Public Services

– in the Scottish Parliament at 9:30 am on 6th April 2000.

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Photo of Lord David Steel Lord David Steel Presiding Officer, Scottish Parliament 9:30 am, 6th April 2000

Our first item of business is a Scottish National party debate on motion S1M-736, in the name of Andrew Wilson, on financing public services, and amendments to that motion.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

Good morning, on a glorious Edinburgh spring morning. The emptiness of the Government benches probably reflects less on the motion than it does on the social event that was enjoyed by the Labour and Liberal Democrat parties last night.

However—and turning to the future of the country—I would like to say that this is an attempt to have a positive debate as we look forward to the first anniversary of the first election campaign of this Parliament. We hope that most people will agree with Ron Davies, the much-missed Secretary of State for Wales, who coined the phrase that devolution is a "process, not an event". This debate is an attempt to get members from all parties in the chamber to sign up to the fact that our Parliament is not an end but a beginning. We can look forward to having greater scope and greater responsibility. In Wales, believe it or not, Assembly members refer to each other quite openly as either processors or eventists—it is all very evangelical. They have a specific view of the way in which the Welsh Assembly must move on, and I suggest that we should take the same view here.

My view, as expressed in the motion, is that the current financial settlement for the Parliament is unsustainable; it hampers public choice; it reduces democratic accountability and fiscal responsibility; and—most important of all—it lacks a proper ability to finance valued public services. At present, we do not have the normal tools of a normal country at our disposal to deliver on the people's priorities—priorities that every one of us, I have no doubt, would like to deliver on. Our budget is handed down in total from Westminster. Even the supposed role of the Secretary of State for Scotland is limited, because he does not sit on the crucial EDX sub-committee—the Ministerial Committee on Public Expenditure—of the Cabinet, which discusses the allocation of expenditure.

Arid debates in the chamber about the allocation of pieces of a set cake are futile. Normal countries talk about allocating the nation's wealth, not about allocating a fixed sum. We should be talking about the most efficient way in which we can make our economy grow, remove poverty and inequality, and use all the tools at our disposal to do so. We should not simply be spending our time arguing about how we should rob Peter to pay Paul.

It is a nonsense that local authorities have 10 times the responsibility over fiscal matters that we have in this Parliament. It is a nonsense that does not afflict any other normal country in Europe, nor, indeed, all the devolved legislatures in Europe that were held up as such great examples by the Labour party before the devolution referendum.

We are talking about taking Scotland towards normality. We want it to go all the way towards full normal status, but to those who are romantically wedded to the idea of Westminster, I say fair do's—they can still argue for that, but they can also argue for greater fiscal autonomy in the context in which we find ourselves.

The Barnett squeeze is a phrase with which I bore for Scotland. However, that squeeze is critical in the debate.

Photo of Mike Watson Mike Watson Labour

I would like to confirm that Mr Wilson does indeed bore for Scotland on that point. Will he comment on a letter that I received from Professor Arthur Midwinter, relating to Mr Wilson's comments in a debate in the chamber on 10 February? Professor Midwinter writes:

"Mr Wilson claimed that I had 'concluded that our per capita share of UK spending will fall by 0.5 percentage points' . . . What I actually wrote . . . was that 'these figures provide no evidence of a spending squeeze in practice', and that 'Scotland's share of the UK budget would remain broadly stable'."

Would Mr Wilson like to clarify his position?

Photo of Andrew Wilson Andrew Wilson Scottish National Party

If Professor Midwinter was ever misrepresented, I would retract. If the member reads on in the Official Report , he will see that I was very surprised to read in the paper that Professor Midwinter had said such a thing. He, of course, is the only member of the Scottish academic community who does not agree with the existence of the Barnett squeeze.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I will move on—I have covered Mike Watson's point.

The key issue to be considered—and Mike Watson should know this—is that the Barnett squeeze is converging spending-per-head levels at an accelerating rate. The Chancellor of the Exchequer made a clear commitment on health—to increase UK spending above inflation by an average of 6.1 per cent. Why is it sensible that the Scottish equivalent figure for total health spending will be 4.9 per cent? Why is health spending rising more quickly in the rest of the UK, when there is no evidence that health services and standards are improving faster in Scotland? It is an arid and mechanistic formula that takes no account of our ability to pay, our needs or public choice. The Barnett formula is mechanistic, undemocratic and does not work.

There is a wider issue—the Barnett formula ties us into the policy prescriptions of English departments. If the health service in the rest of the UK were to choose to implement direct service charging—as is its right—that would directly affect our budget. Charges for visits to GPs or eye tests would have an effect on the Scottish budget, irrespective of the choice of the Scottish public on that question. That is an argument raised by another academic, Professor David Bell.

The water industry is another case in point—it was privatised in England, remains public in Scotland and the funds have been taken out of the Barnett formula. At the extreme, if education or health is privatised in any way in the rest of the UK, our budget will suffer. That position is not sustainable; it is not normal and takes no account of public choice. Such a constraint is damaging to Scotland.

The result of all that has been demonstrated by the growth in private finance initiatives. We are currently the PFI capital of the UK. According to the new draft expenditure plans published by Mr McConnell, in the past two years, PFI has grown from a massive 17 per cent of all public capital works to 34 per cent this year. More than one third of public capital works in Scotland are financed through PFI. Furthermore, 44 per cent of all capital spend by private sector bidders in the UK is taking place in Scotland. That is because of the Barnett formula and the current structure. According to an answer that I received from Mr McConnell, the total cost of PFI over the next 30 years is just under £8 billion. That is what the Scottish budget will give to PFI contracts over the next 30 years. We find ourselves in a disgracefully difficult and damaging situation.

That need not happen. To say that that is the only route is simply dishonest. We can operate within the golden rule set by the chancellor and within the Maastricht criteria; significant funding is available within current budgets and prudence to deliver much more. The chancellor has admitted that over the next five years he will have a budget surplus of £60 billion. According to the Treasury's estimates, £22 billion of that will come from North sea revenues. The surplus over the prudent constraints of the Maastricht deficit of 3 per cent of gross domestic product is £136 billion over those five years. Scotland's crude share of that total is approximately £2,400 for every person in the country.

We need not fall for the nonsense that PFI is the only show in town because we cannot afford anything else—that is simply not true. The only reason why the war chest is not being spent is inflationary fears that do not afflict the Scottish economy. We would not be going through the same constraints if we had normal powers of a normal country.

Looking around Europe, we can see what normal countries do with the normal powers at their disposal. It is a question of public choice. We are not arguing for specific policies; we are arguing for options. The Conservatives could use the powers to argue for lower tax. We would argue—as I am sure many members would—for investment in public services using honest taxation and investment.

In Finland, Mija Perho, the Minister of Social Affairs and Health, has taken pensions up to 66 per cent of Finnish average earnings, compared with 45 per cent in the UK. In his latest budget, the Swedish finance minister, Peter Lagerblad, invested £1.8 billion of new money in local government. During the same time that that investment is taking place in Sweden, council budgets are being cut by a cumulative £2.4 billion in Scotland. Investment in local government or divestment in local government—those are the opportunities before us.

In Denmark, the Finance Minister, Mogens Lykketoft, has revealed that in one year, lower corporation tax has brought in an extra £42 million to the Treasury of a country that is the same size as Scotland. In Norway, the oil fund is worth £23 billion. It has similar oil production levels to Scotland. The Labour Minister of Petroleum and Energy, Olav Akselsen, is using that to make a significant and on-going contribution to Norway's just and progressive benefits and pension system. Those are the opportunities that we would have as a normal country, with a normal standard of living in a normal context in Europe. Those are our choices if we regard devolution as a process, not as an event, and look forward to where we can take this chamber. If such an approach is okay for Sweden, Norway, Denmark, Finland and other countries, why not for Scotland?

Even if—unlike the free-thinkers in the SNP—members are wedded to the unnecessary layer of bureaucracy that is Westminster, they could seek greater responsibility in that context. Every other devolved legislature in Europe—even the so-called models in Spain and Germany that Labour was so keen to mention during the referendum—has greater fiscal responsibility than this Parliament. In Flanders, where the Government is the equivalent of a Labour-Liberal-SNP coalition—which might seem a strange idea—the Flemish Parliament has 10 times the financial responsibility of the Scottish Parliament and can also borrow. The Government in the Basque Country has complete fiscal autonomy, paying the Cupo quota—which is the equivalent of a subvention to Westminster—to Madrid for central services. The Basque Government has lower rates of income tax for low earners, higher rates for top earners and lower corporation tax than the rest of Spain. Perhaps we could consider such a mix in Scotland.

The Governments in Catalonia and Bavaria have greater powers than this Parliament, and I should tell the Conservatives that the provincial Government in the Alto Adige or South Tyrol region of Italy has 10 times the tax powers that we have and has used those powers to cut tax. We have no such opportunity beyond a very minor tax-varying power. I simply ask all the devolutionists who still want to be part of the UK: if such fiscal responsibility is okay for those devolved regions, why not for Scotland?

Another issue that throws the financial constraints on the Parliament into sharp relief is the financing method for the Holyrood project. We must move the debate on from the issue of the site itself to how we pay for the building. First, it is absurd that of every £3 that we spend on the project, £1 will be lost from the Scottish budget and recycled to the Westminster Treasury in tax. VAT will account for £25 million; corporation tax will account for nearly £3 million; and £30 million will spent on income taxes and national insurance. That is before we consider other taxes such as fuel tax and landfill tax. If we had the normal fiscal powers of a normal country—or even fiscal autonomy—that money would be retained in the Scottish budget and not lost to Westminster.

Photo of Robert Brown Robert Brown Liberal Democrat

Would Andrew Wilson apply the same principle to projects south of the border such as the dome, where the VAT contribution dwarfs the VAT contribution from the Holyrood project?

Photo of Andrew Wilson Andrew Wilson Scottish National Party

If Mr Brown checks the facts, he will find that the dome is meant to be a national institution and investment; the Holyrood project is being financed from a fixed Scottish budget. I would be delighted if the people of London had raised the money for the dome themselves; I would love them to have fiscal autonomy. However, I am arguing for fiscal responsibility for the Scottish Parliament.

I would not risk quoting the Presiding Officer directly, so I will say that on "Newsnight" last night senior MSPs were talking about the frustration felt in many parts of the Scottish Parliamentary Corporate Body about the method of financing Holyrood and the need to pay for a Parliament that is supposed to last 200 years. Why should the project funding come out of only two or three years' money? If we had normal borrowing powers, we could borrow the money and pay it back over a long period. I suggest that Mr Kenneth Macintosh—whom I briefly heard on the radio in his role as the Executive's chief back-bench spin-doctor—check the following fact with the advisers at the back of the chamber: if the interest rate on 30-year gilts is less than the public sector discount rate, the net present value of such borrowing is less than the capital cost. According to actuarial advice that I have received, the net present value saving to the Scottish budget from borrowing on a 30-year bond would be £40 million. Regardless of whether members agree with the facts, the key point is that we would not have to take money out of education and health to pay for a project that will last 200 years. We cannot do that within the current powers of the Parliament, unless we use off-balance sheet finance.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

I presume from Mr Wilson's proposal that he now supports the private finance initiative. We could borrow such money without it counting against the Scottish Executive's assigned budget only if it was off balance sheet, and the only way to do that is through a version of PFI. Mr Wilson seems to have had a radical conversion on this issue. However, I find it astonishing that he proposes to borrow money instead of paying for the project in cash; such a measure would lead only to higher costs for the Parliament.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

If he listened carefully to what we were saying, the minister would see that we are saying exactly the opposite. I am suggesting that if we were a normal country, we could borrow ourselves. That is why countries borrow. Is the minister suggesting that no country should borrow?

