Official Report 975KB pdf
The next item of business is a debate on motion S6M-14614, in the name of Shona Robison, on the United Kingdom budget, Scotland’s priorities. I invite members who wish to speak in the debate to press their request-to-speak buttons. [Interruption.] Excuse me. I am speaking, so I would appreciate members listening to what I have to say.
I call the Cabinet Secretary for Finance and Local Government, Shona Robison, to speak to and move the motion. You have up to 30 minutes, cabinet secretary.
14:55
Three weeks ago, I set out the challenges facing the Scottish budget and the difficult decisions that this Government was taking to balance the budget and deliver on our priorities. I told Parliament that the new United Kingdom Government had made it clear that funding would continue to be constrained, and the Prime Minister has said that this year’s UK budget would be “painful”.
For as long as our budget is tied to decisions that are taken in Westminster, we will not be immune from that pain—just as we were unable to avoid all the damage caused by the years of Tory austerity, the chaos of the Truss mini-budget and, of course, Brexit, which has reduced the size of the UK economy by 2.5 per cent, equating to a £2.3 billion annual cut in revenue in Scotland. The UK budget on 30 October will be an opportunity for us to take a different approach. I want to work with the Chancellor of the Exchequer and the Governments in Wales and Northern Ireland to ensure that the UK budget delivers for all four nations.
Since the new Labour UK Government took office, we have committed to work together constructively. I have written to the chancellor, setting out our priorities and offering to work together to achieve them. I am pleased to have seen a distinct improvement in our relationship with the Treasury since the election, and it is important that that continues. Next month, I will meet the Chief Secretary to the Treasury, along with the Welsh and Northern Irish finance ministers, to discuss Scotland’s priorities for the UK budget. I look forward to hearing from members across the chamber on those issues.
In her July statement, the chancellor set out the pressures on the UK’s public finances. In dealing with those she is constrained by her own fiscal rules, which limit her room to achieve her own ambitions and, with that, damage our plans for Scotland. However, we must be clear that it is a political choice to follow the Tories’ fiscal rules, and there is another way.
We propose that the rule governing net debt should be replaced with a focus on public sector net worth, which would allow for further borrowing for investment to renew public infrastructure and services. It would allow the chancellor to move away from an approach that risks embedding austerity further. That would help to provide the investment that we need, which could boost jobs and ease some of the fiscal pressures that we face. The chancellor’s own spending audit estimated that this year’s departmental spending budgets are at least £15 billion lower in real terms compared with those in the 2021 spending review plans. That means that public services have been consistently short changed over the past few years, so it is no wonder that the Governments of all four nations now face such acute pressures.
It is vital that the chancellor uses her upcoming budget to reset spending plans to take account of the inflation of recent years and to make clear the UK Government’s plans for investing in public services. Those investment plans should include full funding of pay awards on a recurring basis. If they do not, that will leave a substantial gap between the expectations of the workforce and the available funding.
Yesterday, I noted that the Royal College of Nursing in Scotland accepted the national health service agenda for change pay deal in Scotland but rejected the deal that the UK Government had offered in England. My suggestion to the UK Government would be to ensure that, before the budget, it offers to match the NHS agenda for change pay deal here in Scotland. That would see an experienced nurse in England get an uplift of over £3,200 more than the deal that the RCN rejected. It would also mean that, in 2024-25, an experienced band 5 nurse here would take home £2,233 more, after income tax and national insurance, compared with a nurse on the same band in England.
Our public services are knitted into the very fabric of our country and our daily lives. More funding for our schools, hospitals and local government services helps to grow our economy, enhance quality of life and tackle the scourge of poverty. The First Minister has been clear that ending child poverty is a central priority of the Government. For many years we have had to step in to protect the most vulnerable in our society as best we can from the actions of a UK Government that has pushed households into hardship through austerity. We are spending £134 million this year alone to mitigate damaging welfare policies put in place by the previous UK Government, including the benefit cap and the bedroom tax. That is money that could have been spent on services such as health and education, or on further ambitious anti-poverty measures.
We are also investing £457 million this year though our Scottish child payment, helping the families of the more than 325,000 under-16s who currently receive it. However, the impacts of this game-changing payment are being counteracted by policies such as the two-child limit. With a limited, fixed budget we cannot mitigate all the UK Government’s policies while pursuing our own ambitious policy agenda. That is why the new Labour UK Government must act now to reverse the Tories’ welfare decisions and take a different approach, including steps towards delivery of an essentials guarantee. Abolishing the two-child limit should be an easy choice. I know that members will join me in urging the chancellor to consign that dreadful policy to the dustbin. The Institute for Fiscal Studies has calculated that abolishing the two-child limit could immediately lift 360,000 children out of poverty across the UK, rising to 500,000 by the time the policy is rolled out in full.
This is also an opportunity for the Labour UK Government to think again about its decision to restrict the winter fuel payment. The decision has been roundly criticised, and it is not too late to reverse it. I read reporting online in The Guardian yesterday that suggested:
“Scottish Labour believes access to the winter fuel allowance could be widened in Scotland as it tries to fight off its opponents’ attacks before the next Holyrood election.”
It seems that, not content with this Parliament mitigating Labour’s two-child limit, it now expects us to mitigate Labour’s cut to pensioners’ winter fuel payments. The question is: would it not be simpler all round if Labour simply did not cut that funding to the elderly in the first place?
Investing in our vital infrastructure is key to growing our economy and achieving net zero, yet we are dealing with the legacy of years of underinvestment by previous UK Governments and the continuing impact of high inflation. Capital investment needs to grow substantially to renew public infrastructure and deliver on net zero projects, but we are facing 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 £1.3 billion between 2023-24 and 2027-28.
We have successfully used financial transactions funding to deliver affordable housing, fund our Scottish National Investment Bank and invest through our enterprise agencies. However, that funding from the UK Government has fallen by 62 per cent since 2022-23, and we need it to be replaced if we are to continue to support our businesses and build more of the housing that we so urgently need.
We must also build for the future, investing now to harness the opportunities of a just transition to net zero. We are already ahead of the rest of the UK in renewables, but we need to go further. I am pleased that good progress has been made on a memorandum of understanding with the UK Government on GB energy, which needs to deliver real benefits for the people of Scotland and support a just transition to net zero by 2045. I am pleased to hear that GB energy will be located in Aberdeen—I think that is absolutely the right decision.
I look forward to further discussions with the UK Government on plans for GB energy. I am keen to ensure that Crown Estate Scotland receives equivalent and proportionate benefits to those being granted to the Crown Estate. We also want the UK Government’s new national wealth fund to work with Scottish public bodies and the Scottish National Investment Bank to unlock investment and make our net zero ambitions a reality.
Most of the tax levers that can help address the pressures that we face remain with the UK Government. In Scotland, we have used our tax levers to raise revenue to support investment in our public services. Our progressive decisions on income tax since the devolution of powers will raise up to an estimated £1.5 billion of additional revenue in 2024-25 compared with if we had matched UK Government policy. However, income tax revenues alone are not sufficient to deliver fiscal sustainability over the medium term. The UK Government currently holds wider levers on tax and funding and must consider how they are used to allow necessary investment in public services.
On the issue of tax, given everything that the cabinet secretary has said about the use of tax levers, does she now regret the decision taken by the Cabinet to freeze council tax for the current year?
The decision to freeze council tax was a support measure in response to the pressure on household incomes due to the cost of living crisis that has been driven by the decisions of Murdo Fraser’s UK Tory Government and, of course, the catastrophic mini-budget that sent inflation sky high. I think that Murdo Fraser was a supporter of Liz Truss and wanted us to follow her tax decisions, so I am not sure that he is in the best position to give me any advice on income tax or any other tax in this place.
I will present the Scottish budget on 4 December, and I have already told Parliament that it will be a challenging budget. However, despite being only 71 days away from our budget, I simply do not yet know how much funding we will have for next year. I am looking to the chancellor to give further clarity on 30 October.
We have called for a move away from an approach that is focused on annual funding. We need greater certainty of funding to help the devolved Governments to plan further ahead, so I welcome the chancellor’s intention to move to multiyear budgets. I want to work with her to ensure that they provide the certainty that we need for our medium-term budget planning.
I appreciate what the cabinet secretary is saying about the lack of certainty from the UK Government on the financial settlement, but we do have clarity on the reserves that the Scottish Government is sitting on, not least the revenues that were forthcoming as a result of the ScotWind leasing round. Can she confirm to the Scottish Parliament how much of that money is left for next year’s budget?
I confirmed that in our written answer to Alex Cole-Hamilton, which shows that we have utilised only around £96 million of ScotWind revenues for 2023-24. The point about the £460 million is that I have said that it would have to be set against a path to balance. The thing that will change and reduce that, which I am very keen happens, is if the UK pay review body awards are funded in full. The more that they are funded, the less ScotWind revenue I will need to use. There is an absolute direct correlation there, so we wait to hear what the Chancellor of the Exchequer has to say.
I want to make one final point, Presiding Officer, if that is okay. The new UK Government has said that it will respect devolution. In June it was splashed on the front page of The Daily Record that a £150 million war chest would be handed to the Scotland Office to spend in devolved areas, along with lines from the new Secretary of State for Scotland, Ian Murray. What is stranger still is that at the weekend, Ian Murray gave an interview in which he said that a journalist had made up the £150 million figure. Then yesterday, he gave further clarification that despite his slur, the journalist had not made it up and instead what he meant was that he did not have the money yet.
At this stage, my best guess to explain Ian Murray’s behaviour is that he does not think that he is actually getting £150 million from the Treasury, or perhaps he is demanding that there should be no more bypassing of this Parliament through the UK Government spending money in devolved areas—something we would welcome.
It is really important that Labour’s clear manifesto commitment to end the practice of bypassing devolved nations is delivered and delivered in full.
I want to work with the chancellor to ensure that the UK budget delivers for Scotland. It does not need to be another budget of austerity and underinvestment. Instead, it can be a budget that renews public infrastructure, helps to tackle child poverty and supports keeping and attracting jobs, with fiscal rules that value public services. Those are the choices that I encourage the chancellor to make. I urge all members to support the motion.
I move,
That the Parliament recognises the importance of the UK Budget on 30 October 2024 to Scotland’s budget; supports the call from prominent economists, including Professor Mariana Mazzucato, Professor Anton Muscatelli, Lord Gus O’Donnell and Professor Simon Wren-Lewis, for the UK Government to use the forthcoming UK Budget to halt “the under-investment that has resulted in a vicious circle of stagnation and decline, whereby low investment leads to both a weaker economy and greater social and environmental problems”; calls on the Chancellor of the Exchequer to replace the current austerity fiscal rules that the UK Government is operating under, in order to allow for greater investment to renew and enhance public infrastructure and deliver projects that support the transition to net zero; believes that the UK Government should reverse its cut to the Winter Fuel Payment, as this cut will impact many of the most vulnerable older people in society, and urges the UK Government to use its first Budget to remove the two-child limit on benefits and deliver greater investment to tackle child poverty, and deliver a sizeable increase in investment in the NHS and schools, which would deliver consequentials for application in these vital public services in Scotland.
15:10
It is a novel experience for those of us on this side of the chamber that, for the first time in 14 years, we are not in government in Westminster and, therefore, will not have to defend a budget that is on its way. That will bring an interesting new slant to my remarks. To borrow a line that we have heard several times from members on the other side of the chamber, I can say with all integrity that Scotland is being failed by both its Governments—the one in Holyrood and the one in Westminster—because we have had a dismal start from the new Labour Government. It is not surprising that the Prime Minister’s ratings are already in free fall.
Before I turn to the Scottish National Party, let us look at what will come from the budget of the Labour Party in government. The economic legacy that was inherited by the Labour Government is far better than it would suggest. Despite the headwinds that all western Governments have faced since the financial crash of 2008-09—a financial crash that happened, of course, under the watch of a Labour chancellor and Government—the UK economy has performed well in relation to many competitor economies. In that period, UK gross domestic product grew faster than GDP in any other European country in the G7 and faster than that in the European Union as a whole, and we avoided the depth of recession that was seen in, for example, Germany.
