Strategic Spending Review

– in the Scottish Parliament at 9:15 am on 28 June 2007.

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Photo of Alex Fergusson Alex Fergusson None 9:15, 28 June 2007

Good morning. The first item of business is a statement by John Swinney on the approach to the strategic spending review. The minister will take questions at the end of his statement, so there should be no interventions. Mr Swinney, you have 10 minutes—I beg your pardon, you have 15 minutes.

Photo of John Swinney John Swinney Scottish National Party

Thank you for that heart-stopping moment, Presiding Officer.

I will make a statement about this year's Scottish strategic spending review and the context in which our future spending plans are set. Before I do so, I am required to look back at the previous financial year by announcing the provisional outturn figures for 2006-07.

The agreement with Parliament states that the Scottish Government should report the outturn position against each of the budgets authorised by the Parliament in the spring budget revision. The outturn position for 2006-07 will be reported against the final budgets authorised by Parliament in the spring budget revision in January 2007. Further details of the underspend for 2006-07 are contained in a supporting document entitled "Provisional Outturn 2006-07", which I have published today alongside this statement. Copies are available in the Scottish Parliament information centre, which is the normal arrangement.

Before I provide details of those numbers, it is worth reminding members why we have end-year flexibility. The process originates from the parliamentary principle of authorising budgets annually. The Parliament approves the Government's spending plans for only one year. If we do not undertake all the spending by 31 March, we need to return to Parliament to have that expenditure reauthorised in the following financial year.

The provisional outturn supporting document shows that last year the Scottish Government spent £106 million less than the budget that the Parliament approved in the spring budget revision. Arms-length bodies, including bodies such as Scottish Water and the Forestry Commission Scotland spent a further £136 million less than their approved budgets.

Taken together, this year's shortfalls total £242 million against the spring budget revision. However, the end-year flexibility mechanism operates only on the departmental expenditure limit portion of the Scottish budget. In 2006-07, the unspent portion of the total DEL budget was £135 million. That is part of the £242 million underspend against the spring budget revision.

My Cabinet colleagues and I have decided not to allocate any of this year's end-year flexibility to portfolios at this time, with a view to considering those resources alongside decisions that are to be taken as part of the forthcoming 2007 strategic spending review. Those resources will be used to benefit Scotland in line with the new Government's priorities. They will be added to the cumulative balance of end-year flexibility that is held at HM Treasury, which the previous Scottish Administrations have allowed to build up over the past seven years.

At the end of 2005-06, the Scottish Executive's cumulative balance of EYF at HM Treasury was £1.454 billion. Last year, the Minister for Finance and Public Service Reform indicated that he planned to reduce the balance of money at HM Treasury from £1.45 billion by drawing down £780 million by the end of 2007-08. The fact that, one year into that two-year period, the balance has in fact increased slightly to £1.5 billion suggests that that target is unlikely to be met.

Those resources are Scottish resources and the Government will expect to obtain access to them when and where they are required to enable us to deliver on our commitments and priorities. The money can be used to help us to meet existing pressures; to contribute towards our priorities for Scotland; and to help us to manage during the period of lower budgetary growth that we expect from the 2007 spending review. I am reviewing what resources need to be drawn down in 2007-08, with a view to maximising flexibility during the spending review period to 2010-11.

As I set out in the approach to government debate, we must expect a period of lower growth in public spending in the next spending round. Since devolution, we have seen large increases in public spending in Scotland, from a high of 11 per cent in real terms in 2000-01 to around 5 per cent for most of the following years. In this financial year, the real-terms increase was 2.4 per cent.

Annual increases for this spending review will not be of the level to which we have become accustomed but will be significantly lower. That will mean that to deliver on our manifesto and achieve our strategic objectives we will have to make tough strategic decisions. However, we will not be making the difficult choices in isolation. We are already involving more people in reaching these decisions, which is shown by our early publication of the budget review report, which is commonly known as the Howat report.

