Official Report 1204KB pdf
The next item of business is a debate on motion S6M-02949, in the name of Kate Forbes, on the Budget (Scotland) Bill.
14:56
I thank the Finance and Public Administration Committee for its report on the budget.
The budget is clear in its missions: it will tackle the climate emergency, support economic recovery and reduce poverty. It will also deliver on other priority commitments, including free bus travel for young people, non-domestic rates relief for businesses and substantial increases in health and social care spending.
As I have made clear previously, the absence of Covid-related funding, despite the real on-going impacts of the pandemic, which all of us can attest to, has meant that this is a challenging budget. The Scottish Fiscal Commission has highlighted that, as a result of reductions, the overall Scottish budget for next year is 5.2 per cent lower in real terms. With Covid funding having been removed, our day-to-day funding next year is less than that for the current year, at a time when we undeniably need to invest in the economy and help services to recover.
As I have said before, this is a budget of choices—some hard choices—but I believe that we have made the right choices. As I stated yesterday, I recognise the valued contribution that our local government partners make to the delivery of our front-line public services. Having engaged with the Convention of Scottish Local Authorities and individual local authorities regularly over the past few months, I am conscious of the challenges that they face, including the increasing impact of inflation.
I have repeatedly said that next year’s Scottish budget is fully allocated. That remains the case. However, I have also been clear that I have been monitoring this year’s budget very closely. The United Kingdom Government spent weeks advising us that we should not expect further funding. That has changed in the past few days. It has now advised that we should anticipate further funding for this year, which will be finalised and confirmed in the spring supplementary estimates next month.
As I said last week in the chamber, the fact that next year’s Scottish budget is fully allocated remains the case but, in light of the new information from the UK Government, I now have some new and additional flexibility on this year’s funding.
Will the cabinet secretary give way?
If Stephen Kerr will allow me to finish this piece, I will bring him in.
I am pleased to confirm my intention to utilise the Scotland reserve to carry forward sufficient funding from this year to next year to allow me to allocate a further £120 million of resource to local government. Councils will have complete flexibility to allocate that additional funding as they wish next year. I intend to lodge an amendment to the Budget (Scotland) Bill at stage 2 to deliver that.
Will the cabinet secretary take an intervention?
Once I have finished this part of my speech, I will give way to Mr Kerr.
Councils asked for an additional £100 million to deal with particular pressures. We have heard them and listened and we are going to go further. That will allow them to deal with the most pressing issues that they face, at a time when people are understandably worried about the cost of living. That increase in funding would be equivalent to a 4 per cent increase in council tax next year so, although councils have full flexibility in setting local council tax rates, I do not believe that there is a requirement for any inflation-busting increases next year.
I will take an intervention from Mr Kerr.
Can the cabinet secretary further amplify whether that £100 million, which is coming as part of the additional money from the UK Government, is on top of the money that the UK Government already committed to the Scottish Government as part of the Covid recovery money? That is the money that the Scottish National Party Government made such a big fuss about, saying that nothing was certain about it and that we might end up with less. Can she confirm that that is additional money?
Mr Kerr is right to ask those questions. Next month, as in every year, we expect the UK Government to confirm, at the supplementary estimates, our final position for this year. Over the past few days, I have had a personal conversation with the Chief Secretary to the Treasury and, of course, officials have been engaging extensively with the Treasury. As Mr Kerr will recall, when it came to the £440 million, there was some suggestion that some of that would be clawed back if the consequentials were not generated. The UK Government has now confirmed that that will not be the case for the £440 million, but the final position will be confirmed next month. That provides me with sufficient flexibility to prioritise funding for local government.
Can the cabinet secretary confirm to the chamber whether the £70 million that has been given to ministers in relation to the national insurance contributions compensation fund is part of that funding, or is that another announcement that we will have to hear from ministers?
As I said, that £120 million allows local government to cover the challenges that they face. Clearly, national insurance contributions are costs that local authorities have to deal with, and that £120 million will allow them to deal with those additional costs.
Will the cabinet secretary take an intervention?
I will take a third intervention.
I thank the cabinet secretary for being very generous with her time.
There will still be massive cuts for local government. Does she think that local councils should be grateful that the cabinet secretary has just taken the foot off their neck a little bit? Should she not recognise that massive cuts are coming to local services?
Willie Rennie has articulated an important point. All members of this chamber have been calling for me to go further with local government, particularly in the light of the pressures of inflation, and we have done that today. I have painstakingly identified additional funding from this year’s budget. I have not changed my position on next year’s budget, which is fully allocated but, out of a challenging budget settlement, we have chosen to prioritise additional funding for local government, and local government will be able to determine how that funding is spent. That is something that we can all welcome.
As the member would expect me to say, the real question will be whether, at 5 pm tonight, all parties in this chamber back additional funding for local government. That decision will ensure that next year’s budget delivers for Scotland’s local authorities a total funding package of more than £12.6 billion, which is an increase of more than £1 billion or the equivalent of a 6.1 per cent increase in real terms.
The budget provides the best funding package that we can offer for local government, based on our current resources. It will deliver increased resources for social care and education, and it will ensure the continued delivery of vital local services across Scotland. It is a fair settlement for local government within a challenging budget.
The budget recognises that we face some of the most challenging economic circumstances, through rising inflation, increased costs and the fact that Covid-19 has had an unequal impact across society. The budget reflects the on-going realities for many families, and some of those challenges have only increased since the budget was laid. It delivers on our national mission to tackle child poverty through increasing family incomes and continues our action to tackle the poverty-related attainment gap.
We are investing £197 million in our new Scottish child payment, including by doubling it to £20 a week from April 2022. That will fund the most ambitious anti-poverty measure anywhere in the UK.
Will the cabinet secretary take an intervention?
I would be delighted to, but I look to the Presiding Officer to ask whether there is time in hand, because I am quite behind the time.
The cabinet secretary is in her last minute.
Okay.
In line with the Scottish Fiscal Commission forecast, we are committing over £3.9 billion for benefits next year. We are also continuing to tackle homelessness, by committing £831.5 million next year towards the delivery of more affordable and social housing.
Underpinning those spending commitments, the budget also invests in Scotland’s ambition of being a wellbeing economy and a growing economy that enables successful business activity, entrepreneurship and innovation. It is a particularly crucial time to support businesses. That is why we will deliver the highest level of investment for our enterprise agencies since 2010, with over £205 million in capitalisation for the Scottish National Investment Bank. The budget will continue to offer a generous non-domestic rates package and ensure that we support all parts of Scotland.
This is a transitional budget. It supports Scotland’s recovery next year but also looks beyond, as we build the foundations for, and invest in delivering, a just transition to a net zero and climate-resilient Scotland.
The budget delivers on Scotland’s priorities, which are the priorities that I imagine most people across the chamber share. They are the priorities of tackling poverty, supporting Scotland’s economy and ending Scotland’s contribution to climate change. I commend the budget to the chamber.
I move,
That the Parliament agrees to the general principles of the Budget (Scotland) Bill.
15:06
I warmly welcome the actions that have been taken by the UK Government to assist with the budget.
I will start with a few points of consensus. First, I acknowledge that the backdrop to the budget is particularly challenging: a lengthy Covid pandemic, which, although the signs are improving, is by no means over; worldwide economic trends, which, due to major issues with supply chains and energy costs, plus the political dangers of aggression by Russia against Ukraine, are creating serious inflationary pressures; labour markets having to cope with the post-Covid and post-Brexit landscapes; and increasing issues in relation to forecasting errors and timings.
The cabinet secretary will be pleased to know that we do not believe that any of those are within her control, so we understand why she has been keen to describe the budget as being one of “difficult choices”. It is. I certainly know that we cannot commit to absolutely everything that we would like to do.
Secondly—to pursue the consensus for a little bit longer, although it will not last—we agree with the cabinet secretary on some key commitments, including the doubling of the Scottish child payment, investment in employability schemes, additional funding to tackle the attainment gap—which is ever widening, as we know—and maintaining landfill tax in line with UK rates.
I am afraid, however, that that is where the consensus has to stop, because we are very clear that the Scottish Government has created many more problems in this budget than it has solved, despite its having received a £3.9 billion increase in core block grant funding from the UK Government.
I wonder why the member is mentioning the £3.9 billion. Is she suggesting that some of it has not been allocated?
I am suggesting that that is a very substantial increase in the core block grant. That is extremely important, as a backdrop to the budget.
I will deal first with business—specifically, the sector’s very strong feedback about the future of the Scottish economy, which is backed up by extensive statistical analysis from economic forecast groups. They all tell us that although, as we saw yesterday, there is little cause for optimism in the next few months, the longer-term prospects are particularly grim for the Scottish economy. For quite some time they have been warning successive cabinet secretaries about the inherent structural weaknesses in the Scottish economy, which were present long before Covid and Brexit, and which this budget should be addressing as a priority.
The Scottish Fiscal Commission, Scottish Chambers of Commerce, the Scottish Council for Development and Industry and the Fraser of Allander Institute have all warned the Scottish Government about the demographic issues that are reducing labour market participation, and about slower growth in earnings and employment, relative to the rest of the UK. All of those have important implications for tax revenues and the Scottish budget.
The Fiscal Commission has told us that Scottish income tax revenues are growing more slowly than the income tax block grant adjustment, which means that there is a net negative position of £190 million for the coming year, which will possibly rise to £417 million by 2026-27. It also noted concerns that the scaling down of the oil and gas industry, with its highly skilled workforce, will exacerbate those problems. Those are serious statistics; so, too, are the statistics about weaker productivity and economic growth. It is our contention that the budget should be responding to them.
In a constructive spirit, I ask what fundamental policy Liz Smith thinks is missing that would significantly deal with those challenges. What funding would she allocate to it?
I am just coming to that. Business is saying that one of the most important things is the skills gap. Policies to address what we can do to ensure greater productivity and economic growth are also important. There are two things that we can concentrate on. We said in our manifesto that we would commit to 100,000 lifelong learning accounts specifically being spent on training, qualifications and longer-term, more flexible and demand-led apprenticeships, which are a big ask from the business community.
We also know from business that there are serious concerns about our town centres. They were already in trouble before the pandemic; that is why we are so keen to see business rates relief being extended to relief for the whole year, and not just the three months to which the SNP has committed.
That brings me to local government. Notwithstanding the announcement today, in a debate last week, the Conservatives, along with Labour and the Liberal Democrats—although notably not the Greens, who, not so long ago, with Andy Wightman in their ranks, would have agreed with us—exposed the full extent of the SNP attack on local government. The Convention of Scottish Local Authorities, every council group leader—including the SNP’s own—and various groups, including care workers, who are on the front line of delivering council services, have all said that they see really big cuts coming. In her budget statement on 9 December, Kate Forbes said that she felt that the budget “deepens” the relationship between the Scottish Government and local government, but that is clearly not what local government thinks.
Will the member take an intervention?
I will not. I need to make progress.
