Wellbeing Economy, Fair Work and Energy
Good afternoon. The first item of business is portfolio question time.
The first portfolio is wellbeing economy, fair work and energy. I remind members that, if they wish to ask a supplementary question, they should press their request-to-speak button or enter the letters RTS in the chat function online during the relevant question.
City Centre Recovery Task Force
To ask the Scottish Government how the work of the city centre recovery task force is helping to increase footfall in shops. (S6O-02862)
I send my best wishes to Jeremy Balfour for his on-going recovery.
Delivery of the actions in the task force’s report is led by the Scottish Cities Alliance, of which the Scottish Government is a member. Last month, the First Minister and I met city leaders to hear about their ambitions.
We allocated £6 million from the city centre recovery fund to task force priorities. For example, part of Edinburgh’s award facilitated the opening of the St James Quarter, including support for a retail and hospitality academy, while Glasgow used some of its allocation to support the golden Z regeneration project, which focuses on the city centre’s traditional shopping streets.
Will the cabinet secretary follow the example of the United Kingdom Government and support 75 per cent business rates relief?
Decisions about business rates are for the budget, and we are taking all aspects into consideration. However, part of that consideration is the fact that only £10.8 million came as Barnett consequentials for the health service—and therefore for public services—from the autumn statement. We want to ensure that we reflect the needs of public services as well as supporting businesses at a challenging time.
Reinvigorating high streets is a Scotland-wide challenge. Our Union Street, in Aberdeen, has harnessed the ideas of Aberdonians to help transform the city centre for the better. Will the cabinet secretary provide an update on the Scottish Government's support, worth £400,000, to fund the campaign and give the iconic Union Street a fresh lease of life?
We have spoken with the council and Our Union Street to get more detail on those plans, because we want our investment to support the campaign to revitalise Union Street to be used to its best effect. Indeed, the Minister for Local Government Empowerment and Planning visited Our Union Street in November to find out more about the initiative. A lot can be learned from the partnership, which involves business and the community, and I will provide further updates as we have them.
Trade Unions
To ask the Scottish Government what value it places on the role of trade unions in delivering and sustaining a wellbeing economy. (S6O-02863)
The Government places a critically high value on that. Trade unions are key social partners in realising our fair work ambitions as we successfully transition to a net zero economy. That work will form the foundation of a wellbeing economy, one that creates better communities and which capitalises on the opportunities of net zero to establish a fair, green and growing economy.
Our strategic relationship with the Scottish Trades Union Congress is underpinned by a memorandum of understanding, which demonstrates the value of trade union input to the Scottish Government. Through it, we have commitments to including the STUC in relevant policy development and for the First Minister to meet with the STUC biannually to discuss current issues.
Trade unions have campaigned for the immediate implementation of safe staffing legislation in the national health service; they have fought against funding cuts to the Scottish Fire and Rescue Service; and they have fought to rid our schools of violence. However, on each of those points, the Government has let them down. If the cabinet secretary truly values the contribution of trade unions and considers fair work to be a key principle of a wellbeing economy, why is the Government overseeing a falling employment rate, a widening gender pay gap, a declining employee voice and a reduction in secure contracts?
I would challenge that. Progress has been made on all the elements that Carol Mochan has referenced. For instance, we have, contrary to what Carol Mochan has set out, seen the gender pay gap reduce in Scotland, particularly for full-time workers. We also have a much narrower gender pay gap than the rest of the UK. That is because of the good work that has been done, in collaboration with the trade union movement, to apply fair work conditionality and to raise the standards of working conditions across the public and private sectors. We will continue to collaborate in that manner.
I declare an interest as a member of Unison.
With draconian legislation such as the anti-strike bill that was passed in the United Kingdom Parliament, it is clear that protecting workers’ rights is more important than ever. The Strikes (Minimum Service Levels) Act 2023 is another appalling piece of legislation from Westminster that will harm, not improve, industrial relations. What steps is the Scottish Government taking to stop Westminster attacks of that sort on Scottish workers and to help deliver fair work in a wellbeing economy?
I agree with Kevin Stewart. The Scottish Government views that legislation as unnecessary and expects it to be completely ineffective and, as Kevin Stewart says, counterproductive. I and my colleagues have written to UK ministers, expressing our strong opposition to the introduction of minimum service levels and associated codes of practice. We will continue to do all that we can to resist this anti-worker, anti-trade union legislation.
That attack on workers’ rights underlines why the devolution of employment law, at the very minimum, is imperative. That viewpoint is championed by the STUC and other organisations; I think that the Scottish Labour Party is on side with it, although I do not think that the UK Labour Party is. That underlines that, short of the devolution of employment law, we need independence to ensure that we have an employment system that meets the needs of workers and employers.