In that same period, 4 million new jobs were created, there were record levels of employment and inflation returned very close to the Bank of England target of 2 per cent. Therefore, the economic legacy that was inherited by the Labour Government was a strong one in relative terms—as, indeed, was the financial legacy. According to the Office for Budget Responsibility, the deficit that Labour inherited was 4.5 per cent. Mr Johnson is shaking his head at that, but I remind him that, when Labour left office in 2010, the financial deficit was 10.3 per cent—more than double the deficit that the Conservatives left Labour. If the Deputy First Minister wants to intervene to defend the Labour Government, I will give way to her instead.
Can the member confirm the deficit of the Scottish Government, which, by law, is required to balance its budget every year?
I think that the Deputy First Minister is very familiar with her own “Government Expenditure and Revenue Scotland”—GERS—figures, which set out the nominal deficit of the Scottish Government were we to become an independent country. It would be double the rate of the UK as a whole—
Will the member take another intervention?
Of course I will take another intervention.
I did not think that the member needed a lesson on the difference between the Scottish Government’s budget and projected figures, but can he confirm whether the Scottish Government has balanced its budget every year for the past 17 years?
Well, what the Deputy First Minister is tempting me to do is congratulate the Scottish Government on not breaking the law, because the law says that it has to balance its budget. If the height of the Deputy First Minister’s ambition is that we should congratulate the Government on not breaking the law, it will have to do better than that.
As we know, the deficit the last time Labour left office was far greater than the current deficit. Labour talks about the fabled £22 billion black hole, yet we know from all the independent analysis that £9.4 billion of that total has come not from the previous Conservative Government but from the above-inflation pay deals that have been agreed by Labour since it came to power.
It is no wonder that Labour is confused about its sums. As the cabinet secretary reminded us, the new Secretary of State for Scotland is in total confusion about the amount of money that is available to him. With regard to the fabled £150 million, which his Scotland Office was supposedly going to get, he accused journalists of making up that figure, but it turned out that he misspoke and that that was indeed his figure.
That is not surprising—after all, this is the man whose first major intervention in his new office was to diss Larry the cat, the nation’s favourite feline. How did Ian Murray describe the nation’s favourite pussycat? I could not use that language in a speech in Parliament. That is the mark of the man. Alister Jack would never have said such things about Larry the cat, but Ian Murray did.
What do we see now from Labour? We see a shameful attack on pensioners, with the removal of the winter fuel allowance. Nearly 900,000 pensioners in Scotland will be affected by that—it is no wonder that Labour’s ratings are plummeting. Of course, it is correct to say that the Scottish National Party Government could do something about that if it wanted to.
Let us look at the choices in the Labour budget. The Labour Party has said that it will not increase VAT, income tax or national insurance. What taxes are we going to see increased? Are we going to see fuel duty increased, which would hit people who have to rely on their cars to travel around? Are we going to see capital gains tax increased? When Jeremy Hunt reduced the top rate of capital gains tax from 26 per cent to 24 per cent in the spring budget, the estimates at that point were that such a move would actually increase revenue, because it would stimulate activity. An increase in capital gains tax will hit entrepreneurs and those who want to invest in businesses and sell them on. Is that going to help to stimulate economic growth?
Will it be inheritance tax that is increased, which would hit those who have built up savings over their lives and want to pass them on to their families? Will the energy profits levy be extended still further? According to energy experts, the levy risks more than 2,000 jobs—it is a reckless attack on the oil and gas sector, which is so important to the economy of Scotland and of the north-east in particular.
The member described the energy profits levy as “a reckless attack”. Would he remind the chamber which party of government introduced that levy?
We are not proposing to take away the allowances in the way that the Labour Party is currently doing. We are not proposing to turn off the tap on North Sea oil and gas as the Labour Party is threatening to do. If members were to ask businesses in Aberdeen and the north-east which party they think can be trusted on oil and gas, they would find that it is certainly not the Labour Party. We will hear more on that from my colleague Douglas Lumsden shortly.
Having spoken about the Labour Party for too long, I turn to some of the choices that the SNP has to make. The budget challenges that the SNP is currently facing are a result of its own choices. That is not my analysis; it is the analysis of the Institute for Fiscal Studies and of the Scottish Fiscal Commission, which has said that it is
“the Scottish Government’s own decisions”
that are to blame for
“much of the pressure”
facing the country’s finances.
Will the member take an intervention?
Yes—if I have time.
Briefly, cabinet secretary.
I wonder how the member might react to the stage 2 amendments to the Social Security (Amendment) (Scotland) Bill that were lodged by his Conservative colleagues, which propose to add to social security. He cannot come to the chamber as an Opposition spokesperson demanding that we cut that funding, while at the same time, in committee, his party are asking for it to be increased.
The cabinet secretary should listen to what the Scottish Fiscal Commission has said about the need for growth. If we matched UK economic growth, that would, in the current year alone, deliver £624 million extra in tax revenues. The way in which we get more money to spend is by delivering growth. That is a lesson that the Government needs to learn.
What the SNP Government never tells us is that, according to its own figures—the GERS figures—the Barnett formula gives us £2,400 per head of population more to spend in Scotland than the UK average. That is the result of our being in the United Kingdom—the very United Kingdom that the SNP wants to take us out of. We currently benefit by that additional sum, which the SNP Government has to spend as it chooses.
We know what choices the SNP has made. We know about the fact that it has increased income taxes in Scotland. According to a recent survey by the Fraser of Allander Institute, more than one in three businesses are reporting that that has had
“a fair amount to a lot of impact”
on their ability to recruit. We hear that all the time from businesses across Scotland, in construction, manufacturing, hospitality and financial services. The tax gap between Scotland and the rest of the UK is actively deterring their ability—
Will the member take an intervention?
I have taken lots of interventions.
The member is bringing his remarks to a close.
The tax gap is actively deterring them from attracting talent to come and work in Scotland. I know that the Deputy First Minister gets that, but I am not sure that the finance secretary does.
I think that I am probably running out of time, so let me say, in closing, what both Governments should be doing. Both Governments should be going for growth: lowering taxes, not raising taxes; passing the rates relief that has been given by the UK Government on to retail, hospitality and leisure businesses; supporting North Sea oil and gas and not seeking to close it down, as Labour is trying to do; bringing in a national workforce plan for skills; and investing in infrastructure in roads such as the A9, the A96, the A75, the A77 and the A1.
We need to have a positive vision for Scotland. Instead, it is going backwards under the SNP and, under Labour, the UK is heading in the same direction. We are being failed by two Governments, and we need to do better.
I move amendment S6M-14614.2, to leave out from “supports” to end and insert:
“acknowledges the crucial role of the previous UK Conservative administrations in securing the largest ever block grants for Scotland, in curtailing inflation, guiding the country through and out of the COVID-19 pandemic, protecting businesses through the furlough scheme, and in providing non-domestic rates relief, which the Scottish National Party (SNP) administration chose not to pass on to businesses in Scotland; credits the Conservative administration for ensuring consistent economic growth for the UK, frequently outpacing the rest of the G7, and protecting UK pensions; notes that the current UK Labour administration, despite this legacy, has created a budget deficit by paying above-inflation pay awards to the public sector; condemns the UK Labour administration for scrapping the Winter Fuel Payment, thereby putting 900,000 Scottish pensioners in Scotland at risk this winter, and acknowledges the legacy of 17 years of economic mismanagement by the SNP administration in Scotland, which has resulted in stagnant growth, high taxes, underinvestment, spending cuts, and difficulties in attracting skilled workers to Scotland.”
15:21
I have to say that Murdo Fraser standing up and describing things being in free fall is somewhat ironic. I remember that, this time almost exactly two years ago, the thing that was in free fall was UK gilts and that mortgage products were being removed from the market as a direct consequence of the reckless decision made by his Government—the previous Tory Government. So, this is a bit of a strange—[Interruption.] I do not know what the First Minister is saying from his sedentary position, but perhaps we could have a bit more of a constructive debate.
It is a little bit strange to have a debate about a budget five weeks before it is published. I gently point out that, since the general election, the First Minister has met the new Prime Minister, the new Deputy Prime Minister and the new Chancellor of the Exchequer. If the budget was so important, that might have been the appropriate time to raise it.
The serious point is that we have heard much—[Interruption.] I acknowledge the point made by the finance secretary about the need for constructive dialogue
Will the member take an intervention?
If I could take a moment to finish the point.
There is a danger of sending a mixed message—that today’s debate is something of a hasty attempt to cry betrayal before we have even had the budget instead of seeking the cross-party co-operation that we seem to be being promised and that seems to be on offer.
If the cabinet secretary would like to intervene, I am happy to take the intervention.
I think that Siobhian Brown was seeking to intervene.
Apologies.
First, given the importance of the UK budget, and the consequentials to the Scottish Government, to delivering for the people of Scotland, whom we all represent, it is really disappointing that only three Labour MSPs are in attendance for this debate.
Secondly, I note that the Labour amendment would remove mention of urging the UK Government to reverse cuts to the winter fuel payment and to remove the two-child limit on benefits. Does Mr Johnson not agree that the UK Government should be doing those things to protect the people of Scotland, whom we all represent?
That was a very well-read intervention. However, there are serious issues at hand. Siobhian Brown wants to know where my Labour colleagues are—well, they are listening to the Prime Minister and to the plans that we have set out. [Interruption.]
If this was such an important debate, maybe the Finance and Public Administration Committee would be here rather than in Estonia. We all know fine well that the debate was tabled very much at the last minute. Let us not pretend that this is some serious attempt at discussion. It is a last-minute intervention. Let us not pretend that it is anything other than a political stunt.
The reason that it is important to have the debate at this point is that I am going to meet all the other finance ministers and the Chief Secretary to the Treasury next week, and it is important that I can relay what this Parliament thinks about the priorities for the chancellor’s upcoming budget at the end of October. I am very surprised that Daniel Johnson does not agree.
The debate is so important that it was tabled only at the end of last week. [Interruption.] If we want to talk about budgets, maybe the cabinet secretary should be a little bit more reflective, given what she said three weeks ago, when she was forced into an emergency budget revision—for the third time—having identified a £1 billion black hole. As the Fraser of Allander Institute and other organisations have made clear, the cuts are a direct result of the Scottish Government’s decision making.
There is an important contrast: the UK Government has had to make difficult decisions because of assumptions that were made by the previous Government, such as the cynical assumption that public sector pay increases could be held down to between 2 and 3 per cent, whereas the SNP Government has had to fix its own errors in its own budget, which—what is worse—was based on the same cynical assumption about being able to hold down public sector pay increases to between 2 and 3 per cent.
We know that there will be one big difference between the UK Government’s budget and the Scottish Government’s budget, though, because we know one big fact about the Scottish Government’s budget, as Alex Cole-Hamilton pointed out. Almost half of the £1 billion black hole is being filled using non-recurring ScotWind funding sources, and £0.5 billion-worth of cuts are coming down the road in December.
Will the member give way?
I have given way plenty of times.
If we want to talk about budgets ahead of time, perhaps the Scottish Government should come clean on where those £0.5 billion-worth of cuts will fall.
The Scottish Government might want to focus on the jobs and opportunities that are being lost here because of the £600 million performance gap, as identified by the Scottish Fiscal Commission, which is simply a result of its failure to keep pace with the sluggish rate that was achieved by the Conservative Government. Across the UK, GDP per head of population grew by a mere 6 per cent over the past 14 years of Conservative rule. Poor performance on growth has meant that wages today are barely higher than they were in 2010.
Will the member take an intervention on that point?
I am afraid that I do not have time.
