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Deputy First Minister Responsibilities, Economy and Gaelic
The first item of business is portfolio question time, and the first portfolio is Deputy First Minister Responsibilities, Economy and Gaelic. There is a lot of interest in asking supplementary questions in this portfolio and the next, and there is a lot of business to get through this afternoon, so we are tight for time. I make an appeal for brevity in questions and responses, as far as is possible. Members who wish to ask a supplementary question should press their request-to-speak buttons during the relevant question.
Brexit (Impact on Economy)
To ask the Scottish Government how it continues to assess the impact of Brexit on Scotland’s economy. (S6O-03973)
Independent research continues to track the fiscal and economic impacts of Brexit. To assess the impact of Brexit on Scotland’s economy, the Scottish Government monitors the research as well as data on trade and business conditions for Scotland in the export statistics for Scotland and the business insights and conditions survey. The impact is clear: the latest research from the National Institute of Economic and Social Research finds that the United Kingdom economy was 2.5 per cent smaller in 2023 due to Brexit. For Scotland, that is equivalent to a cut in public revenues of around £2.3 billion.
The governor of the Bank of England has admitted the damaging economic consequences of Brexit, urging the UK Government to rebuild relations with the European Union. Given that Labour remains inexplicably opposed to reversing the damage of Brexit, does the minister agree that it is now more important than ever that Scotland rejoin the European Union as an independent nation?
The member raises a very important point. It is a matter of fact that the UK Government is not just in favour of Brexit but supports staying out of the huge European single market and the customs union. So far, it is refusing to sign up to even the limited youth mobility scheme that the EU is offering to the UK, let alone returning to freedom of movement, which is so important to Scotland and, indeed, the rest of the UK.
Brexit has led to an economy that is smaller and that generates less revenue for public services than Scotland would have had as part of the EU. Given the position of the UK Government and other Westminster parties, it is only by becoming an independent country that Scotland will be able to rejoin the EU and reverse the economic damage.
The Scottish Government’s eminent economic adviser Professor Mark Blyth, of Brown University, has said that, in his view, the economic impact of independence would be “Brexit times 10”. Has the Scottish Government made any assessment of what the impact of independence would be for the Scottish economy, or has it told Professor Blyth that he is wrong?
I have huge respect for Professor Blyth and certainly commend his work—particularly his publication of four years ago, “Angrynomics”—to all members of the Parliament, as it makes an important contribution to understanding some of the challenges that we face.
The Scottish Government is committed to an independent Scotland that would be a full member of the European Union. By obtaining membership of the European Union as a full independent state while still enjoying close and cordial relations with the other nations of these islands, we would be able to take advantage of a huge single market, freedom of movement and many of the other benefits that would be conferred. That would offer Scotland a much more positive future than being in a United Kingdom that has committed, against all its economic and social interests, to maintain a distinct position of being in a relationship with the European Union that is completely contradictory to its interests.
Question 2 has not been lodged.
“Scottish Economic Bulletin”
To ask the Scottish Government what its response is to the latest “Scottish Economic Bulletin”. (S6O-03975)
The Scottish Government welcomes the recent publication of the economic bulletin. It clearly shows the resilience of the Scottish economy, with unemployment remaining low and inflation stabilising around its 2 per cent target. Economic growth is set to improve as we go into 2025, but business conditions remain challenging. The Scottish Government is listening to businesses and will keep working with them to help to create a mutually beneficial environment that supports a fair, green and growing economy.
The latest statistics show that Scotland’s economy grew by just 0.1 per cent in the past few months to August and that the service sector experienced completely flat growth during that period. What action is the Scottish Government taking to attract inward investment, to ensure that Scottish service businesses are in an environment that enables them to thrive and survive?
The Scottish Government is absolutely committed to attracting inward investment. As the investment minister, I attended an investment event in London a few weeks ago, and the Deputy First Minister has just returned from meeting investors in London. We are absolutely committed to doing that.
