the cabinet secretary three things. First, given the recent independent analysis, will she finally put it on the record that the large black hole in Scotland’s public finances is a result of the actions of the Scottish Government, not those of Westminster?
Secondly, will the cabinet secretary clarify the Scottish Government’s tax strategy in relation to economic growth? On the one hand, we have the Deputy First Minister repeatedly warning of the dangers of the Scottish National Party’s counterproductive income tax rises, which could further hamper growth and investment; on the other, we have the First Minister saying that higher taxes are necessary to maintain the SNP’s so-called social contract. Who is right?
Thirdly, in light of the very hard choices that the cabinet secretary is outlining today and the corresponding unaffordability of many aspects of the Scottish Government’s spending commitments, does the Scottish Government agree that it is time to review universal payments, some of which are paid to better-off recipients?
I say to Liz Smith that the Government’s choices have been to invest in social security measures such as the Scottish child payment, which keeps 100,000 children out of poverty. [Shona Robison has corrected this contribution. See end of report.] If Liz Smith is arguing on behalf of the Conservatives that that is a wrong priority, that is for her and her party to defend in public.
Secondly, yes, we have funded fair pay deals. That has meant that we have avoided some of the costly industrial action that has blighted public services in other parts of the UK. It has been costly to the NHS in particular. I will make no apologies for the investment decisions that we have made.
Liz Smith made an important point about the Scottish Fiscal Commission, which also said that there is significant uncertainty about the funding that we can expect to receive from the UK Government. In the light of the UK Government’s acceptance of UK pay review bodies’ recommendations, this Government has to take action to ensure that we can create the headroom to fund such pay deals. I assume that Liz Smith is not arguing that we should not pay nurses in Scotland the same deal as they will get in England. I am sure that she does not intend to say that.
Finally, we absolutely want to grow the Scottish economy. Members will see tomorrow the programme for government’s emphasis on the green and fair economy. We are also investing more than £5 billion this year in support for economic growth. Scotland is—absolutely—open for business. We can see from the figures on productivity and growth that the Scottish economy is doing rather better than Liz Smith and her colleagues would have us believe, and we will continue to make the investments to ensure that that is the case.
The cabinet secretary, instead of getting a grip on her Government’s crisis in Scotland’s public finances, has made in her statement a threadbare attempt to pass the buck once again. After 17 years in power, it is always someone else who is to blame, again and again.
What the public must know is that all the independent experts—the Fraser of Allander Institute, the Institute for Fiscal Studies, Audit Scotland and the Scottish Fiscal Commission—are absolutely clear that these SNP cuts stem from the SNP Government’s incompetence. It is SNP mismanagement of the public’s money from a Government that has, I am afraid, long since lost its way.
The culture of always blaming someone else comes with a cost, and it is meted out in cuts to jobs and services. When we have the longest NHS waiting lists in history and attainment is dropping in our schools, Scots are left paying more and getting less. Almost half of the total adjustments that have been laid out today are pulled from a one-off raid on Scotland’s money, which is now lost in a black hole rather than being invested in our future. That almost guarantees that the cycle of short-term sticking-plaster politics will run and run.
Will the finance secretary publish the real full details—or, to be frank, any details—of these incompetent cuts? After three years of annual chaotic emergency spending reviews, and after what looks like another exercise in kicking the can down the road, will she today confirm the date of next year’s crisis cuts statement, so that we can all get it in the diary?
First, Michael Marra should read my lips: Labour austerity is as damaging as Tory austerity when it comes to public service cuts.
When the Labour Prime Minister has announced, in the gardens of Downing Street, that there is a difficult and tough budget coming—[Interruption.]
Members!
—immediately after the Labour Chancellor of the Exchequer announced £22 billion of public sector funding reductions, it is a bit rich for Michael Marra to come to the chamber on behalf of the Labour Party and lecture anyone about the public finances.
I assume from what Michael Marra said that, if he were standing in my position, he would make another £460 million of cuts rather than utilise the ScotWind resources that the Government has enabled to happen in Scotland, which have supported public finances.