All of that is telling us that we will require to demonstrate good financial discipline to deliver our strategic objectives in this more constrained fiscal environment. As part of our drive to get the most value from the money that we spend, we will take forward a sustained programme of efficiency and reform. That will come partly through a new efficiency programme to deliver a minimum of 1.5 per cent annual efficiency savings from across the public sector, providing a more streamlined, effective and efficient public service. We will ensure that public service workers are better placed to meet the needs of front-line services. The public sector must be able to use and share its own resources and skills better to ensure that they are redistributed to where they can be used most effectively.

Last month, I told Parliament that we would be taking action to declutter and simplify the landscape of public sector organisations. Reforming public services is essential if we are to maintain a sustainable public sector.

As members know, the former Chancellor of the Exchequer, who is now the Prime Minister, has announced a delay to the United Kingdom comprehensive spending review announcement. That means that we will find out the Scottish settlement three months later than we would in a normal spending review year, probably in mid-October. We will finalise and publish our spending plans as soon as possible after we know our overall budget.

I have already had a helpful discussion with the convener and deputy convener of the Finance Committee to maximize the opportunity available to scrutinise the Government's budget within a timescale that has been shortened due to circumstances outwith our control. Although time for the overall process of a spending review and consideration of our budget by Parliament will be three months shorter than normal, I have recommended a timetable that protects the two-month period of detailed scrutiny that is normally available to parliamentary committees. I look forward to discussing that approach with the Finance Committee after the summer recess.

In addition, the Parliament will play a critical role in scrutinising the Government's spending plans after we have announced them later in the autumn. The Finance Committee and the subject committees will have a full opportunity to examine the detail of our spending plans following the publication of our plans and the draft budget document. Those documents will at the same time be under the scrutiny of the people of Scotland. The process will be drawn together and will conclude with the Finance Committee report and recommendations on our spending proposals, which are likely to be published in late January or early February.

The spending plans for 2008-09 will receive further examination by the Parliament through the annual budget approval process, which will allow additional debate and scrutiny to be undertaken. That demonstrates clearly the transparency, openness and consultative nature of the Scottish budget process.

I acknowledge that the timing of the announcement of the strategic spending review outcome will impact on the notice that we can give delivery bodies of their allocations for 2008 to 2011. It is essential that, despite the delay in announcing the CSR, we still have a budget in place timeously in early 2008 to fund our public services properly. We will work with our delivery partners to minimise any disruption so that they can maintain a smooth service to their customers.

We will set three-year spending plans that take us to the end of this parliamentary session—2008-09 to 2010-11. Along with my cabinet secretary and ministerial colleagues, I will be in dialogue with a range of stakeholders over the summer to gather evidence and views on how we can use the spending review to set spending plans that will enable us to fulfil our purpose and achieve our strategic objectives.

A key focus of those discussions will be to establish a new relationship with local government—one in which we can work together in partnership and in which we recognise local government's central role in the governance of Scotland, there is less prescription from central Government and local government has greater freedom to exercise its responsibilities.

We therefore intend to ensure that there is a settlement and a financial framework for local government over the spending review period that will let it deliver across the range of its functions and will, in return, help us to deliver on our strategic objectives and key commitments, including freezing council tax rates at 2007-08 levels while we work to introduce a fairer system of local taxation to replace the council tax. The appropriate funding for local government will therefore be an important outcome of the 2007 spending review.

I want to describe the direction that we will take to the strategic spending review. Our move towards smaller government will assist us in undertaking the spending review in a more strategic and focused way. The outcome of the review will be an important step in allowing us to fulfil our purpose: to focus government and public services on creating a more successful country, with opportunities for the whole of Scotland to flourish, through increasing sustainable economic growth.

