Budget (Scotland) (No 4) Bill: Stage 1

– in the Scottish Parliament at 3:13 pm on 25th January 2007.

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Photo of Murray Tosh Murray Tosh Conservative 3:13 pm, 25th January 2007

The next item of business is a debate on motion S2M-5441, in the name of Tom McCabe, that the Parliament agrees to the general principles of the Budget (Scotland) (No 4) Bill.

Photo of Tom McCabe Tom McCabe Labour 3:21 pm, 25th January 2007

Today's proceedings bring us to the final stages of the 2007-08 budget process. All members recognise that it is an extremely important process, although at times members regard it as excessively long and somewhat confusing, despite all our efforts. In today's stage 1 debate in Parliament, we are considering the Finance Committee's stage 2 report: that is difficult enough for members to understand, so it must be even more difficult for those who watch our proceedings from outside. There may be some merit in our thinking about the terminology and different stages of the process.

We strongly welcome the Finance Committee's constructive report. We also welcome what it has to say about the approach that it and we should take to improving the budget process. We in the Scottish Executive have responded to the report in a way that indicates our broad agreement with the recommendations that have been made.

Every year we say—I am happy to say it again—that it is the Executive's sincere wish to continue to work with the committee on the areas that are of particular concern to it. The committee has mentioned again the standard of cross-cutting information in the documents. It has placed a special emphasis on the way in which we engage during the forthcoming spending review. We have made significant progress—not just this year, but over recent years—on the scrutiny process, which involves the Executive, the committee and Executive officials, and on the transparency and rigour that are attached to it. We look forward to continuing what I regard as a constructive relationship. We do not agree with the committee on everything, but the intent of both sides is the same—to do our best to improve the process and to shine a brighter light on the important parts of the information that is contained in the budget.

As in previous years, we have done our best to ensure that as many people as possible around Scotland are aware of the process. We have circulated more than 1,300 copies of the budget document to individuals and organisations, and have published it electronically on the worldwide web. We are doing our best to ensure that anyone who has an interest in the process—we hope that an increasing number of people will take such an interest—is able to engage with the various pieces of information as they are published.

One of the major recommendations in the Finance Committee's report related to local government finance. The report was issued the day before I announced a new package of measures for local government for the financial year 2007-08, totalling about £250 million. Members from all parties agree that local government provides the services to people in Scotland that they deserve and require as they make their way through life. We now allocate more than a third of the Scottish budget to our colleagues in local government. In the financial year 2007-08, that amounts to about £10.6 billion—a substantial amount, by any measure. The figure equates to more than 33.6 per cent of the total budget—a substantial proportion of the resources that are available to us.

The new £250 million funding package for local government that we announced has been warmly welcomed. It will mean that local government finance has increased by 4.7 per cent on the previous year's figures and that, in the eight years since devolution began, local government will have received increases of around £3.2 billion—or just under 58 per cent.

With that kind of money, the ability exists to provide the core services that are so necessary to the public and which allow them to experience personal advancement and have the personal security that they seek. We want to ensure that not only the new funding but the totality of funding help us to sustain such services. Moreover, we want to ensure that all that funding adds to our ability to transform our public services and ensures both that they are consuming the human capital that they need and no more and that they are sustainable.

People care about having good, reliable public services. After all, they make a real difference and allow people to make substantial choices about their lives. That is what the budget does, and I am more than comfortable with commending it to the chamber.

I move,

That the Parliament agrees to the general principles of the Budget (Scotland) (No. 4) Bill.

Photo of Jim Mather Jim Mather Scottish National Party 3:26 pm, 25th January 2007

Once again, we are invited to debate the Scottish budget; once again, we are reviewing an expenditure-only approach to national financial management; and once again, we have only a very short time to debate our nation's financial affairs.

At this point, businesses and other revenue-earning organisations would be scratching their heads as they tried to work out how efficiency, effectiveness, staff motivation and productivity can be achieved without making the motivational link to revenue maximisation and without any credible attempt to boost Scotland's competitiveness and the value of its balance sheet. Indeed, the debate coincides with news that has filtered down to me from the International Institute for Management Development in Switzerland that it is dropping Scotland from its "World Competitiveness Yearbook". Such a move is certainly convenient, given that, otherwise, we would have received in March the IMD's annual reminder of the lack of a United Kingdom-level playing field and Scotland's lack of the comprehensive array of powers that it needs to compete effectively.

However, this year, the lack of IMD data is not the only problem. We still lack the Howat committee's report, and on Tuesday the Auditor General for Scotland qualified his report on the Government's efficient government initiative by saying that it was not possible to confirm the accuracy of the efficient government technical notes. In so doing, the Auditor General produced an elegant response that appeared to pull its punches while leaving the so-called efficient government initiative in tatters.

There is no doubt that real efficiency would have helped this year's budget; indeed, it should always have been a permanent and credible feature of Scottish government. There is also no doubt that the Howat report would have informed this debate, the scrutiny of the Finance Committee and the Audit Committee and a proper efficiency programme.

That said, I recognise that the process has one tangible benefit. Many people want to be part of a process of perpetual improvement in their own sphere of public sector endeavour. I am happy to say that we can build on that—and we intend, after May, to provide the leadership, methodologies and motivation to make that happen.

One budget issue that affects everyone in Scotland is Scottish Water. In last year's autumn budget revisions, the original £314 million that was to be available for Scottish Water in 2006-07 was reduced by £161.8 million to a net sum of £152 million. However, in schedule 3.8 of this year's budget documentation, the comparative figure for 2006-07 is not £152 million, but the original £314 million. As a result, we lack a true and fair view not only from the efficiency technical notes and the "Government Expenditure and Revenue in Scotland" document but from the budget documentation.