By comparison, if the UK economy had continued to grow at the pace it was growing at in 2008, under a Labour Government, real GDP per capita would be £10,000 more per person than it is today. That is the cost of Conservative failure, of Liz Truss’s mini-budget and of reckless, unfunded tax cuts that sent the value of the pound tumbling. We have had to make tough decisions to fix the £22 billion black hole that the previous Government left us.
Let us look at what we have been left, because it was not just cynical assumptions about subsequent pay increases. There is the £6 billion on the asylum system. Jeremy Hunt tried to claim that that money would not need to be spent, because the Rwanda scheme would work. That was ridiculous and shameless. There is the £3 billion on rail projects to which the previous Government had not allocated funding. Those commitments led to the national reserve being applied three times over. That is the inheritance that the Conservative Government left, and the Labour Government is having to fix the mess.
However, let us be clear that, in order to fix that reckless inheritance, there can be no return to Conservative austerity. As the Chancellor of the Exchequer made clear yesterday, we need to look carefully at how we understand investment. She said:
“it is time that the Treasury moved on from just counting the costs of investments”
in our economy
“to recognising the benefits too.”
As we do so, it is vital that spending and borrowing remain affordable.
Another fiscal rule states that the
“Upper limit on debt servicing costs”
must
“allow explicit consideration of the sustainability of the stock of debt”.
That is not our fiscal rule; it is the SNP’s fiscal rule from its previous manifesto. We can talk about investment and the need for a growing economy, but we must have a responsible approach to debt.
We need an active industrial strategy that drives growth, and we need to secure long-term growth, unlock investment and empower our nations and regions.
Will Daniel Johnson take an intervention?
The member is bringing his remarks to a close.
Above all, we must ensure that there is no return to austerity under the UK Labour Government.
I move amendment S6M-14614.3, to leave out from “recognises” to end and insert:
“believes that Scotland’s priorities were reflected in the overwhelming mandate that the people of Scotland gave to the Labour Party on 4 July 2024; recognises that the new UK Labour administration inherited a black hole of £22 billion from the previous Conservative administration; understands that the only way to deliver fairness and opportunity for people is to fix the foundations of the economy; welcomes the renewed commitment from the Chancellor of the Exchequer that there will be no return to austerity; calls on the Scottish Government to work with the UK Government to ensure that the benefits of economic stability and the opportunities of national renewal are felt across Scotland, and further calls on the Scottish Government to reflect the importance of financial competence, economic stability and transparency in its management of Scotland’s finances.”
15:28
Two weeks ago, the UK Government’s fiscal watchdog reported that the UK’s finances are unsustainable, partly because the UK Government does not have a credible plan for funding the costs that are associated with tackling climate change.
Governments have choices. They can do as the Tories did and maintain that growth will solve all problems if only we cut taxes, environmental regulations and workers’ rights enough. However, that did not work. Britain’s economy has suffered from historically weak growth over the past 14 years.
Austerity was a choice and it did not achieve that problem-solving growth. What it did was wreck public services, drive working people into desperation and poverty, and drive down investment in the UK compared with investment in similar countries. A different choice can be made. We clearly desperately need an increase in public investment to get public services back on their feet and to tackle the climate and nature emergencies.
Does Lorna Slater acknowledge that the £7.3 billion that we have pledged to the national wealth fund and the £8 billion for GB energy are exactly the sort of investment in growth that she is looking for?
We look forward, of course, to seeing detailed plans for investment and, more specifically, for how the incoming Government intends to pay for them.
I have some suggestions. The UK Government must look at the revenue-raising options of taxing polluters and the very wealthy. Indeed, one of the outcomes of the austerity years in the UK is that the wealth of billionaires and the super-rich has ballooned—slow clap for the Tories for taking from the poor and giving to the mega-rich. Trickle-up economics is what we have had. We need to tax that money back into our economy.
Windfall taxes are all very well, but a consistent approach to the taxation of big polluters in order to fund the transition to net zero would be more effective. Simply stopping tax breaks for oil, gas and aviation would be a start. Last week in the chamber, we all agreed that one of the best things that we can do for small businesses is ensure that big businesses pay fair taxes. The Observer found that, between 2018 and 2020, Shell and BP paid no corporation tax or production levies on North Sea oil operations while claiming tax reliefs of nearly £400 million. How are small, clean energy companies in the UK supposed to compete when big oil gets massive tax breaks? Jet fuel has always been tax exempt in the UK. How are small, clean transportation businesses or publicly owned buses and trains supposed to compete with a polluting aviation industry that does not pay tax on its fuel?
The UK needs to collect that money and to revise the capital budget strategy to align with climate goals. We have a whole bunch of stuff that we need to build—wind turbines, energy storage, grid infrastructure, train stations, hydrogen-powered buses and low-carbon homes. Let us get on with it. There is no shortage of money. Follow the trickle-up economics and tax dodgers to see where it has gone.
I challenge the UK Government to take a different approach and to rebalance the UK economy in favour of hope, to get money into the pockets of people who need it and can spend it, and not to be shy about making those who can and should contribute more do so.
Our devolved Government in Scotland has a role to play, too: the Scottish Government has not exhausted all our tools to address the current financial crisis. In recent weeks, the Scottish Greens have been highly critical of some of the spending decisions that the Government has made. The cuts to climate spending and the nature restoration fund, and the scrapping of policies to cut peak rail fares and to give free bus travel to asylum seekers have all been active decisions made by this Government while protecting other areas of spending and maintaining tax cuts for businesses. We cannot sit back and say that this is all Westminster’s fault when we are making decisions such as those and are failing to explore all options to establish sustainable revenue streams to support public services and investment.
The Scottish Greens have a range of proposals on such solutions. There must be strategic reprioritisation towards critical areas including climate action, social security and public health, with a focus on efficiency and impact.
I challenge the Scottish Government to review unconditional handouts to large landowners and the approach of putting money into unsustainable infrastructure projects such as the A9 and A96, and into fossil fuel derivatives. Significant untapped revenue-raising opportunities include carbon emissions land tax, devolution of air passenger duty and reforms to non-domestic rates relief, landfill tax and council tax. Those should be pursued aggressively in order to create a more sustainable fiscal framework.
Last week, a major report by Oxfam confirmed that bringing in the devolved air departure tax and using it to target private jets would raise enough money to scrap peak rail fares permanently, thereby supporting more commuters to make the switch to low-carbon travel.
When the Scottish Greens were in government, development of a carbon land tax and cruise ship levy were well under way, as was the long-overdue reform to council tax. Will the minister confirm in closing today what the Scottish Government’s plans are now for those important measures?
It is time to think again about taxation.
I move amendment S6M-14614.1, to insert at end:
“; believes that, whilst the fiscal levers available to the Scottish Government are inadequate to fully protect public services and communities from UK Government austerity, it must use every power available to address the urgent social, economic and environmental challenges that Scotland faces, and calls, therefore, on the Scottish Government to explore all avenues to fiscal sustainability, including maximal use of existing tax powers, a review of tax reliefs and other subsidies, reform of local government finances, and the creation of new local revenue raising powers, such as the carbon emissions land tax and cruise ship levy, and to reprioritise spending away from programmes that undermine its core missions of tackling child poverty and the climate emergency.”
15:35
I am grateful for the opportunity to speak in this afternoon’s debate.
At the United Kingdom general election in July, the people sent a message. They rendered a judgment on the UK Conservative Government and the Scottish National Party Government at Holyrood. The message was clear and unequivocal: people want things to be done differently. They are tired of the old politics, but the early days of this UK Labour Administration will not have given them comfort, as yet. I hope that that changes. We need the narrative to shift. We need some hope in our politics and in our country.
While the Conservatives fight among themselves, the Liberal Democrats will act as a constructive Opposition, both in this place and on the green benches at Westminster, working in the national interest to hold the new UK Government to account. We will support it when we agree with it. We will look to improve Labour’s plans when we feel that they lack ambition and we will oppose them when we think that they are wrong. That is our responsibility and it is our job.
A responsible Opposition has an essential role in any democracy, and there are now a record 72 Liberal Democrat members of the UK Parliament to do that. They are the largest third party in a century, and they are ready to champion our policies and to hold the Government to account. Those strong Liberal Opposition voices will be louder and more important than ever before.
There is no time to waste in repairing the damage that has been done by years of chaos at the heart of number 10. It is perhaps surprising that the Scottish Government’s motion does not address that chaos and its inheritance. It does not refer to the context of the disastrous state in which the Conservative Party left the nation’s finances. I understand why, but it is important that we contextualise the debate and frame it in that way.
Nor would we know that from Murdo Fraser’s amendment. It does not offer any hint of contrition. It makes no mention of Liz Truss—the Prime Minister who, with an agenda that he and Russell Findlay championed in this place, crashed the economy, sent mortgages through the roof, sent gilts into apoplexy and cost our country untold billions.
Looking ahead to the UK budget, what would Liberal Democrats do differently? The top priority of the new Labour Administration’s first UK budget must be to fix the NHS across these islands. Although policy for that vital area of public service is devolved to the Scottish Parliament, the UK Government has at its disposal much that it can do to improve the context. The Prime Minister recently promised a 10-year plan for the NHS, but without the pledge of any additional funding. Our health service needs reform—of course it does—but reform alone will not be enough to replace ageing equipment, to fix crumbling hospitals and to relieve pressure on our health service so that it will allow people to see a general practitioner at the first time of asking.
We need proper investment, as well as reform, or the crisis will get worse. In particular, we need reinstatement of capital funding. We have heard the Government repeat time and again that the cuts to the capital budget that it received from Westminster are the reason for the hard stop on so many aspects of our health service, such as the reprovisioning of the Princess Alexandra eye pavilion, the national treatment service and the Belford hospital in Fort William. I could go on. However, with latitude and extra extension of funding, those projects can continue.
I do not, however, excuse the Scottish Government for its role in our Scottish health crisis, but there are certainly keys to its resolution and salvation that are available to the UK Labour Government, and we need that: it is so necessary. The Royal College of Nursing Scotland’s intervention today was clear that patient care is being compromised daily. I agree with it on another point, which is that good care costs, but missed care costs more.
Our ministers can invest to save by investing in public health and in early access to GPs, pharmacists and dentists, so that fewer people need to go to hospital in the first place. There are steps that the UK Government can also take.
We need to fix the crisis in social care. If we do that, we can prevent people from being stuck in hospital beds. On any given night in Scotland, there are 2,000 patients who are well enough to go home, but too frail to do so without a care package to receive them there. We need to make social care a profession of choice again. Liberal Democrats across the United Kingdom have urged the UK Government to create in the budget a new national minimum wage that is £2 higher than the national average for our nation’s carers in order to make social care a profession of choice. By helping people to stay healthy for longer, we can bring down waiting lists, get people back to work and give the economy the boost that it needs.
Liberal Democrats are clear on what the people’s priorities are, because we have asked them and listened to them, door by door and street by street. Those people are telling us now that the Labour Party has got it wrong, particularly on its decision to retain the two-child benefit cap—originally, in 2016, our MPs walked through the lobbies of Westminster with Labour MPs to oppose it—which plunges thousands of children into poverty.
Labour has got it wrong on scrapping the winter fuel payment for pensioners just as bills are set to rise again in the teeth of winter. Hundreds of thousands of people should be on pension credit but are not, so that is the wrong way to means test it. I remember, as many members will, the days of the cold weather payment, which was brought in to stop the annual body count of pensioners who died because they felt too uncomfortable, or were unable, to switch the household heating on.
We would raise billions of pounds in tax revenues in a fair way by reversing the Conservative Administration’s tax cuts for the big banks; by closing loopholes on capital gains that are exploited by the very wealthiest people—the top 0.1 per cent; and by taxing the social media giants. We must make sure that the latter pay their fair share, and we should hypothecate that revenue to pump prime our investment in mental health services, because it is the social media giants that do so much of the harm to our young people. That would, in turn, lead to consequentials that we would spend in Scotland.
