The next item of business is a debate on motion S3M-1814, in the name of John Swinney, on the impact of the United Kingdom budget on Scotland.

The Scottish Government's Budget (Scotland) Bill received royal assent on the day of the Chancellor of the Exchequer's statement on the 2008 budget. It is fascinating to compare the budget that the Scottish Parliament passed with that of the United Kingdom Government.

The Scottish Government's budget addressed the needs of the people of Scotland. Our spending plans provided a clear statement of priorities, which was based firmly on the social democratic contract that we offered the people during the election campaign. The contract's central purpose is increased sustainable economic growth, the fruits of which should be enjoyed by all parts of our society and nation—north and south, strong and disadvantaged.

In contrast, the UK Government's actions will result in some of the poorest people in our society paying more tax and in one of our premium industries, the Scotch whisky industry, which employs thousands of people in Scotland, facing significant increases in duty and the danger of loss of competitiveness. All that comes at a time when tax revenues from the North Sea oil and gas industry continue to support the UK's public finances. During the next six years, the Treasury's figures show that North Sea tax revenues will contribute more than £55 billion to the UK Exchequer—the highest nominal level of revenue from the North Sea in more than two decades. The relentless appreciation in oil prices will lead to further increases in revenues that will benefit the UK Treasury.

In addressing the UK budget, I focus first on a key issue that has been debated in recent weeks: the abolition of the 10p starting rate of income tax. Although the policy was announced in the 2007 budget, its impact has only just been felt. The chancellor had ample opportunity to reverse the approach at the 2007 pre-budget report stage and in his 2008 budget, but no changes were made to the original proposition. The Scottish Government estimates that even if we account for the more generous tax credits that were announced at the same time, approximately 500,000 households in Scotland are worse off as a result of the abolition of the 10p starting rate. That will have a disproportionate effect on people on low incomes, with people earning less than £19,500 losing out. The effect is further compounded by recent rises in food and fuel prices. Claims that the hike is offset by tax credits are without substance. Many people on low incomes are ineligible for tax credits while others are put off by the complexities of the tax credit system and, as a consequence, do not claim the benefits to which they are entitled.

In contrast, the Scottish Government is delivering for the people of Scotland a council tax freeze, reduced prescription charges, the abolition of the graduate endowment, and increased payments for free personal and nursing care. All those measures help to put money back into the pockets of hard-pressed individuals and families in Scotland. Furthermore, the abolition of the unfair council tax, and its replacement by a local income tax that is based on the ability to pay, will see the poorest 20 per cent of Scottish households gaining an average of £350 each year.

Although, we welcome in principle the Chancellor of the Exchequer's announcement last week of his plans to investigate ways in which to compensate low-paid workers and pensioners who will suffer from the loss of the 10p rate, we must see the detail of what is proposed. People on low incomes are affected by the change—they are affected today. It is important that any package is put forward as soon as possible. Furthermore, any changes must ensure that all households in Scotland that are adversely affected by the change are adequately compensated by the measures that are put forward.

An interesting contrast can be made between the chancellor's decision on the 10p tax rate and this Government's proposals to introduce a local income tax. It is a choice between the UK chancellor's approach of abolishing the 10p rate, which will see members of the Scottish Parliament gain £300 on their tax bill, and the Scottish Government's proposal for a fairer local income tax, which will see MSPs lose about £600, while people on the lowest incomes—our pensioners and families under financial pressure—will be among the biggest winners. That is the contrast between the different positions that the Administrations north and south of the border take on taxation. At a time when UK tax bills are up, food and fuel bills are up and the cost of living is increasing, ministers in the Scottish Government are doing all that we can with the measures that we have at our disposal to benefit the families of Scotland through the council tax freeze and the other measures that I mentioned a moment ago.

I turn to the business community. Our economic strategy sets out how we will support businesses to create a more successful country, using all the levers that are available to us. This Government wants to make Scotland more competitive—we make no apologies for that fact. That is why we have reduced and will remove business rates for thousands of small businesses. Abolishing rates for 120,000 business premises in Scotland will set our small firms free to create new jobs and new growth in the Scottish economy.

However, Scottish businesses are feeling the impact of the measures that were announced in previous UK budgets. Since 2007, the small companies' corporation tax rate has increased year on year, rising to 22 per cent in 2009. That will have a disproportionate effect on the many small and medium-sized enterprises that are the bedrock of the Scottish economy. This Government believes that a lower corporation tax rate would boost economic growth in Scotland, as exemplified by the success of other small European Union countries, such as Ireland, that have taken a similar course. The approach that this Government has taken on competitive taxation to encourage the business community to grow and invest is the right approach for Scotland.

One industry that has been severely affected by the budget is the whisky industry, which is one of Scotland's most significant industries. In 2006, the spirits industry's overseas exports were worth more than £3 billion and the Scotch Whisky Association estimates that its members support more than 41,000 jobs in Scotland, both directly and indirectly. However, following the UK budget, duty will increase by 9 per cent—6 per cent in real terms—with further increases of 2 per cent per annum above inflation over the next four years. It is estimated that that will put 59p on to the price of a bottle of Scotch whisky. That runs the risk of encouraging international competitors to introduce punitive tariffs and threatens not only our ability to export but the jobs that the industry sustains.

The UK budget represents a backwards step for the Scotch whisky industry, at a time when whisky is taxed more heavily than any other alcoholic drink. The challenge for the chancellor was to introduce a fair alcohol tax regime, combat the discriminatory tax on Scotch whisky and take proper measures to tackle alcohol abuse.