Such an approach Snopakes away the release of £161.8 million of capital back to the Executive and the reallocation of some of those moneys to other organisations, such as Scottish Natural Heritage. That is an unacceptable attitude to accurate reporting. The whole approach needs to be beefed up, particularly given that people should understand that the £161 million came from their payments.

Photo of Jim Mather Jim Mather Scottish National Party

I will let the minister in, but first I will set the stage for him.

This is the point in time when the Executive tells us that everything in Scottish Water is fine. It says that Scottish Water is okay because the Finance Committee and the Audit Committee say so. I put it to the minister that the majorities in question were the result of either members not getting to grips with the complexities of water industry finance or their excessive tendency to accept the sort of unproven assertion that no doubt the minister will now give us.

Photo of Tom McCabe Tom McCabe Labour

I am surprised at how lightly Mr Mather dismisses the Finance Committee and the Audit Committee of the Parliament, particularly given that he is a member of the Finance Committee.

The Water Industry Commission sets the framework for Scottish Water. It has now set Scottish Water's total expenditure and determined the capital expenditure that is required over the period 2006 to 2010. Lest the SNP yet again deliberately mislead people in Scotland, it is important to stress that Scottish Water has available to it every pound that the Water Industry Commission says that it needs—and that Scottish Water itself says that it needs. If Scottish Water needed an extra pound today, that would be made available.

Photo of Murray Tosh Murray Tosh Conservative

I will give you an additional minute to compensate, Mr Mather.

Photo of Jim Mather Jim Mather Scottish National Party

Thank you, Presiding Officer.

I enjoyed the minister's speech but, unfortunately, it was very inaccurate. The reality is that Scottish Water is overcharging—the methodologies that encourage that are clear to see. That overcharging will continue because those methodologies will continue into the future, given the regulatory capital value approach that Ofwat is using down south, which is now being used up here. That approach is the reason why the money was released and why, in the accounts for the three years up to 31 March 2005, of every pound of capital expenditure 87.7 pence was paid out from income from current water charge payers.

I put it to the minister that the approach that the Executive is taking with Scottish Water is a prime example of Executive mismanagement. Not only does its approach amount to a stealth tax, but it has caused development bottlenecks and created disaffected communities. The Executive has created a cash cow that is ripe for privatisation by increasing Scottish Water's assets and holding down its debt. We are also talking about massive tax losses and about risk being topped up, particularly given the new regulatory capital value approach. Water charge payers and communities are now pointing the finger at Scottish Water. The regulatory capital value method has to be challenged, if not in Scotland, then in England. Instead of focusing on fixing leaks, that approach creates the false priority of building up new assets. When the people of England realise that, more pressure will be put on the Executive, Scottish Water, the WIC and all those who have been complicit in the confidence trick that has been perpetrated on the people of Scotland.

I will leave it at that, Presiding Officer.

Photo of Derek Brownlee Derek Brownlee Conservative 3:32 pm, 25th January 2007

Mr Mather made a point about the short amount of time that is devoted to debates on the budget process in the Parliament. It is also worth noting the low level of interest that is generally accorded to a process of such importance—not just by MSPs but by the media and the wider political community. There is something wrong when the spending of more than £30 billion seems to attract so little scrutiny both outwith and within the Parliament. The minister spoke about process improvements and it is clear that we need to look at how the process can be improved. If the minister brings forward any substantive proposals to aid the beefing up of the process, he will have our full support.

It is obvious that, in looking at the budget in this very short debate, we need either to focus on individual specifics or to take a broader approach. I will take the latter option. Our central argument on the budget, and on the record of the Executive, is not to say that the Executive has not presided over a significant increase in public spending in Scotland—we concede that it has—but to point up the significant increase in the level of money that is being wasted. That is a matter of very real concern.

If Executive ministers do not want to take my word for it, they can hear what their colleagues have said. The consultant contract—the cost of which is four times greater than predicted—is but one example of the way in which the Government has spent taxpayers' money without paying sufficient attention to what the money will buy.

On Tuesday, the Audit Committee considered Audit Scotland's report on the subject. The Official Report of the meeting is not yet available.

Thankfully, The Herald of yesterday is, and Margaret Jamieson is reported in it as saying:

"When I was in the health service these were things that were ongoing. It didn't take a truckload of cash to be up front for individuals to change the way in which they worked."

Not to be outdone, Susan Deacon is reported as saying:

"I think many groups within the health service and many other sectors could quite reasonably ask the question as to why it required such a substantial and costly change in terms and conditions ... I think some of these are actually quite marginal changes in improvements and practice."

Just in case we had forgotten that the situation is not exclusively the fault of the Labour Party, Margaret Smith added:

"That's a pretty good contract if you can get it. Get your workload reduced and your pay packet increased".

Indeed, but I ask Margaret Smith, "Who signed it?" The problem is that we in Scotland have not paid sufficient attention to what we get for our public spending. We have spent far too much time talking about the quantum of public spending. In the Finance Committee on Tuesday, the minister conceded that there are further opportunities to deliver greater efficiencies in government—he will get no argument from us on that. More can be done, and more efficiencies can be realised. Better public services can be achieved by means other than simply throwing money at them. We can get better value for money, but we need the political will to do that.

There are many worthwhile initiatives in the budget documents with which we would agree, but given the levels of tax, spending and waste that ministers and Executive members seem to wear as almost a badge of honour, we cannot support the motion. There is a better alternative to the budgetary path that the Executive has chosen—one that pays much more attention to delivering value for money; that does not see an inexorable rise in the levels of spending as end in itself; and that places much more emphasis on the quality of public services rather than the quantity of money spent on them. It is an alternative that the Executive has rejected for the past eight years, but in only a few weeks' time, the people who pay for all the services will have the opportunity to reject the Executive and, frankly, that cannot come a moment too soon.