The SNP has rightly asked where we would find the money. Before I say more, I say that we would definitely not be devoting millions of pounds to a second referendum, preparing for independence or doubling up on external affairs. That money would be far better spent supporting business and local government.
Like many people in local government across the political spectrum, we Conservatives are concerned about the controversial setting up of a national care service, which has all the signs of being an extremely costly reorganisation of care services. Many people in local government feel that it will not work. Indeed, we think that it is the last thing that care workers need right now. Today’s Audit Scotland report into social care spells out some of the biggest concerns.
No one believes that setting budgets is easy, but Kate Forbes has had at her disposal the largest UK budget settlement and extensive additional money for Covid recovery from UK Barnett consequentials. She has asked for a rational approach from the Opposition parties for her spending plans; we will continue to take that approach. However, she cannot, in the same breath, explain why, although it is Scotland’s oil, the SNP will walk away from that sector. She cannot say what currency the SNP would adopt if Scotland were to become independent, and nor can she explain why she has been so harsh to local government at the very time when she claims that it is central to delivery of more efficient public services.
The budget does nothing to properly secure Scotland’s economic future or to safeguard essential local services, so we will oppose it at stage 1.
I move amendment S6M-02949.1, to insert at end:
“, but, in so doing, regrets that, despite a £3.9 billion increase in core block grant funding from the UK Government, the Scottish Government is delivering a cut of £371 million to local government budgets, which will have serious implications for the delivery of front line services and local businesses.”
15:14
Presiding Officer, I apologise for not being there in person. I am dealing with something of a domestic omicron wave. However, by the same token, that allows me to attest to the efficacy of the vaccine and the booster.
After two years of Covid-19, the budget needed to be a turning point. It needed to build resilience and support recovery, it needed to create jobs and build back our public services, and it needed to help people who had put themselves on the front line to care for the vulnerable and those who had missed out on their education.
We support some things in the budget, such as the increased funds for the national health service and the increase in the child payment—which, as the Government knows, will not be enough to meet its own statutory child poverty targets.
The budget delivers neither the focus on, nor the foundation for, the wider needs of recovery. Instead, it offers an insulting pay rise of just 48p for social care workers and underfunds our councils.
On the cabinet secretary’s announcement, £120 million is welcome, but still leaves local services short of £250 million. Moreover, it seems that although Derek Mackay’s sofa has been moved out of the office, Kate has found a few pennies down the back of her armchair. That is no way to construct a budget seriously and rationally, as the cabinet secretary seems to seek to propose.
We need more honesty about the numbers. The Government wants to compare the budget to this and last year’s emergency Covid funding. The Government was clear that Covid money would only be used for non-recurring Covid spending. I took it at its word and agreed with that principle. However, that means that with a £2.9 billion real-terms increase in core funding in the block grant, that sum was unallocated as it went into the budget. To bake emergency Covid funds into its calculations and compare a year of emergency with a year of recovery misrepresents the position that we are in, but that is the approach that the Government took, as it allocated the emergency funds.
Less money is available in total, but almost £3 billion is unallocated and available for investment in recovery. If the Government were to apply the logic that it applies to its funds to the funds of local government—including the emergency funds that local government has had at its disposal—local government would have faced a 25 per cent cut, which is not the line that I hear from the cabinet secretary.
We know that the Government is not transparent when it comes to its budget and to how Covid money has been spent. Audit Scotland said so in July—and again in September and December—and was also clear that it was not possible to track the money from budget to announcement to outturn to consolidated accounts.
The Government must be honest about the numbers, but so must the Conservatives. Using the figure of £3.9 billion at a time of raised inflation is disingenuous, and to claim that figure as additional spend is simply to imply a cut in every other budget line in real terms, not cash terms.
The budget requires difficult decisions—more so because of the SNP’s mismanagement of the economy. The Scottish Fiscal Commission’s forecasts are clear: Scottish income tax receipts are underperforming compared not only with the south-east, as the SNP tried to claim, but with the average of the UK as a whole. On wages and employment growth, every Scottish region, bar one, underperformed compared with the UK average. That failure to grow jobs and wages not only lets down Scottish workers; it has also left the Government with £200 million less than it would have had if income tax had not been devolved.
What we needed in the budget was focused intervention to get people into work, to fill labour shortages and to re-skill people into better pay. When it comes to the economy, the Government’s constitutional distraction leaves Scots with less money in their pockets and the Scottish Government with less money to invest in public services and recovery.
Where is the plan to address labour shortages? Where is the plan for our cities and for building green industry and supply chains? What sums up the SNP Government is that, two years into the pandemic, it has yet to publish an economic or jobs recovery plan. Its promised 10-year plan is delayed until another day—there is no plan for the here and now, and there is a delayed plan for the distant future.
It is in social care and local services that the budget moves from being flawed to being unsupportable. The continued decrease in local authority funding is unacceptable, regardless of what the cabinet secretary manages to pull out at the last minute. Analysis from the Scottish Parliament information centre confirms that local councils are the losers in the budget. Almost every other budget line was static in its share of spending, whereas cash-strapped local government’s share of funding has fallen by 2.4 per cent. Whether we look at the real-terms cut that COSLA outlined or at the SPICe analysis of local government’s share of total spend, whichever way one cuts it the budget further centralises public services and undermines local services.
On top of that, the pay offer to social care workers of an increase of just 48p per hour is nothing short of scandalous. The reality of their work is that staff deal with vulnerable people around the clock and work under tremendous time pressure.
Findings from the Audit Scotland report that was published this morning underline those points and the stark realities. The report outlines the lack of worth that is felt by every social care worker, and it outlines the immense vacancy pressures across the sector. It notes that
“36% of services reported having vacancies in December 2020”,
which is three times higher than the rate across all employers in Scotland. Furthermore, 20 per cent of staff
“are not on permanent contracts ... 11% are on zero hours contracts”,
and “15% ... work unpaid overtime”.
We need a social care system that pays its staff well and attracts people to the sector. The question is not whether paying £12 an hour is affordable; it is whether, in terms of recruitment and preventing bed blocking in the NHS, we can afford not to pay care workers that reasonable sum.
There are, of course, things in the budget that Labour supports, including the needed increases in the Scottish child payment and NHS funds, but the SNP budget fails to deliver for the people who desperately need it. We cannot build a national care service on low pay—
Will you conclude, please, Mr Johnson?
We cannot grow the economy by underfunding local services, and we cannot build recovery or re-skill without targeted support. For those reasons, Scottish Labour cannot support the budget.
I move amendment S6M-02949.2, to insert at end:
“, but, in so doing, believes that this must be a Budget that prioritises Scotland’s recovery; expresses concern that the measures in this Budget are not of a scale or pace needed to meet the child poverty targets and lift children in Scotland out of poverty, and notes the calls on the Scottish Government to deliver an immediate increase to social care pay to at least £12 per hour.”
Can I confirm that you have moved the amendment in your name?
I just did, in my closing breath, Presiding Officer. I apologise if it was not clear.
Lovely. Thank you very much.
15:21
I am pleased to speak to the Finance and Public Administration Committee’s report on our budget scrutiny.
The Scottish Government, the Scottish Parliament and Scotland face a challenging year. The independent Scottish Fiscal Commission has made clear in evidence to our committee that this Parliament will suffer a real-terms cut in the Westminster block grant. It has said:
“Overall the Scottish Budget in 2022-23 is 2.6 per cent lower than in 2021-22, after accounting for inflation the reduction is 5.2 per cent.”
Indeed, further declines in resource expenditure are likely in the years that follow. However, we now find that additional moneys will be made available. It would therefore be helpful to have clarification of the detail of those resources as soon as possible.
With UK Government capital grants slashed by 9.7 per cent, borrowing to the £450 million maximum that is permitted is required to enable a 1.2 per cent increase in infrastructure expenditure after inflation.
It is inevitable that previous budgets and reports have focused on the health pandemic and its economic and fiscal impact. However, although we are still dealing with Covid, we must look and are looking to the future and recovery, assessing the extent of the economic damage and how we move beyond it. The FPA Committee acknowledges the need to balance short-term demands of responding to and recovering from Covid-19 with continuing longer-term pressures such as demography, poverty, inequality and structural imbalances. That is a key theme of both our pre-budget and final budget reports.
Scotland faces structural inequalities as we move back towards a more normal way of life. To ensure that our public finances are placed on a more sustainable footing, we note in our budget report that productivity, wage growth and demographic change should focus the Scottish ministers. Scotland must improve its economic performance in absolute terms and relative to the rest of the UK. Doubtless other members will pick up—two already have—on those and other issues such as business investment levels, labour market participation and skills.
We face a number of risks. Inflation is rising at the fastest rate in three decades, with the worst possibly still to come, and average earnings are failing to keep up. The Office of Gas and Electricity Markets is expected to announce soon that the energy price cap will rise again on?1 April. The SFC points to a slow recovery in wage growth and income tax receipts as we emerge from the pandemic.
The FPA Committee is particularly concerned to note forecasts showing Scotland’s income tax receipts falling behind the block grant adjustment, which could put Scotland’s future fiscal sustainability at risk, with social security expenditure likely to reach £764 million more than allowed for in the block grant adjustment by 2024-25. Next year, Scotland’s net income tax position is likely to be negative by £190 million. The SFC expects that gap to grow, reaching £417 million by 2026-27.
It is clear that, with UK Government grants continuing to decline, it is time to consider further fiscal flexibility for Scotland. Borrowing limits are too constrained and are being eroded by inflation. Tax rates remain unchanged but, as in the rest of the UK, inflation will bring more people into higher bands through fiscal drag, while UK increases in national insurance contributions erode disposable income yet further. The committee believes that the two Governments must engage on the impact of UK tax policies, including national insurance, that interact with devolved tax policy to ensure that Scottish taxpayers are not negatively impacted. The fiscal framework review provides an opportunity to put in place formal arrangements for intergovernmental working to ensure that interactions between tax policy decisions by the UK and Scottish Governments are fully considered.
Regarding tax receipts, the committee was drawn to the reasons behind the gloomy forecasts. Labour market participation is driven by demographic factors and is declining as Scotland’s population ages. The number of working-age people—people aged 16 to 64—is falling, while fewer migrants and a record low birth rate mean an upward trend in the number of people aged over 65, many of whom have longer-term health-related needs. Any future population growth is projected to come from inward migration.
The committee is keen to hear more about the work of the population task force and how it plans to reverse adverse demographic trends, given that it has no control over immigration. That presents challenges for the Scottish ministers in considering how to grow the working population and, in turn, income tax receipts.
In scrutinising Scottish Government plans for the budget and resources available to it, the committee wrestled with the figures and information received. Identifying and tracking Covid funding is becoming more difficult as the lines between what is and what is not Covid funds become increasingly blurred. Although the committee recognises the challenges around that, transparency in the full and timely presentation of figures is essential, alongside how moneys are allocated by the UK Government and subsequently the Scottish ministers, and the impact of that expenditure. The committee flags that in its budget report. Transparency in the presentation of figures is also highlighted by Audit Scotland, which agrees that the Scottish Government had to act quickly and decisively to respond to the pandemic. Nevertheless, we would welcome clarification on how the additional financial package for business is being funded. As part of the fiscal framework review, both the UK and Scottish Governments must consider and agree a process whereby Barnett consequentials are clearly communicated, to bring greater certainty over what is new and what is reprofiled money.