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I am suggesting that if we had normal powers, we could get through this situation, as the Presiding Officer has argued. I am arguing from an autonomous position.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I am suggesting that funding should be on the balance sheet. Normal countries should be able to borrow. However, within the restrictions of devolution, funding could be taken off the balance sheet using a cheap public sector bond, which would be cheaper than the private finance initiative. That is the mechanism that is proposed in London and used in Holland for water and in New York for the underground.

I am arguing, not for private finance, but for normal public finance for the Scottish Parliament, borrowed over 30 years in the normal way, which is perfectly sensible. It is absolute nonsense that the Parliament has no borrowing powers. The situation cannot be sustained. I share the frustrations of Scottish Parliamentary Corporate Body members. This is not the way to finance a 100-year project. I look forward with interest to hearing Mr McConnell justify the position.

My argument is best summed up in the following quotation:

"I think the answer"— for this Parliament—

"lies in us considering full fiscal freedom for the Scottish Parliament, under which it would raise and spend all its own taxes, with a just contribution for the services we still receive from London".

That was not me, nor any nat, but Brian Monteith quoted a year ago in The Herald.

I also agree with the contention of Labour and the Liberal Democrats in the Scottish Constitutional Convention document "Towards Scotland's Parliament", published in 1989—coincidentally, the year after I joined the Scottish National party—which says:

"The Parliament certainly could be funded by the allocation of a block grant from Westminster".

The document goes on to say about that system:

"It would be a minimalist approach that is neither radical in concept nor conducive to accountability as it would mean that the Parliament would be more accountable to Westminster than the Scottish people and would be even less financially independent than local authorities".

However, that is the situation in which we now find ourselves.

The document concludes:

"The conclusion therefore, suggests that the greater access to sources of revenue given to the Scottish Parliament the greater the freedom of action it will have and the more acceptable it will be to the Scottish people".

I agree. That is what we propose—in line with Brian Monteith's quotation from last year and with the position of the constitutional convention.

Mr McConnell's amendment smacks of self-congratulation rather than of concern for public services. It is not the people's priority to see council taxes rise and services cut; to see less of our nation's wealth invested in public services than at any point in recent history; nor to constrain and restrict Scotland's Parliament. The priority must be to make the Parliament grow.

To Mr Johnston, I say, "Play a new tune." Barnett does not enhance; it damages. Look beyond the confines of the UK to what is normal in Europe. Mr Johnston's amendment is a 19th-century amendment to a 21st-century motion. He should think big and think better, because there are no limits to what we can do with this Parliament.

To everyone who is interested in the good government of Scotland—I am sure that everyone here today is—I say that we have the opportunity to be part of the process of making the Parliament grow. Where individuals choose to stop and jump off is up to them, but we should all at least agree that we are part of a process, not an event.

For me and my colleagues, the target is for Scotland to be a normal country in the wider Europe—like Ireland, Denmark and Sweden. It should be no better, but certainly no worse. Other people may have other targets, but they should at least sign up to grow, because that is what the debate is all about.

I move,

That the Parliament expresses its concern at the level of resources allocated to Scotland by Westminster which takes no account of the requirements of Scottish public services, the level of revenues raised in Scotland or of the priorities of the Scottish people; notes in particular that health expenditure is rising faster in the rest of the UK than in Scotland despite the fact that there is no evidence of relative improvement in health standards in Scotland; observes that the latest polling evidence suggests that more than two thirds of Scots want greater powers for the Parliament, and therefore calls upon the Scottish Executive to bring forward proposals for a fairer, more fiscally responsible and more democratically accountable system of funding Scottish public services that allows the Scottish people, through the Scottish Parliament, to make the key choices about the share of the nation's wealth that should be allocated to public services.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour 9:48 am, 6th April 2000

We have travelled a long way in the 12 months since the election campaign that Mr Wilson mentioned at the beginning of his speech. Three issues marked the debate on economic policy during the election campaign. One was the private finance initiative, which the Scottish National party chose as the subject of its first debate on financial matters in the new Parliament. We have heard very little from the SNP about it since, presumably because it recognises that the figure of 34 per cent represents investment in Scotland's schools, hospitals and water infrastructure, which—although Andrew Wilson may think that it is disgraceful—is welcomed across Scotland by local communities and by those who will benefit from the improved water supply, better health services and better schools that will result.

The election campaign was also marked by an entertaining episode at a press conference, when the nationalists had a problem in being accurate about the fiscal deficit that is in place between Scotland and the rest of the United Kingdom. I remember that Andrew Wilson had his calculator out, trying to make an accurate calculation, and failed to do so.

The other issue was the penny for Scotland, about which we heard nothing this morning. Therefore, in a year, we have managed to move away from the penny for Scotland, which is presumably not now a central part of the nationalists' financial policy.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

It was not mentioned in Andrew Wilson's 18-minute speech this morning, so presumably it has gone.

We have moved away from a recognition of the fiscal deficit—there was no attempt to counter that argument this morning—and there is recognition of the substantial investment in public services through public-private partnerships. Andrew Wilson may feel that they are disgraceful, but I believe that they are particularly important for Scotland.

This morning's debate comes at an important time, when the Executive's decisions and the UK chancellor's announcements have led us to the highest ever public expenditure in Scotland, and to the highest ever—a record level in real terms—investment in Scotland's public services. There is a record amount of investment in education at all levels, and in health. Health investment is about to be increased even more dramatically, with a £34 per head increase in Scotland, the same as in England and Wales. There is a record level of investment in transport, as we renew, improve and return investment in roads in particular, following the decimation of the road programme and of public transport in general during the final years of the previous Conservative Government.

Investments in new, specific initiatives in Scotland, including the Drug Enforcement Agency and the domestic violence fund, have been critically important, and have been a direct result of the actions of this Parliament in its first 12 months.

Compare that—not mentioned at any point in Andrew Wilson's 18 minutes—with the endless day-after-day, week-after-week spending commitments of the nationalist party and, occasionally, of the Conservatives. I note that Mr Wilson is now quoting Mr Brian Monteith in particular as his economic authority on a weekly basis. Those commitments, on education, health, transport, local government, housing—

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

I named some of them last week, and I am happy—

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

No, but I am happy to name them. There have been commitments on railway lines, business rates, local government, housing, education and health.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

No—Andrew Wilson was not keen to take interventions himself.

The SNP's endless commitments, made week after week in the chamber, do nothing for the process of good debate in the chamber, or for good government here in Scotland.

The outputs from our spending are just as important as the inputs. Expenditure may be at a record level, but what we spend the money on is just as important. Until we get away from the endless argument about figures and about our relationship with England, and start to deal with our own budget and expenditure, and with getting maximum value from that, we as a Parliament are not dealing with the budgetary process properly.

I urge members, particularly those on the nationalist benches, to move on from this debate and, through committee meetings over the next few months, actually to debate what we spend the money on, rather than try to play with figures and distort the overall picture week after week.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I suspect that there is more to unite us on this debate than Mr McConnell thinks. We want to do that exactly. I agree that we have to move on and consider normal budgets.

Can the minister comment on the time when he was a leading figure on Stirling Council? He had greater scope for manoeuvre then than this Scottish Parliament does. Why does no other Parliament in Europe have the same constraints as we do? Can he comment on why every other devolved legislature in Europe has more power than we do?

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

I will return to that point at the end of my main remarks.

Andrew Wilson began this debate, and has put ideas—apparently—on the table for us to discuss. The two main ones appear to be, first, that we should not pay tax on the Holyrood building or, secondly, that paying tax to the UK Exchequer, from which Scotland benefits directly, is somehow a bad thing for the Holyrood building or for any other project in Scotland. I fundamentally disagree with such a proposition.

It is important that we pay our taxes and that we recognise that what we get back from the UK Exchequer is significantly more than what we put in. It is recognised by every sensible rational academic study that we benefit from our relationship with the rest of the UK, and that there is a structural fiscal deficit. Andrew Wilson himself admitted that during the election campaign last year.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

To suggest otherwise now is deceitful and dishonest. To suggest that we can borrow on the public balance sheet—as Andrew Wilson just admitted is his intention—to pay for the Holyrood building, and that that would not count against the Scottish budget, is also dishonest—it is simply not true.

The only way in which borrowing for the Scottish Parliament would not count against the Scottish budget is if that money were taken off the balance sheet and the project was turned into some sort of private finance initiative. If that is what the SNP is proposing, it should say so. If it is not what it is proposing, it should be more honest and admit that borrowing will not free up any resources and will end up costing us more than conventional cash means would.

It is important to consider the matter in the wider context of our relationship with the UK and the benefits that we receive economically from that relationship. The SNP does not like the Barnett formula because it ties us into the UK arrangement that delivers benefits to Scotland. The Barnett formula delivers for Scotland the same per capita increase in public expenditure that England gets. That is a vital and reassuring point for the people of Scotland in the post-devolution age. Not only does the statement of funding policy allow us to get that increase; it allows us to go to the UK reserve for money. As Mr Finnie will outline in a statement this afternoon, last Thursday, we received far more than the Barnett formula would have given us for agriculture.

Even within the statement of funding policy, Scotland benefits time and again from our relationship with the rest of the UK. It is time that the SNP recognised that. We should concentrate on how we spend the money that we get, rather than on numbers games that distort the position in a dishonest way.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

The Barnett squeeze has an adverse effect on public sector pay. Could the minister tell me whether the settlement for public sector workers in Scotland will be more or less than for public sector workers in England? I understand that, because of the Barnett squeeze's impact on the budget, the settlement in Scotland will be far less. Public sector workers in Scotland will be paying for the problems caused by the public sector cuts in the minister's budget.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

The Executive has made a firm and fair decision that, in the early years of the devolved settlement, we will follow the same pay policy for the civil service in Scotland as is followed in England. That will translate into our policy for local government.

If Mr Gibson were here, he would be able to confirm that, in recent discussions with the Convention of Scottish Local Authorities, we agreed to put the issue of local authority pay on the agenda and have discussions in Scotland about how to ensure that our financial relationship with local authorities allows them to deliver the services that they want to deliver with a flexibility and targeting that are vital. In the election campaign last year, the SNP said that it could deliver higher efficiency savings in the Scottish budget than any other party in the chamber. If the SNP's position today is that that is not the case, it has gone back on its promises of 12 months ago.

We must recognise Scotland's deficit in relation to the rest of the United Kingdom and we must bear that in mind when considering the issue of separating Scotland from the rest of the UK, which is what Mr Wilson was advocating this morning when he was talking about having an entirely separate tax system for Scotland. He tells us that this Parliament needs more powers to tax and to spend, but we must ask him which taxes he is talking about. Which taxes would go up? Will he tell us in advance, or is he asking us to buy a pig in a poke?