We recognise that, in the lead-up to the United Kingdom Government budget and subsequent announcements, a degree of uncertainty has been created. It seems that that is impacting on demand, which is reflected in economic figures across the UK. However, we are committed to ensuring that Scotland remains an attractive destination for investment and to working collaboratively in partnership to achieve that.
I welcome the bulletin’s highlighting of the current strength of Scotland’s labour market, with recently published labour statistics showing that Scotland has a lower unemployment rate than the rest of the UK has, along with stand-out growth in employment. What assessment has the minister made of that news, and how can we build on that success to strengthen Scotland’s economy with the limited economic powers that the Scottish Government holds?
Scotland’s labour market is resilient and performs well on a range of indicators. Payrolled employment is high, and Scotland has a narrower gender pay gap than the UK has. Growing the economy is a top priority for this Government. As I said earlier, I was pleased to be in London recently to speak with investors about the benefits of Scotland’s economy, and the Deputy First Minister also did so at the start of this week.
Our green industrial strategy and the work of the Scottish National Investment Bank and our enterprise agencies are key to securing further growth in investment, which will, in turn, benefit all of our communities.
Economic Development and Infrastructure Projects (North East Scotland)
To ask the Scottish Government to what extent its economic development activities and infrastructure project decisions in the North East Scotland region are aligned with the regional economic strategy. (S6O-03976)
Creating new jobs, supporting skills development, increasing investment and accelerating the energy sector’s transition to net zero are key in the activities that we support in the north-east. Those include our £125 million investment in the Aberdeen city region deal, support for projects through the just transition and energy transition funds, and our partnership working with the UK Government to support the development of the north-east Scotland investment zone.
We will continue to leverage our existing strengths in research, innovation and skills to support economic growth for the region and deliver benefits for the people who live there.
Economic development is about improving the quality of life and the wellbeing of our people, and it is about delivering good jobs, vibrant and accessible cultural and leisure facilities, good education, housing and much more. Connectivity is crucial to all of that. The Campaign for North East Rail has just completed its outline business case, having published the “Buchan Sustainable Transport Study”, and connecting Peterhead and Fraserburgh by rail will be instrumental to achieving the regional economic development priorities for the region. How is the Scottish Government supporting the aims of CNER, which include job creation, social inclusion and environmental sustainability?
The member rightly highlights a range of areas that are vital for economic development and highlights the importance of connectivity in that regard. The Scottish Government is aware of CNER’s study. We are considering the findings, and a decision on the next steps is still to be made. However, we are keen to continue the discussion on how we increase sustainable travel and support better-integrated travel infrastructure for the future needs of the north-east.
Central to the regional economic strategy for the north-east is the facilitation of a just energy transition. Given that more energy firms, such as APA Energy, have announced that they are pulling out of the North Sea basin and the north-east, and given the news that GB Energy will receive only £100 million of funding over its first two years—a far cry from the £8 billion that was promised—can the minister provide an update on the action that the Scottish Government is taking to protect the north-east’s economy, jobs and sustainable growth?
I assure Kevin Stewart that the Government is committed to facilitating a just transition for the north-east of Scotland. Our £500 million just transition fund will help to support that journey, maintaining and creating jobs in low-carbon industries and contributing to the region’s future prosperity. Our energy transition fund is supporting four major projects to protect existing jobs, skills and knowledge while creating new jobs.
It was disappointing to see the United Kingdom Labour Government quickly drop its commitment to £20 billion of investment in our green future, and we continue to engage with it on how we can attract private investment, promote growth in high-productivity future-facing sectors and create high-quality, well-paid jobs.
Levelling-up Funding (Dunfermline)
To ask the Scottish Government what discussions it has had with the United Kingdom Government regarding the reported potential withdrawal of levelling up funding for the city of Dunfermline and any economic impact this may have. (S6O-03977)
We are in regular contact with the United Kingdom Government on a range of issues, including the future of levelling up and other funds. Indeed, I raised that in person with the relevant UK Government minister yesterday.
I have raised the point about uncertainty of funding for a number of levelling-up projects, including in the city of Dunfermline, and I will continue to press for clarity on the future of those projects.