The review will centre on achieving our five strategic objectives: to make Scotland wealthier and fairer; to enable Scotland's people to become healthier; to enable our communities to become safer and stronger; to enable our people to succeed and to become smarter; and to enable Scotland to become greener. In the past few weeks, we have provided Parliament with the opportunity to debate each of those objectives and for members to build consensus through discussion. Where we thought that doing so was important, we have announced initial commitments, such as abolishing the graduate endowment fee and reversing the decision to close accident and emergency services at Ayr and Monklands hospitals. The spending review will allow us to set out our overall plans for the parliamentary session. We want to refocus government and public services to create a more successful Scotland and to align our resources to deliver on our purpose, strategic objectives and commitments.

We will build a performance framework around our five top-level objectives. In the strategic spending review, we will focus on a smaller number of targets than has been the case in the past, and we will make those targets more meaningful. The framework will be a further improvement on the current set of targets, and it will build on the findings in the Finance Committee's legacy paper from the previous session. The new framework will help the new Finance Committee and subject committees to understand our priorities and to hold us accountable for them. It will remove the proliferation of competing priorities.

I look forward to coming back to Parliament in the late autumn to debate our forward-looking spending plans. Our new approach will present plans that will deliver a better future for Scotland and a Scotland that is full of opportunity. Scotland deserves nothing less.

Photo of Alex Fergusson Alex Fergusson None

The minister will now take questions on the issues that his statement has raised. I intend to allow around 30 minutes for questions.

Photo of Wendy Alexander Wendy Alexander Labour

I welcome the cabinet secretary's statement.

On a morning on which the media are full of the virtues of substance over spin, the cabinet secretary's talk of tight financial discipline rings a little hollow. Of course, the substance of the Administration's approach so far has been to spend, spend, spend on populist promises and to stall, stall, stall on the tough issues. The statement hints at a new dimension: to stir, stir, stir with the rest of the UK. Is Mr Swinney set to become Oliver and ask for more, more, more in attempting to make his sums add up?

I have three questions. First, there was a climbdown over transport plans yesterday. Has there been another climbdown? Is the pledge to freeze council tax rates a promise or an option? Will the cabinet secretary confirm that the guaranteed cash cuts to councils currently run at £180 million to maintain the business rate reduction, £122 million to extend that reduction and £65 million to freeze council tax rates? That comes to a total of £367 million for next year. Will those promised cash cuts to local services by central Government be fully funded—yes or no?

Secondly, the cabinet secretary is anxious to burnish his reputation for prudence. Therefore, why is it right that Scottish taxpayers should look forward to only half the efficiency savings that are planned for the rest of the UK? The Scottish National Party's savings target of 50 per cent is less ambitious than the 60 per cent target that the previous Administration set and delivered.

Finally, Mr Swinney said that the public sector must use its resources more effectively. Why, then, has his Administration moved in recent weeks against private sector participation to assist in the provision of public services free at the point of use in areas such as health, education and criminal justice? How can such an approach possibly assist efficiency or effectiveness?

Photo of John Swinney John Swinney Scottish National Party

I thought that after the hungry caterpillar escapade Wendy Alexander might have learned something about how to approach parliamentary statements, but her approach on this occasion has been no better than it was then.

Photo of John Swinney John Swinney Scottish National Party

Believe you me, I will answer them.

Wendy Alexander asked about the council tax freeze. I am afraid that she is living in the past. The previous Government had a dreadful reputation with local government, but I want a complete contrast: I want to create a constructive relationship with local government. I want to work with it to establish a council tax freeze. Yesterday, I made it clear to the Local Government and Communities Committee that I want to work with councils to deliver that freeze, and that we will include a range of issues in our discussions and dialogue with local authorities, because it is better, more efficient and more effective to collaborate with them to deliver the council tax freeze that we promised the people of Scotland. That will be my priority.

Secondly, Wendy Alexander should get her story straight about efficiency savings.

Photo of Wendy Alexander Wendy Alexander Labour

Fifty per cent is not 60 per cent.