I briefly referred to the fiscal framework review. Although the medium-term financial strategy and resource spending review framework have informed our budget scrutiny, the committee is undertaking a separate short, focused inquiry that is aimed at influencing the framework and a targeted content review of the strategy, to ensure that both support parliamentary scrutiny. We will report on those in March.
Those reviews provide an opportunity to engage with stakeholders about how public resources should be invested to meet future challenges. The scope of the independent report to precede the fiscal framework review will focus on block grant adjustments only. The review itself will be broader, and stakeholder views will be sought as part of both processes. It would be helpful to continue to receive updates from the cabinet secretary on the review and timetable.
The committee notes Scottish Government assumptions that it will receive extra income of £620 million for the resource budget in 2022-23 from a range of sources, including Crown Estate offshore wind leasing. The SFC expressed reservations about some of those sources but thought that, on balance, the assumptions were reasonable. When we agreed our report, there was a paucity of information about Crown Estate income that might contribute to the £620 million. The subsequent ministerial statement was useful in clarifying that the money raised will reach the Scottish exchequer and fund, in part, net zero policies with any surplus utilised across other portfolios. It would, however, be helpful to know in more detail how and when the funding will be deployed and how the Scottish ministers will secure economic benefits for Scotland.
When the committee considered SFC concerns about future workforce and tax receipts, we specifically noted the loss of highly paid oil and gas jobs in north-east Scotland, given the historic importance of that sector to overall income tax receipts and its projected decline. Such a huge structural change will surely require a change to the baseline figure by which the block grant adjustment is assessed.
The Scottish ministers are committed to using some of the ScotWind leasing income to ensure a just transition for oil and gas workers. The committee will return to demographics and the tax base, and it looks forward to receiving the cabinet secretary’s response on those matters.
In terms of net zero ambitions, we welcome the on-going work by the joint Scottish Government and Scottish Parliament review of the budget to improve information on climate change. To progress that, the joint review commissioned external research through ClimateXchange. An update was provided to the committee last November, and we look forward to more. It would be helpful to hear how the cabinet secretary intends to ensure that the joint review delivers improvements to subsequent budgets, in line with the programme of work shared with the committee.
The FPA Committee’s budget report also included comments on the replacement of European Union structural funds. Having pursued him relentlessly since October, in February, the committee will take evidence from Michael Gove MP, the UK Secretary of State for Levelling Up, Housing and Communities, and question him about the criteria for replacing EU funding. It would be useful to hear about representations from the Scottish ministers to their UK counterparts regarding the lack of clarity around the UK shared prosperity fund.
The FPA Committee and its predecessors flagged preventative spend as an important area for prioritisation. The committee remains convinced that such spend can help to protect the health of the nation and environment. The Scottish Government has set out the areas that it wants to prioritise, but we seek clarification of how ministers deliver preventative measures, along with examples of how the approach has resulted in a shift in policy direction and expenditure, across the budget. The committee will return to that in the review.
The FPA Committee looks forward to feeding its views into the resource spending review, which represents an opportunity for the Government to prioritise where it wants to spend its available funds in subsequent years. In doing so, the Scottish ministers must prepare for potential future pandemics or adverse events to minimise the adverse impact of such shocks, should they transpire.
15:30
I speak in this afternoon’s debate for the Liberal Democrats. As with all other budgets, the Liberal Democrats approached the budget that we debate today in good faith and with an open mind, but I am afraid that a considerable gulf still exists between our position and that of the Government on that budget. I will come on to the detail as to why that is the case.
When Governments set budgets, they must look, first and foremost, to the most vulnerable in our society and build their offer around them as a matter of principle. It is not clear that that has happened in relation to the budget that is before us today. Although it is a matter of public record that the Scottish Liberal Democrats support the doubling of the child payment, in this budget what the SNP Government gives with one hand, it takes away with another. Scottish families—especially those below the poverty line—are being hit hard from all angles. With the cost of food and energy soaring, and with the rise in national insurance and the cut to universal credit, many people are feeling the squeeze like never before. It is not clear that the budget recognises that reality.
The UK’s biggest supermarket, Tesco, has said that its prices could be set to rise by around 5 per cent. Energy costs are reaching an all-time high, while wages are stagnating because of inflation, which, this year, will reach its highest level in nearly 30 years. Citizens Advice Scotland has found that a third of Scots are worried about being able to pay for food and other essentials. That means that parents will face the anxiety of not being able to provide for their children, which is not a good reflection on government in our country.
We need to reflect that crushing reality in the Budget (Scotland) Bill that we pass but, instead, we see cuts—they are cuts—to local government. That will result in an unavoidable rise in council tax, which will compound that reality still further.
The member makes some general points about areas where he would like there to be extra expenditure, but can he tell us where he would make savings in order to give more to families?
I will come on to that later in my speech, but first I would like to make some progress.
Despite the additional money that has been announced this afternoon, COSLA has already indicated, as Daniel Johnson said, that we still face a real-terms cut to the local authority grant of around £250 million. Much of the additional money will be taken up by the £70 million uplift that is required to match the increase in the national insurance contribution of employers.
What does that equate to? In Edinburgh, SNP budget cuts are already impacting on every primary and secondary school. In addition, all funding has been removed from community police, and all qualified teaching posts have been removed from our nurseries. In the Highlands, the cut to local government funding will put pressure on services and local communities. There was already a severe funding gap in the far north. The budget will serve only to compound that.
COSLA recognises the budget for what it is. It has told us:
“Whichever way you look at it, the reality of the situation is that yet again the essential services Councils deliver have been overlooked by the Scottish Government.”
I want to pause on the words “yet again”, because this is a dance that we do every year. Every December, the cabinet secretary brings forward a budget that utterly terrifies our 32 local authorities—one that looks as though it will demand cuts in every aspect of public spending. They are held in that awful limbo until stage 3 of the budget bill or—as on this occasion—the stage 1 debate, when Government ministers miraculously find money down the back of the sofa and are suddenly lauded as heroes for delivering a smaller budget cut than was expected, but a cut nonetheless. Would you believe it? Here we are again today.
I find the Government’s whole approach to local government finance quite shameful. If Westminster was treating the Scottish Government in the Thatcherite way it treats local authorities, SNP members would be taking to the streets.
I think that Alex Cole-Hamilton will find that he and his party’s coalition partners at Westminster significantly reduced the equivalent local authority budgets south of the border for years. Will he speak to Willie Rennie, who I thought made an excellent point in last week’s debate on local government funding when he asked the Conservatives where, if all parties agree that we should pass on health consequentials, we get the money from?
We can tell that the Government is deep in a hole when it has to dig back 10 years to tag my party.
The budget does not answer the crisis in social care. Our care workforce is hollowed out, as we heard extensively during First Minister’s questions today. Our care staff are exhausted and tell us that they cannot give those they care for the dignified support that they deserve. They are in desperate need of colleagues, but they will not find them and will not recruit new staff if this derisory pay settlement is all that is offered. The settlement is not transformational. It will not attract people into the profession. It is myopic.
I said at the beginning of my remarks that we will always try to find consensus on the budget process and in other matters, such as the public health response. We act in good faith, but this Government does not make it easy. In recent days, it has once again announced an overarching agenda that makes it almost entirely impossible for Liberal Democrats to support it.
Since the beginning of the emergency, the SNP has used the pandemic as a ubiquitous shield. It has deferred action and excused inadequacy by making repeated reference to the exceptional circumstances in which we find ourselves. Patients are waiting in pain. Children have been deprived of life-enhancing education. Health workers are on their knees in want of a break. Those problems and people have not gone away—they grow in number every day.
Despite all that, we are expected to believe that the pandemic and its impact have evaporated to the point at which the Government and the Parliament will soon drop everything to pass legislation on another independence referendum. We know that the cost for that preparation is hidden in the pages of this budget. The answer to a freedom of information request, published this afternoon, reveals that almost £700,000 will be spent this year in preparing the prospectus. That is not so much a white paper as a white elephant.
That is unforgivable. For that reason and for the others that I have offered, we stand at a considerable distance from the coalition Government on this budget’s priorities. We will not vote for it tonight.
15:36
When I was an MP, I sat on a Finance Bill committee and on the Business, Energy and Industrial Strategy Select Committee, and my entry in the register of members’ interests shows that I remain an ambassador for the all-party parliamentary group for fair business banking. In those roles, I dealt directly with UK Treasury ministers, so it is a pleasure to join this Parliament and to deal with such a competent finance and economy team.
However, the greatest contrast is not at the personal level, but at the level of the powers and constraints imposed on the budget-setting process.
We face major supply-side shocks caused by Brexit and the pandemic as well as significant climate issues requiring sustained action towards our net zero ambitions. Those three challenges have one element in common: the need for significant investment in Scotland’s infrastructure and economic development. To that end, I commend the provision of significant support for the three economic development agencies, with spending at its highest level since 2010 despite the wider financial challenges of setting this budget.
However, the constraints on the Scottish Government mean that we do not have sufficient powers to borrow to invest on the scale that is required.
Will the member take an intervention?
Perhaps after I make this point. That is not just my view but also that of Nigel Wilson, the chief executive of Legal and General. At the recent launch of Legal and General’s latest version of the rebuilding Britain index, he called for a massive investment boom and for increased borrowing powers for the devolved Administrations.
The political narrative thus far from the Tories is to ask Scotland to give thanks for their largesse, but they fail to mention the ways in which the Scottish people have, for generations, bankrolled the UK Government.
According to the UK Debt Management Office, UK Government borrowing currently stands at more than £2 trillion. Most of that is funded through the issuance of gilts, with purchases made by pension funds, investment trusts and some individuals. That is just one of the ways in which Scots lend money to the UK Government.
Is Michelle Thomson really saying that the announcement that has come from the UK Government today is not welcome?
Of course I am not saying that. I am saying that I do not have the paucity of ambition that means I would go cap in hand, asking for money. We are a wealthy country and a wealthy society, and I want to see a lot more ambition in this Parliament for betterment.
Will the member take an intervention?
Not at the moment.
There is another route whereby we Scots, in return, show our largesse. Some of the more mature members of the Parliament may hold premium bonds, which provide cheap borrowing for the UK Government, given that only about 1 per cent per annum is distributed through winnings. At the moment, the total value of UK premium bonds is £114 billion, which represents about 5 per cent of UK Government debt. We can therefore estimate that, through that relatively small financial vehicle alone, Scots are currently lending the UK Government almost £9.5 billion.