City and Regional Growth Deals (Infrastructure Investments)
To ask the Scottish Government whether it is planning any new infrastructure investments in the next financial year in connection with city and regional growth deals. (S6O-02864)
We are investing £1.9 billion in the city and regional growth deals, which are part of an on-going programme of investment across Scotland. The Argyll and Bute and Falkirk deals will mark a significant milestone in 2024-25, and they will move into delivery in the next financial year, meaning that all 12 deals will be in delivery. As of quarter 2 of 2023-24, deals in delivery have drawn from £991.71 million of the total investment by the Scottish and United Kingdom Governments, which has been used to increase growth across Scotland.
The Scottish Government has committed £300 million to the Edinburgh and South East Scotland city region deal, but economic development has stagnated as communities remain isolated due to poor transport links. Does the cabinet secretary accept that investment in projects such as Winchburgh station will be critical to economic growth in the region?
Obviously, it is for local deal partners to take forward their priorities and business cases in drawing down on the funds that are coming forward. I appreciate the need for good public transport connectivity, and I will continue to work with local partners on the areas that Sue Webber has set out to take forward those projects as quickly as possible.
With regard to the UK Government’s proposals for investment zones, what consideration has the Scottish Government given to proposing the Fife energy park as a cluster area? That would level the playing field so that it could compete for work in the renewables sector, alongside green freeports. As the cabinet secretary knows, the energy park is not in the Forth green freeport area, which risks leaving it at a disadvantage while it is trying to expand its business and increase local employment opportunities.
We are working with colleagues in regional economic partnerships on city and regional growth deals, investment zones and innovation zones, ensuring that the needs and desires of local communities are at the forefront of the decisions that are taken on what incentives come through the processes. I am happy to take any further representations that Claire Baker or other local representatives might make regarding the idea that she has set out.
Small Businesses (Use of Alternative Fuels)
To ask the Scottish Government what discussions it has had with its enterprise agencies regarding how to support innovation by small businesses, including in relation to the use of alternative fuels such as hydrotreated vegetable oil. (S6O-02865)
The Scottish Government and its enterprise agencies are committed to working with small businesses, supporting them to innovate and adopt new technologies and processes to increase their resilience and capacity for growth. Scotland’s enterprise agencies have co-designed, co-invested in and delivered the advancing manufacturing challenge fund and the low carbon manufacturing challenge fund, supporting Scotland’s small and medium-sized manufacturing enterprises in sustainable innovation. We envision using bioenergy only in cases in which the finite supply of sustainable bioresources can best achieve net zero. Officials are engaging with enterprise agencies on a bioenergy policy statement, which will be published in due course.
HVO can be sustainably sourced and stocked in Scotland, and its use allows companies such as Highland Fuels to provide renewable and sustainable replacements for fossil fuels to businesses and homes in the Highlands and Islands that are off gas grid and poorly insulated. As part of the policy statement, what steps are the Government and its enterprise agencies taking to widen its availability through local production and distribution?
The member has raised an important issue, and I would be happy to learn more about the concerns and asks that Highland Fuels has on the overall policy. As I have said, a policy statement has been developed on bioenergy, so, if there are any specific elements that it feels should be in that statement, I would be grateful to hear from it directly.
Biofuels such as bio liquefied petroleum gas—biopropane—or hydrotreated vegetable oil, known as HVO, might be able to provide a low-carbon solution to heating off-gas-grid homes and businesses, but further evidence is required on the sustainability and costs of those fuels. It is important that we speak to local companies such as Highland Fuels that are interested in taking that forward, and I would be grateful to hear from interested businesses directly.
Small Businesses (Support)
To ask the Scottish Government how it will support small businesses over the coming months. (S6O-02866)
Businesses in Scotland can access advice, guidance and financial support from a wide range of organisations across the public sector, most of which is available to any business, anywhere in Scotland, whatever stage of growth it is at. We are delivering a competitive non-domestic rates package worth an estimated £749 million this year, and our small business bonus scheme relief ensures that around half of properties in the retail, hospitality and leisure sectors in the country will pay no rates. Decisions on non-domestic rates for 2024-25 will be announced in the context of the Scottish budget.