Let us cut to the chase: we are going to see Labour presiding over austerity and cuts that will make the Tory cuts look like a pale imitation, yet Labour members will come to the chamber and try to make out that, somehow, Scotland is an exception—unlike Wales, where Michael Marra’s colleagues have had to make extremely difficult decisions because of austerity, or Northern Ireland, where the Administration has faced the same issues and has not been able to balance the budget. All of us are facing the same problems, and we will point out exactly where the root cause lies.
I recognise the financial challenges that we face, although it is important to note that the budget will be fully spent as resources are reallocated to pay. In times of adversity, and with increasing demands on services, we must deliver more efficiently, not least through digitisation while growing the economy, improving productivity and widening the tax base. Can the cabinet secretary explain how she will prioritise investment, partnering with the private sector in areas where Scotland is globally competitive such as life sciences, financial services, information technology and food and drink, to create and sustain skilled, well-paid employment?
The Scottish Government and its enterprise agencies, and the Scottish National Investment Bank, will work closely with the private sector to drive growth in all the sectors that Kenny Gibson mentioned.
In the past couple of weeks, we have seen the annual results of both the SNIB and Scottish Enterprise, which demonstrate their impact on investment. Since its launch, the SNIB has committed £645 million and has brought in a further £1 billion in additional third-party investment to 35 businesses and projects. Last year, Scottish Enterprise helped companies to raise more than £350 million of growth funding, unlocking nearly £1.9 billion in capital investment for companies and delivering more than £2 billion of planned international sales. That is a good record of success, and we want to see more of it.
Growth in the economy is essential to provide the additional revenues that we require to fund public services, but the reality is that since 2014—over the past decade—the Scottish economy has grown on average at half the rate of the UK as a whole. Previously, the Scottish Government cut employability programmes, which are the very initiatives that help economic inclusion and drive growth. What assessment has been made of the impact on growth of all the extra cuts that have just been announced today?
All the assessments that have been done on all the savings have sought to minimise the impact on all the Government’s priorities, but there is no getting away from the fact that, in order to make sure that we balance our budget this year, difficult decisions have had to be made. We have tried to avoid the impact on public services and on front-line services where we can.
Despite some of the cuts that Murdo Fraser has referred to, we are seeing absolutely fantastic performance from Scottish Enterprise and the Scottish National Investment Bank. According to the figures that I laid out in my statement about the performance of the Scottish economy—although I know that this is not the narrative that the Scottish Conservatives like to hear—the Scottish economy is doing rather well. Is there room for it to do better? Yes, there is, and that is why, in the programme for government, Parliament will hear more about the focus on the green and fair economy and the measures that we are going to put in place to make sure that we maximise the potential there.
I note that the Scottish Government intends to use up to 100 per cent of ScotWind moneys available from year 2023-24—£460 million—to fund day-to-day resource spending. Given that that is a one-off bounty, the original intention was for it to help to develop vital supply chains and infrastructure in our renewables sector. It could also have been used as a tool to crowd in private capital.
However, the term “up to” is key. Will the cabinet secretary set out the circumstances in which those vital one-off funds can and will be protected and invested to create future wealth for Scotland, such as through a sovereign wealth fund? Will she also outline her intention for the remaining £200 million that is available in 2024-25? Is that also being earmarked for day-to-day spending?
As I said in my statement, having to utilise ScotWind moneys for day-to-day spend is not what I would want to be doing. Given the choice in front of us with the in-year levers, with spending control essentially being the main lever at our disposal, I would have to go further and deeper on spending reductions in order to minimise the ScotWind utilisation.
Having said that, as I also laid out in my statement, because of the actions that we took last year, we were able to reduce the call on ScotWind resources through the year, and we drew down less than we had anticipated having to do. It would absolutely be my intention to try to do that again this year. Michelle Thomson makes a very good point. Whether it is about using ScotWind money to invest in infrastructure or making sure that we have it as a backstop in future years, that will absolutely be my intention. I am happy to keep Parliament updated on the progress in doing that.
I want to push the cabinet secretary on this point. She identified a £1 billion shortfall in the Scottish Government’s funding before we even had a budget from the UK Government, which she seeks to fill using £460 million of ScotWind money. Can she confirm that that is non-recurring? If so, does that not mean that she will simply have to find another £0.5 billion-worth of cuts in the budget when she publishes it on 4 December?