As I referred to in my initial question, the UK Labour Government has threatened to pull £5 million-worth of crucial levelling-up funding from the city of Dunfermline. That vital cash was intended to renovate St Margaret’s house into a new cultural space; repair and restore the city’s B-listed Fire Station Creative building; turn Tower house into an improved cultural space; and create a new amphitheatre for outdoor performances at the Dunfermline learning campus. I am clear that such withdrawal of funding is a betrayal of Scotland’s newest and fastest-growing city.
Will the Deputy First Minister commit to strenuously making the case for the funding that is necessary to protect those projects and to progress them, or will my constituents be left with nothing?
As a point of principle, the Scottish Government is very supportive of place-based regeneration, and I understand the disappointment that the member has expressed.
The Cabinet Secretary for Finance and Local Government is writing to the Chief Secretary to the Treasury, seeking further information on the UK Government’s intentions for previously committed funding and for previously committed projects that did not receive confirmation of funding in the UK budget. We will, to use the member’s word, continue to strenuously push for maximum support for Dunfermline, and for other areas that have been promised funding.
Westminster promised funding to communities across Scotland, and now, in the face of further austerity, Dunfermline’s projects hang in the balance. Does the Deputy First Minister agree that that funding cannot be another of Labour’s abandoned promises and that, rather than bypassing Scotland’s elected Parliament, any funding should be for this Parliament to deliver for communities?
On the points that David Torrance makes, we appreciate that that uncertainty from the UK Government around projects that have been previously promised is disappointing, but we will continue to work with the UK Government on ensuring that there is funding cover where that has been promised.
I have been encouraged by the Labour Party’s manifesto commitment to restore decision making over the allocation of structural funds to devolved Governments such as the Scottish Government, and I must say that just yesterday I had a very positive meeting with the relevant minister, Alex Norris, to look at how we can work closely together to make every penny go as far as possible in the best interests of our communities.
Ferguson Marine Port Glasgow
To ask the Scottish Government whether it will provide an update on work at Ferguson Marine Port Glasgow, in light of the announcement of £14 million-worth of investment into the yard earlier this year. (S6O-03978)
When I visited Ferguson Marine in July, I signalled the Government’s willingness to back the board’s investment plans, subject to due diligence and provided that they met commercial standards. Ferguson Marine, with the support of my officials, has continued to refine its plans in the intervening period, and the funding needs of the business are part of our current budget planning discussion, the outcome of which will be published on 4 December.
I thank the Deputy First Minister for her reply, and I welcome the recent news about the Glen Sannox. She will be very much aware that I regularly speak with the workforce—the workers at the yard—and I know how genuinely talented they actually are.
Will the Deputy First Minister provide an assurance that before the capital investment takes place, and before the announcement on 4 December, the Scottish Government will have discussions with both the shop stewards and the Ferguson Marine board to ensure that there is full support, given that the new machinery and plant is very much needed to help the yards secure future contracts? Will she also provide an update on the appointment of a new permanent chief executive at the yard?
In the week that Glen Sannox achieved full regulatory approval, I start by paying fulsome tribute to the workers and their representatives at Ferguson Marine, including the shop stewards, whom I have had the privilege of meeting on a number of occasions. Their skills and expertise are at the core of the business. I know that it has been an extremely difficult time, but I want to see the workers and shop stewards continue to play a key role in driving the business forward.
I will meet the chair and two members of the Ferguson Marine board tomorrow to discuss the matters that Mr McMillan raises and others. Once a permanent chief executive appointment has been made, the chair will make that public. I am willing to engage with the workers at the yard again, as Mr McMillan has requested.
Fish Farming (Impact on Economy)
To ask the Scottish Government what discussions the economy secretary has had with ministerial colleagues regarding any economic analysis it has undertaken of the impact on the wider Scottish economy of fish farming. (S6O-03979)
I have not had specific discussions with ministerial colleagues on analyses of the economic impact of the fish farming sector, but according to the Scottish Government’s marine economy statistics, which were published earlier this month, aquaculture generated in 2022 £337 million of approximate gross value added, or 7 per cent of the Scottish marine economy. I note, too, that it supports around 12,000 jobs across the supply chain. Scottish salmon is the United Kingdom’s largest food export.