As the minister will be aware, businesses across the Highlands and Islands already face challenges and costs additional to those faced by businesses in other parts of Scotland. However, as was raised by my colleague Jeremy Balfour, as well as the new burdens that are being placed on the sector—short-term lets licensing and the calamitous deposit return scheme being just two of those—the Scottish ministers still refuse to introduce the 75 per cent rates relief for the Scottish hospitality and tourism sector that the United Kingdom Government provides south of the border and that the Scottish Government has been given the funding to deliver. Will the Scottish National Party-Green coalition finally listen to businesses in my region, the Scottish Conservatives, and even members on its own benches who back the move, and use the funding that the UK Government has provided to give a much needed boost to Scottish hospitality and tourism?
I thank the member for the question, which gives me an opportunity to remind him that I speak regularly to hospitality businesses the length and breadth of Scotland, including in the Highlands and Islands and in my constituency. They say that a number of issues are affecting their bottom line at the moment and that they are facing a very tough trading environment and high costs. They tell me, for instance, that the biggest issue affecting them is rocketing energy costs, which are an issue that is reserved to the UK Government. There is a shortage of labour, particularly in the Highlands and Islands, as a result of Brexit, which is an issue that is reserved to the UK Government. There is the impact of inflation on goods and services, which the UK Government has influenced and has made some serious mistakes with. There is also the campaign to reduce VAT for tourism, which would bring a big boost to businesses in the Highlands and Islands. As the member highlighted, the Scottish Government has responsibility for a number of important issues, which we will consider in the forthcoming budget. Of course, we will have to await what the budget says.
The member referred to money that is provided by the UK Government. Clearly, he has been asleep for the past couple of weeks, because the autumn statement delivered paltry consequentials for the Scottish Government, which means that we face a very difficult situation with the Scottish budget. That is another example of how the UK Government has let down the hospitality sector, but we will do what we can—
Thank you, minister, but I need to take supplementary questions. I have received two. We have some time, so I will be able to take them both.
One of the biggest challenges that small businesses face is being paid on time. That absorbs significant amounts of founders’ time, as well as the obvious cash-flow challenges that late payments create. Often, unfortunately, larger businesses will extend payment terms to use their supply chain in effect as a source of free working capital. My understanding is that legislation in this area is devolved rather than reserved. Will the minister confirm his understanding of devolved competence in the area and say whether the Scottish Government has given any thought to legislating to require businesses to pay their suppliers on time?
I thank Ivan McKee for raising an important issue for Scotland’s small businesses and all businesses, and I confirm that it is within devolved competence. I agree with him that small businesses, in particular, should be paid for their services or products on time. That is one reason why we recently updated our public procurement prompt payment guidance. Under one of the actions that are set out in the new deal for business implementation plan, the Government will be working with small businesses to identify proactive regulations to support them in that and other regards. Prompt payment will form part of those discussions.
Brexit and the resultant economic turmoil have made life hard for businesses in Scotland. Given the limited financial levers that are available to Scotland, which the minister has mentioned, will he outline the impact of the UK’s recent disappointing autumn statement on the Government’s scope to respond to the real challenges facing small businesses?
Alasdair Allan again raises the pretty devastating impact of UK policy on many of Scotland’s businesses, including in his constituency. In my previous answer, I cited issues regarding energy, VAT, the impact of Brexit on labour shortages, inflation and a host of others, and they have largely been the responsibility of UK Government policy over the past few years in particular. That has had a big impact on the bottom line of many businesses in Scotland. The autumn statement was the most recent disappointment. The paltry consequentials coming to this Government limit our ability to repair some of that damage to Scotland’s businesses.
Question 6 comes from Neil Bibby, who is joining us remotely.
Ferguson Marine
To ask the Scottish Government when it last met with GMB to discuss the future of the Ferguson Marine yard. (S6O-02867)
I last met GMB officials to exclusively discuss Ferguson’s on 10 November.
The GMB and I are keen to understand what the Scottish Government is going to do to secure a future pipeline of work for the yard. Does the cabinet secretary agree that the BAE Systems Ministry of Defence work is a vote of confidence in the yard’s workforce? Does he acknowledge that the yard has a positive track record on delivering smaller, simpler and standardised ferries under budget and under time? Does he believe that that puts the yard in a strong place to deliver the small vessel replacement programme?
I thank Neil Bibby for his question and his continued interest, alongside that of others, including Stuart McMillan, in the future of the yard. I know that there has been much local collaboration on that. I continue to be committed to securing a sustainable future for the shipyard, and the Government is doing everything that it can to secure that. Decisions on which vessel opportunities to pursue are for Ferguson Marine’s management and its board of directors. We know that the shipyard is actively pursuing many streams of future work and we will continue to support it in any way we can to secure new contracts and a sustainable future.
On small vessel replacement, whether on direct award or otherwise, it would be inappropriate for me to comment directly, except to say that Mr Bibby has set out the heritage and outstanding workforce that Ferguson’s has and that direct awards are legal only in strictly limited circumstances under public procurement rules.