Photo of John Swinney John Swinney Scottish National Party

Throughout the election campaign, Labour Party members such as Wendy Alexander, Andy Kerr and Jack McConnell went round the country saying that we would traduce public services through efficiency savings of 1.5 per cent. Wendy Alexander is demanding, not for the first or second time but for the third time, that I deliver efficiency savings of 3 per cent, which we all know is the line of argument in the United Kingdom Government. However, such savings would offer no guarantee that compulsory redundancies or service cuts could be resisted. I ask Ms Alexander to work out what side of the argument she is on. If she wants me to go for 3 per cent efficiency savings, she must accept the consequence. The country would be taken in the direction of having compulsory redundancies in the public sector. That is not the Administration's policy position.

Finally, on the involvement of the private sector, the Administration has made it clear that we want vibrant and effective public services. We do not see the value of some of the previous Administration's expensive experiments. In the years to come, the country will have to carry financial burdens as a result of deals that the previous Administration got us involved in. I hear Labour members muttering about prisons. My goodness, what a mess prison contracts are in. The Administration will look in a prudent and effective way at all the issues in order to deliver value for money and effective public services for Scotland. The previous Administration failed to do that, but the current Administration will succeed.

Photo of Derek Brownlee Derek Brownlee Conservative

I thank the cabinet secretary for his statement.

Everybody who is interested in scrutinising the Scottish Government and its spending decisions effectively will be concerned at the implications of shortening the scrutiny process this year. I accept that the shortening of the process is not directly a consequence of the Government's actions, but what action will the Government take with respect to the UK Government to ensure that what has happened does not recur?

On the substance of the decisions that the Government will take later this year, the cabinet secretary said that he was involving the people in taking difficult decisions. Everybody realises that there will be difficult decisions to take as a consequence of the likely tightening of the spending settlement. The cabinet secretary used his publication of the Howat review as evidence of his involving other people in taking difficult decisions. As a way of extending the scrutiny process and involving people in taking difficult decisions, will he publish the Government's response to each of the Howat recommendations and allow a parliamentary debate on the matter prior to the October recess?

Photo of John Swinney John Swinney Scottish National Party

I will explain more fully some of the implications of the spending review timescale. I said in my statement that the draft timetable that I proposed to the Finance Committee protects the two-month period for scrutiny of Government proposals by that committee and the subject committees. To make that possible, the Government is reducing the time that it would normally have to consider the implications of the spending review before publishing its own spending review decisions, from two and a half months to one month. Normally, we would have three months to prepare our budget after the announcement of the UK position, but we are reducing that to four weeks. That puts enormous pressure on civil servants to assist us in that work, but that is the timetable that I judge to be reasonable to protect parliamentary scrutiny.

The circumstances this year are unique—it is not every year that there is a change of Prime Minister and the chancellor becomes the Prime Minister. Various issues have come together to prevent the publication of the spending review as we might have liked. I cannot imagine that there will be many recurrences of the current situation. As part of the quadrilateral meeting of finance ministers, I will meet the Chief Secretary to the Treasury, whose appointment we await today, and the timescale will be one of the subjects discussed.

I said in the debate on the approach to government some weeks ago that the Government would publish the Howat report, which we did. I said that we would incorporate the Howat report and reflect on it as part of the evidence base for the strategic spending review. I am sure that it will be clear from the spending review which decisions we have accepted and which we have not. There will be plenty of opportunity in the budget process for Parliament to scrutinise the Government's decisions.

Photo of Tavish Scott Tavish Scott Liberal Democrat

I thank the cabinet secretary for the advance copy of his statement and his presentation of it this morning. Will he confirm that all the Howat recommendations are being assessed by the Government, except the one on Scottish Water, if I remember correctly his previous statement on the matter?

On spending commitments that he and his ministerial colleagues have made since the Government was formed, if—as I heard him say—end-year flexibility is not to be used, will all such spending decisions this year and in future financial years have to come from existing resources?