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

I will not accept an intervention as Mr Wilson should listen to this point. This Parliament can directly influence only two taxes: income tax, which the SNP was keen to increase at the election last year and is less keen to increase now, and council tax. The people of Scotland should be worried by the fact that, in councils across Scotland, nationalist groups have been proposing greater council tax increases than Labour groups. Which taxes does Mr Wilson want control over? Which taxes would he put up? Corporation tax or other business taxes? Income tax? VAT? Petrol duty? Whisky duty? Perhaps Mr Neil will tell us, as he might be leader of the SNP at the time when those questions are answered.

Photo of Alex Neil Alex Neil Scottish National Party

Is it not true that an English parish council has more fiscal power than this Parliament? Unlike this Parliament, an English parish council can borrow and has no cap on its taxation powers. Is it not a disgrace that the Scottish Parliament has less fiscal power than an English parish council?

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

The people of Scotland voted for this Parliament, after a campaign during which the SNP recommended that they vote yes. However, the SNP has done nothing but dispute its status ever since.

Photo of Alex Neil Alex Neil Scottish National Party

I ask Mr McConnell to answer the question. Yes or no?

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

This is the SNP's debate: it wanted to have a debate on public finance in Scotland, and it should answer the questions on its own policies. Which taxes does it want this Parliament to have control over? Which taxes would it put up, to raise the money that it is talking about? Do SNP members admit that there is a fiscal deficit of around £4 billion in Scotland, compared with the rest of the UK? Which taxes would go up to pay for that fiscal deficit?

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

Mr Wilson has had one intervention, which is plenty. He refused me a second.

The SNP will wind up this debate, and I invite it to answer those questions in the winding-up speech. I hope that, for the first time, those questions will be answered.

This morning, we heard that inflation is not a problem in Scotland. I find that a surprising statement from someone who is standing in a Parliament in Edinburgh, where house prices are rocketing and inflation clearly is a potential problem. There are regional differences in Scotland, as there are throughout the UK. However, across the piece the SNP's policies represent irresponsibility in taxation, fiscal policy and spending commitments. The attitude of SNP members in particular is irresponsible, as they are playing games with Scotland's future and doing their party, and this Parliament, no service whatever.

There would be other costs if an attempt was made to create a separate Scotland. What about the other economic impacts that would be created by the resulting instability? What about the social costs that would result from separating families, and from dividing a shared history and a shared future? What about that deficit? What about that gap in Scotland's public funding? Would it be paid for by increased taxes or cuts in public expenditure? What about the increased costs of armies, systems and bureaucracies that a separate Scotland would create?

Those are the fundamental questions that, in a debate on public finance that is sponsored by the Scottish National party, must be answered in the chamber. I hope that, at some point this morning, they will be.

I move amendment S1M-736.1, to leave out from "expresses its concern" to end and insert:

"welcomes and supports the investment by the Scottish Executive in education, health and other vital services, matching the people's priorities with prudent costed expenditure plans, and endorses the additional funding of £288 million for 2000-01 announced by the Minister for Finance last week."

Photo of David Davidson David Davidson Conservative 10:03 am, 6th April 2000

A moment ago, there was a comment about parish councils. I was once the treasurer of an English parish council and received national media coverage for the fact that I put the penny rate down. Because of good management, we did not have to keep on borrowing. I mention that as an aside.

Photo of David Davidson David Davidson Conservative

Let us return to the subject in hand.

Once again, we have heard the litany of SNP demands for an ever-increasing share of UK resources to be directed into public services in Scotland. Not once did Mr Wilson call for better management or more focused prioritisation, to turn public investment into delivered services. Scotland expects public services to be accessible, accountable and affordable. That means a fair distribution of key services throughout Scotland, which are delivered locally in a way that will ensure real accountability of the decision makers and value for money.

Andrew Wilson talked about taxation. The money should not be used to reduce taxation; it should be invested. Does he not understand how incentives are created, or what that would mean for those who invest in our businesses?

Photo of David Davidson David Davidson Conservative

No. Mr Wilson did not allow me to intervene during his speech.

The SNP never does anything to encourage those who create wealth, whom we should hold on to in Scotland. The fact that the SNP will talk Scotland down as a place in which to invest is a risk.

Photo of David Davidson David Davidson Conservative

Having considered the SNP motion in detail, I have several questions that I would be happy for the SNP to answer at the end of this debate—I trust that my questions will be answered.

The motion should not address

"concern at the level of resources allocated to Scotland by Westminster" but rather how the Executive uses those resources.

The motion also talks about

"the requirements of Scottish public services".

Is that for the benefit of those who run public services or for the benefit of those who rely on or work in them? Mr Wilson's party still believes that nationalisation is a cure-all; even the Labour party recognises that it is not and has moved on.

The SNP motion talks about

"the level of revenues raised in Scotland".

I presume that that is an attack on Gordon Brown's continual use of stealth taxes, which severely damages the Scottish economy's ability to grow. The motion goes on to state that

"there is no evidence of relative improvement in health standards in Scotland".

That must be far more to do with the Labour Government's failure to manage the NHS in Scotland over the past three years than with the amount of money that has been spent. For example, in 1996-97, the Conservative Government spent some £500 million less than is budgeted for the coming year yet we now suffer increasing waiting times for treatment, an ever-increasing number of blocked beds, and health trusts are unable to balance their budgets. Today, we hear about unclean facilities caused by a lack of staff, and there is a general lack of morale across the NHS work force. Money is not everything, but money without management produces nothing more than waste.

The SNP's motion calls for more fiscal responsibility. Does that mean that the SNP thinks that Scots should pay more tax, that council taxes should rise even more and that our businesses should be thrown to the mercy of local authorities, to be treated as cash cows? Does that mean that the motorist—and the essential motorist in particular—is doomed to ever-increasing taxation and charges?

When first I read the motion, I thought it contained a hint of Alex Salmond's recent U-turn on independence as the basis of the SNP manifesto, but then I realised that it had nothing to do with that at all. In the motion, the separatists show their fascination with old-style centralist control. They want everything to be channelled through an outmoded system of services available only from the state or, even worse, from a series of local politburos fully staffed by their people.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I am grateful to Mr Davidson for taking an intervention. The motion argues that people should have a choice. If the Conservatives want to argue for lower tax—just as the SNP argued for lower corporation tax—they would be able do so and the Scottish people would be able to make a choice that, at present, they do not have the opportunity to make.

Photo of David Davidson David Davidson Conservative

That is exactly what we will argue for, come the general election in a couple of years' time.

The SNP's putting the mad scramble for independence on the back burner and entering whole-heartedly into the effort to make this Parliament work would be welcome. I recognise the SNP's unease, because new Labour and its Liberal lobby fodder continue to ignore the new politics that they continually preach, but it is incumbent on the rest of us to try to make the Parliament work.

I was interested to hear Jack McConnell mention local authorities and the Convention of Scottish Local Authorities a few minutes ago. I will compare what the Conservatives did in two areas in 1996-97 with what Mr McConnell proposes to do in the coming year. We put £38 million more into local authority capital account and approximately £400 million more into local authority current account. I hope that Councillor Murray and his COSLA contacts will meet Mr McConnell soon and that they will remind him of those figures, which are real-terms figures based on 1998-99 prices. All that was accomplished under the Barnett formula. I say to Andrew Wilson that this is not about the amount of money that is available—it is about how that money is used.

I will turn briefly to the Labour amendment, because that is really all the attention it deserves. New Labour has again adopted a back-patting posture that is aimed at boosting the confidence of Labour back benchers but probably causes deep unrest in the Liberal ranks. The amendment fails to mention the constant Liberal claim for credit for the coalition's investment in education and health. I am sure that George Lyon will address that point in a minute.

Despite the Executive's much vaunted claims of expenditure in education, three years on, teaching staff remain disillusioned. Nothing has been done—

Photo of Richard Simpson Richard Simpson Labour

Could Mr Davidson elaborate on the word "remain"?

Photo of David Davidson David Davidson Conservative

I am sorry; I missed Dr Simpson's point.

Photo of Richard Simpson Richard Simpson Labour

Mr Davidson said that members of the teaching profession remain disillusioned. Does that mean that, when his party left power, they were totally disillusioned?

Photo of David Davidson David Davidson Conservative

They are now under Labour control. The previous Government was, in fact, a Labour Government run from the Scottish Office. Dr Simpson needs to catch up a bit here.

I will not go on at length about the problems of the health service, but I will point out that many of the Galbraith reforms have done nothing but add to bureaucracy at great cost and remove much-needed resources from patient and staff services.

I hope that the Conservative amendment will receive support from the other unionist parties in the chamber. The Barnett formula is based on the ratio of Scotland's population to that of England. The Barnett squeeze that Mr Wilson regularly punts is diluted by the mere fact that the population in Scotland is decreasing, which is not accounted for in the formula.

Photo of David Davidson David Davidson Conservative

Over the years, under successive Governments, Scotland has enjoyed greater per capita spending, thanks to the Barnett formula, which recognises some of the difficulties that Scotland faces in areas such as health. I admit that there is not a lot of difference in law and order or in culture and sport, but there is a large difference in agriculture, fisheries, food and housing, which are areas of major relative importance to Scotland. In health and education, our two biggest programmes, spending is 19 per cent and 26 per cent respectively above UK levels. In the last 10 years of the Conservative Government, Scottish expenditure per head was probably around 30 per cent greater than that in England.

The SNP never acknowledges that the block applies to only 56 per cent of identifiable expenditure, which tends to mean that the SNP overstates its case. After 18 years of prudent Conservative economic management, controlled expenditure and low inflation, the formula that applies to changes had little to bite on.

Photo of David Davidson David Davidson Conservative

I am coming to the end of my speech. I do not think that I have time to accept an intervention, have I, Sir David?

Photo of David Davidson David Davidson Conservative

We have had discussions about Brian Ashcroft and Arthur Midwinter, but Arthur states quite clearly how fair the formula has been for Scotland. It is a basis for stability in our future relationships. He also flags up clearly the fact that the formula removes an annual round of bitter dispute between different parts of the UK. If that is the main thrust of the Barnett formula, it is to be welcomed.

If the SNP were allowed to take Scotland out of the United Kingdom, how would it manage in terms of the Maastricht treaty on economic and monetary union? I ask the SNP to explain how it will achieve the 3 per cent figure it claims it can achieve, without raising taxation—which is what Mr Wilson seemed to suggest. At the same time, the SNP wants to improve services. Will it build into the calculation all the demands that have been made by SNP members since the Parliament was established?

I supported Andrew Wilson's call in the Finance Committee for an inquiry into Barnett, if only to demonstrate how well it has worked in Scotland and why it should continue. Will the SNP agree that William Hague's public statement to defend Scotland's budget and higher per capita spending is the best route to achieving a strong Scotland in a stable United Kingdom, and that improvement in our public services can readily be attained by utilising better the skills and resources of the private sector?

I move amendment S1M-736.2, to leave out from "expresses its concern" to end and insert:

"recognises that the application of the block mechanism and Barnett formula by successive governments has enabled Scotland to develop high standards of public services and recognises that further improvements in public services in Scotland will be best achieved through sustaining our partnership within the economic, monetary and political union of the United Kingdom."

Photo of George Lyon George Lyon Liberal Democrat 10:13 am, 6th April 2000

Listening to Mr Wilson and his SNP colleagues, I hear the same old constitutional debate over and over again. He seems to know something that the rest of us have missed. It seems that there is enough money out there to pay for absolutely everything in Scotland, but the wicked people down south are not letting us have it all, and all Scotland needs, of course, is separation from England; then, every political initiative will be paid for automatically. I am sorry, but the reality of life is not like that.