When the cabinet secretary met the GMB, did he discuss the possible privatisation of the yard and whether that will be a factor in any future direct award of ferry contracts to Ferguson’s?
We have previously discussed the Government’s strategy to return Ferguson’s to the private sector at a time when that is right. We continue to engage with the trade unions that are involved, including the GMB, and with the management and the board at Ferguson’s on the future and—as has been raised by Mr Rennie and Mr Bibby—the potential for future work. We will continue to support Ferguson’s on the business plans that are needed for some elements of our support.
It was reported that plans to procure the seven small vessels have been delayed for nearly two years. Does the minister accept that islanders cannot wait that long, and what is being done to ensure that those vessels are built on the Clyde?
I have already set out in my answers to Mr Bibby and Mr Rennie the decision-making process that has to be gone through on where the small vessel replacement programme can be sited. The decisions on when that procurement takes place are for ministerial colleagues, and it is right that that is respected, but we obviously want to make sure that, whether the ships are being built at Ferguson’s or elsewhere, we have a resilient ferry fleet for Scotland’s island communities. As an islander, I understand the importance of that and the need for it to be done as quickly as possible.
Oliver Mundell joins us remotely.
Renewable Energy (Dumfriesshire)
To ask the Scottish Government whether it will consider carrying out an analysis of the potential impact of renewable energy and the associated infrastructure on farmland and food production in Dumfriesshire. (S6O-02868)
Where a new proposal for renewable energy development is brought forward, policy 5 of national planning framework 4—“Soils”—is clear that
“proposals on prime agricultural land, or land of lesser quality that is culturally or locally important for primary use, as identified by the LDP, will only be supported”
in limited circumstances. All applications are considered on a case-by-case basis, and a careful balance must be struck between potential impacts and benefits.
On top of wind farm applications, solar farm applications and power lines, constituents in my Dumfriesshire constituency are aware of a deluge of applications for battery storage, many of which appear to be on good agricultural ground and do not seem to be subject to the same level of scrutiny. Will the minister commit to looking further into and reviewing that issue?
There is a great deal of scrutiny of applications of the type that Mr Mundell outlines. We need to rapidly accelerate our deployment of renewables and electricity infrastructure in order to support decarbonisation of the Great Britain grid by 2035. Significant investment in our grid infrastructure is required to ensure that clean, low-cost renewable electricity can flow to where it is needed. That is an imperative national mission for the United Kingdom Government as well as for the Scottish Government and all Governments across Europe, because we need sustainable and secure green energy. Plans for the infrastructure that is required need to be scrutinised, and the potential impacts on community, nature and other receptors, including cumulative impacts, are very important considerations in that decision-making process.
Gaelic (Economic and Social Opportunities)
To ask the Scottish Government whether it will provide an update on what action it has taken to support the recommendations of the short-life working group on economic and social opportunities for Gaelic. (S6O-02869)
The Scottish Government welcomes the report of the short-life working group on economic and social opportunities for Gaelic and has set up an internal Scottish Government steering group to consider the wide-ranging recommendations. The Scottish Government expects to issue a response to the group in the early months of 2024.
The recent publication of the Scottish Languages Bill was very welcome. Can the cabinet secretary indicate which of the report’s recommendations may intersect with the provisions in the new bill—for example, the potential for the creation of Gaelic economic zones or additional support for entrepreneurs in designated areas of linguistic significance?
There is a welcome overlap between the Gaelic economy report and the recently introduced Scottish Languages Bill. Dr Allan, Arthur Cormack and I explored that in the recent meeting that we held on the subject. As Dr Allan is aware, the Gaelic economy report contains a wide range of recommendations that impact on a number of areas, including population, infrastructure, the public sector, Gaelic plans, communities and education. The report also lists key sectors that are important for the social and economic progress of Gaelic.
The provisions in the bill, including the drafting of a Gaelic strategy and Gaelic standards, the designation of areas of linguistic significance and improved Gaelic language plans all have the potential to make progress on the recommendations on the key sectors that are identified in the Gaelic economy report and are the basis from which Kate Forbes introduced the review in the first place.
That concludes portfolio questions on wellbeing economy, fair work and energy. I will allow a brief pause before we move on to the next portfolio questions, to allow front-bench teams to change positions should they wish to do so.