The budget that I publish on 4 December will be guided very much by what the Labour Chancellor of the Exchequer publishes at the end of October. If what the member is saying to me is that it is going to be so grim that I will have to set out a further £0.5 billion of cuts, I am deeply disturbed by that prospect. Let us be really clear. The vast majority of funding for the Scottish Government is reliant on UK Government budget decisions—end of. That is a fact.
On the levers that we have, I have already said to Michelle Thomson that we want to utilise that ScotWind money over a number of years rather than having to use it in one year, because it is, as Daniel Johnson said, non-recurring. I will do my level best to avoid having to use it in one year.
The pressure this year emanates, in the main, from pay pressure, with £800 million of additional pay pressure driven by the acceptance of the UK pay review bodies. At the moment, it is not confirmed that that will be fully funded. In the absence of it being fully funded, we have to create headroom to pay for agenda for change and other pay deals. I assume that Daniel Johnson is not suggesting that we do not give our nurses, doctors or teachers the pay uplifts that are being given elsewhere. In the light of that, we must ensure that we have the headroom to pay for the pay deals. I am happy to explain that in further detail to Daniel Johnson if he requires.
I take the opportunity to say to our friends on the Labour benches that we must have much less chuntering while somebody else has the floor.
The finance secretary spoke about NHS reform in her statement. Can she provide an assurance that free eye tests will remain, as they have multiple benefits for people and their eye-health care?
Those on the Labour front bench obviously do not really care about eye-health care.
In response to Stuart McMillan, I would say that Scotland is the only country in the UK to provide free universal NHS-funded eye examinations, and maintaining that is a Scottish Government commitment. It is critical that such flagship services are protected, so that patients have no financial barriers to accessing services and so that we have the capacity to support safe, high-quality management of patients in the community. I hope that that reassures Stuart McMillan.
Wes Streeting was right to say that
“All roads lead back to Westminster”,
and nowhere is that more true than in relation to the past 14 years of cuts to public services. However, the Scottish Government has choices. The SNP has chosen to slash spending on climate action, hitting budgets for nature restoration and for walking, wheeling and cycling, while bringing back peak rail fares and raiding ScotWind offshore wind income.
Contrast that to the untouched £700 million of business tax breaks, £250 million of which is the small business bonus scheme, or SBBS, for which the Government’s own independent review could find no evidence of enhanced business outcomes—and which, despite having “small business” in the name, throws public money at large, extremely profitable companies, and even at the shooting estates of the landed elite. Why has the SNP chosen to continue handing public cash to big business and elite landowners while slashing critical spending to tackle the climate emergency?
I start with a point of agreement with Ross Greer about all roads leading to Westminster, as Wes Streeting made clear during the election campaign. We agree with him on that point.
Regarding the choices that we can make in-year, as Ross Greer will know, there are very limited options when we are trying to balance the budget in-year. That is a different matter from budget choices that we may choose or not choose to make when we set out our tax and spending plans. In-year, we have to make difficult choices, many of which concern programmes that are not yet under way. Unfortunately, many of those are in the active travel area. That does not diminish the fact that we have put significantly more resources into active travel, and we will continue to do so, but the decisions on the programmes that have been impacted were required, unfortunately, to ensure that we can balance the budget.
The UK Government’s spending plans will have substantial implications for Scotland’s budget next year. Can the cabinet secretary provide any further information on when the Scottish Government expects to receive further detail regarding the consequentials that it will receive for 2024-25?
The Scottish Government continues to discuss the overall financial position with the Treasury. On another point of consensus and positivity—I am always full of positivity—there has been a marked improvement in the Treasury’s day-to-day communications with the Scottish Government, which is helpful for the relationship and the flow of communication.
However, final Barnett consequentials will not be confirmed until we have the UK supplementary estimates, which are completed in late January or early February, although I would expect some formal indication of additional funding at the UK budget on 30 October. We know from what the Prime Minister has said that that budget is likely to be extremely difficult. We do not know as yet what departments will be particularly hit by those budget decisions but, if they are in devolved areas of spend, that directly impacts the budget that is available in Scotland. We will set out all of that in due course.