If we consider that in another way, we can see that, through premium bonds alone, Scots have on loan to the UK Government twice as much as the Scottish Government is allowed to borrow in total for capital and revenue combined. The borrowing limits represent a quite ridiculous constraint on the Scottish Government and they are dwarfed by the amount that ordinary Scots lend to the UK Government.
I do not mean to interrupt Michelle Thomson in full cry, but we are fascinated by some of the numbers that she is coming out with. Can she tell the Parliament when she expects to have a column regularly printed in The National with those kind of figures?
When they ask me, I will be delighted. I thank the member for suggesting that.
Another area where the Scottish Government is denied the power to act is financial crime. Stopping institutional crime is predominantly the preserve of UK authorities such as Companies House and HMRC, which do a poor job of preventing abuse of the financial system. Only this week, Lord Agnew, who was a Treasury and Cabinet Office minister, resigned over the UK Government’s lamentable track record on Covid fraud, stating that the Treasury shows no interest in tackling the issue.
On the same day, Spotlight on Corruption published a report estimating that financial crime costs the UK economy £290 billion per year. The UK Government has consistently failed to act on multiple calls over years to tackle large-scale financial corruption, as I know only too well from my work with the APPG that I mentioned. To put that figure another way, I note that the UK Government is failing to act on financial crime that costs approximately 276 times the annual borrowing powers of the Scottish Government.
Presiding Officer, excuse my frustration about being boxed into a system in which our people in Scotland lend to an incompetent Tory Government that shields large-scale financial corruption, denies our Scottish Government access to proper borrowing powers and subjects our budget to constant cuts.
That is why I remain passionately ambitious for change in Scotland. We seek powers for a purpose. Scotland is our business and the SNP means business. Only by having the normal financial powers of an independent country can we better fund the Scottish National Investment Bank, invest more in our infrastructure and increase our support for new developments such as hydrogen technologies.
15:43
I am a member of the Finance and Public Administration Committee, which has been hearing evidence over a number of weeks from a variety of groups. What we have heard is a catalogue of confusion and obfuscation from the Scottish Government in respect of how it is spending resources. This is a devolved Government that loves to make grand announcements but provides little detail and is woeful on delivery. This is a Government that cares more about spin doctors than our nurses on the front line of our NHS. I will give some examples of that.
We keep hearing from this devolved Government—and we have heard it again today—that its funding is going down. In reality, it is going up, but the devolved Government is muddying the waters by including the emergency Covid funding. The Fraser of Allander Institute has confirmed that the core resource block grant will be £35 billion in 2022-23, which is 8 per cent higher in real terms than it was in 2019-20 and is higher than it has ever been outwith the pandemic years. However, it is all about grievance politics for this devolved Government.
The Scottish Fiscal Commission sets our forecasts. They are the ones that determine the budget. They claim that next year’s budget is 5.2 per cent lower in real terms. Are they wrong?
They are including the emergency Covid funding. Is the Fraser of Allander Institute wrong? [Interruption.] They are right? Great, so we know that the core budget has increased.
A great example of political deceit is local government funding. The SNP-Green coalition of chaos badged it, just earlier today, as an increase. COSLA said that it was a cut. The SNP council leaders said that it was a cut. SPICe tells us that it is a cut. Everyone in the chamber knows that it is a cut of—now—£251 million. That is how the devolved Government views local government. It is not partnership working.
I agree with Alex Cole-Hamilton. Every year, we go through the pantomime. For me, as a council leader over the past four years, today is like groundhog day. The gap was always about £350 million, and £100 million was always thrown in at the last minute. We used to think that the Greens were saving the day; now we know that it was going to happen anyway.
I am grateful to the member for giving way. I have a very simple question. What exact amount in the budget does he believe that the total local government settlement should be?
I will easily set the budget whenever the Government wants to move out of office.
Again, it is all spin. When we cut through the spin, the detail is very hard to find. For example, the just transition fund for the north-east and Moray remains a mystery that Agatha Christie could not solve. Little contact has been made with local authorities in the area, and local representatives have been kept in the dark about the scope and the aims of the fund. We can see it as a budget line, but we do not know where, how or by whom the money will be spent, nor what engagement will be made with local authorities in the north-east, or when.
The budget is about priorities and this budget is about a devolved Government whose priorities are all wrong. The Government’s priorities should be to help businesses recover from the pandemic, help our high streets and retail sector, find ways to halt the economic divergence from the rest of the UK, grow our economy, manage the energy transition and not throw the oil and gas industry under a bus. Instead, there is spending on offices and staffing abroad, with no detail and no reason why that money is being spent or who benefits. In addition, resource is being diverted to planning for another divisive independence referendum, which will drive investment away, wreck business confidence and be bad for jobs because of the uncertainty that it causes.
The Finance and Public Administration Committee’s report shows the economic challenges that Scotland faces. It is sheer recklessness even to talk about an independence referendum. If the Government cared about Scotland’s economic future, it would take that threat off the table now.
I remind members of my entry in the register of members’ interests, which shows that I am still a member of Aberdeen City Council. It is from a council point of view that I am so angry about the budget. As well as cutting funding for essential services, the devolved Scottish Government has increased the ring fencing of council budgets: further project announcements mean that the bread and butter of council work—the issues that people care about—are cut further. Local councils deliver such projects in good faith, but are concerned that, because funding is being cut, essential services can no longer be delivered.
Yesterday, I took part in an Aberdeen City Council education committee meeting, in which we learned that the funding for early learning and childcare had been cut by £4.6 million, despite a promise from the Scottish Government to fully fund early learning. That service is now statutory, so it must be delivered, which means cuts to other services. SNP-run Moray Council also reported a £3.3 million black hole in its funding for ELC, thanks to the Scottish Government breaking its promise.
The reason why I get so angry when it comes to local government funding is that I am sick of the hypocrisy that comes from the devolved Government. Time and again, we hear about prevention; I heard about it in committee, and I heard about it in the chamber just yesterday. Early intervention is key to so many challenges that we face as a country. Much of the best prevention and early intervention takes place through local government. It is local government that provides the youth clubs, social centres, sports facilities, lunch clubs, community policing teams and school counselling services. All those services are at risk if the Scottish Government fails to properly fund local councils. Those are the things that will bring savings to the health and justice budgets and will improve people’s outcomes. Without those preventative services, how will we tackle, at the earliest possible opportunity, the challenges that Scotland faces? The budget is a missed opportunity.
15:49
The budget could not have come at a time of greater economic and social uncertainty for families, communities and services across Scotland. The pandemic created unprecedented challenges for businesses and our schools, and it added immense pressure to our struggling health and social care sector. There has been more job uncertainty than ever before, and there is not a high street in Scotland that has not seen closures over the past two years. In the face of all that, one would think that the Scottish Government would have introduced an ambitious, forward-thinking and recovery-focused budget, but, sadly, we are faced with something that largely disappoints.
I welcome the increase in the Scottish child payment, which Labour and third sector organisations called for and campaigned for, but I make the observation that it will be insufficient to meet the target to reduce child poverty. We are facing a cost of living crisis of a scale and intensity that has not been experienced for many years. Household bills, energy bills and water bills are rising, and it is likely that council tax will rise, too. Given what we face, this year’s budget document reads like missed opportunity after missed opportunity. The SNP is making hard-working families across Scotland pick up the bill for almost 15 years of fiscal mismanagement.
I turn to the impact that the budget will have on our national health service and the social care sector. Earlier today, the First Minister reminded us that she was the health minister previously. How could we forget? She was the health minister who failed to pass on record levels of funding for the NHS from a UK Labour Government led by Gordon Brown. Had she passed on to health the Barnett consequentials that she received from 2007 to 2010 instead of diverting the money elsewhere, the health budget would be £1 billion more than it is now. Of course, the SNP used to say that all Barnett consequentials for health would remain in health, but that is simply not true now. Now, it uses a strange formulation of words to say that they are the consequentials for front-line health and social care.
If members need any more evidence, they should just look at the £45 million that was taken from the health and social care budget and given to the business hardship fund in December. I am sure that the cabinet secretary will have a line in her briefing to justify that, but how many care packages would £45 million have bought? How many delayed discharges could have been prevented, to free up capacity in our hospitals? What measures could have been put in place to support staff?
Figures published only yesterday by the Royal College of Nursing Scotland highlighted the fact that a staggering six in 10 nursing staff in Scotland are thinking about leaving the profession. Nurses told the RCN that they feel undervalued and poorly paid—at a time when the NHS cannot afford to lose a single member of staff.
The workforce crisis existed before the pandemic. The First Minister cannot stand in the chamber and tell us how many more nurses there are, when there are clearly not enough to meet demand. It is also just a little bit rich, given that, when she was the health minister, she was responsible for cutting the number of nurse training places.
The facts are clear. There is a workforce crisis in our NHS. There is an urgent need to put measures in place to value and retain the existing workforce and to make sure that there is a supply of clinical staff in the future.
Will the member take an intervention?
No, I will not.
The workforce planning strategy has been delayed yet again. What about the Health and Social Care (Staffing) (Scotland) Act 2019, which was passed by this Parliament? It is all about safe staffing levels, high-quality services and better outcomes for service users—nothing with which anybody in the chamber would disagree. The Government might point to the pandemic, but there is no reason not to implement that legislation now. So far, it has not done that, and it needs to be part of the context for workforce planning.
I turn to social care. The 48p pay rise for social care workers is a slap in the face from the SNP and a stab in the back from the Greens, who, only months ago, promised a £15 per hour wage in their manifesto.
I know that the member wants us to go further on social care pay, but dismissing the rise as 48p reduces its impact. It is equivalent to £3,000 per annum if one compares last year’s minimum wage with next year’s £10.50 per hour wage. It is £3,000—a 10.5 per cent increase.
The cabinet secretary fails to identify that the workforce is severely low paid, and she wants us to thank the Government for giving those workers a small increase. That simply is not good enough. We are asking for £12 an hour immediately. We have done the costings and the cabinet secretary knows them. I shared them with her last year and we have shared them with her again this year. It is doable, if the Government has the political will to do it. However, the SNP coupled with the Greens simply do not.
Delayed discharge remains a problem, as does dealing with the issues of pay for social care workers. Delayed discharge removes bed capacity from the national health service. A staggering 650,000 people—one in nine Scots—are now waiting for diagnostic tests and treatment.
To go back to social care, I note that the Audit Scotland report found that social care workers—a predominantly low-paid, female workforce—felt that they were neither valued nor rewarded for the work that they do. That is not me saying that; it is Audit Scotland telling the Government that it is not paying social care workers enough. The problems in social care are simply not addressed by the budget. Family carers have struggled to cope as care packages have been withdrawn. Respite care has been cancelled and support has been removed. Urgent action is required to reinstate care across the country, and the budget simply does not provide it.
In our response to the budget, Scottish Labour has set out detailed plans of action that can be taken across the NHS and social care to address those challenges. Those plans have been informed by talking to those on the front line of health and social care, and they are about supporting and restoring our NHS, improving social care and valuing the staff who are the backbone of both services. However, I am sorry to say that the Government is simply not listening. The Government is happy to clap for NHS and social care staff on a Thursday, but when it comes to this budget—this Thursday—it is simply deaf to their concerns.