Finance and Parliamentary Business
A9 Dualling
To ask the Scottish Government whether it plans to propose the scheduling of time for a ministerial statement on the dualling of the A9. (S6O-02870)
The Scottish Government remains firmly committed to completing the dualling of the A9 between Perth and Inverness. Work to determine the most suitable procurement options for the remaining sections of the A9 dualling is now well advanced, and procurement of the Tomatin to Moy project is continuing. We expect to update Parliament on a renewed programme in the coming days.
I have to push on that point, because the Government has form on this. In 2007, it promised to dual the A9 by 2025. In 2023, it was forced to admit that it would not do that. In 2023, the Minister for Transport promised to deliver a statement to the Parliament, with a backstop of autumn, on what she had found out on the A9 and what was going to happen. She has clearly broken that promise.
Surely the Government would be much better off being honest and coming to the chamber without being forced to, to tell us when we will find out when it will deliver on the promises that it has so far failed to keep.
I will stick with the actual detail here. As the Minister for Parliamentary Business, I can explain the process for making the statement.
As the member knows, proposals for business in Parliament are subject to consideration by the Parliamentary Bureau and, in turn, approval by Parliament. The Scottish Government remains firmly committed to completing the dualling of the A9 between Perth and Inverness, and we expect to update the Parliament on a renewed programme in the coming days.
Does the minister not understand the irritation that is felt throughout the Highlands and, in fact, the whole of Scotland by the Government’s prevarication? The minister cannot give us vague answers. Is he proposing a statement before Christmas or is he not?
I do not think that I can be any clearer than saying that, in the coming days, there will be details about the statement. It is pretty obvious what everyone should take from that.
When the transport minister makes her A9 statement, it must include putting all eight remaining single carriageway sections into procurement. If it is believed that private finance is to be used, does the Scottish Government understand that it is essential that the Inverness to Nairn and Nairn bypass sections of the A96 should also be placed into procurement at the same time, and all within the next three months?
As the Minister for Parliamentary Business, I cannot comment on that. However, I will ask the Cabinet Secretary for Transport, Net Zero and Just Transition to write to Mr Ewing on the issue.
Public Sector Procurement (Conditionality)
To ask the Scottish Government whether it will provide an update on any impact on communities, including in the north-east, of conditionality in public sector procurement. (S6O-02871)
We use conditionality and other carefully crafted approaches as part of our procurement policies and processes to drive social, economic and environmental outcomes, and we publish evidence of impact annually. The £14.5 billion of procurement spending covering the 2020-21 financial year supported around £12.5 billion of economic activity and around 120,000 full-time equivalent jobs, and contributed around £6.9 billion to Scottish gross domestic product, which benefited communities across Scotland.
I thank the minister for that response and the detail contained therein.
The Scottish Government rightly expects companies that are awarded public contracts to maintain high standards of business and professional conduct, including by following international law and taking environmental protections and human rights seriously. Will the minister outline how the Scottish Government is implementing those principles and values with respect to any business dealings with companies and others involved in illegal settlements in the occupied Palestinian territories?
The Scottish Government strongly discourages trade and investment from illegal settlements anywhere in the world, and it is absolutely right that it should expect companies that are awarded public contracts to maintain the highest standards of business and professional conduct.
The Scottish Government has taken a number of steps following the publication in 2020 of the Office of the United Nations High Commissioner for Human Rights database of companies’ active enlisted activity in the occupied Palestinian territories. We wrote to public bodies in Scotland and asked that they consider the database as part of their human rights due diligence process. We also contacted companies that are listed on the database and have a relationship with a Scottish public body to ask what they are doing to cease the activities that led to their inclusion.
As the First Minister confirmed to Parliament in November, we are currently considering next steps following the publication of the revised database in June 2023.
“Raising taxes to deliver for Scotland”
To ask the Scottish Government what its response is to the recommendations outlined in the STUC’s report “Raising taxes to deliver for Scotland”. (S6O-02872)
We are very grateful for the contribution made by the Scottish Trades Union Congress through the publication of its work. We will, of course, reflect carefully on its proposals and those that other organisations have brought forward.
Our tax policy and spending plans for 2024-25 will be announced in the budget on 19 December. Our budget will deliver against our three central missions of equality, opportunity and community.
In November 2022, I asked whether any work was going on in the Scottish Government to look at a land value tax, and I was told that there was not. Since then, has any work been carried out to consider the feasibility of any version of a land value tax or, indeed, any form of land-based taxation to raise additional revenue, given that those forms of taxation are fully devolved?
I remind Katy Clark that we are, as per our existing commitments, engaged in a joint working group with the Convention of Scottish Local Authorities to look at sources of funding for local government, including reform of the council tax. As part of that process, we are open to considering a wide range of measures and, indeed, we have introduced regulations on, for example, council tax and the treatment of second homes as a result of work that has been undertaken to date.