Photo of Mr Andrew Arbuckle Mr Andrew Arbuckle Liberal Democrat 3:36 pm, 25th January 2007

In considering the Scottish Executive's budget for the forthcoming year, it would be beneficial to consider the wider economic situation in Scotland. With interest, I picked up the latest edition of the "Lloyds TSB Business Monitor", which looks at the Scottish economy. Its verdict on the final quarter of 2006 was that

"This is the second best quarterly result" of the past nine years, and the

"trend rate of growth identified in Scotland's economy during the summer has been sustained and even increased into autumn this year."

Further quotations from the document include:

"Growth is expected to come largely from new business ... Scottish claimant unemployment is near to its lowest level for thirty years ... The Scottish economy continues to grow above its trend rate".

Against that background, it is therefore easy to state that the increased level of funding from the Executive has helped to fuel the surge of economic activity. I accept that there is concern about the high level of public spending in Scotland, but a great deal of capital investment has been required after many years of infrastructure being allowed to wither. As far as I am concerned, the budget marks the latest successes for the Liberal Democrats in their role in the coalition.

The detail within the spending of £31 billion is bound to give rise to some criticism, especially from those who take a different view, but the impartial onlooker is now able to see positive changes across the board. In education, we have more teachers and more new schools, all heading towards the coalition objective of a better educated Scotland.

We also see positive changes emerging from our support for transport, especially the promotion of public transport. Many capital projects are now getting under way, despite lengthy delays in getting them on the road or, indeed, on the rail track. In my area, the reopening of the Stirling-Alloa-Kincardine rail line is going ahead, and other projects will help the train to take the strain, such as the park-and-ride facilities that are aimed at reducing the level of private car usage. The coalition always intended to increase its commitment to public transport, so those who are poring over the detail in the budget document will see that Scotland now spends two thirds of its transport budget on support for public transport systems. It is of particular interest to me that some of that money will go towards subsidising rural bus routes that would not otherwise be economically viable. Therefore, there has been a lot of benefit to the people of Scotland.

I know from first-hand experience that, last year, there was concern about the budget and the local government settlement. As the minister indicated, the financial allocation to local authorities has increased—that was announced in December—and some of the pressure has been taken off councils.

I am concerned that, with council elections under 100 days away, some councillors are looking as if they could be tempted to go for a 0 per cent increase in last year's council tax level. I hope that that has nothing to do with political posturing and something to do with the real issues that face local government.

Councils still face the added financial burden of introducing single status, which was supposed to be cost neutral. When other major issues such as changing demographics are taken into consideration, it must be acknowledged that, even with the increased allocations, local government is going through an extremely challenging period.

As the minister said, many councils have brought fresh thinking to their delivery of services and how to achieve their financial targets. Some of the old work practices have been binned and councils are now more focused on how they can best deliver all important services.

As a Liberal Democrat, I would like the financial rigour that councils have applied to be carried through to all other parts of government. The Finance Committee, of which I am a member, has been examining how the efficient government programme is working. That is essential to ensure that we get the due outcomes from taxpayers' cash investment.

As I said at the beginning of my speech, most services have received considerable extra financial support in the short lifetime of this session of Parliament. As we enter a period of greater financial stringency, we should demand positive results from that investment. We must ensure that the public sector in Scotland is as alert to efficiency as private businesses are.

In my view, the budget settlement is good for Scotland and for the people of Scotland, so I support the motion.

Photo of Wendy Alexander Wendy Alexander Labour 3:41 pm, 25th January 2007

I welcome the debate and commend the Budget (Scotland) (No 4) Bill to the Parliament. In keeping with past practice in such debates, I speak not in my capacity as the convener of the Finance Committee but as an individual member.

I begin by welcoming what the minister said in response to the Finance Committee's report on stage 2 of the budget process, the central recommendation of which was that local authorities should be treated more generously. We welcome the fact that the bill provides for the allocation to councils of an extra £250 million. There are improvements that could be made to the budget documentation, but it is more appropriate for such detail to be discussed in depth by the committees.

Let me turn to the bigger picture. As other members have mentioned, the debate is about the authorisation of the expenditure of £28 billion, which will be the largest sum that has ever been spent on services in Scotland. That settlement reflects the stable economic climate that has been created in the UK and the secure financial arrangements that exist under devolution. Derek Brownlee was wise to observe that in such a debate, it is possible either to focus on the detail of line items or to take a broader approach to the budget-setting process. In the same vein, Andrew Arbuckle talked about some of the bigger issues.

It is astonishing that the principal Opposition party, which not only wants a budget with different content, but would turn upside down the process of setting the budget in Scotland in less than a hundred days from now, had not a word to say about it. The Scottish National Party told us all about Scotland's position in some obscure Swiss academic's league table and we heard a great deal about a single line item in the budget. Why is the SNP so coy? It wants to turn the entire system upside down. Instead of being so coy, it should tell Scotland's national Parliament about its system.

In the most recent finance debate, Alex Neil told us that he wanted pensions to be decided in Scotland. In vain I searched the SNP's website for a line describing how its new budget process for Scotland would treat pensions; there was not a single line on how the pensions system would operate in Scotland under the SNP. Moreover, we have not had a single statement from the SNP about how taxes might have to rise to meet its promises to pensioners, students and small businesses. We have been told nothing about how its promise to cancel public-private partnership contracts would set back infrastructure in Scotland and given no details of the proposals whereby businesses would be asked to prepare for 32 collection rates for local income tax. Imagine what it would be like if employers had to track changes in residency in a system that involved 32 different rates. No details have been provided on how the SNP would compensate local government for cutting its revenue base in half by capping local income tax.

It is quite extraordinary that although the SNP proposes that we should transform the basis of financing in Scotland, we have not had a line on how the process would work—no line on the SNP website and no line in the chamber today. We have not had a line on what services are in and what services are out, or on how the £10 billion gap—or, on the most recent figures, when oil is included, the £5 billion gap—would be covered.