The Liberal Democrats will be a responsible Opposition in this Parliament and we will urge the UK Labour Government to be bolder. We will tell it when it is wrong, and we will support it when we think that it has got it right. That is what constructive opposition looks like.
I move amendment S6M-14614.4, to leave out from “importance of” to end and insert:
“terrible state of the public finances caused by the mismanagement of the previous UK Conservative administration; believes that the top priority of the new Labour administration’s first UK Budget must be fixing the NHS and social care crisis so that people across the UK can get the care that they need; considers that it would not be right to further squeeze households that have seen their living standards fall, and believes that a fair deal would see the removal of the two-child limit on benefits, the reversal of the cut to the Winter Fuel Payment, and tax revenues raised in a fair way, including by reversing the previous Conservative administration’s tax cuts for the big banks, closing loopholes in capital gains tax exploited by the top 0.1% wealthiest people, and taxing the social media giants so that they pay their fair share.”
We move to the open debate. There will be back-bench speeches of up to six minutes. There is no time in hand, so interventions must be absorbed within members’ time allocation.
15:42
I welcome the decision to locate GB energy to Aberdeen, the announcement of which was made this afternoon. That was the only logical choice, and we await the detail with some interest.
I disagree with Daniel Johnson’s remark that five weeks before a budget is not the time to discuss it—now is exactly the right time to discuss it. I can tell Mr Johnson and other members that the forthcoming budget is the talk of the steamie in my airts and pairts. I met academics at the University of Aberdeen on Friday to discuss energy, and the focus was on what Ms Reeves is going to do in her budget, because, among the industry, the unions and academics in Aberdeen, there is a real worry about the decisions that Ms Reeves will make on oil and gas.
It is not often that I agree with Murdo Fraser, but the allowances regime is extremely important to the oil and gas industry. I am really concerned that, if Labour MPs, the chancellor and the Prime Minister do not start listening, we might well see a flight of capital and the demise of the North Sea industry before a just transition.
I associate myself with much of what Mr Stewart has said so far. It has been said that Labour’s policies could cost tens of thousands of jobs up in the north-east. Labour has said that GB energy will come up to Aberdeen. Does he know how many jobs that might provide?
As I laid out at the beginning of my speech, we need to see the detail on GB energy. We do not know how many jobs it will provide, but according to Unite the union, if Labour carries on with the policies that it has on the table so far, that will lead to 30,000 job losses. Of course, others say that there could be up to 100,000 job losses if we do not get this right. Renewables are our future, but we require a just transition and will need oil and gas for some years to come. The chancellor must listen and must get that right.
In the past couple of days, I have also spoken to the housing sector. Yesterday, I met the chief executive of the Scottish Federation of Housing Associations and, once again, the budget was at the forefront of our discussions because housing associations, like many others, want to see capital investment. We know that our capital budgets have been slashed by £1.5 billion and, if I remember rightly, the financial transactions budget—the loans budget—has been dramatically slashed by some 62 per cent. The housing sector, and others, want to see capital investment, and I hope that Ms Reeves will listen.
What is also on the mind of many of my constituents is the nonsense that has gone on of late. Free-gear Keir is definitely the talk of the steamie, and all his freebies are top of the agenda in any pub, cafe or community discussion. Although Labour MPs seem to be happy about that freebie situation, people cannot understand why, at a time when vital benefits and public services are being cut, affecting the most vulnerable in our society, others are getting free suits, glasses and hospitality. The list goes on, but that must stop.
During the election campaign, Labour promised change, but people did not expect change for the worse, which is what has happened thus far. We had the Labour leader in this Parliament, Anas Sarwar, saying during the course of that election:
“Read my lips: no austerity under Labour.”
That went at the very beginning with the massive cuts to winter fuel payments that are austerity on steroids. Of my constituents, 821 will lose their winter fuel payments because of that dire decision by the Labour Party.
Does the member agree that the winter fuel payment is vital because, even today, the temperature in Aberdeen sits at 9° while Westminster sits at 17°? That is what we are facing: Scotland has lower temperatures.
Please bring your remarks to a close, Mr Stewart.
I agree completely and I know that more than 13,000 folk in Ms Dunbar’s constituency will lose their payments.
Labour has made a choice to cut services that support the most vulnerable, but that is not the choice of the SNP or of Scotland and it should not be the choice of Westminster either. The chancellor can choose to take a different path with the budget and not to follow Tory austerity rules. I hope that she will choose to make a difference.
15:48
We are here to debate Scotland’s priorities, but it is clear that the SNP has no idea what the priorities of the Scottish people are. Time after time, we have watched ministers announce new policies, legislation and vanity projects, only to be forced into a U-turn when they discover that they have their sums wrong. The reintroduction of peak fares on ScotRail and the scrapping of the commitment to free school meals are the latest examples.
This Government continues putting taxpayers’ money down the drain with unnecessary and unwanted independence papers that even Humza Yousaf admitted no one reads, while failing to provide some of the most basic public services or to deliver on repeated promises made during its time in power.
If we were to ask the people who live and work in the north-east of Scotland for their priority, I am sure that they would tell us that it is to finally see this Government deliver on what it has continually promised and consistently failed to deliver for the region. It promised to dual the A96, but that has still not been done. It promised to dual the A90 north of Ellon by 2025, but there is still nothing. It made a promise eight years ago to spend £200 million to cut rail journey times between the north-east and the central belt by 20 minutes, but not a second has come off journey times and barely any of the money that was promised has been committed to make that vital improvement for the people of the north-east. There is a list of broken promises by this devolved Government.
The Labour Government is no better. Its honeymoon period has resulted in the callous decision to rip away the winter fuel payment from those who have worked for their entire lives and contributed to this country. Simultaneously, it has handed over inflation-busting pay rises to its union paymasters.
Sadly, it appears that this failing devolved Government is meekly following suit. Across Scotland, communities are no stranger to the cold. Indeed, Braemar, in the north-east, holds the record, jointly, for the coldest temperature in the UK—a chilling -27° in 1982. However, across the north-east of Scotland, more than 128,000 pensioners are having their winter fuel payments snatched from them. This winter, pensioners the length and breadth of the country are going to freeze in their homes thanks to the decisions that have been made by the parties opposite. Let us be clear that those are political decisions by the Labour and SNP Governments, which reveal their true colours and what they view as priorities.
How about prioritising our energy industry? How about prioritising the thousands of oil and gas workers who are facing a future of uncertainty and the inevitable job losses that are resulting from the hostility of this devolved Government and the extremists whom they invited into Bute house? Meanwhile, we have a Labour Government that has placed the likes of Ed Miliband in charge of our energy security—a man who seems intent on destroying the north-east of Scotland. Both parties have insisted on prioritising the premature decline of our oil and gas industry, slamming our region with increased taxation without a single thought for the economy of the north-east or the impact that their economically and environmentally illiterate positions will have on thousands of families across the region.
The member is absolutely right about the criticality of the energy sector, but does he recognise that we have already lost around 30,000 jobs over the past decade and that, with no other interventions, we would continue to see a decline of between 5 and 15 per cent? This is about managing the transition and ensuring that there is investment. Will he at least concede that point, even if he disagrees with the detail of how we are trying to produce it?
I thank the member for the intervention, but it is also about managing the decline. The Labour Party seems not to be doing that just now. It wants to accelerate that decline and see thousands of jobs lost right across the north-east.
In June, a poll showed that 75 per cent of Scots back our oil and gas industry. That is because the Scottish people have the common sense to understand the impact to the environment and the economy of stopping domestic production before we have reduced demand. Sadly, the sense that the Scottish people have seems far less common in the parties opposite.
Representing the north-east of Scotland, I feel that we are suffering from a double whammy—not just the destruction of the oil and gas industry but the constant raiding of the rural budget, which is having a hugely negative impact. We have seen £32 million cut from the forestry grant scheme and £5 million cut from the nature restoration fund, and £33 million of agricultural support funding from the Bew review has been snatched from our farmers. The rural sector is key to our economy and also to our drive towards net zero, but it seems to be an easy target for this central belt-biased SNP Government.
It is really important to inject some truth into this situation. Money is not missing. The money was ring fenced and it will be returned to the portfolio. Would the member like to account for the £358 million that the Department for Environment, Food and Rural Affairs did not spend in the UK on its agricultural budgets?
There we have it. We know that the £33 million of Bew money has been taken, and there is no timetable for when that money will be returned to our farmers.
The Scottish people know that strong public services have to be paid for. We need a thriving economy and an environment that increases opportunities for employment and we need a Government and policies that will help that economy to grow, yet in Scotland, we have a Government that, since using devolved income tax powers, cost the country over half a billion pounds in lost revenue in 2022-23 alone. We can couple that with the £2.7 billion over the course of this parliamentary session that has been wasted on botched schemes such as the failed ferry fiasco. Money is tight, but only because of the SNP’s financial incompetence.
15:55
This past weekend, what commentators predicted would be a victory lap for the new UK Labour Government at its party conference has been overshadowed by fights, fall-outs and scandal. While the new Deputy Prime Minister told her party’s conference that “Now is our moment,” major trade unions were railing against its first steps in office.
What first steps those have been: cutting winter fuel payments from 10 million pensioners in England and Wales and more than 800,000 in Scotland, including more than 50,000 in South Lanarkshire, where my Rutherglen constituency is based. The general secretary of Unite, Sharon Graham, did not mince her words when she described the cuts as
“cruel”,
saying that the chancellor was
“picking the pockets of pensioners”
while leaving
“the ... wealthiest ... pretty much untouched.”
The new Prime Minister has admitted that there was no impact assessment ahead of the decision to strip that payment. Incredibly, he added that the UK Government was not legally required to produce one. I am sure that members across the parties will agree that the Prime Minister’s statement that he slashed the payment “with a heavy heart” is of no comfort to our constituents, who are desperately worried about how they are going to get through the winter—not least because the energy price cap is set to rise next month, adding an additional 10 per cent to their fuel bills.
The Prime Minister’s hand wringing does not wash with my constituents, and it certainly does not wash with me. The message from every member of this Parliament should be crystal clear: the cut to the winter fuel payment is unreasonable and cruel, and the UK Government should reverse it immediately.
Of course, when there was a flicker of rebellion among Labour MPs at Westminster, it was squashed immediately. When SNP MPs tabled an amendment to immediately abolish the two-child benefit cap, only seven Labour MPs put their heads above the parapet and voted with them. Not a single Scottish Labour MP joined them.
One in nine families across the UK is now affected by the two-child cap. That is a rise from previous figures. Limiting the support that is available to families with more than two children has been widely recognised as the key driver of child poverty. The chief executive of the Child Poverty Action Group, Alison Garnham, has stated that it
“makes life harder for kids,”
by
“punishing them for having brothers and sisters.”
Less than an hour after that Westminster vote concluded, the whip was removed from those seven MPs—a ruthless move, from a ruthless Prime Minister. I say to my Labour colleagues that, if so few of their MP colleagues are prepared to do the right thing, all eyes are now on them—on all three of them who have turned up to the chamber.
As Alison Garnham from CPAG also stated,
“Children are losing their life chances to the two-child limit now—they can’t wait for the new government to align every star before the policy is scrapped.”
The two-child cap is keeping families in poverty, and the UK Government must use its first budget to scrap it immediately.
Before the general election, Scots were promised a Labour Government that would give the Scotland Office £150 million to tackle poverty. The then shadow Secretary of State for Scotland, Ian Murray, appeared on the front page of newspapers saying it was
“the change Scotland ... can get”.
Confusingly, the new Scottish secretary—the very same Ian Murray—said last weekend that the £150 million figure was “made up”, before retracting that claim and admitting that he does not have the cash in a “war chest”. The change that Scotland has seen instead has been a £160 million cut to the Scottish Government budget, before the UK budget has even been announced.
In that context, it is little wonder that prominent economists are sounding the alarm before the UK budget, calling for the brakes to be pulled on the vicious cycle of underinvestment and continuation of Tory fiscal rules and austerity.