Across Scotland, all of our constituents are working harder, but it feels like they are falling further behind, and they are just not buying these excuses any more. For decades, the SNP lectured us about Margaret Thatcher’s failure to create a sovereign wealth fund for the oil that was found underneath Scotland’s sea bed. That is exactly what the SNP has failed to do with the wind farms that are now being built upon that sea bed. When the Government draws down the £460 million—as we know it very well might—as Daniel Johnson says, that is a one-off spend, and a hole that will need to be filled next year. I want to understand from the Government and the finance secretary how she intends to fill that hole, or whether there are other one-off expenses that we will just have to make do with.
Unlike other independent countries that have developed sovereign wealth funds and which have all the fiscal levers available to them, we do not have those fiscal levers. The only fiscal lever that we have in year to meet pressures such as pay review body recommendations being accepted but not fully funded is to make spending reductions. If I was to maintain the ScotWind revenues intact, I am afraid that I would be coming here and announcing a further £460 million of public spending reductions. I am sure that Alex Cole-Hamilton would not want me to do that as my first priority, given what that would mean.
Having said that, I will, as I hope that I have made clear, do everything within my power to drive down the utilisation of the ScotWind revenues, for all the reasons that we understand and that have been articulated in the chamber. I did that last year and drew down much less than we had anticipated having to do, and I will do the same this year as well.
The Labour Government’s first move—of course, this was not in its manifesto—was to base winter fuel payment on pension credit, knowing that 40 per cent of those who are entitled to pension credit do not claim it. Of course, the Labour Government cut our funding to make the payment here universal.
Does the cabinet secretary agree that Labour should explain and, indeed, apologise to the estimated 929 households in my constituency of Midlothian South, Tweeddale and Lauderdale that have not claimed pension credit and that will lose that vital support in winters that are incredibly cold and colder than those in London and the home counties, where these decisions are taken?
That is one of the most regrettable decisions that the UK Labour Government has made. Of course, Labour did not tell anyone about that during the election campaign and nor would it accept the First Minister’s point that public expenditure cuts were coming down the line. That was denied, and yet here we are, with all the Labour austerity being laid out, a difficult budget coming and, of course, the changes to winter fuel payment, removing that benefit from millions and millions of pensioners.
Unfortunately, the Scottish Government and I cannot find £160 million from other budgets, whether it is the health budget or anywhere else, to replace the money that we will not secure from the UK Government for winter fuel payments. I have no choice in that matter but, as Christine Grahame said, it is a deeply disturbing and upsetting decision, particularly given the climate here in Scotland.
Caroline Lamb, the director general for health and social care, has said that funding for Scotland’s public services has reached “a tipping point” and implied that cuts to universal benefits may be on the cards. Will the cabinet secretary confirm whether that is correct?
First of all, I say to Pam Gosal that the 2024-25 budget provided funding of more than £19.5 billion for health and social care, giving our NHS a real-terms uplift. However, reform of how health and social care services operate has never been more urgent, and I set out that priority in my statement.
On the difficult decisions on those issues going forward, we believe that many of those investments are vital, whether they are in our system of free university education and our efforts to not put financial barriers in the way of young people getting an education, or in our efforts to not put financial barriers in the way of people accessing their prescriptions. Those important things have been invested in and built on.
Does that mean that there are not difficult decisions to make as part of the budget process? No—of course there will be difficult decisions to make as part of the budget process, and we will set out the decisions that we are making when I come to the chamber on 4 December.
In a letter to health boards, Caroline Lamb, the chief executive of the NHS, warned that there is a £1.1 billion black hole at the heart of the NHS budget for this year. The documents that the cabinet secretary provided today show that she has slashed a further £115 million from the health and social care budget—from mental health services, from primary care services and from the independent living fund, which is an attack on disabled people in our community. How is that protecting NHS and social care?
The cabinet secretary talked about prioritising essential NHS jobs, so why are there vacancy freezes for consultants and nurses? Are they not essential jobs?
First, on the independent living fund, Jackie Baillie should be accurate in this chamber. That is based on the predicted number of applicants for the independent living fund, which we have re-established here in Scotland. I do not think that it will be re-established in England, where Labour is in power.
We have continued to invest in mental health services. We have invested in excess of £1.3 billion, which includes £120 million of direct funding to NHS boards and integration joint boards. Does that mean that health and social care is immune from some of those difficult decisions? No, it does not, but I know that my colleague Neil Gray and his team have worked extremely hard to ensure that the £115 million will have a minimal impact on front-line services.