Am I right to understand that some of the cabinet secretary's ministerial colleagues have ruled out using public-private partnership money—I think that he just said that to Wendy Alexander—whereas yesterday, Stewart Stevenson confirmed that PPP would be used for the M80? Perhaps the cabinet secretary will tell Parliament about the clear principle that is being followed with regard to the use of private resources.

The cabinet secretary spoke about the clutter of public bodies. His colleague Jim Mather gave fair evidence yesterday to the Economy, Energy and Tourism Committee about such clutter, but he did not say that legislation would be forthcoming to declutter—or whatever the appropriate word is—and reduce the number of bodies. When is Parliament to be told about the Government plans for the public sector, particularly in light of what I understand to be the decision not to shelve sportscotland, despite a previous commitment to do so?

I ask the cabinet secretary to expand on his point about the new partnership with local government. Surely the principle of freezing council tax rates, irrespective of whether that is a good or bad decision, will mean that no local authority has any leeway in the decisions that it makes about its income, and that the cabinet secretary will be completely in charge of councils' resources? Is that not the principle that is being established?

Photo of John Swinney John Swinney Scottish National Party

Mr Scott is correct about the Howat report: we are considering all its recommendations as part of the spending review with the exception of the provision on Scottish Water. Despite the fact that we are considering the recommendations, I would not like Mr Scott to think that we will accept them all.

I confirm that commitments that we have made since we came to office 43 days ago will be incorporated into the Government's existing financial plans. We will develop those, and any commitments beyond 2007-08 will be part of the spending review. We have to align the spending pattern with our priorities on an on-going basis.

Mr Scott asked about PPP, about which I am happy to give information to Parliament. The Government wishes to establish a Scottish futures trust to undertake more efficient borrowing and planning for projects. Parliament will be kept up to date on the preparatory work that is under way. Our view on existing PPP projects—some of which we inherited from the previous Administration—is essentially pragmatic. Ministers are taking decisions about whether to allow projects to proceed—which we might do if a PPP project is well advanced and it would be disruptive to halt it—on a case-by-case basis. In that respect, we have in mind the interests of individuals and communities in Scotland.

On decluttering public bodies, I read with great interest the comments that my colleague the Minister for Enterprise, Energy and Tourism gave to the Economy, Energy and Tourism Committee yesterday, which clearly reflected the Government's priorities. We are determined to reduce the number of bodies that are actively involved in delivering many of the economic development services in Scotland and to ensure that all those services are well and effectively focused. If there are legislative implications from that process, which is being examined over the summer, we will bring them back to Parliament. However, it is putting the cart before the horse to talk about the legislation before we know the exact format that we will settle on.

On the new partnership with local government, I would like the Parliament to understand that my objective is to create a shared sense of purpose between us and local government. I do not want to tell local government what to do. I want local authorities to be free to take their decisions. I think that I am entitled to exercise some restraint on behalf of the hard-pressed taxpayers of Scotland, who were roundly ignored by the previous Administration, which presided over a 62 per cent increase in council tax over a 10-year period and took eight years to reflect, moan and worry about how unfair the council tax was while it did precisely nothing about it.

Photo of Alex Fergusson Alex Fergusson None

All parties have fired their opening salvos. I ask that all questions be as brief as possible, because a lot of members have asked to speak and I want to get as many in as I can.

Photo of Alex Neil Alex Neil Scottish National Party

I welcome the new strategy of tax and spend instead of tax and waste, which we had under the previous Administration. I ask the cabinet secretary to consider two points to which I know he cannot give a detailed reply today. First, on improving economic growth, eliminating poverty and dealing with the housing crisis, will the Cabinet give higher priority to affordable housing than did the previous Administration? In Scotland last year, we built only 25,000 houses, compared with the Republic of Ireland, which built 93,000 houses.