The reality is that being part of government means that we must budget and use the available resources responsibly. Let us not forget the facts. The resources for public spending here in Scotland are 20 per cent higher per head of population than they are in the rest of the UK. That is a substantial difference and a substantial advantage to people in Scotland.

The Executive is using resources well. It is staying within its budget—something the SNP will never understand—in the face of the substantive growth it has achieved in public investment, health, education, rural affairs and many other areas. The SNP's only response is to fall back on its all-too-familiar debating techniques. They are the same five techniques that lie behind every utterance of SNP members in this Parliament, and they can be ticked off one by one whenever an SNP member speaks: ignore what has been achieved by the Executive; complain that it is not enough; blame someone else—usually the English; and promise the world. The SNP has promised £2.5 billion of spending, but the figure rises every time SNP members take part in debates.

Andrew Wilson said that the current Barnett formula is not sustainable. I suggest that the SNP's current spending pledges are utterly unsustainable. It is the economics of "Alice in Wonderland", or Alex in wonderland.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

Does George Lyon think that it is in the interests of his constituents in Argyll that Westminster has increased fuel duty four times since 1997? Has that been good for Scotland?

Photo of George Lyon George Lyon Liberal Democrat

As Fergus Ewing well knows, we are opposed to the fuel price escalator, but what the constituents of Argyll are especially pleased about is the huge increase in education spending that has taken place and the increase in health spending that is about to come over the next three years.

Photo of David Davidson David Davidson Conservative

Will George Lyon now take on the Labour part of the coalition, which fails to mention the role that the Liberal Democrats claim to have played in securing that extra funding?

Photo of George Lyon George Lyon Liberal Democrat

I will come to that. Wait your time.

The fifth technique used in SNP speeches is that on no account should a sense of fiscal responsibility be allowed to get in the way of economic policy. Those five principles sum up the SNP's approach and underlie today's motion.

The principle of responsible economics seemed to be understood by the SNP during the election campaign. A document that is not well aired these days is the SNP manifesto for that election. For old times' sake, I dusted off a copy and had a look at it in preparation for this debate. It makes interesting reading. It talked about something called the Holyrood project—perhaps not the happiest of names for an SNP policy paper in light of more recent events. According to the manifesto, the SNP wanted to cut 2.5 per cent off every non-pay budget in Scotland.

Photo of George Lyon George Lyon Liberal Democrat

I have taken two already. I am moving on.

That policy is a far cry from the SNP's policies these days. Now, it wants to increase spending on everything under the sun. The manifesto is a far cry from Andrew Wilson's spendonomics: at the last count, the spending pledges totalled more than £2.5 billion of extra spending—which, of course, would require an extra 10p on income tax to fund it.

The Holyrood project was from a different era. The SNP's finance guru then was John Swinney, who at least seemed to understand the basic principles of responsible economics. The aim of the Holyrood project was to make cuts.

As a Liberal Democrat, I am all for making savings in some areas so that we can invest in public services. The Executive is doing that every day. If it had gained power, what would the SNP have had to cut to make those savings? Every budget would have been cut by 2.5 per cent: housing; agriculture; roads and maintenance; railway grants; student bursaries; police, fire and ambulance; and flu vaccines. Those would have been the real cuts implemented by the SNP if its Holyrood project, on which every SNP member was elected, had been implemented—and they have the nerve to attack this Administration's record of public investment after what we have delivered.

Photo of George Lyon George Lyon Liberal Democrat

I am going to move on, because I have only a couple of minutes left.

The Scottish Executive has presided over considerable growth in the three priority areas for the Liberal Democrats: health, education and, of course, rural Scotland. On health, we have delivered £43 million so far. Spending on health is significantly higher per head of population—18 per cent, or £150 per person—than it is in the rest of the UK. It is untrue—it is lies—to say otherwise.

We delivered on education.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

I am tempted to ask when George Lyon expects to get the promotion for which he is obviously auditioning.

Does Mr Lyon agree that because of the Barnett squeeze, health spending will be increased by 4.9 per cent in Scotland, compared with 6.1 per cent throughout the UK and 6.3 per cent in England? Is not that evidence that Scotland is not getting a fair share because of the Barnett squeeze?

Photo of George Lyon George Lyon Liberal Democrat

As Fiona Hyslop knows, spending on health in Scotland is £150 per head—18 per cent—higher than it is in the rest of the UK. After next year's increase it will still be £150, or 18 per cent, higher than it is in the rest of the UK. The people of Scotland benefit from the Barnett formula because it delivers 18 per cent extra spending on health per head of population. That is a fact—not spin.

We have also delivered on education. We have delivered £50 million extra for schools and £50 million towards the abolition of tuition fees and the introduction of grants. I was pleased to hear that it was confirmed yesterday in the Enterprise and Lifelong Learning Committee that the cheque has already been sent that will pay for the abolition of tuition fees this year. That should be welcomed by everybody in Scotland.

As announced after the UK budget last year, £32 million of budget money was sent straight to our schools. There has also been a real-terms increase of 4 per cent in education spending through money that the Executive has sent to education via local authorities.

On rural affairs, there has already been one £40 million aid package—that is 20 per cent of the UK's total aid package—and another £40 million package was announced last week.

Those are real achievements for the Executive and real achievements for the Liberal Democrats in the Executive. The SNP has got it wrong again. Before the election we heard, "Cut, cut, cut." Since the election we have heard, "Spend, spend, spend." The SNP has tried—and failed—with both.

It is pretty rich to hear the SNP claiming that the Executive lacks fiscal responsibility. It is wrong. It needs to go back to the drawing board. I support the amendment in the name of Jack McConnell.

Photo of Alex Neil Alex Neil Scottish National Party 10:23 am, 6th April 2000

I would like to remind Parliament of Mr Lyon's prediction during last year's election. He said that Scotland would be independent within 10 years. At least he has got something right in the past 12 months.

I find the kail-yard mentality that has been demonstrated by the three right-wing unionist British parties utterly depressing. The SNP is not interested in cheap debating points about a penny here or a penny there—what is important is Scotland's potential.

The other parties tell us that we are subsidy junkies. They say that if it was not for our attachment to London and the largesse that came from 18 years of Tory government and has continued to come from a right-wing Tory Labour Government for the past three years, Scotland would be bankrupt.

Why, if Scotland is such a subsidy junkie, does not the Government privatise Scotland, which is what it has done to every other subsidy junkie in the past 20 years? I will tell members why—it is because Scotland is a net contributor to the UK Treasury. We must examine Scotland's potential vis-à-vis our current situation.

Photo of Alex Neil Alex Neil Scottish National Party

I will give way in a moment.

We are in an ironic position. We are one of the wealthiest nations in Europe—and not only in terms of oil, although Scotland is western Europe's biggest producer of oil. We produce 30 per cent of Europe's natural gas. Scotland is one of the best food producers in Europe and one of the greatest centres of the electronics industry. Our universities are among the best in the world. By any measure, Scotland is potentially a very wealthy nation.

Why is one of the potentially wealthiest nations in Europe one of the poorest nations in Europe? The Executive compares our education and health expenditure with that in England. Why not look at what is happening in the rest of the European Union? Expenditure per head on health and education in Denmark, Norway and Austria—in every other small country in Europe—far exceeds that in Scotland. Consider the potential that we have as a small nation.

Photo of George Lyon George Lyon Liberal Democrat

Which level of spending is the SNP saying it would spend on health and education in a separate Scotland? Would it be the same level as in Finland, or in Sweden or in Denmark?

Photo of Alex Neil Alex Neil Scottish National Party

The SNP's ambition is to raise Scotland to the European average and then above the European average. We are not prepared to settle for second or third best.

Photo of Alex Neil Alex Neil Scottish National Party

I will let Jack McConnell intervene in a minute.

I will take the oil revenue as one example. Over the next five years, we are going to have—

Photo of Robert Brown Robert Brown Liberal Democrat

Is the present fiscal deficit—there is one—based on the price of oil? Will Alex Neil accept that if the price of oil goes down there is a fiscal deficit and if it goes up there is a fiscal surplus, beyond a certain cut-off point?

Photo of Alex Neil Alex Neil Scottish National Party

I do not accept that there is a structural deficit between Scotland and the UK Treasury. If I were a unionist, I would be ashamed to argue that there is such a deficit: if there is one, under unionist management, they have mismanaged Scotland's wealth. They are admitting that over the past 30 or 40 years, when we have had massive oil revenues—we now have massive revenues from gas and all the other things that I have mentioned—they have so mismanaged resources that we have a structural deficit.

Photo of David Davidson David Davidson Conservative

One of the famous professors the SNP regularly uses in relation to oil stated recently that Scotland, even under the SNP rules, has only 40 per cent of the gas deposits in the UK, which I must tell Andrew Wilson is the growth factor.

Upon which price per barrel over the next 25 years is the SNP budgeting?

Photo of Alex Neil Alex Neil Scottish National Party

The official UK forecast for oil revenues over the next five years is £20 billion; I am prepared to accept Gordon Brown's assumptions. If we had 85 per cent of that—as we would be entitled to—we could start to raise the levels of investment in education, housing and health in Scotland to European levels.

This is a constitutional issue, because until we change the constitutional relationship between Scotland and England—and between Scotland and Europe—Scotland, which is potentially the wealthiest nation in Europe, will continue to be one of the poorest nations in Europe thanks to mismanagement by the three right-wing British unionist parties, which have been so miserable in their contributions to this debate.

Photo of Lord David Steel Lord David Steel Presiding Officer, Scottish Parliament

I should have said that the standard speaking time is four minutes.

The two debates this morning are SNP debates and there is time pressure on the second one, which is shorter. If we overrun on the first debate, the second debate will be tiny.

Photo of Janis Hughes Janis Hughes Labour 10:29 am, 6th April 2000

I will keep my remarks short to make up for Alex Neil's overspill— [Laughter.] —welcome as it was, Alex.

The motion is unhelpful in its intentions, inaccurate in its assertions and designed simply to create further divisions between this Parliament and Westminster. I am sorry to say that despite all the hopes of new politics emerging in the Scottish Parliament, the SNP continues to act in a divisive and troublemaking way.

It can be difficult to argue with the SNP's published pledges on public spending because it has published only three detailed spending plans in the past three years. It is particularly difficult to take its claims about the Executive's public spending seriously. The Labour party knows about being in opposition—we spent many long years in opposition. It is all too easy to oppose everything the Government says or does. To be taken seriously by the electorate, a political party has to offer credible, costed, alternative policies. The SNP has failed to do that.

Photo of Nicola Sturgeon Nicola Sturgeon Scottish National Party

Will Janis Hughes point out where on the credit-card-sized pledge card that the Labour party campaigned on at the most recent election there are any detailed, costed spending plans?

Photo of Janis Hughes Janis Hughes Labour

I do not think a small pledge card is the place to publish detailed plans. The manifesto—

Photo of Richard Simpson Richard Simpson Labour

The SNP's plans could be written on a credit card.

Photo of Janis Hughes Janis Hughes Labour

Exactly—and I do not remember seeing that.