Finally, on the payment of nurses and doctors, that is exactly why we want to meet the pay review body recommendations in order to ensure that nurses and doctors are paid. We have done that in Scotland. We have seen nurses and doctors on strike in other parts of the UK, but we have made sure that, through fair funding, we have avoided industrial action in the health service in Scotland.
On those urgent posts and emergency cuts, I made it very clear again, which Jackie Baillie would know if she had been listening, that essential posts on the front line, whether they are in health, police or fire, will be protected in terms of recruitment. I put that on the record again, for the avoidance of doubt.
I call James Dornan, who joins us remotely.
The new Labour Government at Westminster has the levers to end austerity but is choosing not to. Does the cabinet secretary agree that the case could not be clearer for full fiscal powers to be devolved to Scotland so that we can deliver the investment in public services in our communities that people deserve?
I agree with James Dornan that we are doing all that we can with the limited powers that we have, but we could do so much more with the full set of fiscal powers that other European countries of our size have at their disposal. If we had those full fiscal powers, we would not be paying the price for bad decisions taken at Westminster, whether that is the years of austerity cuts that started under the Tories and now continue under Labour, Brexit or reckless mini-budgets, all of which have taken money out of the economy and led to reductions in funding for public services.
I will continue to make the case for this Parliament to have the fiscal powers of a normal independent country. In the meantime, we need the chancellor to use her forthcoming budget to provide the funding that our public services, infrastructure and communities so badly need.
Nowhere in the cabinet secretary’s statement did she acknowledge the importance of the private sector to economic growth or the opportunities that unlocking greater private sector investment presents. Was that an oversight or yet more evidence that business and entrepreneurship are always an afterthought for this Scottish Government?
Brian Whittle should have listened more closely to my statement. I literally talked about our absolute commitment to economic growth. I talked about the coming programme for government that will focus on fair, green growth and the levers that we will use to achieve that. I outlined some of the positive aspects of the Scottish economy earlier. We see record levels of foreign direct investment, which are above the levels anywhere else in these islands.
I know that Brian Whittle will not want to hear about the positive aspects of the Scottish economy, but, for the avoidance of doubt, I say again that economic growth and green economic growth are absolutely key to the future success of this country. Members will hear more about that tomorrow in the programme for government.
I can squeeze in Audrey Nicoll, to be followed by John Mason, if both members are brief.
The cabinet secretary understands the significant role of community justice approaches and their contribution to a range of national outcomes, including reducing reoffending, addressing homelessness and tackling child poverty. Given that the new Labour Government at Westminster is already turning its back on the most vulnerable, what assurance can the cabinet secretary provide that funding in that vital space will be sufficient to support continued delivery of community justice approaches, particularly given the pressures that other parts of the justice system are facing?
Audrey Nicoll makes a good point. We are investing £148 million in community justice this year, which includes an additional £14 million that will build the capacity of justice social work services and strengthen alternatives to custody across Scotland. That increased investment underlines the Scottish Government’s continued commitment to community justice and reflects evidence that such approaches can be more effective than short-term imprisonment at reducing reoffending, assisting with rehabilitation and, ultimately, ensuring that there are fewer victims of crime.
It was encouraging that the cabinet secretary said that she has a slightly better relationship with the current Westminster Government than the previous one. Has she had any indication or is she hopeful that, in the areas of capital expenditure and financial transactions, Westminster might allow a bit more leeway?
I have to say to John Mason that it is a very low bar, but the signals are that there has been a marked improvement in communications. When we met the Chancellor of the Exchequer last week, the First Minister and I directly raised the issue of capital investment, which will form part of the UK Government’s spending review that will be produced in spring, and the issue of financial transactions. We impressed on her the importance of being able to invest in our infrastructure not only from a public service point of view but from an economic point of view. We were very clear about why that was important, and I will continue to press that point with her and the Chief Secretary to the Treasury.
That concludes the statement. I allowed it to run on a wee bit, but we have to protect the rest of the afternoon’s business. There will be a short pause before we move on to that, to allow front-bench teams to change positions, should they wish to.
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