We are committed to progressing the work further in the new year. I am more than happy to engage directly with members on any specific proposals that they may have.
I have received requests to ask three supplementary questions. I will be able to take all three.
Not a single Labour MSP saw enough merit in the STUC’s recommendations to sign Monica Lennon’s motion in support of them, despite many of them being funded by trade unions. Does the minister agree that that reflects how unrealistic the proposals are, given that they appear to take no account whatsoever of the impact on taxpayer behaviour and revenue that would accrue? Perhaps they have not signed the motion because of the United Kingdom Labour Party policy not to
“turn on the spending taps”
if it comes to office.
Minister, please respond on matters within your jurisdiction.
Certainly, Deputy Presiding Officer.
As I said in my original answer, we are very grateful to all organisations, including the STUC, which has submitted proposals, and the range of business organisations and other think tanks that have brought forward proposals for consideration. However, the reality is that we are limited in what measures we can take under the existing devolution settlement. For example, for this Parliament to be able to legislate for new national taxes, the UK Government’s agreement is required, as referred to in section 80B of the Scotland Act 1998.
I note that, although there are members of the Labour group in the Parliament who advocate new forms of taxation, that is in sharp contradiction to the lack of proposals that the UK Labour Party has put forward. Indeed, the shadow chancellor, Rachel Reeves, has been clear in her opposition to wealth taxes, for example.
To be honest, I am not quite sure where the Labour Party stands. I think that there is division in the group in the Parliament, and I certainly think that there is division between that group and the Westminster parliamentary group.
Of course, the Confederation of Business Industry in Scotland takes a view on tax that is very different from that of the STUC—it asks the Scottish Government to abandon any uncompetitive tax policies. Will that issue be addressed in the forthcoming budget?
As Liz Smith will be aware, we assess all tax proposals against our framework for tax, and we are committed to updating our tax strategy at the time of the medium-term financial strategy publication in the spring. We take into account a range of factors, including the need to support public finances, which is particularly important given the horrendous settlement that we are receiving as a consequence of the autumn statement, and ensuring that we can support a competitive and dynamic economy in Scotland.
Does the minister accept that the very reason why we are having these conversations about tax is that the UK Government has completely slashed the consequential funding that comes to Scotland? Evidence that was given by the Office of Budget Responsibility to the Finance and Public Administration Committee yesterday suggested that £19 billion is being cut from English departments in real terms, which results in far less consequential funding to Scotland in the first place.
Kate Forbes sets out the evidence very clearly. There is a further point that I want to add to that, which is very important. There is a lack—almost a complete absence—of headroom that the Chancellor of the Exchequer has left himself, and there is the risk that the horrendous cuts that we face might not be the end of it, but only the start of it.
The UK Government has shown a reckless approach to the economy through its decision to pursue the hardest of hard Brexits and the calamitous mini-budget under Liz Truss, to which the Conservative Party in the Scottish Parliament gave its full-throated support. That underlines the reason why the people of Scotland would be far better served if the Scottish Parliament had the full powers of an independent nation.
Wealth Tax
To ask the Scottish Government what action it has taken to develop a wealth tax. (S6O-02873)
Any approach to wealth taxes must either consider the limits of tax powers that are currently devolved to the Scottish Parliament or seek agreement between the Scottish and United Kingdom Parliaments to devolve further tax powers to create a new tax.
We believe that powers should be devolved to this Parliament, so that the taxation of wealth can be redesigned to work fairly and effectively in a modern, Scotland-specific context. We consider all tax proposals that are in line with our framework for tax, as well as our commitment to progressivity and fairness, to ensure that those with the broadest shoulders contribute the most.
In September, the First Minister said that he would consider a wealth tax, but his Government has already had 16 years in power and wealth remains concentrated in the hands of a few. Can the minister confirm what discussions the Scottish Government has had with the Scottish Trades Union Congress about its wealth tax proposals and when the First Minister’s consideration will turn into real action on a wealth tax? [Interruption.]
Before I call the minister to respond, can we not have conversations across front benches, please? It is disrespectful to the person who is asking the question.
We are committed to considering carefully all the proposals that the STUC has put forward.
The specific STUC proposal, as I understand it, is for a local wealth tax that would be administered locally and at the discretion of local authorities. We have, per our commitments to local government, embarked on a programme of work on fiscal empowerment. I have made reference to the regulations that have been introduced regarding the council tax treatment of second homes; we also have the Visitor Levy (Scotland) Bill progressing through Parliament. That bill would create a discretionary power, and any further powers for local government would, by their nature, have to be discretionary, recognising our commitments in that area.