I am sure Nicola Sturgeon has read our manifesto and is aware of the detailed spending plans in it.

Photo of Janis Hughes Janis Hughes Labour

I will carry on.

Instead of the approach I have described, the SNP sends out its spokespeople to call for more money on every issue that arises. We have discussed that already. SNP members make promises on various issues without thinking about the cost implications. They appear unable to recognise that irresponsible spending in one area means less spending in another.

The Barnett formula, which is criticised by Andrew Wilson and his colleagues, provides a good deal for Scotland. It provides a stability that we could not guarantee in the utopia of an independent Scotland; it is a more stable basis for the economy than oil prices, which are subject to fluctuation. I will not go into all the inconsistencies in the SNP's spending pledges because the recess is only seven hours away, but its pledges have been dwarfed by Labour's spending. As the Minister for Finance said, we have not heard about the "penny for Scotland" campaign today. Perhaps we could be told whether it still exists.

Photo of Janis Hughes Janis Hughes Labour

No—I will carry on.

The SNP has pledged less than £90 million on health spending over the next three years. That is insignificant in comparison to Labour's commitments. Mr Wilson's claim that we have inadequate health expenditure in Scotland compared with the rest of the UK is inaccurate. Spending on health per head is over 20 per cent higher in Scotland than it is in England and every pound of extra health spending announced in last month's budget for England will be matched in Scotland. If there was even the slightest suggestion that Mr Wilson and his colleagues were genuinely interested in health care provision for Scots patients, I would give his claims more credence.

I return to what Mr Davidson said. It never ceases to amaze me that he and his Conservative colleagues can criticise Labour's record on the NHS. I spent 20 years working in the health service, 18 of them under Tory decimation, and I know that we do not have to stand here and defend our actions on spending and in reducing the bureaucracy introduced by the Conservative Government.

Photo of David Davidson David Davidson Conservative

If Labour was doing so well, not in what is being spent but in how it is being spent, we would not be seeing waiting lists, bed blocking and chaos. If the Galbraith reforms are priced, it can be seen that in the first year they led to £400 million on extra bureaucracy that would have been better spent on extra services. Does Janis Hughes have an answer to that?

Photo of Janis Hughes Janis Hughes Labour

Mr Davidson has just given it himself. If there was that much bureaucracy it was introduced by the Conservative Government. We have reduced the amount of bureaucracy in the health service. I worked in the NHS; I do not think anyone on the Conservative benches worked in the front line of the NHS.

Photo of Janis Hughes Janis Hughes Labour

Okay. Having worked in the NHS for two years after Labour came into power, I saw the differences first hand. Only someone who has had that experience can fully understand how we made the health service better, as we will continue to do.

The nationalists are perhaps reassured by knowing that they will never have to put their pledges into practice. That is cold comfort for the people of Scotland who have to listen to constant, uncosted, irresponsible troublemaking. Before they start criticising others on spending plans, they should put their own house in order. Only when they realise that will it be possible to take them seriously as a grown-up representative political party.

Photo of Nicola Sturgeon Nicola Sturgeon Scottish National Party 10:35 am, 6th April 2000

There have been times this morning when I have felt that I was at school. We have had school-marm Janis Hughes telling us to stop making trouble, and I am convinced that one of these days George Lyon will skip his speech altogether and run straight down to the front of the chamber with an apple for the minister. His contribution was truly nauseating. I am only sorry that he is not still here.

Although George Lyon's contribution was nauseating, I must say in all seriousness that the minister's speech was downright depressing. He failed even once to lift his eyes from his civil service brief to enter into a genuine debate about how we can better represent the people of Scotland.

The motion that we are debating today is about ambition. It is about lifting our sights and being confident about what we could achieve if we had the powers and freedoms that other Parliaments all over the world enjoy and take for granted—the power and freedom to make this Parliament, the Government and the Minister for Finance genuinely accountable to the people of Scotland, instead of mere puppets at the whim of the Westminster Government.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

School-marms and feet on desks spring to mind.

I would like an answer to a very specific question. Nicola Sturgeon will again make a point about education spending and raising horizons. Exactly how would she make good the £4 billion fiscal deficit? Exactly which education services would be penalised to do that? If none, exactly which taxes would be used to make up the difference?

Photo of Nicola Sturgeon Nicola Sturgeon Scottish National Party

There is no £4 billion deficit, as Jack McConnell knows only too well. Oil prices have doubled since he published that devastating critique.

Photo of Nicola Sturgeon Nicola Sturgeon Scottish National Party

I have already taken one intervention from Mr McConnell, and I think that that is more than enough.

Photo of Nicola Sturgeon Nicola Sturgeon Scottish National Party

No. I want to move on.

Mr McConnell said that I was going to raise my sights again on education spending. Let us take education as an example. Only last week, the First Minister admitted that our schools require £1 billion to bring them up to acceptable standards. Our school infrastructure is crumbling around the ears of our children. Spending of £53 million is required here in the city of Edinburgh, £100 million in the city of Glasgow. This Government has no answer to that. It spouts rhetoric about improving standards in education, but it expects our children to learn in buildings that are not fit for that.

The Executive's only answer, apart from the private finance initiative, is £185 million over three years, to meet a repair bill of £1 billion. Under the restricted powers of this Parliament, it will take decades to tackle that problem. That is one very good example of why we need fiscal autonomy to tackle the problems that beset our public services in the areas of health and education. Quite simply, it is not good enough to say to our children that they must learn in schools that are falling down around their ears.

Nor is it good enough for Mr McConnell to say that it is okay for Scotland to be near the bottom of the European league table on education spending per pupil. This year, £1,900 will be spent on the education of a primary school pupil in Scotland. Mr McConnell may shake his head, but those are the Government's own figures. The European average is £2,500 per primary school pupil; in Denmark, the figure is £3,500. What does Denmark have that Scotland does not have? Denmark has the ability to take its own decisions, to raise its own finances and to set its own priorities—it is called independence and it is not something that anybody in Scotland should be frightened of.

It is time that this Government stopped comparing itself with the failures of the Conservatives and started to aspire to be the best in Europe. Scotland is a wealthy country. We can be one of the best in Europe, instead of being at the bottom of the league tables. If this Government even once lifted its eyes and was prepared to consider what Scotland could achieve, this Parliament would at last have a debate that was worthy of it. I appeal to Jack McConnell in his summing-up to start considering what we could achieve—how much more we could do for the people of Scotland—if he allowed this Parliament to have the powers that every other Parliament around the world takes for granted. What is wrong with that?

Photo of Murray Tosh Murray Tosh Conservative 10:39 am, 6th April 2000

I begin by congratulating Andrew Wilson on the scope, at least, of his speech—his geographical knowledge, his pronunciation and his interesting ideas. I believe that he was genuinely examining ways in which investment in our services and infrastructure could be increased. Of course, he went on to spoil his speech by quoting Brian Monteith from The Herald . As Fiona Hyslop will tell him, anything that Brian Monteith says in The Herald should be taken as tongue in cheek.

In the motion, Mr Wilson makes much of his desire to increase expenditure on our health services. In his speech, he concentrated more on increasing expenditure on pensions. We have heard from Nicola Sturgeon that the ever-revolving sum of money that will be available when Scotland is independent will be spent on education. When Fiona Hyslop closes, as I assume she will, she will want to spend the money on housing. In between debates, Kenny MacAskill spends the money on roads and railways. The real answer came from Alex Neil, who wants to spend the money on everything simultaneously.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

The key point that we are trying to get across is that, if we had normal powers, we would have the opportunity to produce a manifesto and put our ideas to the electorate. If he wished, Mr Tosh could argue for lower tax. Why does he argue that the people of Scotland should not have the normal power through the Parliament to do normal things?

Photo of Murray Tosh Murray Tosh Conservative

No one here has said that the people of Scotland do not have the choice. They can choose to vote for the SNP if they wish, although I doubt whether they will ever be tempted to do that. It is not a question of choice: the choice is there, but it has been rejected.

The simple fact is that the nirvana of limitless expenditure is a figment of Mr Wilson's imagination. The question of the structural deficit, which has been raised four or five times this morning, remains unanswered. Nicola Sturgeon says that the structural deficit does not exist because the price of oil has just doubled. What happens when the price of oil falls next week, next month or next year?

The SNP should not build a country and make limitless promises on something as unstable and fluctuating as the price of oil. Every serious analyst of the situation considers that Scotland has a structural deficit. How to close that deficit would be an immediate problem for an independent Scotland. Where would the money be found to sustain the existing level of services?

Of course, those questions arise before we discuss the real SNP manifesto after independence, when it cancels all the PFI projects that it hates so much, pays the compensation costs and takes on the increasing costs of managing projects through traditional procurement processes, and when it renationalises the railway lines and what will by then be a privatised air traffic control system. What exactly will the SNP take back into the public ownership to which it is so committed in the independent Scotland? How then will investment in health and housing—Mr Wilson strongly criticised PFI again this morning—be financed?

There is still a fundamental dishonesty in the SNP. By all means, let us debate ways in which we can increase investment. Let our committees consider the Barnett formula and the various devices that the SNP has proposed. However, let us not kid ourselves that by conjuring up independence there will be resources for public services, when we know that there is a structural deficit. Mr Neil attributed the structural deficit to mismanagement of the economy, yet in the same speech he boasted about the strength of our electronics industry. From where did that industry come? It did not arrive with the kilts and the heather, but was built up through economic development and Government stimulation of the economy through the attraction of industry and the development of infrastructure.

Did anyone in the SNP read the interesting item in The Scotsman earlier this week about the boom in the Lanarkshire economy over the past seven or eight years, which has occurred because we have the benefit of the strength and resources of the United Kingdom, whose economy has been growing steadily throughout the 1990s? The SNP will have to conjure up something more fascinating than that before it can delude Scots into the fiction of an independence that will pay for everything—

Photo of Murray Tosh Murray Tosh Conservative

I must wind up, as I have been allocated only five minutes. Otherwise, I would be happy to take on Fergus Ewing and sort him out on his ridiculous promises.

We have had this debate four or five times. It is time that we had some real ideas, some real flexibility and some sense about where Scotland is going, rather than a relentless attack on PFI and a relentless promise that all will be glorious in the morrow of independence. Let us get real and let us get on with the work of the Parliament.

Photo of Colin Campbell Colin Campbell Scottish National Party 10:45 am, 6th April 2000

I wonder whether Murray Tosh would say things in that kind of tone to the Norwegians, the Danes, the Finns, the Irish, the Luxembourgers or anyone else who runs their own independent country. That kind of attack on any other nation or prospective nation would be nothing less than an international disgrace.

A few years ago—

Photo of Colin Campbell Colin Campbell Scottish National Party

No, I am not taking interventions. I am going for the British.

A few years ago, the only proponents of the status quo were those people on the other side of the chamber—the Conservatives. The rest moved to devolution; we now have devolution. It is the settled will of some, but not all, of the Scottish people. What has been fascinating so far about the performance today is the way in which the British have welded themselves together, dug themselves into a trench, put on their armour and are going to sit there and defend the status quo without any forward movement.

I have been accused of being troublesome and of being divisive. I have been told that it is time to grow up. My God, at my age, if I am not a grown-up already, when will I grow up? That is a good question—Jack McConnell should not answer it in his reply.