According to the Scottish Government’s own data, there are now just 253 more jobs in the salmon aquaculture sector than there were 30 years ago. Will the Deputy First Minister tell me how many rural jobs have been lost in sectors such as shell fishing, marine tourism and recreational sea angling as a consequence of the mismanagement of the salmon farming industry?
I have outlined the job opportunities available through aquaculture a little bit. On the wider issues that the member raises, she will know that there has been quite a significant change in marine jobs, driven not just by growth in sectors such as fish farming but because of some of the other challenges, not least around recruitment and exporting as a result of Brexit. There has been a significant change when it comes to overall job retention, recruitment to jobs and the creation of new jobs in and around our marine economy.
That concludes portfolio questions on Deputy First Minister responsibilities, economy and Gaelic. There will be a brief pause before we move to the next portfolio to allow front benches to change.
Finance and Local Government
We move to portfolio questions on finance and local government. I remind members that questions 5 and 7 are grouped together, so any supplementaries on those questions will be taken after the substantive questions have been asked. As ever, members looking to ask a supplementary question should press their request-to-speak buttons during the relevant question.
Unfortunately, the member who is due to ask question 1 is not present in the chamber, for which I will expect an explanation and an apology, so I will have to move to question 2.
Glasgow Airport Rail Link
To ask the Scottish Government whether it will consider ring fencing funding in its forthcoming budget to allocate to a Glasgow airport rail link. (S6O-03982)
The Glasgow airport rail link was superseded by the Glasgow airport access project, which was allocated £144 million as part of the Glasgow city region deal in 2014.
The Glasgow connectivity commission and the second strategic transport projects review recommended a wider metro system that could include a link to the airport. In November 2023, the city region deal cabinet decided to refocus funding on progressing Clyde metro. Strathclyde Partnership for Transport, supported by Glasgow City Council, is leading the development of the case for investment, which includes the development of the network and funding options for the project’s delivery.
I asked the minister a specific question, which I will ask again: what funding will be allocated specifically for the airport rail link? Glasgow is one of the few major cities in Europe that does not have a direct rail link to its airport. I am sure that the minister, who has a Glasgow constituency, agrees with me that having an airport rail link is fundamental to Glasgow’s economy.
I would like an assurance today that the airport rail link will be a priority for phase 1 of the metro plan that the minister mentioned. Will the minister confirm that the Scottish Government, through Transport Scotland, will allocate the funding to enable the airport rail link to be developed in phase 1 of the project?
The decision on the priorities in the Clyde metro project is for the partnership and the city council. I can tell the member that the Scottish Government has provided £72 million—50 per cent—of the £144 million through the Glasgow city region deal towards improving public transport access to the airport. The city region deal has subsequently allocated £12.2 million, half of which came from the Scottish Government, to take forward the development of the Clyde metro project case for investment. Transport Scotland is continuing to provide a project assurance and support role.
Tax Strategy
To ask the Scottish Government when it will publish Scotland’s tax strategy. (S6O-03983)
As has already been set out publicly, we aim to publish the tax strategy alongside the draft budget on 4 December.
We do not have long to wait.
I asked recently whether Scotland had reached the point where raising taxes any further might be counterproductive. The cabinet secretary’s colleague Ivan McKee said that that was a very strong consideration in the Government’s present thinking. I welcome that. However, if raising tax is potentially counterproductive, cutting tax could be productive, surely, not least for households and businesses that are struggling. Does the cabinet secretary agree with Ivan McKee, and will she follow our commonsense plan to reduce tax to promote growth and reverse the damaging tax differential between Scotland and the rest of the United Kingdom?
I assure Craig Hoy that, of course, all considerations in relation to our tax position are carefully gone through, and that will be set out on 4 December.
Ivan McKee did not say that cutting tax was something that the Scottish Government was going to do, because we understand the impact of cutting tax on public services. Our tax policy decisions have raised an estimated £1.5 billion for public services. The Tories want to take an axe to those decisions, but the result of that would be taking an axe to public services, and that is not something that this Government will do.