15:56
I guess that budgets are about choices and, in particular, how we choose to prioritise among a range of good things. Of course, we would all like to spend more on the NHS, as Jackie Baillie has just been saying. We would like to spend more on local government, more on business support, more on the railways and more on other public transport—the list goes on.
There is also the choice between spending more on existing services, including pay increases for public sector staff and trying to expand services with initiatives such as the child payment, 1,140 hours of nursery and childcare provision, free bus travel for under-22s and a national care service. I guess that there is no absolute right and wrong in those choices. We all have manifesto commitments and want to protect existing services and, at the same time, develop new areas.
However, we all have to accept that it is about choices, particularly choices about how we spend the money that we have. There does not seem to be much appetite for raising taxes, so we know roughly how much money we have. The vast bulk of that money is being allocated in the budget, so we know where it is committed. If we would like more spending in an area—I suspect that all 129 of us would like more money for something—we need to be responsible and say what should be a lower priority.
Mr Mason makes the same speech every year in the budget debate, so it is no surprise to hear him make the points that he is making.
On the premise of Mr Mason’s proposition, does he accept what the Fiscal Commission has said, which is that the budget is £199 million less than it could be and that, if the economic growth and tax revenues in Scotland matched the UK average, an extra nearly £200 million would be back in the budget?
Murdo Fraser highlights a problem with the fiscal framework. He might not have heard it, but we had evidence from Wales that it is getting an extra 5 per cent of Barnett consequentials every time, which we miss out on. There are issues with how the whole framework is structured. We cannot compete with London, yet the system is set up for us to compete with it.
The biggest obvious choice that we have to make is between health spending and local government spending, as those are the two largest parts of the Scottish budget. They account for something like 43 per cent and 30 per cent of the budget respectively, which means that 73 per cent of our budget goes to those areas. More money for local government broadly means less money for the NHS, and more money for mental health means less for physical health. I do not apologise for repeating such points every year, because I do not believe that the Conservatives and Labour have been listening.
The Finance Committee spent a lot of time between 2011 and 2016 looking at the question of preventative spending, especially following the recommendations of the Christie commission. We have been returning to that again lately. Again, it is a question of choices. It is all very well stating that, if we spend £1 today on X, we will save £5 on Y in five years’ time. That might well be true—as many third sector organisations are keen to tell us—but that does not answer the question of where the £1 today is to come from. That is broadly what is called disinvestment, which means we reduce spending on something urgent and reactive today in order to spend preventatively and, we hope, save money tomorrow.
One example of that, which members of the previous Finance Committee might remember, is the American state that needed a new prison but decided to put the money into preventative work so that, in the longer term, it would not need so many prison places. Of course, in the short term, that meant that there were not enough prison places and there was overcrowding and other problems. In the same way, we face the potential decision of cutting back on some important reactive expenditure in order to spend more on prevention. An example might be cutting back expenditure on hospitals and putting more money into general practices and primary healthcare.
At committee, when I asked John Swinney—since he had previously been the finance secretary—whether any party or individual member had ever asked him to cut current expenditure in order to spend on preventative measures, his answer was, “No.” That shows how difficult such choices are.
To move on to other aspects of the budget—
Will the member give way?
I am sorry, but I do not have time.
As the convener has already touched on, it is assumed that there will be £620 million for the resource budget, but that is not certain. The committee and our advisers and witnesses consider it to be reasonable to include such a figure, although the exact amount and the timing of receipts are up for debate. In particular, the personal allowance spillover dispute has been running for quite some time, and I am not clear when it is likely to be resolved so payment can be made.
There is definitely a risk in that £620 million figure, although, based on past experience, it is likely that Westminster will announce increased spending at some point and we would then be due a share of that. However, Westminster could be more helpful by clarifying earlier what extra resources—if any—Scotland will get. The convener also touched on that point. To some extent, I accept the argument that the UK Government cannot always guarantee Barnett consequentials, as happened at some points with Covid spending. However, when it announces new spending in England, the UK Government should say up front how much of the money is new and how much is being reallocated from existing budgets.
In relation to capital expenditure and capital borrowing, I am concerned that we are heading towards our limit of £3 billion. That is largely an artificial limit imposed by Westminster, and it does not take into account inflation or our ability to pay the money back.
I will cut out a little bit of what I was going to say, Presiding Officer. We should be thinking about a prudential framework, which would work well for local government.
Overall, I am very happy to support the budget at stage 1. As usual, both the Labour and Conservative amendments propose more spending without saying where the money should come from. They should both be rejected.
16:03
I will start—as I did last week, when I opened the debate on local government finance on behalf of the Conservatives—by thanking all those who work in our local authorities across Scotland, especially for the work that they have done during the pandemic.
I will concentrate my comments on local government funding specifically. At 3 pm today, COSLA and all local authorities across Scotland faced a cut of £371 million. As of now, following what the cabinet secretary has said, they will still face a cut of £251 million. The core local government budget, which has been frozen in cash terms, had represented a cut of around £271 million, and will now represent a cut of £151 million. Across Scotland, council leaders and councillors will be considering what services they need to cut.
Even after everything that has been said today, SNP and Green ministers are asking our councillors and councils to do more with less. In the spin from the Government, the cabinet secretary has tried to present this as a fair budget, but it is simply not fair to local government. Something has to change beyond what has been announced today.
On the theme of doing more with less, the member’s colleague Liz Smith proposed a further increase in rates relief for the coming financial year. How do the Conservatives propose both to fund that and find the £250 million that I presume they want for local authorities? From which part of the budget would they take that money?
Mr Greer is not on particularly strong ground on that, because, last week, I asked him specifically about national insurance and why the Government has not handed on that money. His response was:
“there is no specific consequential for the national insurance increase.”—[Official Report, 19 January 2022; c 54.]
The cabinet secretary has announced £70 million-worth of that funding today. I welcome that, but that was a matter of the UK Government handing on £70 million, which Mr Greer said did not exist. The cabinet secretary has confirmed that it does.
Will the member give way?
Yes, if I can get the time back.
It is on a fundamental point of principle. If Miles Briggs can identify the line in the UK Government’s budget that we receive that states the national insurance contribution, I would be really interested to see it.
Over £800 million is being passed on to all devolved Governments. That £70 million includes £40 million for local government, £30 million of which is still to be presented for the teaching pay rise. We have not necessarily heard anything from the Government today about how local authorities will meet that. Maybe that is something for stage 2, when we will get more detail.
I want to consider what the Local Government, Housing and Planning Committee has been looking at in the budget. Consideration has been given to a number of cuts that local authorities face. We heard from Martin Booth, who is executive director of finance at Glasgow City Council and who was representing the Society of Local Authority Chief Executives and Senior Managers. He stated that, from all their negotiations on all the work that was to come in councils, they will have to look at over £34 million of cuts. That was in a leaked document that we saw yesterday. He stated in his evidence:
“The opportunity to increase charges is fairly limited. Quite often, we are a provider of last resort, so the people who would be impacted the most by charging would be those who we would like to impact on the least.”
Therefore, when SNP and Green ministers try to spin the budget as one that delivers fairness for our communities, let us remember that every council across Scotland will be forced to make cuts because of it.
It is little wonder that council leaders such as the SNP Dundee City Council leader, John Alexander, have labelled the budget as
“perhaps the toughest in recent memory”.
I do not think that what has been announced today will make that statement go away or change it. It is slightly less tough, but it will still be tough for local government. We all fear for services and the impact that that will have.
COSLA has been clear that the SNP-Green Government needs to look again at the budgets that it provides to councils. It talks about
“what we need to survive”.
I do not know whether the cabinet secretary has really heard that message. I know that the First Minister met COSLA and council leaders this week, but simply asking the UK Government for £50 million of additional funding to be made available, which I welcome, and the national insurance contribution of £70 million is not enough. We need to have a serious look at that again at stages 2 and 3. I hope that the cabinet secretary has genuinely heard that message, including from the leaders of Highland Council, who have also condemned the budget.
Let us be in no doubt that, if SNP and Green ministers do not look again at local government funding in the budget, the most vulnerable in our society will be hit. The cabinet secretary clearly knows—we know this from every debate in the Parliament—that the Greens’ votes are in the bag and that deals done behind closed doors will see the Government able to get the budget through Parliament. However, I appeal to Green MSPs and every MSP who will be out campaigning for their SNP councillor colleagues to speak out as we see the budget go through. The cuts are SNP-Green ones that will impact on all services. I hope that they will pay a severe price for that at the council elections in May.
16:08
I want to address the context in which the budget is set and the implications of that. On the positive side, Scottish economic growth returned to pre-pandemic levels in November. Scotland is developing, delivering and building on economic strengths in key sectors for a modern economy. On the negative, the drag of Brexit continues to hinder economic growth. The Office for Budget Responsibility has forecast that Brexit will reduce the UK’s potential productivity at twice the level of the Covid pandemic impact. Brexit has sorely hindered the availability of skilled labour, which is the number 1 concern of many businesses. After years of building up exports, we see eye-watering drops in export business.
However, just about everyone now acknowledges that the financial arrangements of this Parliament cannot properly respond to crises such as Covid. This Parliament has no substantial powers to borrow. More generally, the adjustments from the UK are unpredictable and lack transparency, and transfers are often way behind the original announcement of health, business, culture or other funds for England. Scotland is due its fair share, but often, as we heard from today’s announcement, the transfers come very late in the financial year. The expectations of people in need in Scotland are raised, but they cannot be fulfilled until those transfers are finally made.
There is a vice-like squeeze on the parameters of what the finance secretary can work with in her budget decisions. The fiscal framework review must look at those issues; for example, multiyear funding would be a welcome improvement within and to the Scottish budget.
On top of that, the political choices that are being made in Scotland diverge from those in the rest of the UK. In part, that is due to specific Scottish choices to deliver fair, progressive and net zero policies but it is also due to UK Government decisions for England, whereby political choices to transfer funding for wider health and education services to private models reduce the commensurate payments to Scotland. That is the nature and consequence of devolution when we have Governments of different parties with different priorities.
However, even if members believe that the financial arrangements for this Parliament once worked, they cannot be said to work properly for Scotland now. The wealth, capability and economic and financial power of Scotland need to be leveraged for all Scotland. As we heard from Michelle Thomson, that need far outweighs the confines of the Scottish Government’s budget. We need the tools to magnify the budget.
I do not disagree with some of the comments that Fiona Hyslop has made, and I particularly echo some of the issues that were raised at the Finance and Public Administration Committee, but does she accept that John Swinney signed the fiscal framework along with the UK Government in 2016? It is not just a question of Scotland being able to decide; both the SNP and UK Governments agreed on that.
I acknowledge the history of the agreement on the fiscal framework, but Liz Smith should also acknowledge that everybody understands that it needs to be improved and changed. That is why I hope that the review will address some of those issues, including some of the criticisms that members have made in the chamber today.