Secondly, will he examine schemes such as the excellent proof of concept scheme, which dishes out money only in the form of grant and provides no return on capital for the taxpayer? There is scope to improve private investment leverage and the return to the taxpayer in a number of areas. I urge my friend the cabinet secretary to consider those matters as well.

Photo of John Swinney John Swinney Scottish National Party

First, the Government has set out its intended direction in relation to housing supply. The financial consequences of that work will be considered within the spending review process at the end of the year.

Secondly, like Mr Neil, I am a great admirer of the proof of concept scheme approach, which has successfully assisted the development of a number of innovations. Jim Mather is actively considering that area of activity in relation to Scottish Enterprise's focus. We will examine interesting proposals wherever they come from with regard to strengthening the availability of investment opportunities for new ideas in Scotland.

Photo of Iain Gray Iain Gray Labour

The cabinet secretary acknowledged in his statement that the delay in the spending review announcement, which we fully accept is not of his making, will impact on the ability of delivery bodies to plan. However, the streamlining, decluttering and simplifying that Mr Swinney has talked about will do that, too.

The cabinet secretary did not entirely address the issue that Tavish Scott raised. When will he produce clear proposals that will show what is meant by decluttering? How will that parallel and dovetail with the spending plans process that he outlined earlier? How will the Parliament, its committees and other stakeholders engage with the decluttering process? What reassurances or, indeed, guarantees can he give that that is not just code for job cuts and service cuts?

Photo of John Swinney John Swinney Scottish National Party

First, there is a substantial point about the impact on delivery bodies. I am concerned about how much clarity and certainty we can give to delivery bodies, given that we will give them only relatively short notice of spending priorities. I have thought long and hard about that problem, but I cannot see an alternative way around it. However, we will work closely with delivery bodies to give as much certainty as possible.

Secondly, on decluttering, the Labour Party needs to go away for the summer recess and work out where it is going on some issues. The Labour Administration presided over increasing complexity in the government of Scotland. If members went out of Parliament and talked to any member of the public or any public organisation, they would be told that there is an enormous clutter of bodies and that the situation must be tackled. This Government is prepared to do that, difficult though it will be, and we will pursue it through an orderly process. When that has been done, we will set out proposals to Parliament, which we will align with the spending review.

Iain Gray asked whether decluttering is "code for job cuts", while Wendy Alexander wants me to double the efficiency targets to a level at which it has been proved, under the Treasury's plans for the United Kingdom, they would deliver job cuts. Frankly, they need to get their line straight.

Photo of Brian Adam Brian Adam Scottish National Party

I welcome the cabinet secretary's announcement that he will access the £1.5 billion that the Treasury holds. Will any of that money be made available for the construction of the Aberdeen western peripheral route on the A90?

Photo of John Swinney John Swinney Scottish National Party

The £1.5 billion that is held at the Treasury can be accessed only through agreement between the Scottish Government and the United Kingdom Government. Obviously, that puts certain constraints on the amount of that resource that we can access. For example, in this financial year, we have an agreed and negotiated entitlement to draw down about £550 million from the £1.5 billion, which is the maximum that we can draw down. However, this is the only year for which a negotiated arrangement is in place. Obviously, I will seek to negotiate an arrangement with the Treasury in due course to guarantee our access to the resources.

Of course, the drawn-down money will be incorporated in the Executive's spending plans. The construction of the Aberdeen western peripheral route is part of those plans, so there would be every opportunity for the money to be used for it.

Photo of Liam McArthur Liam McArthur Liberal Democrat

I welcome the cabinet secretary's commitment to safeguard the time available to the Finance Committee and the subject committees to scrutinise the budget. I dutifully checked the text of the cabinet secretary's statement against his delivery of it, and noted that the text suggested that the council tax freeze would be at 2006-07 levels. I may have misheard the cabinet secretary, but he seemed to indicate that rates would be frozen at 2007-08 levels. Perhaps he can clarify whether that will be optional or whether it is a commitment.