The Scottish National party has been accused of not wanting to make the Parliament work. That is a lie and a nonsense. It is in the interests of this party to make the Parliament work, quite simply so that the unbelievers among members and the unbelievers in this country will have their confidence restored and will come with us to the normality of independence.

There has been a lot of chatter about where the money will come from. While I understand that it is not within our remit, I will touch briefly on defence. The UK pays £1 billion a year to the maintenance of the Trident weapons system. It is taking on board a lot of over-ambitious research and development and procurement plans, which will cost a great deal of money. By being out of that altogether, we could save about £300 million per annum—Scotland's share.

In addition, in defence, Scotland does not receive its share of research and development, procurement, executive agency staff or UK forces spend; it does not receive its fair proportion. Most headquarters' top jobs in the United Kingdom are not in Scotland either. There is a logic in that that any one of us can understand. Great savings could be made in that area, were we in a normal, independent condition.

Having said that, I turn to a small nation in a normal, independent condition that happens not to have Trident and that does not have the oil resources that we have: Denmark. In Denmark, the primary school spend per person in 1995, the most recent figure that we could lay our hands on, was £3,570 per pupil. That is 84 per cent more than Scotland's primary school spend per person now. For secondary school expenditure, the figure is £3,904, which is 29 per cent more, I say to Jack McConnell, than it is in Scotland now.

In 1996, Finland, with a similar population to Scotland of about 5 million, and with fewer natural resources, spent 18 per cent more than is being spent in Scotland now. Independence works. It is a question of whether one wants it to work, or whether one's fundamental loyalty is to the United Kingdom or to Scotland and its people. My loyalty, first and foremost, is to Scotland and to the people of Scotland. I joined this party because, having watched politics from the outside and having watched the state of the economy in Scotland over my lifetime, I could see that the people of Scotland were not getting a fair and square deal from the British connection and that there had to be another way of going about it. Independence is the way.

Photo of Malcolm Chisholm Malcolm Chisholm Labour 10:50 am, 6th April 2000

I was not at my most sprightly at 10 past 7 this morning, but I woke with a start when I heard Andrew Wilson's astonishing revelation, on "Good Morning Scotland", that Scottish people pay taxes to help fund our record levels of public investment. Of all the controversies that surround the Holyrood project, I did not think that the fact that the workers and companies who are involved in the project pay taxes was one. His point about the accounting of the project was more interesting, although as Jack McConnell pointed out, under present circumstances that comes close to being an argument for PFI. The move towards resource accounting will help to deal with the problem that Andrew Wilson touched upon.

Andrew Wilson's speech was interesting in many ways. It followed a sort of twin-track argument. He paid obeisance to the traditional SNP policy of independence, but it was clear that he was also very attracted by the huge success of the Labour Government in London in running the economy. Much of his speech was based on the massive surpluses that he said the Labour Government had accrued in Westminster. I was reminded of the debate, three weeks ago today, during which his colleague, the deputy leader of the SNP, said that there should be some fiscal tightening in the budget, because that was the only way in which to deal with the problem of interest rates and the high exchange rate. There is some support for that view—the British Chambers of Commerce and many in the business community argue that the Chancellor of the Exchequer increased public expenditure by far too much in the budget—but it strikes me as slightly odd that the SNP should take that position, implicitly, three weeks ago today and yet call for more and more public expenditure today.

Today, we also heard more of Andrew Wilson's well-known obsession with percentages, but it would help if he quoted the correct percentages on the health budget. Over a period of four years, we have a 5.4 per cent annual real-terms growth in the health budget, which is unprecedented in the history of the national health service.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

If we take that point as read—Mr McConnell has not yet published the full figures—the 5.4 per cent that Malcolm Chisholm quoted compares in real terms to real growth south of the border of 6.3 per cent. Why is spending rising more quickly in England than in Scotland?

Photo of Malcolm Chisholm Malcolm Chisholm Labour

Again, that percentage is incorrect. In fact, there is a 7.3 per cent real-terms growth in the health budget in Scotland this year and a slightly higher—7.8 per cent, I think—real-terms growth in England. Over the four-year period, there is a less than 1 per cent difference in the real-terms growth of the health budget.

The Scottish people are more interested in the £2.4 billion cash increase over four years; that is the same increase per head in the health budget as in England. Everybody in Scotland, apart from the SNP, has welcomed that. The SNP's views on health are almost as bizarre as those of the Conservative party and David Davidson, who said that, somehow, there was more bureaucracy now than there was under the Conservatives. Again, I do not think that anyone else in Scotland believes that.

Andrew Wilson's fundamental point was that public expenditure in Scotland did not take account of needs or of ability to pay, both of which, of course, are untrue. The whole point of our having a much larger health budget is to address the greater levels of ill health in Scotland. The pivot of the argument is, and will remain, ability to pay, but the simple fact is that there is a fiscal deficit, unless we assume a high oil price and a high oil production level. All the figures that suggest surpluses in Scotland assume those two things.

Photo of Malcolm Chisholm Malcolm Chisholm Labour

I am afraid my time is up.

It is very foolish to make such assumptions when the long-term, incontrovertible, trend in oil is towards falling production levels.

Photo of Bruce Crawford Bruce Crawford Scottish National Party 10:54 am, 6th April 2000

When I thought about the debate today, I could not help but reflect on the European Committee's recent visit to Brussels and, in particular, on some of the messages that we must learn from that visit. For instance, it was salutary to hear, from a director general of the European Commission, that the Scottish Parliament and its committees could become more important than Westminster in relation to matters to do with hill farming or fishing. The message that I took from that was that—despite the attempts in things such as the concordats to hem Scotland in, and despite the attempts of many in this chamber to stick with the status quo—the process is evolving anyway, and the Commission is beginning to realise that Scotland will have to have its own distinctive voice.

It was also salutary to learn that 80 per cent of the legislation emanating from, and developing in, the European Community will have a direct effect on Scotland's domestic policy. Given that the vast majority of legislation made, and of other decisions taken, within the framework of the European Community—through the Commission and the many Councils of Ministers—affect Scotland directly, it is concerning, to say the least, that Scotland does not have the opportunity to contribute in the way that other normal nations do. Scotland's distinctive needs cannot be articulated in the same way as can the needs of the Irish, the Dutch or the Danes.

There is another lesson to be learned from the growth in the number of discussions that are taking place at official level between like departments in the various member states. I wonder whether the southern-based big UK departments, when they are involved in talks with like departments in the European Community, have the best interests of Scotland at heart, and whether those interests are properly represented.

The most salutary lesson of all comes from the experience of the Irish. From everyone I have spoken to in the European Community, it is clear that the Irish have made an art of cutting a niche for themselves. In Brussels or Strasbourg, all sorts of people talk about the terrific networking of the Irish, and about the way in which they are superbly able to secure the best deal that they can for their people. It is no accident that their ability to do that is directly related to their status as a normal nation within the European framework.

I heard Jack McConnell talking about trying to create a relationship between us and England. That says more about Jack's mindset than about ours. This debate is about a relationship between Scotland and the rest of Europe. It is time that we started raising our sights and widening our horizons.

Talking about lessons from Europe leads me on nicely to the issue of European structural funds and the way in which they are treated in the United Kingdom. If Scotland had a status similar to that of even the Basque Country—which, as we have heard already, has full fiscal autonomy—our position as far as structural funds are concerned would improve dramatically.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

I will let Jack in in a minute.

In Scotland, structural funds are non-additional to the net overall expenditure that is available to the Scottish Executive through the Scottish assigned budget. Perhaps Jack will address that when he is on his feet.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

I would like to make two points. First, will Mr Crawford confirm that the Basque Country does not, at any time, have a seat on the Council of Ministers, unlike this Parliament and this Executive? It is therefore not as well represented in Europe as is this Parliament. Secondly, will he confirm that this Executive's and this Parliament's budget for European structural funds is not only enough to cover us for the next seven years, but is more than enough, allowing us to divert money to other sources?

Photo of Bruce Crawford Bruce Crawford Scottish National Party

I will come on to talk about some of Jack's own quotations on non-additionality issues. I will first answer his point about the Basque Country. Unfortunately, Scotland does not have a choice as to when it can sit at the top table. We get that place only when the UK department allows it.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

Presiding Officer, I am still on my feet. I had not given way again.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

I want to get on to the key point—and Jack knows that this is the key point—on non-additionality. On 7 October, I asked the First Minister in this chamber to confirm that structural funds were non-additional to Scotland's overall bottom-line position. In response, the First Minister said:

"That is broadly correct. Budget provision is made for European structural funds within the Scottish assigned budget each year."—[Official Report, 7 October 1999; Vol 2, c 1174.]

That was confirmed by the Minister for Finance himself, when, in a letter of 14 January to the European Committee of this Parliament, he wrote:

"As the overall Assigned Budget is determined by other factors, including the Barnett Formula, increases in structural funds expenditure would result in fewer resources being available for other spending purposes."

That is quite clear: there is no net benefit to overall public expenditure in Scotland. Perhaps the minister should take a leaf out of Rhodri Morgan's book, by representing Scotland's case in London, rather than representing London's case in Scotland. Perhaps Mr McConnell should take the same road as Alun Michael took. He should go.

Photo of Kenneth Macintosh Kenneth Macintosh Labour 11:00 am, 6th April 2000

I do not want people to think that I am a back bencher who can see no further than the borders of my constituency, but I wanted to think of some good examples of public services in Scotland and I decided to start in Eastwood. I would like to tell members a little bit about East Renfrewshire and what is happening in the area. My constituency stretches from Uplawmoor, Neilston and Barrhead by Paisley on the west side, through to the south side of Glasgow—Giffnock, Clarkston, Newton Mearns—and over to Busby and Eaglesham on the East Kilbride side. It has prosperous parts, those that are not so prosperous, a commuter belt and industrial areas. However, much of it is suburban, car-owning, home-owning green belt.

Photo of Nicola Sturgeon Nicola Sturgeon Scottish National Party

I am almost reluctant to intervene, Presiding Officer, because I love hearing about life in Eastwood. Perhaps the member can tell us the total of the school repair bill in East Renfrewshire. In anticipation of his being unable to do so, I can reveal that the bill is £13 million. Will the member give us specific answers about the Government policies that will enable East Renfrewshire to tackle that repair bill within—

Photo of Kenneth Macintosh Kenneth Macintosh Labour

Was Nicola Sturgeon presenting yet another SNP spending commitment?

Photo of Kenneth Macintosh Kenneth Macintosh Labour

That is ludicrous. I am about to talk about the public services in Eastwood. Eastwood might not be an area that one would associate with public services, but I have decided to think about and mention what we are delivering in the area. I will start with schools, because the area prides itself on its schools.

In the past three years, six new nurseries have been set up and four others have been expanded. We are currently building a brand-new primary school and are expanding a secondary school. We have put new money into a community school. There are classroom assistants in nearly every primary school in the area. There are also after-school care clubs throughout the area. Our libraries are providing more services, from books for babies to free internet access, including a direct link to the Scottish Parliament. There are more computers in the classroom. On Barrhead's main street there is an internet café, which is a major project that aims to get young people off the street and on to the web.

Photo of Kenneth Macintosh Kenneth Macintosh Labour

I am sorry, but Nicola Sturgeon's last intervention was neither helpful nor a question—it was a mini-speech.