The call is also coming from inside the house. One of the seven suspended Labour MPs, Richard Burgon, managed to speak at a Labour conference fringe event. He warned against the UK Government heeding the
“siren voices on the political Right, in the media, for austerity and for cuts to living standards.”
He also pleaded with the new Government to make a fresh start on living standards and the funding of public services. Given all that I have described and all that we have heard so far, I am afraid that his words might be in vain. As a constituent related to me last week, the Labour Party continues to hammer a message of change on social media and in the press, but for many of my constituents, while there has indeed been change, that change has been for the worse.
Let us be under no illusion about what is happening: the new Labour Government is publicly laying the groundwork for another brutal round of austerity. That may not be what it calls it, but that is what it is. Fourteen years of Westminster failure have left public services in the UK at breaking point. The SNP Government in Scotland continues to push at the constraints of devolution by delivering game-changing policies such as the Scottish child payment, and spending millions of pounds to mitigate punitive UK policies such as the bedroom tax. However, it is impossible to mitigate everything, and Westminster’s painful economic decisions severely impact the Scottish Government’s spending powers.
Since its election, the new UK Labour Government has dodged and brushed off scrutiny, rowed back on promises and slashed budgets. Labour’s cuts have been a political choice. When its budget is delivered in October, it has the opportunity to deliver the change that it promised. It must take ownership of the privilege of office that has been handed to it, and put an end to the politics of austerity for once and for all.
16:01
The budget on 30 October will be a significant event. It will be the first budget of the new Labour Government after 14 years of Tory economic mismanagement, and it will be historically significant too, as Rachel Reeves will be the first female Chancellor of the Exchequer to announce a budget. The fourth of December will also be an important date—indeed, arguably the most important date in the Scottish parliamentary calendar—as it will be when Shona Robison gives her budget statement. However, that will be far less unique, in that it will be the SNP Government’s 17th budget in a row. Perhaps the key difference between the two Governments is that it is the Scottish Parliament’s job to hold the Scottish Government to account on the latter, not to grandstand on the former.
The phrase “I will take no lectures” is frequently heard in the chamber. I do not think that I am alone in thinking that it is overused, but what else are we meant to say to the SNP Government when it tries to tell anyone how to manage the public’s finances? The SNP Government needs to get its own house in order before telling anyone else what to do. The reality is that people in Scotland are paying more and getting less under the Scottish Government. Working people in Scotland who are earning only £29,000 are paying more in income tax than their counterparts in the rest of the UK.
Similar to the Tories, the Scottish Government has wasted billions of pounds of Scottish taxpayers’ money since it came to power, because of its incompetence—and that is before we get to the pet projects and the gimmicks—and public services are getting weaker as a result.
The SNP, under John Swinney, Kate Forbes and Shona Robinson, has spent budget after budget failing to focus on growing the economy, never mind delivering it, and we are now paying the price for that failure. According to the Office for National Statistics, since 2014, GDP per head in Scotland has grown by only 4.3 per cent, compared with the rest of the UK, where it has grown by 6 per cent. That means that Scotland’s growth rate is only just more than two-thirds of the UK’s growth rate during the last decade. That has consequences for our economy, living standards and the Scottish Government’s budget. Those consequences have been laid out by the Scottish Fiscal Commission, which said that if the Scottish economy had simply matched the economic performance of the rest of the UK since income tax was devolved in 2016, the Scottish budget would be significantly better off.
Professor Graeme Roy of the commission told the Finance and Public Administration Committee that
“because of relatively slower growth in the Scottish economy since income tax was devolved ... We estimate that the economic performance gap means that the net position in 2022-23 was around £624 million lower than it would have been had Scottish economic performance matched that of the rest of the UK.”—[Official Report, Finance and Public Administration Committee, 3 September 2024; c 3]
That leads, for example, to the SNP making decisions to abandon policies such as free school meals for all primary aged children and to reintroduce peak fares—things that it does not want to talk about today.
Let us not forget that, less than 12 weeks ago, the people of Scotland gave their verdict on the Tories and the SNP when they supported the election of the new UK Labour Government and 37 Scottish Labour MPs. If the SNP wishes to spend time discussing the UK budget, that is of course its prerogative, but it is for its nine MPs at Westminster—that is what is left of them—to take that forward.
Scottish Labour MPs and the new UK Labour Government have been clear that their number 1 priority is economic growth. For nearly three years, the SNP-Green Scottish Government could not even agree on the concept of economic growth, let alone deliver it in any way that could be seen as a priority. Meanwhile, the new UK Labour Government is focused on fixing the foundations to create such growth, so that we can raise living standards for everyone and rebuild public finances to enable us to invest in public services. That will be the budget priority.
As Daniel Johnson mentioned, yesterday, the Chancellor of the Exchequer was clear that there will be no return to austerity—although we should not underestimate the legacy that the Tories have left the new UK Government. Murdo Fraser mentioned borrowing. It is now more than double what it was before the pandemic, and overall debt is now nearly 100 per cent of GDP, which represents the highest level since the 1960s. Before the election, the previous Conservative Government did not factor in the impact of a series of new challenging pressures on the public finances. Spending commitments were made without funding being put behind them. As Mr Johnson said, wrong assumptions were made about this year’s public sector pay award. Therefore difficult decisions might need to be made. Politics is about choices, but this budget is an opportunity to start to turn the page on years of economic mismanagement and for the new Government to deliver on our manifesto commitments.
The new Labour Government’s top priority is economic growth. Key to achieving that will be fixing the foundations of the economy. The UK Government might have changed, but it is clear that the SNP’s approach remains the same: to blame someone else for its own failures, mismanagement and incompetence. This debate has been another attempt to distract from those failures.
As I said earlier, too often in the chamber we hear the phrase “I will take no lectures.” The one phrase that we never hear from either the SNP or the Tories, though, is “Mea culpa.” Perhaps we should hear that more often when we discuss the current state of our public finances.
16:07
Given that Scotland’s budget is tied to decisions on public spending that are made by the UK Government south of the border, I am sure that members across the chamber will recognise the importance of the upcoming UK budget. As Labour minister Wes Streeting said,
“All roads lead back to Westminster,”
because decisions that are taken there have an impact on every part of the UK, irrespective of devolution.
In the past few years, Scotland has been dragged out of the European Union against our will. We have had to endure Prime Ministers such as Boris Johnson and Liz Truss, who people in Scotland did not vote for. We have lived through a pandemic, and we are still suffering from the Westminster-caused cost of living crisis.
As the finance secretary highlighted, prominent economists, including University of Glasgow principal Professor Sir Anton Muscatelli, are asking the UK Government to stop the underinvestment that has resulted in a vicious circle of stagnation and decline. We have faced more than a decade of austerity under the previous Conservative Government. Despite its protestations, Labour is continuing that pattern by keeping to Tory fiscal rules. It should learn the lessons of the past 14 years and not repeat the same damaging mistakes as the Tories. Now is the time for the UK Labour Government, which has all the necessary economic levers, to invest in our people and public services. In a briefing published yesterday, the Joseph Rowntree Foundation was clear that that is essential, because
“business-as-usual economic growth in the UK”
will not reduce poverty. Similarly, Shelter Scotland was very clear in its key asks of the UK Government, which are to end austerity, scrap the benefit cap, the bedroom tax and the two-child limit, and increase Scotland’s capital budget. To me, those are simple, reasonable calls. With all the powers that the Westminster Treasury has, they should be easy choices for the UK Government to make. Instead, we are told by Keir Starmer that his first budget is going to be “painful”.
The SNP is calling on the UK Government to scrap the two-child cap and reinstate the winter fuel payment for pensioners. Scottish Labour is today arguing against those ideas. Not content with continuing cruel Tory policies such as the two-child cap and austerity fiscal rules, Keir Starmer’s Government has gone further, taking the winter fuel payment from thousands of vulnerable pensioners. Rather than delivering change, the UK Labour Government is short-changing the people of Scotland.
The Labour amendment is full of hubris. Back in Downing Street for five minutes, Labour is already taking voters for granted. That arrogance is the mistake that Labour made in Scotland in 2007, and it is why it is currently the third party in this Parliament. In fact, recent polling shows that most voters think that the Labour Government is just as bad as or worse than the last Tory Government, while Keir Starmer’s approval ratings are at their lowest level ever, at -26. Furthermore, more than half of voters in Scotland think that the Labour Government is not acting in the best interests of Scotland, and a majority oppose Labour’s cuts to winter fuel payments. If Labour politicians do not want to listen to reasonable calls from SNP politicians, or from experts or stakeholders, perhaps they should reflect on those poll findings and listen to the electorate, many of whom lent them a vote to kick out the Tories.
The Scottish Government motion should not be controversial for any MSP who believes in fairness and social justice. We in the SNP are quite clear that the Labour Government in Westminster must scrap cruel Tory policies such as the two-child cap and the bedroom tax, and they must put an end to the Conservative fiscal rules that underpin austerity. If those measures are still in place after Labour’s first budget in October, then those policies will become Labour’s rape clause, Labour’s bedroom tax and Labour’s austerity. With policy choices like that, alongside the cuts to winter fuel payments, it is clear that Labour does not serve the people of Scotland from cradle to grave.
In contrast, the SNP is investing in the people of Scotland. In Government, the SNP has created the game-changing Scottish child payment, championed the roll-out of the real living wage, expanded access to free personal care and delivered free bus travel for under-22s, alongside older and disabled people.
The SNP Scottish Government will always do its best with the powers that it has—but, with Westminster decisions continuing to make life more difficult for households, communities and businesses, it is clear that independence is a vital necessity for Scotland.
16:13
I start with an assumption that the Government has brought the debate to the chamber in good faith, so that we can debate the budget priorities of the Labour Government. If that is the case, the cabinet secretary—who will perhaps catch up on this when she comes back into the chamber—may be in position to take a clear-eyed look at where the UK’s bank balance has been left by the outgoing Conservative Government. It is not that the Tories just dipped into the country’s overdraft to get through a tight spot in the hope or knowledge that they could pay the money back later; the Tories drove a horse and cart through the country’s overdraft limit—and kept going and going and going. The Treasury had a £9 billion reserve.
Will Mark Griffin take an intervention?
Brian Whittle (South Scotland) (Con) rose—
I am spoilt for choice.
Will Mark Griffin member take an intervention from the front bench?
I will take Mr McKee’s intervention.
Thank you very much.
Mark Griffin is going on about the “overdraft”, as he calls it, that was inherited by the UK Labour Government. Why did the Labour Party go through the general election denying—despite us, experts and others telling it—that there was a £20 billion black hole in the finances? As soon as Labour got into power, it recognised that there is indeed a £20 billion hole in the public finances.
The Labour Party was clear throughout the general election that there were going to be tough decisions as a result of the mess that the Conservatives had left, but we did not realise how bad that mess was going to be. The chancellor set that out and said that there would be an immediate review by the Treasury. BBC Verify and the OBR have also confirmed that. The Conservatives committed to spending that money because they knew that there was no way that they would ever be asked to pay it back, and now the country finds itself with that £22 billion bill.
I did not hear the member complaining much when the Conservative Government spent £400 billion on the furlough scheme to make sure that businesses in Britain would still be there after the Covid pandemic.
We are comparing apples and oranges here—of course we did not complain when the Government spent money on furlough. We complained when the Government spent a ridiculous sum of money on the Rwanda scheme, which we knew was never going to come to fruition. Taxpayers’ money was marched right out of the country.
Labour will fix the £22 billion mess that the Conservative Government left, not because it is easy or because it will win us elections or make us more popular but because some things are more important and because it is the right thing to do.
Will the member give way?
I am sorry, Mr Stewart, but I have taken a number of interventions and I am halfway through my time already.