Photo of Jim Mather Jim Mather Scottish National Party

Does the member recognise that in five minutes she will struggle to produce a list, let alone allow the SNP to produce comprehensive answers? The Scottish Council for Development and Industry has today produced a document that says that the jury is out on the status quo and that GERS does not provide a credible basis for the debate. How does that fuel her argument? Where are the foundations for her argument?

Photo of Wendy Alexander Wendy Alexander Labour

Last week, the Finance Committee had a debate that Jim Mather was not so keen to have. We asked every international expert we could find and heard that GERS is regarded as a state-of-the-art document. When it comes to the SCDI, it provides not a shred of evidence for the argument that Jim Mather has been promoting that constitutional change and tax devolution would inevitably lead to growth. The rest of us would love to debate the SNP proposals, but we only ever get a budget when the oil price is high and we never get a proposal on how the SNP's plans for financing Scotland would work, 99 days from now, under devolution.

The people of Scotland deserve better. It is not serious politics to say to Scotland that it should hand over health, education and police services to the mercy of a financing system about which the SNP cannot even provide a one-page guide, much less a motion or indeed a speech. We look forward to hearing one later today.

Photo of Mark Ballard Mark Ballard Green 3:47 pm, 25th January 2007

Here we are again. The last time we had a debate on the budget process, we had the graveyard slot immediately before we broke up for the Christmas recess. This time, although it is not in a graveyard slot, the debate still has some of the atmosphere of the graveyard. Derek Brownlee made a valid set of points about why there is so little apparent interest in the debate. There is no one up there in the press gallery and I doubt that there will be anything in the papers tomorrow. We are spending a vast amount of money—as Wendy Alexander said, the largest amount of money ever spent on services in Scotland. I presume that that was why Wendy Alexander decided to go for the approach of a little light nat bashing to fill in her six-minute allotted slot.

All that is because the budget is quite difficult to discuss. Looking through the details of the budget, and its various sections, we see that it is quite hard to construct a debate about the budget. If we consider the budget for transport—my other portfolio—it looks as though rail funding has received a major financial boost this year, which would be very welcome. However, although it looks like a boost, it is not in fact new money; it is simply a transfer of funds from Westminster to Holyrood. There are still anomalies in the wider public transport budget in Scotland. Two years ago, Robin Harper raised with the First Minister the question why the road haulage modernisation fund is in the public transport budget. I have no doubt that road haulage modernisation is a good thing—something of which I have no doubt we need more—but road haulage is not public transport and yet it still appears in the budget as public transport.

Andrew Arbuckle praised the fact that two thirds of spending in the transport budget is now on public transport. It depends which figures we include in transport. If we include the £517.8 million that goes into motorway and trunk road capital charges, the share of public transport falls. If we exclude it from the transport budget—hey presto!—we have the high figure for public transport to which he referred.

We could have a debate about capital charges, although it might attract even less interest than today's debate has. The problem with the budget is that it is not a full budget, partly because it covers only expenditure and not how we generate income. In its current form, it covers huge areas and there are huge discrepancies.

There is also a problem with the link between the budget and what happens on the ground. The budget mentions

"developing and delivering anticipatory care for those 'at risk' wherever they live" and

"increasing health care services delivered in disadvantaged communities".

That is welcome. However, a few weeks ago, I hosted a members' business debate on community health, which is anticipatory care, and in that debate we heard that community health projects in Scotland face a massive funding crisis. Greater Glasgow and Clyde NHS Board's funding for community health has been cut by up to 50 per cent. How can we reconcile that with the fact that millions of pounds are being pumped into the health service? We do not have the links and the clear targeting that would ensure that the money that we vote for the health objectives in the budget—such as anticipatory care, which the minister will no doubt talk about—results in things being delivered on the ground.

The Finance Committee also heard about the failure to reconcile the budget with what happens as a result of Executive legislation. The budget proposes an additional £106 million for two new prisons in Scotland to deliver the extra prison places that are required, but recent Executive legislation is set to increase the number of prisoners by more than 1,000. The cost of that increase cannot be met from the limited funding for prisons. The solution is not to build yet more prisons but to look at another budget line. We spend only £12 million on reducing reoffending. The gap between the expenditure on prisons and the minimal expenditure on reducing reoffending shows us where we need to spend the money.

At present, the Executive's legislation is outstripping its budget. If the Executive truly wants to tackle persistent reoffending, it should concentrate not on warehousing offenders in prisons but on the reducing reoffending agenda, which is starved of funding. It should focus on parole and the supervision of prisoners when they leave prison and get out into the community. Those areas still lack funding.

I move on to one of my favourite topics in this area of debate. Sustainable development is a cross-cutting theme that appears in every budget document, but we still cannot tell what impact the cross-cutting themes have on spend. What difference does it make that there are fine words about sustainable development in the foreword to the budget? We cannot tell from the documents what departments have done differently, what changes they have made, or what re-evaluation has taken place in departments due to the cross-cutting themes. That is why the budget process and debates on the budget are so frustrating. We cannot see the impact of what we vote on in real changes on the ground or real changes in ministerial and departmental spending.

As Derek Brownlee said, there is lots of good stuff in the budget. We can all vote to support much of the spending. However, I hope that we will begin to rethink the ways in which we spend the money and evaluate where it is spent so that we can see the outcomes and not merely the outputs. If we do that, we might have a budget process that gets the audience that it deserves.

Photo of Bill Aitken Bill Aitken Conservative 3:54 pm, 25th January 2007

I agree with quite a lot of what Mark Ballard said. He built on Derek Brownlee's point that the way in which we handle the budget process in the Scottish Parliament is perhaps a little questionable. After all, £30 billion is hardly a mere bagatelle. There are many priorities in the budget and many of the decisions are highly political. Perhaps we should look for a way to debate the budget more intensively than it is debated under the present system. It is clear that we cannot debate expenditure line by line in the way that is possible in local government, but the picture that has been brought before us consistently since 1999 is far too broad to be sensible.