The Cabinet Secretary for Rural Affairs and the Environment announced earlier this month a £10 million fund to help new entrants into agriculture under the Scottish rural development programme. It subsequently emerged that that was a one-off payment. Perhaps the cabinet secretary can confirm whether that is the case and, if so, whether it is the result of pressure from him to cut back on the budget.

Photo of John Swinney John Swinney Scottish National Party

Liam McArthur is correct that the printed version of my statement that was given to Opposition parties at 8.15 this morning says that council tax rates will be frozen at 2006-07 levels. I did not spot that earlier this morning, but I am thankful that I spotted it before I delivered the words to the chamber. I confirm that the freeze will be, in cash terms, at 2007-08 levels. I thank Mr McArthur for giving me the opportunity to expunge the printed dates from any possible record and recollection that could be thrown back at me by anybody sitting to my right or left in the chamber.

On Mr McArthur's point on the rural development programme, I had the fortunate opportunity last Friday to visit the Royal Highland show, where I met a considerable number of representatives from the agricultural community, who told me that the Cabinet Secretary for Rural Affairs and the Environment had delivered a fantastic arrangement for the rural development programme and that they were grateful for his strong and effective representation of their interests in the Government.

Photo of Elaine Murray Elaine Murray Labour

The minister is a former member of the Finance Committee, so he will be well aware of the importance that it places on publishing baseline data to allow efficiency savings to be quantified. Can he confirm that the Executive intends to publish baseline budgets, so that Parliament can be assured that the promised minimum 1.5 per cent cash-releasing efficiency savings can be calculated?

Can the minister clarify whether all existing PPP arrangements, including those in which preferred bidders have been announced but contracts have not been signed, will be allowed to continue?

Photo of John Swinney John Swinney Scottish National Party

On baseline data, I am considering what can be done to strengthen the availability of that data to ensure that we have a robust examination of efficiency savings.

On PPP contracts, I said earlier that the Government will take a pragmatic look at every PPP project. Some are at a more advanced stage than others. The Government will ensure that, where commitments have been given and projects are at such an advanced stage that it would be disruptive not to proceed with them, the Government will honour them.

Photo of Keith Brown Keith Brown Scottish National Party

Can the cabinet secretary confirm that growth will be essential to the Scottish Government's ambitions for creating a wealthier Scotland? Can he give us further information on how he intends to ensure that the spending review will help Scotland's businesses to grow, particularly small business? Can he indicate the extent to which that will have a beneficial impact on town centres, such as Alloa town centre, which were so disparaged by the former First Minister during the election campaign? Further, can the minister say something about the current plethora of performance reporting? Does he intend to do something about that to relieve the burden on local authorities from inspectorates, audits and performance reporting?

Photo of John Swinney John Swinney Scottish National Party

Economic growth will be central to the Government's decisions. I said in my statement that the spending review will focus the Government and public services on creating a more successful country, with opportunities for all Scotland to flourish through increasing sustainable economic growth. That will be at the heart of our decisions and it will be supported by our five strategic objectives.

On supporting small businesses in town centres, I have much sympathy with Mr Brown's view on the position of small towns. I represent a constituency that is a collection of small towns that have far too many vacant premises in their centres. I hope that the Government's stated intention to reduce business rates for small companies as part of the spending review will help.

On the plethora of performance reporting, investigation, examination and review that is carried out in local authorities and other public agencies, everybody realises that there must be reporting and monitoring of some form, but there is a ridiculous level of investigation of local authorities. I have been utterly persuaded of that by representations from local authority leaders, who say that they are overinspected and overreviewed by numerous bodies that duplicate what each does. If that is not an argument for decluttering, I do not know what is.

I was greatly heartened by the interim report of Professor Lorne Crerar, who is looking into the burden of regulation. I look forward to receiving his proposals later in the summer and to taking early action to pursue the issues that he raises.