By taking those tough decisions now, getting our public finances under control and offering stability after years of chaos, we can maximise the chances of spreading fairness and opportunity across the country for the next five. I assume that this Government has no intention of suggesting ways of fixing the foundation of our economy, which will help us to get out of that black hole, because it has been in power for 17 years. What advice could this Government offer the new chancellor? With the Government having delivered three emergency in-year budget cuts in a row, what wisdom is this Government best placed to offer the new chancellor on financial management and sound decision making?
The chancellor has talked about removing waste by removing spending on consultancy and refusing to pay any more money towards the dodgy Covid contracts that the Tories gave their friends, and she has vowed to recoup that money. The SNP has 17 years of failed financial interventions, incompetence, waste and inefficiency to look back on, and that wasted money has come at a price of more than £5 billion of taxpayers’ money. When it comes to offering suggestions and learning lessons, I suggest that the Government takes a page out of the new chancellor’s book rather than the other way round.
Rachel Reeves spoke about the fundamental link between economic growth and housing for everyone. Labour has already begun to deliver on the commitment to build 1.5 million homes over this Parliament. In contrast, the Scottish Government took the decision to strip affordable housing budgets, and we have today the worst homelessness figures on record. There are 10,000 children in temporary accommodation, and housing starts and completions at the lowest level in years. That is the SNP’s financial decisions—the inefficiency, waste and mismanagement—coming home to roost, and children in temporary accommodation are paying the price for that.
To govern is to choose. The chancellor has made difficult decisions, but she has had to. They will mean that, when the foundations of the economy have been rebuilt, Britain’s public services, the national health service and people’s mortgage payments can never be put in the danger that Liz Truss and the Tories put them in. The chancellor has been clear that there will be no return to austerity and that budgets will grow.
Let us assume that this debate has not been a waste of parliamentary time attempting to distract voters from the Government’s ever-increasing list of abject failures. Let us assume that there was merit in discussing the priorities of a budget that has not yet been published, but we cannot assume that, can we? This is the real world and this country is crying out for change after years and years of SNP and Tory failure.
16:20
I say to Mark Griffin that speaking up for Scotland’s pensioners is never wasted time.
In 2005, when Labour and the Lib Dems were in power here—and Labour was in power in Westminster—Labour led a debate on closing the opportunity gap. I focused on pensioner poverty, with one in five pensioners then living in poverty. Then, as now, the solution was a decent state pension. That, of course, as my state pension is, is subject to tax, if relevant, but then—as now—the UK state pension, compared to those in other European nations, including Norway, the Netherlands and Iceland, was abysmal. Then, as now, UK pensioners were forced to claim pension credit. Then, as now, the figure for those not claiming was more than 30 per cent. Some 20 years on, the figure for non-claimants is just under 40 per cent, so it has increased.
Therefore, Labour knew those figures then, as it knows them now, and those were, no doubt, factored into the savings that it would make, knowing that millions of pensioners will fall foul of pension credit rules. That was bad enough, but now it denies them their very basic right to their winter fuel payment. The online application form is bad enough, but I have the paper form here—all 24 pages of it, with 24 pages of notes. Here are some samples of the questions. On page 23, one of the questions is:
“Have you claimed Tax Credits in the last 12 months?”
If the answer is no, you go to question 102. Further down the same page, question 111 asks:
“Do you or your partner pay ground rent for the place where you live?”
If you answer yes, it says, “Please send us proof”. There are loads of questions such as that—they are bewildering. It is no wonder that people do not fill in the form. It is set up for people to fail to claim. No wonder applications are desperately low. On top of that, if you survive the application form and get to the end of the 24 pages, you might just be above the cut-off point.
By the way, when I received my winter fuel payment, like many other comfortably-off pensioners, rather than return it to the Treasury, I donated it to charities, many of which are necessary because of successive decades of austerity.
According to Independent Age, in my constituency 1,445 pensioners do not claim pension credit and 92 homes in Midlothian and 133 homes in the Borders will go cold, just because they do not claim pension credit. Of course, those figures are only for those who are entitled to pension credit.
To add insult to injury, in energy-rich Scotland, we have higher energy costs and colder, longer and darker winters, and we are losing this vital support as a result of a cruel policy that was dreamed up in the balmy home counties. Oddly enough, if you live abroad you will still get the winter fuel payment if you claim pension credit. Maybe we should all move to sunny Spain.
Seriously, in Scotland, there will be excess illnesses and even deaths. Shame on Labour—Labour, which I thought was for the people. It is not for the people. It looks after itself, but it will not look after Scotland’s pensioners. Shame on the 37 Scottish Labour MPs, who know the score but failed to speak up for Scotland’s pensioners. There is no need to wonder why there was not a single cheep about this in its manifesto, when it was obviously planned. If it had been in the manifesto, I do not think that there would be 37 Scottish Labour MPs.
I call John Mason, who will be the final speaker in the open debate, after which we will move to closing speeches. You have up to six minutes, Mr Mason.
16:23
It is good to have a bit more freedom, now that I am technically an independent MSP. I think that I am also the only member of the Finance and Public Administration Committee to speak, but I do not pretend to speak for it.
As we consider the upcoming UK budget, there are some issues that deal with the here and now that will impact on the Scottish budgets for 2024-25 and 2025-26, but it would also be good to hear from the Chancellor of the Exchequer about longer-term major changes that would benefit Scotland and the UK.
To start on a positive note, I would certainly welcome suggestions from Rachel Reeves herself that, as the first female chancellor, she would seek to improve life for women and close the gender pay gap. Following the review by Dame Alison Rose, Rachel Reeves has said that she would provide
“a funding pool ... for female-founded businesses”,
which sounds good.
As the Scottish Government motion says, we need more investment, in particular in
“public infrastructure and ... in projects that support the transition to net zero”.
The immediate question, then, is where that money should come from. UK borrowing is already very high at some £2.7 trillion, which is around £49,000 per head of population. However, an argument can be made for more borrowing specifically for capital expenditure. If we spent money on house building, those houses would last for 50 years or more. It is reasonable to borrow for such a purpose, because that money would be repaid over the lifetime of those houses.
However, I am much less keen on borrowing for day-to-day spending, because all that does is pass the cost of our current expenditure on to our children and grandchildren for them to pay. That is not right or fair. We are a rich country, whether we mean Scotland or the UK, and we should be paying today’s costs today, not leaving it to future generations to pick up the bill.
Yes—many people are impacted by the cost of living crisis, but we should remember that many other people are not affected. We see, for example, that some restaurants are frequently packed out. Just last Wednesday, after the independence rally, two of us went out for a meal at 9 pm and had to queue for a table. Some restaurants in my constituency are so busy that people always have to book ahead. We are told that some 200,000 Scots travelled to Germany for the Euros, and people are spending large sums on Taylor Swift and Oasis tickets. Some people are short of money, but some of us have much more money than we need and could be paying more in tax.
Therefore, when it comes to this year’s and next year’s UK budgets, I would very much support a universal winter fuel payment. After all, we know that many pensioners who are in need are not claiming the pension credit to which they are entitled, as Christine Grahame eloquently set out, so it cannot be right to use pension credit as a test of need.
Similarly, Westminster should get rid of the two-child limit. Apart from anything else, we need more children—not least so that, in the future, we have more people of working age. We should be doing all that we can—as the Scottish Government is doing with the Scottish child payment—to encourage larger families.
Another justifiable UK change would be to reduce VAT on building repairs and maintenance.
If resource, or day-to-day, spending is not to be paid for by borrowing or by cuts to other parts of the budget, how is it to be paid for? It seems logical that that would be done by raising taxes as a whole. We heard some suggestions from the Greens on that. The UK is a relatively low-tax country, in comparison with our neighbours. There are different measures, but according to the Organisation for Economic Co-operation and Development and Eurostat, our tax-to-GDP ratio is 34 per cent, compared with the Netherlands and Germany at 39 per cent, France at 45 per cent and Denmark at 47 per cent.
The Conservatives tell us that we need to be competitive, by which they mean having low taxes, but there is also being competitive in the sense of having better schools, health services and care for the elderly, and the UK is not currently competitive in those regards.
There are various ways in which the UK could raise more money. Capital gains tax could be raised, including on homes. Is it not unfair that home owners can make big gains on their homes tax free, while tenants have no such possibility, so the gap between the richer and the poor inevitably gets wider?
National insurance contributions stop at age 66, so I am not paying any national insurance, and neither is Christine Grahame. How can that be right? Someone who is earning less than I am, with many family commitments—
Will the member take an intervention?
Very quickly.
I just want to say that the member actually does not benefit from that change, because his tax goes up accordingly.
Okay—well, we will deal with that another time. [Laughter.] The point is still that national insurance contributions should continue with age, and the chancellor could change that.
Thirdly, how about a tax on wealth? If Labour really wants to reduce the gap between the richest and the poorest, surely wealth needs to be taxed to a much greater extent.
As well as those relatively short-term adjustments, we could do with some more fundamental changes to the UK tax system. We could combine income tax and national insurance to create a much simpler and more progressive system. My suggestion would be to start at a combined rate of 10 per cent and then to go up to 20 per cent, 30 per cent and so on. Another suggestion is to make the rates for income tax, capital gains tax and corporation tax much more similar to one another, which would take away the artificial incentives for individuals to incorporate or to use similar tax avoidance measures. Both those changes would make it much simpler for the devolved Parliaments to use tax measures themselves.
To end on a more positive note, I welcome the suggestions from Labour that it would introduce multiyear funding as the norm. That would help Scotland, Wales and Northern Ireland to budget ourselves. It cannot be right that, during an actual fiscal year, Westminster starts spending more money—be it on a pay increase or whatever—and we have, in effect, to match that by making cuts elsewhere.
We await the UK budget on 30 October. I confess that I am not optimistic: I fear that Scotland will be left to pick up the pieces.
16:30
A fortnight ago, I engaged in a very fun activity with Martin Whitfield MSP and Monica Lennon MSP at the University of St Andrews union. It was the show debate for its freshers week, and it was a great event. The motion that was before the house, for which I was lead proposition, was that “This House has no faith in His Majesty’s Government”. Just 10 weeks in, as we were, I thought that that was a little miserly, but it was an interesting thought experiment, to which I applied myself.
A large part of my argument was around the idea that it is not really possible to have faith in a Government that is elected with a landslide majority, in one of the oldest Parliaments in the world, on just 34 per cent of the vote of the people who bothered to show up and cast their ballot during the election—80 per cent of the adult-age population did not vote for Labour, but such is our arcane voting system.
Since that time, however, the faith that I want to have in Labour has been eroded still further, to a degree. I understand that it needs to move cautiously. I welcome some moves that it has made—in particular, the announcement this afternoon that GB energy will be sited in Aberdeen. I very much hope that that will pump prime the just transition of that vital region of energy security.
However, Liberal Democrats have been surprised and dismayed by some of the other decisions and omissions of which the Labour Party can be found guilty—for example, the retention of the two-child cap, which has been well rehearsed this afternoon, and removal of the winter fuel payment, which I covered in my opening remarks.
I agree in large part with much of the substance of the Government’s motion and the remarks of the finance secretary. The statements and assertions of both are absolutely true, but she fails to acknowledge the analyses of very august institutions such as Scotland’s own Scottish Fiscal Commission—the Government-led body that marks the financial homework of this Government. It has stated that many of the fiscal pressures that we face—in the form of the in-year spending cuts that we were asked to look at very recently and the cuts that we anticipate—are in large part caused by the political decisions of this Administration.
We have yet to see the measure of those cuts, but Murdo Fraser is absolutely right to say that it is not the hallmark of a progressive Government to lay down a freeze in council tax under the guise—as it may be—of protecting people from the cost of living, when most of us actually agree that the council tax is an iniquitous policy and a regressive tax. By freezing it, we are helping well-off families more than we help those who have nothing.