Photo of Tom McCabe Tom McCabe Labour

As I said earlier, I concur with the desire to introduce more rigour and transparency into the process. However, the member is in danger of undermining the good efforts that go on in committees of the Parliament. The subject committees have an opportunity to examine in detail the budget for particular portfolios and report back to the Finance Committee. Work is going on in the committee system to try to ensure that committees take that work more seriously in the future, but good work is being done in the Parliament, by the Finance Committee and other committees. Although we should express our desire for improvement, we should not undermine the many hours of work that many members do.

Photo of Bill Aitken Bill Aitken Conservative

I acknowledge that good work is done, but the fact is that we are painting with an extremely broad brush and some of the expenditure could bear more critical examination.

Photo of Bill Aitken Bill Aitken Conservative

Let me proceed for a while.

I am pleased to hear the minister's comments about transparency but, unfortunately, they do not hang well with the fact that the Howat report has still not been brought before the Parliament. How can the minister speak about transparency when the Howat report is being deliberately concealed and held back from the Parliament and the Scottish people until after the next election? I do not know what the report contains, but we in the Parliament have the right to know.

One or two worrying little features can be detected elsewhere. Audit Scotland's report "The Efficient Government Initiative: A progress report" casts doubt as to whether the efficiency savings, which have been much trumpeted by Mr McCabe and others, are as effective as they might be. The report states that the Executive must do more

"to provide assurance on the level of savings ... and their impact on service delivery."

The one way in which he could provide that reassurance is to let us see the Howat report, but he will not do so.

Photo of Tom McCabe Tom McCabe Labour

I am sorry to intervene again, but does the member accept that the Auditor General for Scotland also said that the efficient government initiative represents the most comprehensive attempt to embed efficiency into government for a considerable time?

Photo of Bill Aitken Bill Aitken Conservative

He did indeed, but with the caveat that the auditors were concerned about the way in which some efficiencies have been calculated. For example, the Executive claims that, in local authorities, savings of £122 million have been achieved, but the auditors described the approach that was taken in calculating the savings as being insufficient to guarantee their validity, which is worrying. At the end of the day, we may have nothing to worry about, but we should be given the full picture and, until that happens, debates such as this will take place in a vacuum. Another aspect that the Audit Scotland report highlighted was the reporting on absence because of sickness in the national health service. That reporting mechanism appears to be sadly lacking, on an issue that is potentially costing millions of pounds. We do not know the facts and the minister should give them to us.

We cannot support the bill and we will abstain in the vote on it today, for the simple reason that the Executive, and Tom McCabe in particular, is asking us to sign a blank cheque, which we are not prepared to do. We await the full facts.

Photo of Frank McAveety Frank McAveety Labour 3:59 pm, 25th January 2007

I welcome the opportunity to commend the bill to the Parliament, as other members have done. Members have touched on key points in the bill and commented that we have had a chance to amplify the issues on a number of occasions. It is tempting to revisit some of the debates that we have had, so I will rush in headlong and touch on issues that I have raised before.

The first is the broader context within which the bill operates, which Wendy Alexander highlighted. The employment level in Scotland is now markedly better than it has been for generations and the level of unemployment in all constituencies in Scotland is markedly lower than it has been for years.

Today a report from the Institute for Public Policy Research—more credible than the report mentioned by Jim Mather—identified the ways in which the experiences of many Scottish constituencies have changed over the past 10 years.

The budget identifies key areas for investment. Most members in the chamber would agree that we will have to continue to invest in education and skills. Investment in higher and further education has been increasing year on year. I note with interest a recent report on ways of levering in more money to early years education. I hope that the Executive will take that on board after May. The spending review will have to address long-term investment in young people's lives; investment in the early years will be part of that.

In my parliamentary area, another important investment is capital infrastructure investment. Again, such investment has been increasing year on year. I hope that all the members on my side of the chamber will be returned with substantial majorities but, irrespective of the result of the election in May, there will have to be a debate on major investment in the M74. That investment will be critical for the east and south-east of Glasgow and it must not be used as a bargaining counter in debate by my very gentle friends in the Green party or in any other party. Economic growth is one of the key themes of the budget and investment in the M74 could unlock the great potential within the east and south-east of Glasgow.

The Experian report has been part of the budget process in the past couple of years. It says that we can have greater improvements in the productivity of the public sector, and that we can experiment with innovative ways of raising revenue for the public sector. Those were fairly legitimate points.

I note with interest that one local authority—my own—has announced a council tax freeze. Council tax was meant to be a major cause for the SNP in the forthcoming elections, but who is the first to criticise that commitment by Glasgow City Council? Not a citizen of Glasgow, not even someone in reasonable proximity to Glasgow, but the mighty David Alexander of Falkirk Council. He said that it was nothing but an election bribe. If even a leader of an SNP authority cannot recognise a tax freeze when he sees one, there will be great difficulties for future generations of councillors involved with the SNP.

Furthermore, any of us who have been involved in local government will remember the shocking idea of centralising the decision-making process of local government so badly that people in this chamber would determine council tax levels for local authorities across Scotland through a capping procedure. Many of the other parties in here have opposed that idea consistently since it was presented as part of local government policy in the 1980s under the Conservative Government.

The minister was right to say that the efficient government drive is a continuing process. The Finance Committee continues its vigilant assessment of that process, and we feel that much more can be done with efficiency drives.

Today at the annual general meeting of Epilepsy Scotland, we heard about an example of efficiency. A speaker told us about the use of telemedicine to offer access to neuro consultants for the assessment of individuals with epilepsy. Rather than staying with the old way of waiting eight, 10, 12 or 14 months for an assessment, telemedicine ensures that waiting times can be broken through and that people can receive appropriate assessment and care.