In the budget as it stands, health and social care spending now accounts for £18 billion, and there is £12.5 billion for local councils. That means that £30.2 billion—68 per cent—of Scotland’s budget is distributed to health, social care and local government alone. That percentage is steadily increasing and, with a needed national care service on the horizon, will increase further.
Will the member take an intervention?
I want to move on.
That means that other important portfolios are left with the remaining 32 per cent and have to take the strain and absorb the pressures. Therefore, even within those constraints, I was pleased to see the cabinet secretary support funding for the three enterprise bodies at the highest level since 2010 and deliver the Government’s commitment to the Scottish National Investment Bank.
However, I am concerned that phase 2 of the tourism recovery plan, as recommended by the Scottish tourism recovery task force, does not yet have any funding. As much of what is needed is for one-off promotional work, I urge the cabinet secretary to make that area a priority for any early in-year underspends and not to wait until year-end reconciliations and adjustments.
Despite a real-terms cut in the capital budget of 9.7 per cent, the Scottish Fiscal Commission states that the Government should be able to meet the national infrastructure mission target, but it is concerned about net zero needs, which are capital dependent in many cases. On net zero and making funding work by leveraging private funds, we face a real danger of serious risk aversion—by councils and other public bodies that co-fund private sector initiatives to cut net zero—if the centralising Subsidy Control Bill at Westminster passes without serious amendment. Therefore, the cabinet secretary has an enormous and increasingly difficult challenge.
Meanwhile, at Westminster, UK minister Lord Agnew resigned because of his concern that £4 billion of funds is being lost due to a systemic failure to operate fraud recovery and initial fraud prevention in relation to the Covid loans. He said that those responsible were ably assisted
“by the Treasury, which appears to have no knowledge of, or interest in, the consequences of fraud to our economy or society.”—[Official Report, House of Lords, 24 January 2022; Vol 818, c 20.]
Scotland needs to be independent by right, but it must be independent for a purpose. The purpose of independence is that we can shape our own future with a budget that is supported by policies that reflect the values and the vision of the people of Scotland, and not the waste and wantonness of Westminster.
Scotland has what it takes. What we need is a fresh start for Scotland, with independence.
16:15
As was the case for Miles Briggs and others who spoke last week about local government funding, some of what I am about to say is very much a repeat of that debate, although Mr Briggs and I are certainly not singing from the same hymn sheet. However, given some of the contributions that have been made so far this afternoon, it is important to re-emphasise the context of this year’s budget, which was discussed last Wednesday.
Scotland’s budget for the coming year will be around 5 per cent lower than the budget for 2021-22. That is the result of Covid consequentials being largely withdrawn at a time when Covid and its physical consequences across the country are still very much with us. For example, bus and rail use is down by a third. Keeping those essential services operating requires significant subsidy. Without a repeat of last year’s Covid consequentials, the choice is either to provide those subsidies to operators from the core transport budget, which would put pressure on the other areas that that funds, or to let public transport services collapse across the country as operators withdraw.
Those pressures are being felt across every area of Government spending. No Opposition party has yet put forward a proposal for bridging the funding gap of £1 billion, whether it be through tax rises, spending cuts or a combination of the two. It is easy to call for more spending in areas that we all care about—I certainly want to see more spending. However, although it is, to some extent, reasonable for external stakeholders to push for spending in their areas without saying where the funds would come from, members of this Parliament have a responsibility to do more than just make impossible demands.
The Greens did better than that when we were an Opposition party. We wanted to increase spending on everything from the core local government settlement to public sector pay and the nature restoration fund. We secured that spend, but we did so alongside proposals—which we made and then secured—for tax changes, including an end to the council tax freeze and an overhaul of the rates and bands of income tax.
That alternative of constructive engagement is available to all Opposition parties, but, year after year, we have instead seen exactly what we are seeing this afternoon: demands for more spending from a fixed budget without any explanation of where that would come from. That was not even an electorally rewarding strategy in the previous parliamentary session, so I really cannot understand why it is being doubled down on now.
I am proud of what this budget—the first that has been co-produced by the Greens from inside Government—includes. It reflects the strategic priorities of this Government: tackling the climate emergency, eradicating child poverty and focusing on a green recovery from the economic damage of the pandemic.
Why does the SNP-Green Government no longer see local government as a priority?
This Government prioritises local government to the extent that the local government settlement is increasing by more than £1 billion in the coming financial year compared with the current one. That is a six per cent real-terms increase in that budget line.
The budget also fully funds the first year of free bus travel for young people. That flagship Green policy and genuinely transformational initiative will ease the pressure on family budgets as costs of living are increasing. It will help take cars off the road, thus cutting emissions and cleaning up the air in our urban areas.
The budget includes a record £150 million for walking, wheeling and cycling, and £35 million for low-emission and ultra-low-emission buses, which will contribute towards public health and climate ambitions. It establishes a fund, which was first proposed by the Greens and which Unite the Union has asked for, that will assist local authorities to develop plans for bringing local bus services back into public ownership.
With transport being the one area in which emissions have risen rather than reduced in Scotland, those investments are absolutely critical if we are to play our part in giving the planet a fighting chance of staying below 2°C of warming.
Transport is far from the only area in which climate action is being prioritised, though. The climate justice fund has been trebled, and £50 million has been allocated to support farmers to tackle the climate and nature crises. The first £20 million of the north-east and Moray just transition fund is provided for. There is £45 million to progress the circular economy and reduce waste and £2 billion overall for climate initiatives.
One measure in the budget that I am particularly proud of is the piloting of a four-day working week. That has become an increasing priority of both the Greens and the trade union movement, and I am glad that we will be able to progress that through pilots in the coming year.
I will turn back to local government. Despite the pressure that was mentioned earlier, the budget delivers a real-terms increase through the local government settlement. That includes an additional £145 million for teacher recruitment, which is enough to fund 2,500 permanent posts. There is £72 million for free school meals in primaries 1 to 5 and £30 million in capital funding to facilitate the expansion of free meals to primaries 6 and 7 as soon as possible. There is also £175 million to fund a pay increase for care sector workers and £200 million for health and social care.
I am not suggesting that everything is rosy. COSLA has a perfectly legitimate case to make for more funding—and it is not the only one.
The budget represents the fairest possible distribution of extremely limited funding in extremely challenging circumstances. Once again, I have yet to hear from where, exactly, the Opposition would reallocate a further £250 million or what changes they would make to tax policy to raise £250 million in new revenue. I am grateful for the contribution made by Green councillors across the country, whose feedback we were able to take into discussions with the cabinet secretary. The additional £120 million that was confirmed today will certainly go a long way towards that.
By contrast, the only income tax proposal that I can remember coming from the Conservatives in the entirety of the previous session of Parliament was for a cut to the tax rate for the highest earners in the country, which would have taken a further half a billion pounds out of our budget. Today, we have heard yet another proposal—a perfectly legitimate proposal for further rates relief—that would only grow the gap in our public finances, and there was no explanation of where that money would be found from.
I am of the view that substantial additional revenue will need to be raised through changes to our existing tax mechanisms and the creation of new ones. For the reasons cited by the convener of the Finance and Public Administration Committee, bold decisions will be required in this parliamentary session if we are to meet the ambitious targets that we have set ourselves, particularly on child poverty reduction and net zero. The Greens are prepared to make further constructive proposals about where we believe the additional revenue can come from. For now, though, we are proud to vote for a budget that delivers for people and for Parliament.
16:21
Human rights belong to all of us. When determining whether we, as a nation, are promoting and protecting them, the first thing that we must do is consider what the minimum core of those rights should be. The idea of a minimum core is simple: it sets a red line below which people should not fall.
In a wealthy nation such as Scotland, the minimum core of those rights should be high and it should be met. It takes only a short glance around at the reality of food bank use, child poverty, in-work poverty and care workers on poverty pay to realise that we are not meeting even the lowest of bars. It is often said that Governments should not tell us what they value but show us where they are putting their money. The Scottish Government has said that it values reducing child poverty and inequality, but I am deeply frustrated that the budget does not go far or fast enough to address either.
The task ahead is huge. Child poverty in Scotland sits at 25 per cent. That is one in four children, and I doubt whether anyone in the chamber is comfortable hearing that figure. The budget will not set us on track to meet our child poverty targets. Scottish Labour has called for an increase in the Scottish child payment, but the Scottish Government’s plans do not go far enough.
The increase is too small for us to stop there, and it helps too few people for us to call it anything like a victory. That will not allow us to meet our targets, and that is not just my opinion. Earlier this week, the Government’s advisors in the Poverty and Inequality Commission confirmed what we already know: the Scottish Government is simply not going hard or fast enough to meet the child poverty targets that Parliament has set, unanimously and without caveat. To miss those targets would be a complete dereliction of duty. Unless the Government takes urgent and bold action, that is exactly the path that it is heading down.
The only guaranteed way to ensure that we meet our interim target is to increase the Scottish child payment to £40 by April 2023. The Scottish Government has run out of other options. Even at the current rate, the Scottish child payment is failing to deliver for thousands of children. While they wait for full roll-out, 125,000 eligible children are not receiving any payment at all. I have asked the Government at every turn whether it will address that—I have suggested how to do that—but there is still no commitment or plan to do that.
The Government cannot ignore the situation. Those children depend on their Government to find a solution. There are 170,000 children who get bridging payments, but they will miss out on the vital £10 increase to the Scottish child payment. The Government has made no provision to double the bridging payments. When I asked about that, I was given no indication that it intends to change that. There are 295,000 children who will not receive the £20 payment that they are entitled to when the increase comes into effect later this year, and more than one third of them will receive nothing at all.
The budget does little to address inequality, either. We cannot address women’s or disabled people’s inequality if we do not address the care economy. The pay offer for care workers is a paltry 40p increase. I look to my Scottish Green colleagues, who now sit in Government and who committed to a £15-an-hour pay rate for social care workers, as all of us in the Labour Party did. Why do they now believe that that pay rise is sufficient?
In opening for Labour, our colleague Daniel Johnson acknowledged that difficult decisions would have to be made. I would love to see care workers earning £15 an hour. What difficult decisions would the Labour Party take to fund that payment if it was in Government?
I am sure that the member will have heard my colleague Jackie Baillie explain earlier to the First Minister that we have fully costed that payment. If he is committed to the manifesto on which he stood, I am sure that he will be eager to read it and help to get that delivered.
Unpaid carers, most of whom are women, have stepped up and stepped in throughout the pandemic, plugging the gaps of a social care system that does not meet people’s needs. Now, those carers are floored—the budget has let them down, too. Despite the reassurances that the Minister for Social Security and Local Government gave last year, no provision has been made in the budget to extend the double payment of the carer’s allowance supplement. The Government rushed through legislation on the matter, limited opportunities for scrutiny and batted back criticism about the limited nature of the extension to the double payment.