The introduction of a national wealth tax, which is perhaps what the member and others would like to see, would require the agreement of the UK Government and the UK Parliament. I do not want to be presumptuous, but I do not think that the Conservatives subscribe to that idea. I know that the Labour Party does not subscribe to it, because Rachel Reeves has said as much.
The biggest part of wealth is held in property assets, and everyone recognises that council tax is hugely regressive. Given the Scottish Government’s commitment to progressive taxation, what work has it done on evaluating the percentage of property value that a proportionate property tax would need to be set at in order to be revenue neutral? What percentage of council taxpayers would pay less than they currently do as a consequence of such a tax?
I am not in a position to provide specific details of what those hypothetical costings would entail. However, we are committed, as I mentioned in my earlier answers, to working constructively with the Convention of Scottish Local Authorities, through the joint working group, to look at options for reform of the council tax. I am more than happy to engage with any member who wants to bring forward constructive proposals on which we, in partnership with local government, can work together to seek to deliver.
Scottish Budget (European Comparators)
To ask the Scottish Government, in relation to setting its budget and fiscal policy for 2024-25, whether it has undertaken any quantifiable financial analysis of the relative performance of European countries comparable in size to Scotland. (S6O-02874)
The first paper in our “Building a New Scotland” series, which was published last year, compared the United Kingdom’s performance across a range of economic and social indicators with that of countries in Europe that are comparable to Scotland. It found that those countries are wealthier, with gross domestic product per capita in every comparator country being higher; that they are fairer, as income inequality and poverty rates are lower; and that they have higher productivity. As the series is setting out, with the powers of independence, we would have all the levers that we needed to create a more prosperous and fairer Scotland.
Destructive Brexit agendas mean that Scotland is missing out on so many opportunities, such as the European Union’s NextGenerationEU economic recovery programme. What benefits are comparatively sized EU countries receiving from that transformative European stimulus package, and what could it mean for an independent Scotland in the EU?
Bill Kidd has set out one of a number of consequences of Brexit. The centrepiece of NextGenerationEU is a recovery and resilience facility, which is an instrument offering grants and loans to support reforms and investments in the EU member states to a total of €723.8 billion in current prices. An independent Scotland in the EU would, of course, benefit enormously from such an initiative. I offer a comparison to a similarly sized neighbour by noting that the Republic of Ireland is set to receive more than €900 million in recovery and resilience facility grants.
Cost of Living Support (Engagement with United Kingdom Government)
To ask the Scottish Government what its latest engagement has been with the UK Government regarding the funding available to support households with the cost of living during the Christmas season. (S6O-02875)
As I outlined to Parliament on 22 November, I wrote to the Chancellor of the Exchequer ahead of the autumn statement setting out the Scottish Government’s priorities for action. I also spoke to the new Chief Secretary to the Treasury on 22 November and again emphasised the need for investment in public services, net zero and supporting people with the cost of living. That followed a number of letters that ministers have sent to the UK Government over the past few months, calling on it to do more for households that are struggling financially, including the introduction of an essentials guarantee to ensure that benefits are sufficient to allow people to afford food and fuel.
It is very disappointing that the UK Government continues to fail to provide the funding that devolved Governments need. That increases the challenges for our budget next year and the difficulties facing households right across the country.
Recent financial research undertaken by PwC indicates that Christmas spending in the UK will drop by 11 per cent this year compared with 2022 to an average of around £440 per consumer, with 18 per cent of people in Scotland anticipating spending less due to having less money, the damaging cost of living and having less confidence in their future finances. The measures in the recent autumn statement will not touch the sides of the issues for most households, who have seen their monthly costs go through the roof.
Does the cabinet secretary agree that, even with promotional events such as black Friday, Christmas will be out of reach for many households this year and that the UK Government must change course from wreaking economic havoc to delivering fiscal policy that will make a tangible difference to people living in Scotland?
Audrey Nicoll is absolutely right that the continuing cost of living crisis will have a damaging impact on many people this Christmas. We are doing all that we can with the resources that are available to us, but Scotland is being badly let down by the UK Government’s economic mismanagement and misguided priorities. Its autumn statement prioritised a tax cut over public spending and failed to provide support for people with the cost of living or the funding that our public services need.
The UK Government’s decision to starve public services in England hits our budget in Scotland, and all the devolved Governments are feeling the impact. I called on the chancellor to prioritise public services and support people with the cost of living in the autumn statement, but instead we got an austerity budget. However, it is not too late to change course, and I urge him to do so.