Telemedicine does not require a lot of money; it requires more efficient use of resources that are already in place. We have to connect with a changing public. The speaker at the meeting asked whether anyone did not have access to a television, or a mobile phone, or a digital camera, or any other form of modern technology. Only one or two people could put their hands up to say that they had no access to any of those items. The vast majority of Scottish citizens have access to them, and that fact could transform the way in which we deliver services. Even in health, one of our areas of biggest spending, there can be more efficiency.

I want to talk about what we have to look forward to. The most recent alleged recruit to the SNP's campaign for a change in the way in which Scotland is governed is Crawford Beveridge. According to newspaper reports last week, he would be sympathetic to the party's ideas. However, on financial independence for Scotland, even Crawford Beveridge said that it

"could potentially plunge the place into recession, because it is unlikely that the total tax take would be as much as Scotland currently receives under the Barnett formula."

If a new recruit to the campaign is so sceptical, how can we trust anything that the SNP has said in the debate?

I commend the bill and look forward to a continuing, stable financial arrangement with the wider UK, in which we in Scotland prioritise as we see fit.

Photo of David Davidson David Davidson Conservative 4:05 pm, 25th January 2007

I am sorry to say that this is the eighth budget debate that I have sat through, but nothing seems to have changed in principle.

In his opening speech, the minister made some fair comments. We agree that the process is not transparent—we have been saying that for the past eight years. I liked even better his comment about transparency, when he said that he wants to "shine a brighter light" on the budget information. We have all been trying to achieve that for the past eight years, but I have not seen a lot of results. However, I agree that ministers work well with the Finance Committee. The relationship is always wonderful, but when Parliament debates the budget there is little in the debate because of the timescale.

The minister talked about the work of the subject committees. Committees are rushed. The Justice 1 Committee and the Justice 2 Committee came together to consider the budget, but even though we had an advisor we struggled to pick an area that we could consider in depth. The general view of members of both committees after two or three meetings was that we did not have enough time to do more than pick one issue, to which we would try to give reasonable consideration. To be fair, the Minister for Justice came along and gave a fairly robust account of the Executive's position on the area that we had picked. However, even if we add up all the areas that committees scrutinise, we still do not have enough to go on.

We all know that the press are interested only in headlines; that is their job, but we cannot go on hiding reports such as the Howat report.

Photo of David Davidson David Davidson Conservative

In a minute.

Is the local government distribution formula fair to councils? We are not arguing about how much money has gone out. There might be a lot of money in the pot, but it all seems to end up in the central belt, if we consider the councils that are spending more than their grant-aided expenditure. I am talking about an individual council exercise, not just a glossy, over-the-top exercise by the Convention of Scottish Local Authorities.

The minister did not talk about efficiency at the beginning of his speech, although he mentioned it eventually. Members have asked what the efficient government programme really means. Derek Brownlee was right to say that the programme should be about outcomes and not just about how much is spent and the size of the cheque. What are we getting for our money? Where is the value for money? If ministers reported back to Parliament on outcomes, value for money and potential savings, we would have a productive debate.

Photo of Tom McCabe Tom McCabe Labour

I could not agree more. We have expressed on a number of occasions our determination to move as fast as we can to a more outcomes-based approach. It is interesting that the focus is on outcomes. When we began the initiative and people thought that we would not meet the targets that we had set, the focus was on outputs. Now that we have met—or are very close to meeting—the financial targets, the goalposts seem to have been shifted. However, I am glad that they are shifting in the right direction.

Photo of David Davidson David Davidson Conservative

I am on the record in the Finance Committee throughout the first session of Parliament talking constantly about outcomes, rather than spending. Spending figures can give a false impression. The public initially think, "Things will get better, because there is extra money. We'll get to see the doctor quicker and there'll be a dentist somewhere or other," and so on. However, that has taken time. I am happy that the minister is talking about outcomes and not outputs, because the public are interested in outcomes. If we knock on doors, we meet people who say, "Why can we not get such and such a service? All this money is running about, but where has it gone?" Of course, that brings us back to waste.

Councillor Arbuckle, as I think he prefers to be called these days, said that the Lib Dems could take the credit for high spending. I note that in the past few debates on financial matters, the Minister for Finance and Public Service Reform and Deputy Minister for Finance and Public Service Reform have not sat together. Even now, the Minister for Parliamentary Business is sitting between those two ministers, to stop them arguing—I welcome her to the debate.

In fairness, Mr Arbuckle did mention single status. I seem to recall everybody being told that there would be no costs involved, but representatives of every council in Scotland wrote in to say, "Yes, there will." That is just one of those things. The best comment that Mr Arbuckle made was to ask why the rigour that is imposed on local government not imposed on Government departments.

Photo of Margo MacDonald Margo MacDonald Independent

Am I correct in deducing from what Mr Davidson says that he is prepared to confer special status on Edinburgh because of the outcome of expenditure in the city, which results in a growth rate of twice the Scottish average, I think?

Photo of David Davidson David Davidson Conservative

I do not think that I said anything as simplistic as that. Aberdeen City Council and Aberdeenshire Council have a very low tax base and they do not do well. [ Interruption. ] They must spend more than their GAE year on year. Aberdeen City Council has a structural deficit of £20 million. The Minister for Finance and Public Service Reform can shake his head if he likes, but I got that figure from the leader of the council, the finance director and the chief executive last week. They showed us the figures.

I was interested in Wendy Alexander's new approach to the big picture—which is all we really have time for in such debates. I am sorry that I did not take Mark Ballard's intervention—he has now vanished—but he, too, spoke about outcomes and referred to a funding cut in community health. [Interruption.] The voluntary sector is desperate to get money to deliver things that it does on behalf of the Government. It was all summed up beautifully in a wonderfully good unionist speech by Frank McAveety.