Photo of Kenneth Macintosh Kenneth Macintosh Labour

It was not a question, it was a mini-speech, during which Nicola Sturgeon made yet another spending commitment.

I have just listed the Government's achievements in East Renfrewshire. Those are proper public services, delivered for the people of East Renfrewshire by a Government that can be trusted to run the economy, unlike the shower across the chamber, with their vague promises and uncosted, illusory economics. The SNP gestures are puerile and do not fool everyone. This morning, on the radio, Andrew Wilson was trying to turn us into a Parliament of tax dodgers. That is nonsense, back-of-the-envelope economic thinking, and it will not work.

We are delivering decent services for the people of East Renfrewshire, not just in education. We have invested in transport through several schemes, including in small but significant matters such as the improvement in disabled access at railway stations. I am sure that Alex Neil will support the multi-million upgrade of the A77 to motorway status. For the first time in 20 years, people are beginning to see publicly owned, affordable housing. East Renfrewshire Council and Renfrewshire Enterprise are helping businesses to develop through e-commerce. The new deal has helped us to cut youth unemployment by more than 50 per cent. That is an achievement.

We have sports co-ordinators in schools and, for the first time, new money for local arts companies. The Levern valley social inclusion partnership is working with voluntary groups, disabled people and people with learning difficulties. I have not even touched on the biggest public investment—health. We have put resources into hospitals and GP services and have given our nurses decent pay rises.

My list has not included the minimum wage, the largest ever increase in child benefit, the winter allowance, the minimum income guarantee for pensioners, the new tax credits for working families and child care, all of which will help thousands of the poorest people in my community. The list goes on and on.

Photo of Lord David Steel Lord David Steel Presiding Officer, Scottish Parliament

I am afraid that you cannot go on and on, Mr Macintosh.

Photo of Kenneth Macintosh Kenneth Macintosh Labour

I was surprised to read the business bulletin and find that this was a non-Executive motion. The SNP has made only puerile, ill-thought-out, illusory, fantasy promises that it cannot deliver. The figures just do not add up. At least we are delivering on true public services.

Photo of Lord David Steel Lord David Steel Presiding Officer, Scottish Parliament

I ask the closing speakers to stick strictly to the time limit. Robert Brown, you have four minutes.

Photo of Robert Brown Robert Brown Liberal Democrat 11:05 am, 6th April 2000

I must be very naive: I did not realise that the SNP's motion was in fact an end-of-term resolution, designed to give the independence fundies a chance to rant and rave in the chamber. The press have obviously realised that—only a few minutes ago, the only press representative in the gallery was a gentleman reading his newspaper.

The SNP motion is peculiar: it grunts and groans at us with the depressingly chip-on-the shoulder attitude that we have come to know and love from the SNP. Its 12 lines of convoluted English do not propose anything. Part of it is the usual wail about Scotland not getting its fair share; part of it concerns rather unclear changes to the internal tax system. Furthermore, it cleverly avoids the choice of whether more or less money should be raised. In fairness to Andrew Wilson, however, I should say that he admitted as much when he said that the SNP was not arguing for any specific policies. He is absolutely right. The motion reads as though it were composed by a committee of three gradualists and three fundies, then translated into Russian and back again.

Although I agree that the precise arrangements for financing the Scottish Parliament are not perfect, that might have something to do with the fact that the SNP skulked in its tents during the Scottish Constitutional Convention and did not support those of us who argued for a better system.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

Does Mr Brown, like me, agree with the Scottish Constitutional Convention's conclusion that fiscal autonomy or greater financial powers are good ideas? If he makes it clear that he backs that proposal, he can vote for our motion, as that is all that it calls for.

Photo of Robert Brown Robert Brown Liberal Democrat

I am pleased to have a translation of the motion; that was certainly not my reading of it.

I agree that we could have a better fiscal system and that the Parliament should have sensible borrowing powers—a useful point to make about Holyrood—but the motion plays the usual SNP game of having its cake and eating it. The motion says that Westminster's allocation of resources

"takes no account . . . of the level of revenues raised in Scotland".

However, what is suggested would mean a drastic reduction in the Scottish block, removing the formula that provides £1,057 per person on health in Scotland compared with £890 in England. That is the reality, however we diddle the figures.

The SNP wants to separate Scotland from the United Kingdom; it is perfectly free to argue that position. However, it should be honest enough to clarify the implications of that. We will lose the advantage of being able to draw from the larger UK pot in times of difficulty to deal with our higher levels of need. For example, we must tackle Glasgow's problem of having the six constituencies with the worst health in Scotland. Weasel words and futile attempts to pretend that two plus two makes five only demean the Parliament.

The Parliament and the partnership Executive have been engaged in realigning resources sensitively to promote health, instead of simply curing sickness; we have been tackling the causes instead of the symptoms and making the best use of the available money to do so. We have gone further down that road than any Government before us. George Lyon detailed the changes in the simple financial additions to the Parliament's resources. Real money is going to real public services for rural and other parts of the economy; that money is not the toytown money that Andrew Wilson is printing in ever-increasing amounts. It is an absolute mercy for Scotland that its fortunes are in the prudent hands of this Executive, instead of the Mickey Mouse economics of the Opposition. As a result, I back Jack McConnell's amendment.

Photo of Nick Johnston Nick Johnston Conservative 11:09 am, 6th April 2000

We know by now that this debate is not about finance, economics, VAT or even the long-term financing of public works. It is one more attack by the SNP on the devolution settlement, destabilising the Scottish Parliament and using a crude pretence to drive a wedge between the constituent parts of the UK. Janis Hughes made that point very well.

Even so, I was surprised at the SNP's choice of debate. After the mauling that it received last week over its pathetic attacks on PFI, after the embarrassing exposé of its tax-and-spend policy and its toe-curling summing up, I thought that it would stick to safe subjects, such as tartan weaving, the shortbread industry and theme rides through Brigadoon, rather than laying bare its inadequacies on economic matters.

The SNP is the modern equivalent of the what-the-butler-saw machine. On tartan day, people can put in their tartan penny and the SNP will lay bare the naivety of its economics and spending policies. Turn the handle and they will see Andrew Wilson do the dance of the seven veils—with every piece of gossamer that he sheds, another piece of the SNP's economic credibility goes.

Andrew Wilson says that he wants to go all the way, but he wants to go all the way without being honest about the status of Scotland. Most of the examples that he gave, including the Basque Country and Catalonia—a place I love well—are part of a federal system. If the SNP policy has changed again and it now wants to be part of a federal system, it should be honest and let us know.

The SNP's veil No 1 is that all our economic ills can be solved by proclaiming or reclaiming, "It's Scotland's oil." Let us ignore the outflow of capital, which David Davidson mentioned, the business incentives and the fact that an SNP Administration, intent on fulfilling its imprudent spending plans, would drive people away from Scotland.

What about veil No 2? Scotland contributes 8.9 per cent, but takes 10 per cent of Government spending. The balance is weighted severely in Scotland's favour. Alex Neil called for the privatisation of Scotland.

Photo of Nick Johnston Nick Johnston Conservative

In a moment.

We heard dreamland economics. Perhaps Andrew Wilson will answer this: what will the public sector borrowing requirement be in an independent Scotland? What would interest rates be? What would the level of the Scottish pound be?

Let me finish my point about Alex Neil—I congratulate him on reminding us of Tony Blair's words about this Parliament being the equivalent of an English parish council. Perhaps Andrew Wilson can respond to that, too.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

The factors Mr Johnston mentioned would of course be determined by the choices of the Government of the day. Can Mr Johnston name me one year under the Conservative Administration in which the UK did not spend more than it raised in taxes?

Photo of Nick Johnston Nick Johnston Conservative

I am sorry. I thought that Andrew Wilson was going to answer my point. I will answer his in a minute.

Let us move on to veil No 4, because we will start to see a bit more flesh on the bones. Murray Tosh made the point well that veil No 4 is based on the price of crude oil, which is a volatile commodity, as recent rises have shown. Can the SNP tell us how the gap of £4 billion, £5 billion, £6 billion or £7 billion will be plugged? I know that Ms Sturgeon does not accept that point, but she is to be congratulated on her excellent exposé of the sycophancy of the Liberal Democrats, whose contribution to today's debate has done nothing for their credibility in Scotland.

Bruce Crawford touched on veil No 5—structural funds and match funding. The SNP uses that issue as a cloak before revealing parts of its economic nakedness. The Conservatives have always called for a full debate on EU funding. Bruce should be congratulated on bringing the issue into the debate. The minister will no doubt attack that.

Let us examine veil No 6—the SNP's spending plans, which are a wish list of sticking plasters to cover the gaping wounds of hope over reality, with spending commitments far outweighing Scotland's resources.

We then come to the removal of the final veil, which concedes the true figures in Scotland. Let me go back to Bruce Crawford and to the fact that the SNP motion does not address the SNP policy of joining the European single currency. To meet the criteria, the SNP would have to cut public spending and raise taxes, which is the opposite of what it outlines in its motion.

The rhetoric today is mischief making. The SNP knows that and cannot defend itself. The figure of £1.8 billion has been mentioned as the cost of the SNP's policy on Europe.

Photo of Nick Johnston Nick Johnston Conservative

By me.

I agree that there should be a more fiscally responsible and democratically accountable way of funding public services, but responsibility for that lies at the feet of the Executive, at the heart of whose policies lies spend and not—as we have called for for many years—the spending of public money wisely. Before using public sector financing as a vehicle for political mischief making, all the other parties should examine how local authorities are run and how wasteful they are with public finances.

Photo of Nicola Sturgeon Nicola Sturgeon Scottish National Party

I have been waiting for this all morning.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour 11:15 am, 6th April 2000

It would be rotten to disappoint, Presiding Officer. I am interested in the new alliance between Nick Johnston and Nicola Sturgeon, which is one of the more interesting alliances of the Parliament.

It has been good that the debate has not just been on the numbers that the Opposition parties have bandied around the chamber over the past six months. The fact that they have clearly given up on that debate is welcome. They recognise that there are significant, real-terms increases in all areas of public spending in Scotland—a grand total of almost £500 for every man, woman and child in Scotland even up to this year, never mind to next year or the year after. That is a significant increase in Scottish public services, which bears testimony to the Barnett formula, to the statement of funding policy and to our relationship with the rest of the UK. It bears testimony to the success not just of the devolution settlement but of the Government's economic management and of the coalition Executive's priorities in putting education, health, transport and crime at the top of the agenda.

It has been disappointing that we have not heard the answers to the fundamental questions. We did not call this debate. Despite the fact that the Conservatives are quoted so often by the Scottish nationalists, they were not responsible for the debate either. The Liberals did not call for this debate. Even Mr Harper, who has just entered the chamber, did not call for it. The debate was called for by the Scottish Nationalist party, so its members might have been expected to give some answers on the future financing of Scotland, were their plans to come to fruition.

The only specific thing that we heard this morning was Bruce Crawford's disgraceful misrepresentation of Scotland's position in relation to European funding. We need to tackle a series of potentially misleading and dangerous statements about the future financing of Scotland. I presume that Fiona Hyslop will do that when she sums up—at least, I think it is Fiona who is summing up. We might eventually get answers to our questions.