There is no escaping the malignant inheritance that was handed down by the hapless Conservative Government to the new Labour Administration. I do not think that we can blame it for that. It is astonishing to see the cognitive dissonance of former Prime Minister Liz Truss, who just yesterday—some two years after the failure of her disastrous economic plan—issued an “I told you so” video. I do not know what universe she is living in.
Murdo Fraser made some compelling and amusing remarks in a speech that was for some debate, although I am not sure that it was for this debate. It is a fascinating exercise to hear him offer his insight on tax policy. I am old enough to remember when Murdo Fraser came to this chamber proselytising for the Truss-Kwarteng mini-budget and demanding that the Scottish Government reflect that budget’s tax policy in its own. It is a position that perished alongside the lettuce that defeated Liz Truss in longevity.
Daniel Johnson picked up the theme of how a panic in the city was created by the financial incompetence of the Conservative Party under Liz Truss. He rightly pointed to the subsequent collapse of the gilts markets, which we have not really seen in modern British economic history. It set the markets into panic, massively devalued our currency and set interest rates sky-rocketing—the cost of which is being felt by our constituents in the mortgage bills that they pay.
In a typically measured contribution, Daniel Johnson called for patience for his Government. I understand that. He asked us to wait, but the straws in the wind are still troubling. I come back to the fact that Labour and Liberal Democrat MPs walked through the “no” lobby together in opposition to the two-child cap when it was first introduced. The Liberal Democrats spent five years preventing the Tory Government from introducing the policy, and I am very sorry that the Labour Party does not still hold to the principle that the policy is iniquitous and is causing material harm to people.
Also, what was true about the iniquities of the rape clause then is equally true now.
On the winter fuel allowance, I made reference to the fact that we can all remember the days before the cold weather payment, which was introduced to stop the spectre of pensioners in our modern developed country dying for want of putting the heating on. I hope that we do not go back to those days.
It was interesting to hear Kevin Stewart reference capital flight several times in his speech. Clearly, he is a late convert to that notion. On several occasions, my party has supported his Government on tax policy, but we have stopped doing so in the past couple of years because of capital flight: behavioural change is a thing.
Liberal Democrats would fill the hole that has been created in our national finances by doing several things. We would reverse the tax decisions on big banks, hammer the social media giants—which cause so much harm to the mental health of our young people—and close loopholes in capital gains tax. All those things represent cogent economic policy that would not harm the most vulnerable people in our society.
16:36
In reflecting on the debate, I note that quite a few members have spoken about the causes of the financial situation that both Governments face, but something has been missing from the reflections on the causes.
There was substantial opposition to what the Conservative Government did over the past 15 years, whether it was the austerity that began under the coalition Government; the obsession with public sector debt, which should be seen as a source of investment rather than something to be ashamed of; the decision to allow huge amounts of private wealth to be hoarded by super-rich individuals and corporations, which has resulted in a drag on investment; the decision to go for the hardest of hard Brexits; or Liz Truss’s mini-budget. However, the Conservatives crashed on with their own agenda, despite that solid opposition. After hearing some Conservative members’ speeches today, I think that one or two of them might have contributed to the script for Liz Truss’s bizarre self-pity video yesterday—“If only I’d been allowed to crash on with the mini-budget after all.”
We can contrast that with the criticisms that have been made relating to the reasons for the Scottish Government being in a very difficult financial situation. Some of the difficulties have been imposed from outside as a result of UK changes, but some of them, to be sure, are the result of the Scottish Government’s decisions.
The difference is that most of those decisions were supported by a large majority of members of the Scottish Parliament. I did not support some of them. For example, for many years, the council tax freeze has had a damaging impact on public sector finances and has benefited the wealthiest, but most members supported that policy. I criticised capital budgets being committed to funding wildly expensive, unsustainable and high-carbon infrastructure, but most members supported that. However, I strongly supported the Scottish child payment and fair pay for public sector workers, and most members supported those policies, too. Therefore, most of the decisions that have been made in Scotland that have worsened the Scottish Government’s financial position have been made with political support from across the parties. That is worth reflecting on.
Does Patrick Harvie now regret supporting the council tax freeze that was Government policy quite recently?
I never did. In fact, the policy was criticised not only by dangerous extremists but by many others, including anti-poverty organisations. It was a bad policy and it was bad politics.
I understand why the Government has lodged the motion, and I do not disagree with anything in it. The Government wants to draw attention to the impact of austerity to date, the on-going austerity fiscal rules and the lack of a serious investment plan from the UK Government. Daniel Johnson mentioned some areas where the UK Government intends to invest, but, even before the election, Labour had dropped the £28 billion investment pledge on net zero, which would just have brought the UK up to a level of investment comparable with that of our neighbouring countries.
The Scottish Government is also criticising the process and the lack of co-operation with the UK Government. Even the winter fuel payment decision came with barely a moment’s notice to the Scottish Government. There are also points about the lack of Scottish autonomy and the severe limits on Scotland’s ability to make different choices. I understand why those points are being made.
The Government motion states the truth, but it is an incomplete truth. The Green amendment seeks to add to the motion, because some important parts are missing. In particular, there is a lack of recognition that wealth taxes and taxes on high incomes and corporate profits are an absolutely necessary part of the Scottish and the UK path out of the incredible fiscal challenges.
Will Patrick Harvie give way?
I am afraid that I need to make progress.
Also missing from the motion are the choices that we have. The cabinet secretary and the Government want policy change from the UK Government and a change in the powers that are available to the Scottish Government, and I want both of those changes as well. However, whatever context we face of UK policy or Scotland’s powers, the Scottish Government and Parliament still have the responsibility to use the powers that we have to the maximum, and we are not yet doing so.
The Scottish Greens not only have made the case for policies such as the Scottish child payment but have successfully brought to the chamber solutions showing how we can pay for them. It is because of the work of Greens over the years that we have progressive taxation in this country and an extra £1.5 billion in the Scottish budget every year. It is because of the work of the Scottish Greens that we have already made progress on more local powers as options for councils, such as council tax on second and empty homes, the transient visitor levy and the workplace parking levy. As my colleague mentioned, there is more to come on that, with measures such as the carbon land tax and others. We need to go further on that.
Finally, we need to cut unsustainable investment in high-cost, high-carbon infrastructure and instead invest in infrastructure that will cut costs and emissions, such as energy-efficient homes and buildings that use renewables rather than fossil fuels. Today, we will support not only the Green amendment but the Government motion. However, whatever happens with the vote, the challenge will remain.
You need to finish.
Regardless of the policy context or the power context, the Scottish Government will have to go further with the powers that it has.
16:43
It has been a fascinating debate, and I have to say, not churlishly, that I expected worse than we heard. There have actually been some very interesting and fascinating contributions. I want to start with the cabinet secretary’s confirmation that there is better communication between the two Governments. At the end of the day, politicians who are elected to any venue represent the people who send them there, and it is an obligation to have those discussions. They are sometimes difficult, but it is only through those discussions that solutions will come about.
There is also the welcoming of GB energy and, in particular, the Scottish Government’s input to the memorandum of understanding, which is important. I am sure that, as many speakers have done, all members welcome the announcement that GB energy will be based in Aberdeen, which is the right place, and that, in the future, there will be sites in Edinburgh and Glasgow, so that the challenge of drawing on the expertise in this country can be met.
With my tongue slightly in my cheek, I welcome Murdo Fraser’s contribution from his new-found wonderful world of not being in government anywhere, with the freedoms that that allows him. I look forward to the future, when we will have more and more of those contributions.
I agree with Mark Griffin that important things have been discussed during this debate on Scotland’s priorities, which sits in an environment in which the Scottish Government will sit down with the UK and Welsh Governments to discuss these matters. It also sits in the environment of a general election that happened only a few months ago. A number of speakers have talked about polling, and it was only 12 weeks ago that 37 Labour MPs were sent to Westminster to fight for Scotland—not just from the sidelines but from inside the Cabinet and around it, and they will do that.
It is a short period of time since those Labour MPs were elected, but, from what I have heard, there is a lot of buyer’s regret. Does Mr Whitfield not recognise that continued austerity and the cuts to winter fuel payments are having a real impact on folk and that people have already lost trust in the Labour Government?
With regard to buyer’s regret, I could point to a number of doors that I have knocked at in the past decade, and certainly in the run-up to the election, and to people who have changed their view. On buyer’s regret about the Government that they voted for, what they now have in the UK is a Government that is being bitterly honest about the position in which it has found itself.
It is right that members talked about the winter fuel allowance, but it is also right to say that the UK Government has identified £6 billion spent on the asylum system with nowhere for that money to come from, as well as £3 billion spent on rail projects. The Conservative Government delayed the spending review until after the election and then updated the individual departments’ budgets at fiscal events, putting even greater pressure on. Indeed, the Treasury reserves have been spent three times—
Will the member give way?
I ask the member to give me one moment, because I have an apology to offer to her before I let her in.
The Treasury reserves were spent three times in just three months, and that was 18 months after the economy was crashed by the underfunded promises that were made previously.
It is also right to say that discretionary spending commitments were made by the previous Government without putting them into any spending envelope. The fact is that, when the Labour UK Government went in, it was not just the politicians but those who advise them who were completely and utterly unaware of that. The risk to the UK economy was phenomenal.
I must apologise to Christine Grahame for missing her contribution, which I will review later. As some recompense, I will give way.
That is very gentlemanly of you, Mr Whitfield.
Through the chair.
I beg your pardon, Presiding Officer. The member is a gentleman. Does he think that making the winter fuel payment dependent on claiming pension credit is the right thing to do for Scotland’s pensioners? Yes or no?
I am less of a gentleman.
I redirect the gentlemanly comment to the Deputy Presiding Officer.
At the time, with the financial crisis that the Government faced, it was a way of identifying a saving. We should remember the £150 warm home discount and the £500 million household support fund, which will deliver consequentials to the SNP Government and support low-income pensioners. Hard decisions have to be made—indeed, we have heard both the cabinet secretary and the chancellor talk about the challenges of the budgets that they have to present.
I would like to make comments about a number of other contributions that were particularly valuable, but I am conscious of the time.
I find it disappointing that this very important debate has taken place in the absence of a committee. The committee’s journey abroad was fixed many months ago. To echo John Mason, a newer member of that committee, although he was not speaking on behalf of the committee, we have the missed contributions of those voices this afternoon.
I am grateful, Deputy Presiding Officer.
16:49
I just want to say at the outset that, when listening to Martin Whitfield say that the Government was being bitterly honest, I thought that the public might have welcomed that bitter honesty during the election.
I would say that I welcome the opportunity to speak in this debate—
Will Brian Whittle give way?
I am just warming up. I am a wee bit older now and I need a wee bit more of a warm-up.
I would say that I welcome the opportunity to speak in this debate, but let us be honest: we have spent two hours on a topic that could basically have been a letter from the cabinet secretary to the chancellor. All this after a mere 30 minutes devoted to winter preparedness in Scotland’s NHS—but what else should we expect from a Scottish Government that always prioritises grandstanding over efficacy?
Even a brief glance at the Government motion demonstrates a total lack of self-awareness and economic credibility. It attacks others for underinvestment, resulting in stagnation and decline, yet Scotland’s economic growth under the SNP’s stewardship has failed to keep pace with that of the rest of the UK. There is an economic performance gap to the tune of £624 million. To give some context, that is about 10 times what the Scottish Government would have needed to avoid real-terms cuts to local authority core funding.
On that point, where is the Conservatives’ economic and fiscal credibility? On the one hand, we have heard calls for tax cuts this afternoon and, on the other hand, there have been calls for expenditure in a number of areas of Government expenditure. That is economic illiteracy. Will Brian Whittle not accept that that does not add up?
Actually, I am very grateful to the cabinet secretary for that intervention, because it highlights why the Scottish Government continues to fail. The cabinet secretary should understand that, when we invest in certain portfolios, we do not have to spend in other portfolios. She well knows, because she has been health secretary, that investing in things such as education is an investment in health and in many other portfolios. However, the way in which the Scottish Government views investment in portfolios is why it continually fails.