Photo of Mr Andrew Arbuckle Mr Andrew Arbuckle Liberal Democrat

Perhaps Mr Davidson can explain why, if there are so many things wrong with the budget, we have had an indication from the Tories that they are going to sit on the fence on the issue.

Photo of David Davidson David Davidson Conservative

It is very simple. There is not enough evidence to support anything, not enough facts are put on the ground and there are not enough explanations. All we have is a list of spending with nothing about outcomes. The two parties that occupy the middle of the chamber—they seem to be two different parties now—do not even agree with each other, yet we are supposed to have faith in the Executive's budget. Mr Arbuckle should get a life.

Photo of Trish Godman Trish Godman Labour

I remind members that their mobile phones should not be switched on.

Photo of Alex Neil Alex Neil Scottish National Party 4:12 pm, 25th January 2007

David Davidson said that, in the eight years of holding this debate, not much has changed. With all due respect, that could be said of his speeches. I reassure Frank McAveety that the incoming Administration following the election of 3 May will complete the M74. We are totally committed to that, and we will see it completed no matter what negotiations we have to enter into.

I thoroughly enjoyed the latest, and very entertaining, instalment in Wendy Alexander's campaign for the Labour leadership once Jack McConnell is sacked following the election.

Photo of Alex Neil Alex Neil Scottish National Party

It is okay—I will let Wendy Alexander in soon. I was not winding her up deliberately. I was interested to note that, last week, according to the Labour Party, the alleged black hole in the budget was £11 billion. This week, Wendy says that it is £10 billion. There are 14 weeks to go until the election. At that rate of decrease, by the time we get to polling day there will be a structural surplus of £4 billion a year.

Photo of Wendy Alexander Wendy Alexander Labour

Thank you very much. On the matter of leadership, I would simply say "pots and kettles". On the matter of the size of the deficit, we really are interested in the Scottish National Party's estimate of the black hole for 2004-05, and we will ask the SNP about it every day for the next 99 days. The question to which we want to know the answer is whether the SNP will publish its plans for how it will change the budgetary system in Scotland under devolution, so that Scotland knows what it will be voting on. Will the SNP do that? Yes or no? It has had no plan for three and a half years. There are 99 days to go. Will we have a document on how the SNP's financing system will work under devolution?

Photo of Alex Neil Alex Neil Scottish National Party

I was hoping for an intervention, rather than a speech. The first major change that we will make is that the new Executive's finance minister will be responsible for all revenue raising, as well as all expenditure. That is by far the biggest and most productive change that we can make.

In answer to the second question, there is no black hole. Let us go through the so-called black hole. GERS starts with £11 billion, it ignores the oil money, it then includes a deliberate mistake—an accounting error, which has been admitted—of £300 million and it also allocates to Scotland a payment of £400 million for English prisons. We know that John Reid is in charge of English prisons—well, we think he is—but it is a bit unfair to allocate the spending for them to this Parliament. Further, GERS takes out our share of Gordon Brown's deficit in the United Kingdom and the mistakes in corporation tax revenue, which result in the document suggesting that we get only £2.4 billion, despite the fact the top companies in Scotland, put together, make profits of about £24 billion a year.

Photo of Alex Neil Alex Neil Scottish National Party

I will not give way to Mr Muldoon as he has only just come into the chamber.

When we add all the figures up, we can see that, far from there being a structural deficit, Scotland will be in surplus.

Photo of Margo MacDonald Margo MacDonald Independent

If the Scottish National Party is sitting in the middle seats in the chamber after May, will it ensure that Edinburgh gets special capital status in terms of funding?

Photo of Alex Neil Alex Neil Scottish National Party

We have always recognised the special needs of Edinburgh as a capital city. I am absolutely sure that the additional money that is required by the capital city of what will be not only a nation but a nation state will be recognised. When we win the referendum, Edinburgh will be one of the capitals of the nation states of Europe.

As I was saying, far from there being the structural deficit that Wendy Alexander talks about, there would be a surplus.

I direct members' attention to the share of money that is allocated to us as our share of defence expenditure. Our share of the cost of defence is 8.9 per cent, which includes our share of the cost of nuclear weaponry, the illegal war in Iraq and the illegal war in Afghanistan. However, only 5.5 per cent of that money is spent in Scotland. If our share was spent in Scotland, it would be creating many more jobs in Scotland and this country would be far better off. Of course, GERS does not take that into account.

Photo of George Lyon George Lyon Liberal Democrat

I take it that Mr Neil is implying that he will defend only the constituencies that have a Ministry of Defence base in them. That is what he is saying if his position is that it is only the defence spending that occurs in a constituency in which there is a defence base that he is willing to take into account. He is saying that none of the benefits of the wider defence budget accrues to Scotland. That is complete and utter nonsense.

Photo of Alex Neil Alex Neil Scottish National Party

For a deputy finance minister, Mr Lyon does not have much of a grasp of what I have just said. I said that our share of the money that is wasted on nuclear weapons will be spent in Scotland on schools, hospitals, education and housing. On current figures, that amounts to between £700 million and £800 million a year. That substantial additional investment in essential services in Scotland will mean that we will not resort to the expensive Tory policy of using private-finance initiatives, which is practiced by the Executive. We will save £110 million a year just by getting rid of PFI and by more wisely funding investment through far better methods.

Unfortunately, I do not have time to finish my little lecture, but I am happy to do so after the vote.

Photo of George Lyon George Lyon Liberal Democrat 4:19 pm, 25th January 2007

This has been an interesting debate. It is quite interesting to note that, in the various speeches, there seems to be some agreement about the Executive's spending plans for 2007-08.

Photo of Margo MacDonald Margo MacDonald Independent

I ask my question in that spirit of all-round agreement. We know that the Tories are not going to give Edinburgh the money that I am asking for, but does the Scottish Executive intend to recognise the special status of Edinburgh in Scotland, and the contribution to the economy that it makes, by giving us capital city funding and status?