Will the cabinet secretary provide an update on the stakeholder engagement work that the Scottish Government has undertaken to inform the development of a tax strategy?
The Scottish Government has engaged with 65 external organisations to support the development of the upcoming tax strategy publication. That included representatives of Scotland’s business community, think tanks, civic society, tax professionals and local government partners. Our approach to those engagements was designed to gather a range of views to feed into the final tax strategy. The sessions were chaired by ministers, senior Government officials and external stakeholders.
Health Projects (Capital Budget)
To ask the Scottish Government what assessment it has made of the implications of the United Kingdom budget for its allocation of capital budget for health projects. (S6O-03984)
The capital funding position remains challenging, and infrastructure projects remain under review. The Scottish Government is assessing the full implications of the UK autumn budget and we await the outcome of the UK Government’s spending review in late spring 2025. Full consideration will be given as to which projects are affordable and deliverable and can be included in our revised infrastructure investment plan pipeline.
The cabinet secretary will be aware of my long-standing fight to get a much-needed new medical centre for Lochgelly—something that was first promised by the Scottish Government back in 2011. Given that I understand that there will be additional capital spend available and that decisions will quite properly be made according to priority, I put it to the cabinet secretary that it must surely be Lochgelly’s turn now.
I absolutely agree that it is vital that spending is prioritised based on need and expected impact. We are working with all health boards, including NHS Fife, to consider infrastructure needs across all of Scotland to develop a whole-system national health service infrastructure plan. That will support the continued safe operation of existing facilities as well as determine the longer-term investment priorities. I am happy to continue to discuss that with Annabelle Ewing in the run-up to the revised infrastructure investment pipeline.
Local Authorities Budget Settlement
To ask the Scottish Government whether local authorities will receive a fair budget settlement. (S6O-03985)
Yes. The independent Accounts Commission confirmed that the Scottish Government provided a real-terms increase to local government in this year, in 2023-24 and in 2022-23. We will continue to work in partnership with the Convention of Scottish Local Authorities to ensure that local authorities receive a fair settlement in 2025-26.
The cabinet secretary mentions the Accounts Commission. It is projecting a budget gap of £392 million next year, rising to a cumulative gap of £780 million by 2026-27. Integration joint boards, which are responsible for caring for the most vulnerable, had a funding shortfall of £357 million last year, which is up 187 per cent. In social care and social work, staff shortages are rife, and more than 6,000 people are waiting for a social care assessment. Every single council in Scotland is making cuts, while nearly all are hiking up fees and charges. Will the cabinet secretary match her warm words about the value of local government with some cold, hard cash to deliver the services that our communities need?
First, I will go back to the Accounts Commission. It has confirmed that the Scottish Government provided real-terms funding increases this year, in 2022-23 and in 2023-24. That was against a backdrop of the most severe constraint on public finances in the whole era of devolution, so I think that that was a fair settlement to local government. In fact, the Scottish Parliament information centre confirmed that a real-terms increase in funding was provided to local government in 2024-25.
Do I accept that there are pressures? Yes, there are pressures across the public sector, because the inflation of costs has outpaced spending availability. We will continue to talk to COSLA, with which we are having very constructive discussions, particularly in the area of social care. We will bring those to a conclusion in time for the budget on 4 December.
Convention of Scottish Local Authorities (Financial Settlement Discussions)
To ask the Scottish Government what early discussion it has had with the Convention of Scottish Local Authorities regarding the detail of the financial settlement that it has received from the United Kingdom Government’s budget. (S6O-03987)
We have had unprecedented levels of engagement with COSLA ahead of the budget, in line with the principles that are set out in the Verity house agreement. With regard to the UK budget, the First Minister committed to providing COSLA with an open-book assessment of the impact on the Scottish budget, and that commitment has been delivered in full. We have also been in discussion with COSLA about the adverse impact of the imposition of increased employer national insurance contributions on local government, which COSLA has estimated will cost local authorities an additional £265 million.