I should commend Scottish Labour members for their contributions today, because they have clearly learned their lessons well at the SNP school of blame shifting, where rule 1 is that it does not matter if you are the one in power—it is still somebody else’s fault. Labour has slashed the winter fuel payment, a benefit that was introduced by Gordon Brown and left untouched by six Conservative chancellors, even as they fought to clean up the mess of the 2008 financial crash, met the huge costs of furlough in the pandemic and supported households through the cost of living crisis; it was axed by a Labour chancellor within weeks of taking office. I am not surprised that that decision has shocked the SNP; after all, it has been saying that anyone earning more than £28,000 is a high earner, and here is a Labour chancellor saying that people earning as little as £11,300 are well enough off to manage. This UK Labour Government came in promising change, and change it has delivered.
Given that the Office for Budget Responsibility is on the record as saying that the budget black hole was not known about or established, would Brian Whittle acknowledge that the facts were not known, and that that was the responsibility of his Government?
As Murdo Fraser said, £9 billion of that was down to the increases that Labour has given in public sector pay. Those were unfunded. [Interruption.]
Let us hear Mr Whittle.
All the promises that the Labour Government made prior to coming into office were unfunded.
Will Brian Whittle give way on that point?
I will need to make some progress.
Pensioners are losing benefits to help to cover the gap between the cost of bumper public sector pay deals that Labour has agreed to and what it can actually afford. My colleague Douglas Lumsden eloquently described an oil and gas sector that is reeling from extensions to the energy profits levy, which is presumably to fund Ed Miliband’s social media team, since Sue Gray’s salary is swallowing up the special adviser budget. Pledges not to increase tax are disappearing faster than the receipts for Keir Starmer’s wardrobe. Britpop was riding high in the charts when Labour last came to power. Unfortunately, it looks as though this Government has misheard the lyrics: Blur sang “Parklife”, not perk life.
Members: Oh!
Thank you. I particularly liked that one.
I do not want to spend too much time on the Labour Government, which is just in the door and still learning that being the Government is much harder than blaming the Government. The Scottish National Party, on the other hand, has no excuses. It has been in government for 17 years and, in the past decade, we have half the growth of that of the rest of the United Kingdom; we have record NHS waiting lists, an education system in disarray and a justice system that is straining at the seams; and, for years, transport investment has been promised that has never materialised.
The Scottish Government titled this debate “The UK Budget—Scotland’s Priorities”. I suggest that this time in the chamber would have been better spent on the latter than on the former. I appreciate that Stephen Flynn clearly believes that he could do the First Minister’s job, but does the current First Minister really have to dedicate this time to trying to prove that he could do Stephen Flynn’s?
Scotland has priorities, but they are increasingly not those of the SNP, if they ever were. During a business day at the SNP conference, the glossy programme talked about Scotland being open for business and listed different sectors of the economy, but missed out energy, which generates more than £65 billion in turnover, and financial services. Those are our two most valuable industries, employing between them around 250,000 people. That was just a minor failure in the grand tapestry of the SNP’s abysmal approach to economic growth, but it is symptomatic of a lack of focus.
Kate Forbes makes many of the right noises about a new approach to the economy, but this Government has a long track record of saying all the right things and then launching 16 separate consultations on a feasibility plan for how to do the right things. That is never more obvious than with our infrastructure, a subject highlighted by my colleagues Murdo Fraser and Douglas Lumsden. Across Scotland, our road and rail networks are in desperate need of investment, not only to create economic benefit but because of safety. The Greens do not seem to understand the need to get goods in and out. From the A9 and the A96 in the north-east to the A77 and the A75 in the south-west, we have had years of promises and consultations with little tangible improvement.
I am aware of the time. The Government talks about the UK Government investment to deliver net zero—
Please conclude, Mr Whittle.
—but it has wasted years by failing to put skills and training in place while crowing about its now-abandoned target for 1 million homes to have heat pumps.
Some of the Scottish Government’s cuts have been dramatic—
Please conclude, Mr Whittle.
—but the self-awareness budget has apparently been eliminated altogether.
I call Ivan McKee to wind up the debate.
16:56
I will start in a most unlikely place, by following on from where Mark Griffin left off. To govern is indeed to choose, and the UK’s new Labour Government is learning that the hard way after perhaps the shortest honeymoon on record.
I will say more about that later, but first I will talk about the choices that this SNP Scottish Government has made in office, where, as the Deputy First Minister highlighted, we are constrained every year by the need to balance our budget and by the limited borrowing powers that we all understand and recognise.
We recognise the value of public sector workers. Those in Scotland are paid significantly more and there are significantly more of them. We have 25 per cent more police officers per head of population, 30 per cent more nurses and midwives, 30 per cent more GPs and 32 per cent more teachers. Police officers are paid £1,500 more, nurses £1,800 more and teachers £2,000 more because we recognise the value of public sector workers. Those are our priorities in government.
If there is so much more investment in health and education here, why are we still the unhealthiest nation in Europe? [Interruption.] I hear the First Minister, but we are the unhealthiest nation in Europe and our education standards—[Interruption.]
Let us hear Mr Whittle.
—are sliding downwards.
If Mr Whittle looked at the statistics, he would recognise that Scotland has the best-performing accident and emergency service in the whole of the UK. A key priority of this Government, as articulated by the First Minister, is tackling child poverty. We are spending £1 billion more on social security than the sum that comes from the UK Government in Barnett consequentials, and we are using £137 million of that to mitigate UK Government welfare policies that, tragically and sadly, have been continued by the new UK Labour Government.
The Scottish child payment, which 320,000 of our under-16s are in receipt of, is helping 100,000 children in Scotland to stay out of poverty. Choices made by this Government raise £1 billion extra in tax to support the social contract between the Government and the people. We have free university tuition in Scotland, free prescriptions and free bus travel for under-22s. As a consequence of that, more taxpayers are moving from the south to the north, and we are seeing a growth in the number of top-rate taxpayers in Scotland.
We agree with Labour on the need to grow the economy. Since this Government came to power in 2007, GDP per head has gone up by 10.7 per cent in Scotland, in comparison with the less than 6 per cent that Daniel Johnson rightly identified as the figure for UK growth per head. Productivity has also doubled under this SNP Government, compared with the growth rate across the rest of the UK. The most recent statistics show wage growth being higher in Scotland, and the Federation of Small Businesses’ small business index shows that confidence among small businesses is higher in Scotland than in the rest of the UK. We have a lower unemployment claimant count than the rest of the UK, and we have the best-performing foreign direct investment anywhere in the UK outside of London.
I turn to the new Labour Government and its tragic failure so far. Daniel Johnson asked why we are having this debate now. This is exactly the time to have this debate in order to influence the new UK Government and the new chancellor, and to make clear Scotland’s priorities for what she should include in her first budget. Why does Scottish Labour not want to talk about that? Indeed, why have only three of its members turned up to not talk about Scotland’s asks of the UK Government?
I will tell members about somebody who does want to talk about the UK Government and get their asks on the record. Cammy Day, the Labour leader of the City of Edinburgh Council, in the same city that Daniel Johnson represents, has written to the UK Government to ask it to end the two-child cap and the cuts to the pensioner winter fuel allowance. While he was at it, on the subject of economic growth, he has asked it to reverse the planned cancellation of the £800 million investment in the exascale supercomputer at the University of Edinburgh. Cammy Day gets it, but Daniel Johnson does not.
What else is going on? Energy prices are going up and not—as was promised in Labour’s election campaign—down. In an energy-rich Scotland, fuel poverty is being continued by Labour.
Will the minister take an intervention?
I ask the member to give me a minute.
This morning, I listened to Anas Austerity Sarwar on “Good Morning Scotland”, spinning and struggling to give timescales for when GB energy will deliver the promised £300 reduction in energy prices for the people of Scotland. Maybe it will be in this session of Parliament and maybe not; maybe it will be in the next session. Who knows? Meanwhile, Ian Missing War Chest Murray is desperately seeking his £150 million war chest. Where is it?
Minister, I remind you that we do not use nicknames in the chamber.
Oh—sorry.
I will take Mr Lumsden’s intervention.
Does the minister agree that we would be in a better position if the SNP Government scrapped its presumption against oil and gas?
This Government supports our energy sector, which is one of the most important sectors in Scotland, and it supports driving forward investment to ensure that the transition to net zero is a just transition.
Let us talk about winter fuel payments. I note again that there are not many Labour members in the chamber, but they tell us privately in the corridors that they are deeply embarrassed and upset by what has happened on winter fuel payments. Christine Grahame articulated the impact of that very well. Labour is putting party before pensioners.
John Mason made the astute comment that some people pay lots of money for Taylor Swift tickets but, then again, some do not. The new Prime Minister certainly does not have his troubles to seek. I suggest that we want to see fewer designer suits from Keir Starmer, although I think that what we are seeing is more empty suits. There is no honeymoon—no wonder.
I turn to our asks of the new UK Labour Government. As the cabinet secretary outlined, it should fully fund public sector pay increases so that Scotland gets the money that is due to it as a consequence. Better still, why does the UK Government not commit to raising public sector pay in England to the same level as Scotland’s? That would be interesting. How about reversing the £1.3 billion of cuts to capital and nearly £300 million of cuts to financial transactions? If the UK Government is serious about investing to grow the economy, that would be a good place to start in order to grow the economy and deliver net zero.
The UK Government should allow the Scottish Government to have greater borrowing powers so that we can take the steps that are needed to invest in the economy. It should reinstate the winter fuel payments and remove the two-child cap. Frankly, I am not ambitious enough to ask it to copy the groundbreaking Scottish child payment, but maybe it wants to get that on its radar as well and deliver the same thing down south that we have delivered for the people of Scotland in tackling child poverty.
The UK Government should change course on austerity. Our motion rightly mentions the letter from leading economists that identifies the problem with the austerity measures that the UK Government is taking. It is focusing on austerity and not on investment to grow the economy. That direction needs to change.
While we are at it, the UK Government might want to consider reversing Brexit. The £40 billion that is lost every year to public sector revenue is more than double the black hole that it talks about endlessly. I will say that again: the £40 billion that is lost as a consequence of the misguided, disastrous decision to leave the European Union, which is supported by the Labour Government, is double the black hole that it is trying to fill. Pensioners in Scotland are paying the price for that misguided approach.
I will comment briefly on the amendments from the Greens and the Lib Dems. They are much more considered than the Conservative and Labour offerings, and there are many elements in them that I and the Government would strongly support, not least on the continuing work to explore levy powers for local government, support for social care investment, and taxing social media companies properly, which is mentioned in the Green amendment. However, we are, unfortunately, unable to support those amendments because of other elements in them. The Lib Dems’ amendment seeks to delete much of the substance of our motion. I do not understand why they want to do that.
I will move to a close. This Government has been determined to work constructively with the UK Government. The First Minister and the Cabinet Secretary for Finance and Local Government have met the chancellor and made it clear that our Government wants to work together with the UK Government for the benefit of Scotland. The finance secretary will meet the Chief Secretary to the Treasury next month to put forward Scotland’s priorities for the budget. The Prime Minister has said that he wants to reset relations with the devolved Governments, and we are taking him at his word, but the budget will be a test of that reset.
In her opening speech, the finance secretary said that the chancellor faces a choice in the budget, and I remind members of that choice. The chancellor can choose to follow the tired playbook of previous UK Governments—cuts to spending, low investment and no long-term ambition—or she can choose to chart a new course that promotes investment, looks to the long term and works with, not against, devolved Governments, in a budget that protects and values public services, invests in the infrastructure that we need to grow our economy and make the transition to net zero—
You must conclude, minister.
—abolishes the previous Government’s damaging social security policies and takes real action to tackle child poverty.
I urge members to support the Government’s motion.
That concludes the debate on the UK budget, Scotland’s priorities.
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Business Motion