Photo of George Lyon George Lyon Liberal Democrat

That is already recognised through our cities growth fund, and much extra spending is devoted to Edinburgh to ensure that its capital status is reinforced and that it gets the proper resources to invest in its future.

I hope now to make some progress. As no amendments were lodged to the actual budgets, I conclude that not only are we all agreed on the need for the bill but that we seem to have some measure of agreement on the detailed contents. I note that our Conservative colleagues are undecided about that, although they have not put forward any alternative proposals—they are just undecided.

Photo of Derek Brownlee Derek Brownlee Conservative

On the subject of fence-sitting, the Deputy First Minister told Scottish Business Insider magazine in October—

Photo of Derek Brownlee Derek Brownlee Conservative

I would apologise, but I am talking about the Deputy First Minister. He told Scottish Business Insider magazine that a further cut in business rates and

"a lower basic rate of income tax would give businesses a real competitive edge."

The Deputy Finance Minister told Parliament a few weeks ago:

"The only proposal that Nicol Stephen has made is to cut business rates".—[Official Report, 10 January 2007; c 30895.]

Is that fence-sitting or flip-flopping?

Photo of George Lyon George Lyon Liberal Democrat

What I stated was the current position, and the member will see the detail in our manifesto once it is published. I have no doubt that he will be delighted to read it.

Members have raised a number of important issues during the debate, and I will try to address some of them now.

Mr Mather said once again that there is a great need to make Scotland more competitive and, as the SNP always says, that more powers are the answer to making Scotland more competitive. I am sorry, but the important point is not the powers but the policies that it would implement if it ever got those extra powers. As Wendy Alexander pointed out, with roughly 100 days until the election it would have been helpful if the SNP had told us what its post-election fiscal policy would be. As Mr Neil has now confirmed—this is what I understood from his speech—we will be independent from day 1, which obviously means that the SNP has dumped the pledge on a referendum.

Photo of George Lyon George Lyon Liberal Democrat

Given that we now know that monetary policy will be reserved to, and interest rates set by, the Bank of England, the only tools that are left to the SNP to make the economy more competitive are fiscal. We have heard that it intends to cut corporation tax, although it has not told us how it will afford that. It might be useful—given that fiscal policy will be its only tool—if it were to tell us what the individual tax bands, national insurance contributions and inheritance tax will be, so that we can see what fiscal framework this competitive Scotland will emerge with.

Photo of George Lyon George Lyon Liberal Democrat

As I said, the SNP has given monetary policy to the Bank of England. It might have taken the time to explain how that might work. How will the Bank of England's independent monetary committee take into consideration the needs of Scotland when Scotland is no longer part of the United Kingdom? That is a conundrum that Mr Mather and Mr Neil might have spent some time on, but there was not a word—complete silence.

Photo of George Lyon George Lyon Liberal Democrat

Mr Davidson might have something to offer.

Photo of David Davidson David Davidson Conservative

The minister is hazarding some guesses. As the SNP is totally dependent on oil and as the oil west of Shetland, which will be the future, will be three or four times as expensive to exploit, what does he think that the SNP will do with tax rates to make up for that loss?

Photo of George Lyon George Lyon Liberal Democrat

When Mr Robertson was across in Norway, he gave the game away: higher taxes for Scotland. However, it would have been interesting if we had been given some indication today of what those taxes might be. Indeed, when I asked whether there would be Irish spending levels and Scandinavian tax levels, Mr Mather said that we would choose our own tax levels. They would be Scottish ones, but what are they? Please tell us. It is 100 days to independence, according to Mr Neil, and we have heard not a word. Mr Mather: tell us.

Photo of Jim Mather Jim Mather Scottish National Party

I thank the minister for finally taking an intervention. I put it to him that there is a double standard, because when we ask him details of his proposals, he tells us to wait for the manifesto. Minister: wait for our manifesto.

Photo of George Lyon George Lyon Liberal Democrat

We are not promising independence on day 1 after the elections in May 2007—that is great difference between the two of us. As I said, there has not been a word from either Mr Mather or Mr Neil about how on earth the Bank of England will take Scotland into consideration when it will have suddenly become independent. That is a pretty far-fetched proposition in anyone's terms.

I know that Mr Neil is a big fan of moving quickly towards the euro, but even that seems to be growing a little cool, according to our good friend Mr Salmond, who spends much time down south.

As Wendy Alexander said, the SNP might even say how it would replace private finance when it scraps the private finance initiative. How many of the schools that are being built under PFI will be stopped in their tracks? Where will the money come from? Will it be on book or off book? That is the key question if PFI is to be replaced.

We could have had some enlightenment on a whole lot of questions, but the SNP is reticent about telling us exactly what its plans are, although it can tell us that it will spend £1 billion on pensions. It will be interesting to hear how all that will be done.

Several members, including our friends in the Conservatives, have said that we must ensure that we spend the money in the right way and that we obtain the best value for every pound that we spend. We agree, which is why we introduced the efficient government agenda. According to the Auditor General's report, we are making good progress on that.

It is worth stressing that the budget is important because of the impact that it will have. It will allow us to deliver our ambitious plans for 2007-08. The budget is a key part of the plans that were announced in the spending review in 2004. As we have said many times before, growing the economy is our top priority, and the budget will do just that. It will deliver excellent public services, support stronger, safer communities and develop a confident, democratic Scotland.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

On a point of order, Presiding Officer. At the beginning of his closing speech, the deputy minister said that the fact that Opposition parties lodged no amendments suggested that there is some satisfaction—I think that he used that term—with the bill. Will you confirm that—whatever else it means—our having lodged no amendments means no such thing because standing orders allow only ministers to lodge amendments to a budget bill?

Photo of Trish Godman Trish Godman Labour

Apparently that is true not for amendments to the motion, but for amendments to the bill.