The Government reassured the Parliament, committees and carers that the legislation allowed scope for ministers to extend the payment, but it rejected amendments from Scottish Labour that would have protected the uplift. I have lost count of the number of times that I have spoken and heard in the chamber about the detrimental impact of removing the universal credit uplift. In looking at the budget, I have a question for the Government: why does the budget not include the uplift that it promised to unpaid carers? If the Government still intends to double carers payments, where will it find the additional funding in June?
It is not only underfunding in care that risks further increasing inequality. The budget line for lone parents—the majority of whom are women—is now set at zero. Unless we properly recognise the value of women’s work and design a system that supports their participation in the workplace and recognises unpaid work, tackling the gender pay gap and moving towards our child poverty targets will be a distant dream.
The third sector, too, has long been the key to addressing inequality. This year, those organisations have gone above and beyond, so I am dismayed at the Government’s decision to cut their budget. The Scottish Council for Voluntary Organisations has been clear that those cuts threaten a weakening of support for voluntary organisations and their volunteers, so I urge the Government to reconsider them.
I started my contribution by talking about human rights. We have immunised our country against a virus that has exacerbated inequality. We needed a budget that immunised us against inequality and that protected human rights. To do that, we needed to be able to assess the impact of what we are doing. I am concerned that the considerable data gaps that must be addressed if we want to do that work will not be rectified until 2025.
The budget will not meet child poverty targets, will leave women on low pay and will deny disabled people the support that they need, and it fails to fund the public sector properly. Because of those things, it will not enable the realisation of the most basic of rights for so many in Scotland. It is far too little, and we already know that it is far too late, especially for the hundreds of thousands of children in poverty.
We are staring long-term inequality in the face. The budget does not deliver nearly the scale or the pace that we need to address that. We are Scotland and our ambitions are high. We needed a budget that met them and empowered us to realise our human rights and escape poverty and inequality. As it stands, others and I do not believe that the budget will do that.
I ask the Government to reconsider its budgetary priorities to ensure that people can reach their full potential and that Scotland really can be the land of opportunity that we all want and need it to be.
16:28
I am delighted to speak in the stage 1 budget debate, which at its heart is about building a fairer, greener and more prosperous Scotland. As we recover from Covid, securing stability and support for my constituents in East Lothian is my utmost priority.
The budget sets out an ambitious path while balancing the management of the Covid crisis and the rising cost of living. Our public services and the hard-working people within them have held the country together during the pandemic. I thank all those who worked in our public services in East Lothian and Scotland. We owe them a debt of gratitude.
As we continue the battle against Covid, the budget has set out provisions to bolster support for our public services, such as a record £18 billion investment in health and social care, which includes £1.6 billion for social care and integration. Those provisions will progress the commitment to increase spend by 25 per cent by the end of this session. The budget also sees an increase to nearly £13 billion for our health boards, and that generous package will be essential in supporting the vital services in East Lothian and beyond.
As we rebuild our economy, we are taking every step to ensure that our approach prioritises the needs of the people of Scotland. As a strong advocate for the wellbeing economy, I think that our economic recovery must put the health of the people and our environment first. A principled and focused approach on wellbeing will help Scotland to heal from Covid and meet the challenges of the cost of living crisis that is impacting on our constituents.
In November, the Wellbeing Economy Alliance Scotland produced the report “Failure Demand”, which argues that we should be doing more on preventative spend. Its point is that a failure to do so will result in Governments spending more money in the long term. The £20 cut to universal credit is a prime example. How much will that cost us through different services in the months and years ahead?
Alongside fixing harms, we, in Scotland, are spending £600 million on mitigating harmful policies from Westminster such as the bedroom tax. The most recent UK budget includes measures that exacerbate the cost of living crisis, with national insurance rising while energy prices soar, alongside the highest inflation rate for a long time.
I will focus on a few other commitments. The investment of £831 million in affordable housing, delivering 110,000 affordable and energy-efficient homes across the next decade, will benefit all our constituencies.
The Scottish Government is putting welfare first, with the investment of more than £4 billion in social security and welfare payments, including doubling the game-changing Scottish child payment. Of course, we need to do more, but that is a massive step forward.
Tackling inequalities is core to building a fairer and more equal society. The Scottish Government’s commitment to a £500 million whole family wellbeing fund and its investment of 5 per cent of the community-based health and social care spend in preventative whole family support is very welcome. We had a debate on such support just a couple of weeks ago. It has been recognised by all parties in the chamber as a key element in tackling poverty, supporting attainment and preventing mental health issues. The investment will help the Scottish Government to deliver the commitments that it made when it accepted the Independent Care Review’s report, “The Promise”.
East Lothian has been a key player in showing the path for sustainable living, as Dunbar was Scotland’s first zero waste town. I am proud that the budget will work to tackle climate change, with a commitment to a just transition providing £2.5 billion-worth of public and private investment, which is needed to meet our net zero target. That investment, alongside equipping businesses to grasp the opportunities of a green recovery, will secure new jobs and lay the roots for long-term job security and prosperity—I have already seen opportunities in East Lothian in that regard. The £350 million to drive forward decarbonisation and a generous package to support active travel are other key commitments in the pledge to tackle climate change.
The budget is a step in the right direction. We can achieve a wellbeing economy. That has been discussed in many debates in the chamber. With ambitious policies, our economy can prosper and Scotland can care for its environment and people.
I want to touch on our constraints as a devolved nation. On borrowing powers, the Fraser of Allander Institute, in its report on devolved fiscal frameworks, said:
“there is a case for a modest extension to the scope and scale of the devolved governments’ borrowing powers in ‘normal’ times. The ability to borrow to fund discretionary resource spending would provide additional flexibility to respond to unforeseen events and therefore reduce the need to hold back funding instead.”
We have already heard about that. The report went on to say:
“Even fairly substantial borrowing by the devolved governments would have little impact on the UK’s borrowing and debt.”
A level of flexibility would allow us to invest more in our recovery, for example by increasing funding to the Scottish National Investment Bank.
The Institute for Fiscal Studies added:
“With the Omicron variant of coronavirus ... across the UK, it is vital to learn lessons from earlier waves of the pandemic for the devolved governments’ funding arrangements. If new policy and spending announcements start to come in quick succession, the devolved governments should swiftly be given some combination of the funding guarantees successfully deployed last year, and/or enhanced borrowing powers, to allow them to respond in a timely and effective way.”
I look forward to both the Labour and Conservative parties supporting that view.
Without the full economic levers of independence, we cannot fully deliver the bold economic redesign that a wellbeing economy requires. I ask members to support this budget.
16:33
Today has been a frustrating experience for many members. As colleagues have outlined, this is meant to be a recovery budget and a bold statement of intent for the country. Instead, it fails to address the lasting impact of Covid, fails our local authorities and public sector workers and risks compounding the financial challenges that households across Scotland face.
As my friend Jackie Baillie has said, the 48p pay increase for social care workers is unacceptable, given the tireless work that they have put in as part of the national effort to tackle the virus. The Government should treat fair pay for workers as an urgent priority and commit to an immediate £12 an hour settlement, moving towards a £15 an hour baseline as soon as possible, which would be in line with our aspirations for the national minimum wage. If only all health consequentials had been protected, that would have been a mechanism to deliver the measure—it would have driven wealth back into the lowest-paid sectors of the economy.
I thank my Glasgow colleague Pam Duncan-Glancy for her strong case for further increasing the Scottish child payment if we are to have a hope of coming close to the target of reducing child poverty to 10 per cent in relative terms by 2030 from our current situation of 25 per cent and flatlining or potentially getting worse in the coming year. The Fraser of Allander Institute’s modelling has said that Scotland could meet its child poverty targets. Under all three of the published policy models, we would succeed in meeting the targets, and all three of them include a significant increase to the Scottish child payment.
The payment might well be game-changing, as the Child Poverty Action Group has said, but I am afraid that the Scottish Government is playing that game very badly indeed. In the face of the cost of living crisis, a commitment from Government to further doubling the payment is therefore even more pertinent, and we wish to see that happen in the current financial year.
It makes sound economic sense to do that. Think about the tax base underperforming that of the UK. Surely, the lowest income households need every penny, because every penny will be spent in the economy, creating a multiplier effect that will repay itself in due course and increase the tax base in time. That is what we call a virtuous cycle rather than a vicious cycle, and if there were more economists rather than accountants in Government, perhaps we would have that sort of thinking at the heart of what is going on in the budget.
I turn to the cuts that local authorities face. Since 2013, the Scottish Government’s revenue fiscal resource budget limit has increased by 3.1 per cent. Despite that, the funding that it has allocated to councils has decreased by 2.4 per cent. Today’s starting point was therefore a cut of £371 million to councils across Scotland. It has been ameliorated by the announcement of an additional £121 million that has been pulled out of the bag. Councillors across Scotland might be grateful for that, but I doubt it, because it is cold comfort when it leaves them with £250 million more to cut.
How will they do that? They face an invidious choice. This is a one-year patch-up job in a year when there are council elections. The Government has put local authorities in an impossible situation in which they will have to consider making cuts to local services and increasing the price of accessing local amenities when people already face a cost of living crisis, or hiking the regressive and obsolete council tax, which the Government pledged to axe in 2007 to make up for that critical and fundamental lack of funding.
Glasgow City Council’s draft budget options for the next financial year include horrific proposals to offset a funding gap of £33.9 million by axing a holiday scheme for children who are eligible for free food, withdrawing services for dyslexic pupils, increasing crematorium charges for bereaved families and cutting teaching staff. That effect might well be reduced marginally by what was announced today, but it certainly will not take away the pain completely. In fact, it will address only one third of the potential cuts that are faced by local government. The bulk of the pain remains, and it is disingenuous and cowardly of the Government to force councillors to wield the knife in this way.
On 17 February, Glasgow councillors will be asked to agree that budget, which is simply about how to slice a much smaller cake. The fact that there will be severe cuts is a fait accompli decided by a Government that controls 80 per cent of Glasgow City Council’s annual budget allocation.
The member seems to be suggesting that it should be the Government rather than local authorities that make the difficult decisions. Leaving aside the difficult decisions that have already been made in the budget, if this was a Labour Government, where, from what has already been allocated, would it find £250 million? Where would it cut, or where would it raise taxes?
I thank the member for his intervention and note the commitment of the Greens to protecting local government funding and increasing it in real terms every year of this session of Parliament, although that has obviously not been achieved.
As for how we address the tax gap and increase revenues, we have presented creative ideas. In fact, there was a cross-party commission, including the member’s former colleague Andy Wightman, that suggested introducing a land value tax that would have raised an additional £12 billion in revenues for Scotland. We could be introducing and pushing such ideas now.
Where is the sense of urgency coming out of the pandemic? Where is the idea of fundamental renewal? The local government settlement that was achieved in 1996 has fundamentally failed and we need a root-and-branch review of local government. Devolution has failed to address that in two decades. I hope that we can all agree that that needs to happen sooner rather than later.