Scotland receives every penny of European funding that it deserves. That money comes from the European Commission through the UK Treasury and on to Scotland. Not only that, but the fact that we have that money this year, and that it will stay in our budget year after year, means that, because one kind of European funding that we can spend in Scotland is to decrease in years to come, we have extra resources that we can allocate elsewhere. That has been confirmed by the Commission in evidence to a European Committee meeting that Mr Crawford attended; it has been confirmed to that committee by European officials; and it has, I think, been accepted by all concerned. To continue to raise that matter in the way in which Mr Crawford does will do nothing but put in doubt the funding for groups across Scotland. It is dangerous talk, and it should stop, because it is untrue.

Notwithstanding the alliance between the two Opposition parties, we have again heard incredible statements from the Conservatives about their so-called economic legacy, which they claim has resulted in the current situation in public expenditure. I remind Nick Johnston of the position in 1997—a national debt of £20 billion and rising. That has been not just turned round but eliminated by the Labour Government at Westminster.

Photo of Alex Neil Alex Neil Scottish National Party

That is not a national debt—you have got it wrong, Jack.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

Some £8.5 billion has been added to the spending plans of 1997. Those are fundamental changes to the financing of this country and the rest of the UK and we can be proud of them.

I agreed with one thing that David Davidson said—that the purpose of this morning's motion and debate, and of the points that Mr Wilson and his colleagues make, is to create a bitter dispute between this Parliament and Westminster and the rest of the United Kingdom.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

No.

It is designed entirely to create a dispute and instability inside the UK and inside Scotland. Nothing is made of the SNP's proposal, which I think existed last year, to reduce corporation tax, apart from a brief mention by Mr Wilson. There is no mention of the proposal to increase personal taxation in Scotland and no attempt to justify how that tax decrease for business in Scotland would be paid for by increased personal taxation. Moreover, there is no attempt to suggest how the structural deficit between Scottish public spending and Scottish taxation revenues would be filled in a separate Scotland and there is no attempt to fill that gap with proposals for taxation or reduced spending. The SNP is being dishonest and should supply some answers.

I want the SNP to tell us today its policy on taxation. Does it want to increase personal taxation, which was its policy at the election? Does it want Scots to pay higher taxes than everyone else in the UK? I am sure that that is Mr Neil's position, but I would like to know whether it is the position of other SNP front benchers.

How can a policy of higher personal taxes and lower business taxes be consistent with the priorities of the people of Scotland? Does the SNP agree with Mr Salmond's opinion, expressed last year, that tax rates are not a disincentive this side of 50 per cent? Does the SNP want personal taxes to rise to near that level?

What are the SNP's policies on the exchange rate mechanism, a separate Scottish currency and the other key matters that would affect the financing of a separate Scotland? The SNP cannot blandly compare the situation that a separate Scotland would be in to the current situations in Denmark, Norway, Finland, Sweden, Holland, Ireland or anywhere else. We should compare the situation that a separate Scotland would be in with the situation that Scotland is in today—increased public expenditure, a strong fiscal and economic position, economic growth and rising employment. That would be a more useful comparison to make.

The SNP claims to stand up for Scotland but it does not do so by coming to the chamber week after week calling for more powers and cash, by disputing the current settlement, which is the settled will of the Scottish people, and by creating disputes. This Parliament will stand up for Scotland by making use of the cash that we get and the powers that we have. We will do that properly and prove that the Parliament can work. When the SNP becomes involved in that process, it will receive more respect than it does for initiating debates such as today's, which denigrate the Parliament and do us no service whatever.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party 11:22 am, 6th April 2000

We have had a debate of some quality this morning. Listening to the minister, however, I experienced a sense of déjà vu. A number of years ago, Michael Forsyth, a Conservative minister, used the same arguments when talking about the devolution settlement. Obviously, there are more similarities between the two men than simply the Stirling connection.

We have had quality speeches today, but not from everyone. Listening to speeches by members of the Executive parties, I often think that they fail to understand the nature of parliamentary democracy. They seem to expect the Opposition not to criticise or scrutinise the Executive and not to oppose wrong-headed and ill thought out policies. It is time that the Executive parties stopped girning and started respecting the SNP's role as the official Opposition. As the Opposition, we are dedicated to the success of this Parliament but are relentless in our pursuit of the best possible deal for this country.

I will remind the chamber of Andrew Wilson's speech. He quoted from the Scottish Constitutional Convention document "Towards Scotland's Parliament", which said of the block grant settlement:

"It would be a minimalist approach that is neither radical in concept nor conducive to accountability as it would mean that the Parliament would be more accountable to Westminster than the Scottish people and would be even less financially independent than local authorities".

In yesterday's debate, it was suggested that some of the rooms in the new Parliament could be sponsored. I am sure that companies such as Coca Cola or Pepsi will not be invited to sponsor the Parliament, but I suggest that the SNP's proposals would give us a Holyrood Max, whereas the Executive's proposals will deliver not even a Holyrood Lite but, because the devolved powers are not being used properly, a Holyrood Super Lite.

We should reflect on some of the comments that were made today about the European context. We should look at other countries to see what they can do that we cannot. Alex Neil talked about Scotland being a net contributor. The figures contained in the "Government Expenditure and Revenue in Scotland" report show that Scotland pays 9.3 per cent of Government revenues from a population that is 8.5 per cent of the United Kingdom's population. We do not have a structural deficit. Nicola Sturgeon talked about what we could achieve if we had the powers and freedoms that other Parliaments all over the world enjoy and take for granted. She was right to say that we are talking about raising our sights.

I agree with Murray Tosh, who is no longer present, that we should consider the Barnett formula. Robert Brown let the cat out of the bag when he said that we should have a better fiscal system. That is what we are suggesting: not to stay where we are, but to think about where we could be.

It should be remembered that, according to opinion polls, 68 per cent of Scots want this Parliament to have more powers. In my speech two weeks ago, I called for local authorities to be freed from the narrow confines of Treasury borrowing consents. I said:

"Where a council has a sound business plan and a proven track record, it should be allowed to borrow what it requires to get the job done. Even local authorities that did not pass that test could set up arm's-length companies to enable that within the current regime without changing the existing Treasury rules."—[Official Report, 23 March 2000; Vol 5, c 886.]

I was pleased to be joined in that call by the Deputy Prime Minister, John Prescott, who said in the House of Commons on Tuesday:

"Local authorities will be given new borrowing powers to invest in their housing and retain full ownership where they put their housing management in arms-length companies and demonstrate an excellent record of management through best-value inspection."—[Official Report, House of Commons, 4 April 2000; Vol 347, c 814.]

The similarity with my speech is uncanny—I was not aware that the Deputy Prime Minister followed my speeches with such diligence. The option would be on balance sheet; it could be on balance sheet under devolution. However, with more powers, and with the ability to impose borrowing consents on local authorities, this Parliament would have much more scope.

The infrastructure debate has moved on, but the agreement continues. Two weeks ago, I also said:

"There is no reason why local authorities cannot borrow the money that they require, apart from the fact that the Executive is not prepared to negotiate with the Treasury or to consider new and imaginative ways in which to help local authorities meet their funding needs."—[Official Report, 23 March 2000; Vol 5, c 887.]

On Tuesday, Mr Prescott said:

"On local borrowing and my influence on the Treasury, I am accused, on the one hand, of having no influence with the Treasury and, on the other, of getting something from the Treasury that I should not have received. What I achieved for local authorities was the right to borrow."—[Official Report, House of Commons, 4 April 2000; Vol 347, c 818.]

Even under devolution, the Executive has not managed to use its powers to influence the Treasury in that way. That is what I have been calling for and what COSLA has been calling for—the right to borrow.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

Will Fiona Hyslop confirm that local authority borrowing in Scotland is already significantly higher than in England, and that, although Mr Prescott has perhaps secured an increase in borrowing for English councils, particularly for housing, that would not bring their level of borrowing anywhere near what exists in Scotland, either for housing or for local authority expenditure across the board?

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

No. The minister will realise that there has been a net cut, after inflation, in the borrowing consents that are available for housing.

Let us consider the use of expenditure powers. There should be a sensible, responsible and prudent use of public finances. We should not mortgage to the hilt our children's future, through expensive private finance initiatives, which are forming an unhealthy and disproportionate percentage of public finance. Figures show that 34 per cent of Scotland's finances are spent on PFI schemes and that, in 2001-02, 43 per cent of all the UK's PFI schemes will be in Scotland. Scotland is a PFI guinea pig.

In the debate a fortnight ago, Peter Peacock described the SNP's proposals—which now, interestingly, have been adopted by John Prescott—as "unachievable, unsustainable and unprincipled". Will he now use the same language to describe the Deputy Prime Minister's announcement as "unachievable, unsustainable and unprincipled"?

Photo of Malcolm Chisholm Malcolm Chisholm Labour

Is it not true that the SNP's proposals were nothing like John Prescott's? John Prescott's proposals were still on balance sheet, whereas the SNP is trying to get around that. Is it not also true that every increase in housing expenditure that John Prescott gets out of Gordon Brown, we get through the Barnett formula?

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

No. I am arguing that the expenditure could be on or off balance sheet. If it were on balance sheet, Jack McConnell would be required to negotiate with the Treasury, as John Prescott admitted to doing.

I would like to move on to some of the other contributions to this debate. Robert Brown raised a point on the Holyrood project and taxation. We are not talking about not paying taxes. If we had the powers to allow us to borrow for the Holyrood project, those taxes could be recycled into health, education and housing.

I agree with David Davidson that stealth taxes are harming the Scottish economy. The high value of the pound is harming the Scottish economy. Grampian Foods yesterday announced the loss of another 99 jobs, and Murray Tosh talked about the situation in the electronics industry. We have a strong manufacturing base in Scotland, which is being harmed by the high value of the pound.

Photo of David Davidson David Davidson Conservative

Like the Conservative party, the SNP decries stealth taxes. Will the SNP give a cast-iron guarantee that any taxation introduced by that party will be in the form of direct taxation—yes or no?

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

Taxation can be organised in a variety of ways, such as having a mix of taxation. The SNP believes in transparency in taxation, which we are not getting at the moment.

It is important that we agree that devolution is about using devolved powers. If the Executive wants to use those powers to introduce more stealth taxes or to cut taxes, that is fine. If it wants to use what powers the Parliament has to stay put, to move forward, to move back or to change the mix of taxation, that would be the Executive's choice, which it would be able to put to the Scottish people. All we are asking is for the Scottish people to be given the choice and the flexibility that we are proposing.

It was depressing to hear the arguments used by Janis Hughes, as they were the same arguments that the Tories used against the Labour party during the devolution process. Devolution is now the status quo. The choice is whether we stop at that. If we do, we will stagnate and we will never move forward.

I offer the Executive parties a challenge—or an opportunity. They do not have to come the full way towards the SNP's policy of independence—I do not expect them to—but they should at least have the courage to try to expand the powers of the Parliament.

The theme of today's debate is fiscal autonomy, and the debate has rightly concentrated on the many powers that this Parliament should have, but does not. However, fiscal autonomy means more than that—it means the ability to think as an independent Parliament that could act on its own priorities according to its own needs and be a Government for Scotland, not just a department of London government in Scotland.

Photo of Lord David Steel Lord David Steel Presiding Officer, Scottish Parliament

That concludes the debate. Before we start the debate on the dairy industry, I suspend the meeting for five minutes.

Meeting suspended.

On resuming—