Photo of Richard Baker Richard Baker Labour

I am pleased to hear that the cabinet secretary will continue to award three-year spending settlements to local authorities. I understand that he does not want to be prescriptive, but will he be proactive in encouraging local authorities to award three-year funding settlements to the voluntary sector organisations that they contract to carry out vital local public services?

Photo of John Swinney John Swinney Scottish National Party

It would be good practice if that were delivered. As part of my discussions with local authorities, I will take forward that approach, because it gives organisations sustainability, continuity and clarity about where they are going. One of my worries about the period between now and the start of the next financial year is that there will be less time for us to put some of that in place, but I will pursue that objective with local authorities and other bodies.

Photo of Lord George Foulkes Lord George Foulkes Labour

I want to be helpful. Does John Swinney remember the rates rebels in Troon who panicked George Younger, Michael Forsyth and Margaret Thatcher into bringing in the poll tax? Does he also remember the riots in Surrey, which forced them to get rid of the poll tax and bring in the council tax? Does he recall that just transferring from rates to the poll tax cost hundreds of millions of pounds, none of which went to local authorities and all of which was used administratively to change from one system to the other? Then, when they changed from the poll tax to the council tax, hundreds of millions were spent again. Moving from the council tax to the so-called local income tax—which is not local—will cost at least £100 million, and probably many more hundreds of millions. That will be the cost just for moving from one system to the other, without any benefit to the council tax payer.

Photo of Lord George Foulkes Lord George Foulkes Labour

Can John Swinney in all conscience not think again about his plans to change from the council tax to another form of financing local government? It will cost huge amounts of money and benefit no one. Can he not think again?

Photo of John Swinney John Swinney Scottish National Party

I am not sure what has happened to George Foulkes's cheery disposition that I always used to see. What a terrible tale of woe that was.

The Government is absolutely committed to replacing the unfair, oppressive council tax with a fair system of local income tax. One of the great joys of the many in the past 43 days in which we have been in office has been the co-operation that we managed to put together with our friends in the Liberal Democrats to secure the first parliamentary majority in favour of the abolition of the council tax and the introduction of a local income tax. It was a welcome piece of political co-operation, and I look forward to the will of Parliament being respected by everybody on that important point.

Photo of James Kelly James Kelly Labour

The cabinet secretary has acknowledged that he will consider the Howat report as he prepares for the forthcoming spending review. On transport, I am sure that he welcomes the fact that the number of bus journeys has increased by 5 per cent since 2000-01, therefore will he give an assurance that he will treat with extreme caution the Howat report recommendation to remove £57 million from bus company subsidies, as that would increase fares by 17 per cent and hinder the progress that is being made in support of public transport?

Photo of John Swinney John Swinney Scottish National Party

I said in response to Tavish Scott that we are considering all the options in the Howat report but that we will not implement all of them. Clearly, a number of propositions in the report are more developed and credible than others, and the Government will apply a number of tests before we make any decisions on them. I note the points that Mr Kelly has raised.

Photo of David Whitton David Whitton Labour

The cabinet secretary made an intemperate passing reference to the prisons budget earlier. I understand that his colleague the Cabinet Secretary for Justice got a bit of a shock when he asked how much it would cost to renationalise Kilmarnock prison and buy out the Addiewell contract. However, I am concerned about Low Moss prison in my constituency, the contract for which is at the second stage of bidding. Four private companies are involved in the expensive process. Can the cabinet secretary tell me today whether a new Low Moss prison will be built?

Photo of John Swinney John Swinney Scottish National Party

At my most generous, I would have to say that I do not think that the existing contracts for Kilmarnock and Addiewell were particularly well negotiated by the previous Administration. On replacing Low Moss prison, the Cabinet Secretary for Justice will make appropriate announcements when he is ready, in the considered fashion that Mr Whitton would expect from the new Administration.