The impact on funding is evident to citizens across the country, and nowhere more so than in Glasgow. We have seen communities having to picket their libraries, week in and week out, to protect the most fundamental services. We have seen facilities such as the iconic People’s Palace lying empty. If Labour had done that when it was in administration, we would have been hounded relentlessly by the SNP on a weekly basis yet, when the SNP does it, it passes without comment. Facilities in Dennistoun such as the Whitehill pool are on the brink of collapse because of repair backlogs. The city’s cleansing department is falling apart.
Our councils deserve better, workers deserve better and, quite frankly, Scotland deserves better. It is for that fundamental reason that Labour cannot possibly support the budget at stage 1, given its severity and the civic vandalism that it proposes. I urge members to support our reasoned amendment, in an effort to salvage the budget before it is too late.
I invite Murdo Fraser to wind up for the Scottish Conservatives.
16:40
It is my pleasure to close the debate on behalf of the Scottish Conservatives. I will start where the debate set off, on the size of the overall budget settlement. The backdrop to the bill is the provision by the UK Government of the most generous budget settlement, in terms of a core block grant, in the history of devolution. The finance secretary should be turning cartwheels down the Canongate, celebrating the fact that she has more money than any of her predecessors in office.
Do I or do I not have more money for next year, compared with this year?
Taking out the extraordinary additional sums that have been paid for Covid over the past financial year, the coming year’s core block grant is up by 10.6 per cent in cash terms and 8 per cent in real terms. As Liz Smith said, some £3.9 billion extra is being provided. You would think that the SNP would be celebrating that additional resource, which is part of the largest block grant in the history of devolution.
SNP members like to talk about how this is a “fixed budget”. Of course, that is not correct, because the Scottish Government has tax-varying powers that it is free to use if it feels that the budget is insufficient. The Scottish Government used to call for the devolution of air passenger duty and corporation tax so that it could cut those taxes. It has reneged on both those policies. Instead, it uses its tax powers to increase the tax burden on ordinary working Scots, and it damages our economy as a result.
This week, in a damning cross-party report on the Scottish budget, the Finance and Public Administration Committee concluded that Scotland is lagging behind almost all other areas of the UK on key indicators of economic performance. That is deeply worrying. We have the same macroeconomic policies across the whole of the UK, yet Scotland—almost uniquely—is performing the poorest. We must conclude that responsibility for that rests at the door of the SNP Government.
The consequence of that is clear when it comes to the Scottish public finances: our block grant is being reduced because of poor Scottish income tax performance. According to the Scottish Fiscal Commission, as the convener of the Finance and Public Administration Committee reminded us, the budget is expected to be £190 million worse off because of fiscal devolution, and that figure will rise in subsequent years.
So, here we have a tale of two Governments: a Conservative Government at Westminster that is putting more money than ever before into the Scottish budget; and an SNP Government here in Holyrood that, because of its economic incompetence, is actually reducing the amount of money that is available because we are not matching the economic performance elsewhere in the UK.
On the contrast between the two Governments, I would be interested to hear whether any Tory member is prepared to condemn the fact that, under the regulation of the Tory Government, £290 billion is lost to financial crime every year. That has a direct consequence for the money that is available to the Scottish Government and, in turn, to councils. Will Mr Fraser condemn the UK Government’s lack of action on that?
What a splendid line of attack that would be if the Scottish Government had such strong fiscal rectitude that not a penny was being wasted.
That sets me up nicely for my next point. Throughout the debate—for example, by John Mason, in his annual speech on the subject, and by Ross Greer—we have been challenged on where the Opposition would find additional money.
I will summarise where we could find some savings. We could find savings from the £200 million that has been spent on building two ferries that will probably never serve any island communities and that are years behind schedule. So far, £40 million has been paid in compensation to the victims of the malicious prosecution of those involved with Rangers Football Club. Tens of millions of pounds have been paid in subsidies to Prestwick Airport, Burntisland Fabrications and Liberty Steel. Millions have been paid out in legal costs in the unsuccessful defence of challenges against this Government, including one from their former First Minister—the man who cannot be named. Look at all the resources that are being spent in preparing another bill for an independence referendum that everyone knows is not going to happen. That is where the money could come from, and it would be far better spent on the people’s priorities than wasted as it currently is.
Despite all the extra money that we have identified as being available to it, what does the Government actually deliver? It delivers a real-terms cut in the funding of local authorities, which COSLA has estimated at £371 million. That is money just to stand still, not to do anything extra.
Earlier in the debate, the finance secretary told us about an extra £120 million from the UK Treasury. We should welcome the fact that money from the UK Government is mitigating the impact of SNP cuts on our communities. That is welcome, but it still leaves us with a cut of £251 million just to stand still, as Douglas Lumsden said. That will mean increases in council tax and cuts to local services and, like Miles Briggs, I am sure that people will be reminded of that on the doorstep in the run-up to the elections in May. That is what this SNP Government is delivering.
The settlement has been attacked by council leaders from across the political spectrum, including SNP leaders. Shame on the SNP Government for delivering those cuts, and shame on the Greens for enabling them.
In previous years we could perhaps have relied on Andy Wightman’s negotiating skills, as part of the Green group, to force the SNP Government to provide more generous support to local councils. Alas, in a sad loss to this Parliament, Andy Wightman is no longer here and his memory is besmirched by his erstwhile colleagues in the Green party. With him gone, they have sold their souls for ministerial salaries and limousines, and our councils and local communities are poorer as a result.
Fiona Hyslop and Paul McLennan talked about independence. If only we were independent, how much money we would have! [Interruption.] There we go. I gently suggest that they should read the paper published this morning by David Phillips of the Institute for Fiscal Studies. His calculation is that Scotland’s projected deficit in 2026-27 would be 7.5 per cent of gross domestic product, or almost £3,000 for every man, woman and child in Scotland. That would mean tax rises and spending cuts, and the Scottish Government has no idea how to meet any of those challenges.
Scottish Conservatives cannot support this budget. With record sums available to spend, it actually delivers cuts to the services that people rely upon while money is being wasted and spent on SNP vanity schemes. I urge members to vote down the budget at decision time.
16:48
This is stage 1 of a budget that tackles poverty and helps families meet the cost of living. It invests in the just transition that we all, apparently, believe in and it secures economic recovery. Despite that, Labour, Tory and Lib Dem spokespeople could not start talking about the constitution fast enough in their remarks. That is why we are setting the budget and why, after 15 years, they are still opposing it. Their rhetoric today suggests that they will be opposing it for a few more years yet.
I will move to the substance. Kenny Gibson began with comments on behalf of the Finance and Public Administration Committee. He spoke about additional funding and the need for transparency. I place on record that we expect the UK Government to finalise our budget in the coming weeks. Until then, we are proceeding on the basis of personal indications in meetings with the Chief Secretary to the Treasury and of communications with Treasury officials about where our budget might end up. I have chosen to prioritise funding for local government from those additional flexibilities. Just yesterday, everyone in the chamber was calling on me to do just that, yet I imagine that most will vote against it at decision time. That sums up the Opposition.
Many members talked about priorities. I agree that this is a budget of choices, which are, by their very nature, hard. Let us look at some of the choices. Douglas Lumsden talked, quite rightly, about front-line nurses. Let us talk about our front-line nurses, who are, under this Government, paid over £1,000 more per annum than they are paid under Douglas Lumsden’s party. Those are choices.
Jackie Baillie talked about social care. I agree with where she wants to end up, but we are delivering increases. It is not just rhetoric. I think that to dismiss it as 48p does a complete disservice to the value of the wage increase to social carers, which is the equivalent of £3,000 per annum if we compare the £10.50 per hour with the previous year’s national minimum wage, which is what many carers in Wales, under Labour, and in England, under the Conservatives, are being paid right now.
There are other choices. It is a fact of parliamentary life that every member wants all budget lines to increase. Jackie Baillie wants at least another £1 billion to be spent on health. The Tories want several hundreds of millions of pounds to be spent on local government, and rates relief, and skills, and presumably they agree with the UK Government that health consequentials should be passed on to health and social care.
In members’ contributions, there were areas of agreement. I think that we all agree that our priority is recovery. As Fiona Hyslop said, it should be welcomed that, with the estimates of growth this month, Scotland has exceeded the pre-pandemic level of GDP. We need to build on that. It reflects the resilience of our business communities and our workers and the country’s ability to pull together in times of crisis.
The challenges that we face right now require that same solidarity and commitment in making hard choices and determining our priorities. We need all the tools that we can get in order to do that, and particularly the fiscal tools, which can be delivered through the fiscal framework review. As Liz Smith said—I agree with her on this—there is an opportunity if both Governments are willing to approach the review in good faith. I will certainly approach it in good faith. I think that all parties probably agree on where there need to be significant changes. I will meet the Chief Secretary to the Treasury next week, and I hope that those conversations will be constructive and will progress the discussion.
This is just stage 1. There are, if members can believe it, more debates to come on the budget. In those debates, which will cover areas that we agree on and areas that we disagree on, let us not lose sight of the fact that the budget delivers on some key commitments. I am always struck by Pam Duncan-Glancy’s remarks, and I was struck by what she said today. I recognise the importance of opposition and scrutiny to push us to go further, but next year’s budget delivers on our commitment to double the Scottish child payment. Other members talked about the need to focus on economic recovery, and I note that next year’s budget delivers the highest level of investment for our enterprise agencies since 2010. All members have seen the importance of our health and social care services over the past few years and recognise the pressures that they are dealing with right now. Next year’s budget delivers record levels of investment in health and social care.
I have talked about the budget being a transitional budget, and it is a budget for one year. We really want to end up in a position where we can set multiyear budgets so that we can deliver on our commitments to reform, to improving outcomes and to delivering tangible benefits to the people of Scotland. We now have that opportunity as a result of the UK Government’s comprehensive spending review, and we are in the process of a resource spending review.
The principle of setting multiyear budgets is about recognising things such as the spend-to-save principle. Does the cabinet secretary not recognise that an investment in social care with a meaningful uplift in social care pay will see us reduce delayed discharge and the massive cost that that creates to the public purse?
I agree with the principle, and that is precisely why we cannot just dismiss the choices that we have made when it comes to, for example, the increase in wages. However, I also set this challenge down: for preventative spend to work, we have to be willing to move budgets. It is not that there will be additional budget to invest in, for example, social care and reducing isolation. For us to really deliver preventative spend, we all need to have a far more mature debate on budget lines because, for some lines to go up, other lines will require to go down. If we want to move more funding into social care, as Jackie Baillie believes in, it will need to come from other parts of the budget. In a parliamentary context, believing that budgets should only go up makes things very difficult.
The resource spending review gives us an opportunity. We have a commitment to consult as widely as possible—because the budget needs to be Scotland’s budget—and we will publish the review report in May, after the conclusion of the consultation that is running just now. We have an opportunity.
We face many challenges. The budget is transitional. It backs Scotland’s key priorities. I hope that the Opposition will vote for it at 5 pm.
That concludes the debate on the Budget (Scotland) Bill.
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Parliamentary Bureau Motion