It is good to hear that the Government is now adhering to the principles of the Verity house agreement, after last-minute budget announcements to its party conference and the breakdown of trust that inevitably followed from those decisions. Will the cabinet secretary share the Government’s planning assumptions for the local budget settlement to COSLA and local authorities in advance, to allow them to properly prepare for the coming financial year and to start to repair that relationship?
If we are going to talk about surprise announcements, we should mention the hike in employer national insurance contributions, which applies to local government to the tune of £265 million—that was a bit of a surprise announcement that local government had not expected.
We will continue to work with local government on the budget in the run-up to 4 December, and we are sharing a lot of information. On the information about the budget itself, I would get in quite a lot of difficulty if I did not share that in this place first on 4 December. We will go as far as we can in discussions with COSLA, and those discussions will continue for as long as they are required, up until 4 December.
I have spoken to chief executives in local authorities across my region of West Scotland who have said that councils are struggling financially. One local authority chief exec even compared last year’s council tax freeze to a power grab whereby the United Kingdom Government tells the Scottish Government whether or not it can raise taxes. If councils are being dictated to by the Scottish Government, the Verity house agreement is not worth the paper that it is written on. Will the cabinet secretary therefore provide clarity on whether councils will be able to set their own council tax rates in the coming budget?
That will be part of the budget announcement on 4 December, and it is part of the discussions with local government. It is a bit of a surprise that Pam Gosal is talking about funding to local government, given that a number of local authorities in England went bust under the auspices of her Government, due to a lack of funding. The funding that is provided to local government in Scotland is much better than what has been provided to councils in England—hence the fragility of so many of them. We will continue to discuss with local government their needs for funding and the position of the council tax within that.
Year after year, local government budgets have been squeezed while COSLA continues to highlight concerns that councils are struggling to find funds to provide for even statutory services. In real terms, the budget for local government this year is lower than it has been in the past, while demand for public services continues to increase. Will the cabinet secretary guarantee that the forthcoming budget settlement will be sufficient for councils to deliver their lifeline statutory services?
We started this session of portfolio questions with Craig Hoy demanding that we cut taxes in the budget and, within a few minutes, we get to Alexander Stewart demanding an increase in funding for local government. The Conservatives really need to start talking to one another, because that is economic and financial nonsense. If we want more money for public services, taxes are an important part of that. We cannot cut taxes and have more money for local government as well. [Interruption.]
And we cannot listen to the answers to questions when members are being heckled. I encourage members on the front benches to be quiet.
Third Sector Funding
To ask the Scottish Government how it plans to protect the allocation of funding to third sector organisations in its forthcoming budget. (S6O-03986)
I know and appreciate the huge importance of the third sector in delivering Scottish Government priorities across all portfolios, especially in eradicating child poverty. That is why we are committed to developing a fairer funding approach for the third sector, despite the financial constraints that we face. The Scottish Government continues to focus on building a more inclusive Scotland and investing in services that are provided by third sector organisations that help and support our communities across Scotland.
Edinburgh integration joint board officers recently proposed to end grant funding for 64 third sector organisations. Although that was not taken forward, charities still do not have funding beyond March 2025, and the board’s financial deficit remains. Those organisations provide vital services through prevention and early intervention. Is the cabinet secretary considering using the budget to improve the financial situation of integration joint boards, which fund those important services?
The funding that goes to the national health service and local government is the funding that then provides funding for integration joint boards. That is why we are working with local government on its settlement at the moment.
We have also, of course, already committed to providing the NHS with resource consequentials, which we have done for many years and will continue to do.
That is not to take away from some of the pressures, which I absolutely accept. I hope that Foysol Choudhury will accept that the position of those third sector organisations is not helped by the additional employer national insurance contributions that each and every one of them will have to find money for; they will have to find that money from somewhere. That is a real and present danger and problem. I hope that Foysol Choudhury will get behind our calls for the United Kingdom Government to act on that.
Does the cabinet secretary agree with the Scottish Council for Voluntary Organisations that the financial impact on fragile third sector organisations of the increase in employer national insurance contributions, estimated at £75 million a year, will be devastating for the sector? The increase will, for example, cost the Scottish SPCA, Scotland’s oldest and largest animal welfare charity, £400,000 a year.