Free School Meal Provision (Local Authorities Budget Allocation)
To ask the Scottish Government whether it plans to allocate funding to local authorities in its 2024-25 budget to facilitate the cancellation of any school meal debt and expand universal free school meal provision to those age groups that are not currently entitled. (S6O-02876)
That is a really important question, because we know that school meal debt can have a significant impact on the mental wellbeing of families. If a family is experiencing difficulties, I expect local authorities, in the first instance, to use the powers available to them to provide any necessary support.
Although school meal debt is a specific matter for local authorities, the Scottish Government is determined to do everything that we can to support people through the cost of living crisis, and we will consider all available options to ensure that families do not find themselves punished for struggling through tough financial times.
The families of 30,000 children across Scotland are in debt over the cost of school meals, which might have something to do with income thresholds for free school meal eligibility having barely risen in the past 20 years. In 2002, low-income working families with an income of less than £13,230 were eligible; today, the income threshold has risen to just under £19,000. However, if the figure had been adjusted in line with inflation, the income threshold would now, two decades later, be just under £28,000. Will the Scottish Government consider maximising eligibility for free school meals for low-income working families in order to reduce the financial hardship that the minister spoke about, to help end school meal debt and to tackle the cost of living crisis?
It is important that children and young people have access to healthy and nutritious meals as part of their learning. The Scottish Government recognises that, which is why Scotland has the most comprehensive free school meal offer in the United Kingdom. Families who take up the offer save, on average, £400 per eligible child per year, and we are committed to expanding the offer further. As I said in my initial response, the Scottish Government is looking at all options to support families who are struggling through the cost of living crisis.
Non-domestic Rates (Reform)
I remind members of my entry in the register of members’ interests.
To ask the Scottish Government whether it will provide an update on its progress in implementing the recommendations made by the new deal for business group on reforming non-domestic rates. (S6O-02877)
We have already made progress in extending the deadline for lodging non-domestic rates proposals, providing businesses with an extra month to submit their 2023 revaluation proposals.
The “New Deal for Business Group Implementation Plan”, which was published on 19 October this year, details how all the recommendations, including those from the consultative sub-group on non-domestic rates, will be taken forward over the next 18 months. The sub-group continues to meet regularly, and it has established a number of short-life task teams that will report back to it.
Although the fiscal circumstances might mean that the Government has had to rule out passing on the 75 per cent rates reduction in general, the tourism and hospitality sector faces specific invidious circumstances, such as the increasing costs of utility bills and wages at a time when transaction volumes are down. Has the Scottish Government considered taking specific measures and providing extensions for that particular sector? Has it carried out any modelling on the impact of holding business rates level and, indeed, on the cost of business failures if business rates are held at their current level?
As Daniel Johnson will appreciate, the budget will be published next week, so I am limited in what I can say.
That said, I am extremely grateful to those operating across various sectors, including the hospitality and tourism sector, for their constructive engagement as part of the pre-budget engagement process and for their valuable contribution to the work of the non-domestic rates sub-group. I am committed to continuing to work with businesses on the sub-group’s work as we take it forward in the new year. We will consider what meaningful and constructive changes we can make to the non-domestic rates system to ensure that it supports investment and creates opportunities for all businesses in Scotland.
Murdo Fraser, who joins us online, has a supplementary question.
I am sorry that Daniel Johnson and the Labour Party seem to have given up the fight for 75 per cent rates relief for retail, hospitality and leisure businesses. In the past few minutes, I have seen the Scottish Chambers of Commerce’s top asks for the coming budget. Number 1 is that the 75 per cent rates relief should be passed on, and number 2 is that there should be no widening of the income tax differential between Scotland and the rest of the UK. Is the Scottish Government listening?
I am very grateful to the Chambers of Commerce for its engagement throughout the process involving the work of the sub-group on non-domestic rates and, in particular, to Liz Cameron for her work as the group’s business lead. I am very grateful for all the submissions and the ideas that have been put forward; we will set out our policies for all areas of taxation and spend in the budget next week.
However, what is inescapable is that we are facing the most challenging budget situation since devolution. That flows directly from the decisions of Murdo Fraser’s colleagues in the UK Government in the autumn statement, as a result of which we are seeing a paltry £10.8 million of consequentials coming from the health service. Is that really the position of the Conservatives in this group? Is that the position of Conservatives here? Is that the position of the Scottish Conservative health spokesman—that the uplift for the health service next year should be £10.8 million, out of a budget of £19 billion? If so, it is an utterly shameful position.
Thank you, minister. That concludes portfolio questions on finance and parliamentary business. There will be a short pause before we move to the next item of business to allow the front bench teams to change position, should they so wish.
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