Does she also agree that the UK Labour Government, which has ham-fistedly imposed those additional costs, should meet them in full?
Yes, I do. That is the point that I was making to Foysol Choudhury.
Only weeks before the UK autumn statement, the UK Labour Government proclaimed a new “covenant” with civil society and the third sector, founded on the principles of
“recognition, partnership, participation and transparency”.
Despite those claims in relation to the third sector, we then saw employer national insurance contributions swiftly hiked, without, I think, a thought about the impact on charities and third sector organisations. As Kenny Gibson said, the SCVO estimates that impact to be more than £75 million.
The chancellor has to act. We cannot have that pressure on charities, hospices and voluntary organisations; she will have to think again on that, which is what we have been urging her to do.
Portfolio Budgets
To ask the Scottish Government what on-going discussions the finance secretary is having with ministerial colleagues and officials regarding the planning of portfolio budgets in the lead-up to the publication of its budget for 2025-26. (S6O-03988)
I am in regular engagement with ministerial colleagues in relation to portfolio budgets in advance of presenting the budget next month.
Budget planning with cabinet secretaries and officials has been on-going since the summer. During the first two weeks of November, I met individually with all cabinet secretaries and their officials to discuss portfolio budgets and priorities. Cabinet has discussed the overall Scottish Government budget on several occasions, including on 19 November. We will meet again on 26 November in advance of the budget on 4 December.
Correspondence that was obtained under freedom of information legislation shows that, when the cabinet secretary wrote to Cabinet colleagues in the summer requiring ministers to halt all non-essential spending, her colleagues wrote back highlighting significant pressures dating back to the beginning of the budget year.
The justice secretary said that there was “additional portfolio pressure”. The health secretary said that “enhanced spend controls” had already been in place since the beginning of the financial year and that
“more fundamental decisions were required to bring expenditure into line”.
The transport secretary said that the portfolio had been carrying a
“significant resource deficit since budget 2024-25”
and had already been operating in
“an emergency control environment”.
Does the cabinet secretary think that it demonstrates good management of the public finances that portfolios were setting budgets that immediately entered emergency controls as soon as the budget started? When did she know that that was the case? In relation to the discussions that she just referenced, how will she avoid that in the forthcoming budget?
Dearie me.
First, no one denied the challenge when I stood here and announced the package that was required to be taken. No one denied the impact and the difficulty in relation to any of that, including that only essential spending could be taken forward. We had to do that, because we did not know where the landing space on resource funding was going to be in order to fund pay deals. We had to take that step, and that is the step that we took.
What we are doing now, in relation to the budget of 4 December, is making sure that portfolios and cabinet secretaries start the year with a clear direction of what they are going to deliver with the funding that is available to them.
What is not prudent financial management is announcing a bombshell about employer national insurance contributions out of the blue and then not fully funding it. At the moment, we do not know whether Scotland’s core public sector—never mind the third sector and the charities that we have heard about—will be funded for the ENIC challenge. If it is not, that will put a pressure on public finances that we could absolutely do without. I suggest that Paul O’Kane gets on the phone to the chancellor, or whoever he has contact with in the UK Government, to make that point on behalf of Scotland’s public services, because it is a very serious matter, and the Labour Party should take it seriously.
On portfolio planning, in the light of the likely change to three-year planning for budgets, will the cabinet secretary put on record whether that will be in the new Verity house agreement between the Scottish Government and local authorities, which want to be able to plan long term?
At last, I have a sensible question from those on the Conservative benches. I am very sympathetic to Liz Smith’s position. It depends on whether we get multiyear funding. Indications from the UK Government on that are very positive, with the spending review for resource and capital due in late spring. If we get into a three-year cycle that is reviewed every two years, I am happy to have a similar arrangement with local government. That would also open up potential for an arrangement with third sector organisations. I am happy to keep Liz Smith informed about that.
That concludes portfolio questions. There will be a short pause to allow for front-bench members to organise for the next item of business.