As a matter of fact, my understanding is that vodka, gin and other spirits are taxed at the same level as whisky.

I will come on to the point about the budget failing to have an impact on tackling the significant issue of alcohol misuse, which I have just raised. We want to ensure that there is a mature debate about alcohol content and taxation. Unless we tackle the issue, we will not create a situation in which one of our premium industries, which none of us believes is at the heart of the problems of binge drinking in our society, can be fairly and properly treated.

Has the Scottish Government done economic modelling on any proposals to increase the drinking age to 21 in Scotland?

I am not aware of any economic modelling that has been undertaken, but I give Mr Purvis a commitment to examine the issue and give him the appropriate response in due course.

The approach taken by the Treasury in the budget was an easy one, which simply targeted boosting tax revenues for the Treasury. The budget failed to mention the need to tackle alcohol misuse and overconsumption and failed to incentivise producers to develop and market low-alcohol alternatives. It is questionable whether the blanket increases in duty will contribute to a reduction in consumption and associated harm or whether big retailers will ask producers to absorb the cost.

An opportunity has been missed to act to protect and improve public health and address wider alcohol-related harms. We believe that a more comprehensive approach is required that considers issues related to the costs and impacts of alcohol misuse. Therefore, in the summer we will publish for consultation proposals for a long-term strategic approach to tackling alcohol misuse. If this Parliament and this Government had responsibility for alcohol taxation, we would not have introduced proposals that do too little to discourage binge drinking and too much to harm a vital Scottish industry. We need flexibility in alcohol taxation so that we can tax high-alcohol, low-price booze, influence behaviour and support a premium Scottish export industry.

The final issue that I will raise is fuel. The impact of continuing high fuel prices, in particular on household energy bills, has been felt throughout Scotland. The price increases are having an effect on efforts to address fuel poverty in Scotland. The Scottish Government is doing all that it can to combat fuel poverty. Our housing is more energy efficient than housing south of the border and we are investing in energy-efficient programmes throughout Scotland, but not enough is done in the budget to tackle fuel poverty, nor is enough done to tackle the significant effects of road fuel duty that are felt in rural Scotland and within the haulage industry. I am proud of the efforts of my colleagues in the House of Commons, who have long promoted a road fuel regulator to remove some of the worst impacts of increasing petrol and diesel prices. I have written to the UK Government on the issue and the Scottish Government will continue to exercise pressure to seek a more favourable regime.

The debate highlights the central problem: key decisions can still be taken that harm Scotland's interests. This Government will not allow that to happen and we will assert the Scottish interest at all times.

I move,

That the Parliament is disappointed with some of the decisions taken in the 2008 UK Budget and their damaging impact on the Scottish economy and households; in particular regrets that action was not taken to reverse the 2007 decision to abolish the 10p tax rate; notes with concern the increase in the small companies' rate of corporation tax; believes that the blanket approach taken in setting alcohol duty is too simplistic and does not address the wider social and health issues around alcohol; regrets that the measures aimed at tackling fuel poverty are insufficient, and further regrets the lack of appropriate measures to moderate the impact of rising fuel prices.

The first question that many will have is why the debate is happening and why this Parliament seeks to take an interest in what look like reserved matters. There are several reasons why it is right for us to do so. Whatever our view on the constitution and wherever we think the boundary should be drawn between devolved and reserved powers, most Scots would expect the Scottish Government to make representations to the UK Government when Scottish interests might be affected. Any genuinely unionist UK Government would listen carefully to such representations to avoid playing into the hands of the nationalists.

Although this Parliament has very limited powers over taxation and no influence over the content of the UK budget, the knock-on impact of policy decisions made at Westminster must surely influence policy judgments in Scotland. The Scottish Government cannot reasonably be expected to pick up all the pieces in the Scottish economy if the UK Government gets it wrong, but it can surely be expected to act to mitigate the negative impact of bad policy decisions and to argue the case when Scotland will be badly affected by decisions made on a UK-wide basis. That is why, for example, I proposed the acceleration of the business rate cuts in the Parliament on 21 November and, thereafter, in the Scottish budget to limit the damage that Labour's tax rises are doing to the Scottish economy and small businesses in particular.

It is reasonable to expect the Scottish Government to argue against tax changes that would hit Scotland especially hard, and when the chancellor targets a key Scottish industry for tax rises, we do not expect the Scottish Government to sit idly by and pretend that nothing is happening. That view is taken not only by the Conservatives. We can say that with some confidence because it is the approach of not only the current Scottish Government but its predecessor.

We know that the previous Scottish Executive made representations some years back on the taxation of the oil and gas industry. Although the content of those representations is not in the public domain, we can draw one of two conclusions from the fact that it exists: either—this is not as far-fetched as it seems—the previous Scottish Executive was hell-bent on political suicide and wanted higher taxes on the oil industry that is critical to the Scottish economy, or it argued strongly against them and was ignored by the current Prime Minister when he was chancellor. One of those two things must be true. I use that example to illustrate that the debate would be relevant even if the Scottish National Party were not in government, and that concern about the content of UK budgets and their impact on Scotland is not limited to those who happen to be in opposition at Westminster at the time nor to any particular industry.

Anyone who is interested in working out what the UK Government's budget means in practice long ago gave up listening to the content of the budget speeches and spends their time instead looking at the reams of detailed paperwork that are published the minute the chancellor sits down. Helpfully, the Treasury publishes each year a table that outlines the changes in tax revenues arising from each of the policy decisions that are taken. In that table, we can see the budget's real impact. It may have taken Labour MPs 11 years to work it out, but it is better late than never, and having seen an £11 billion increase in tax targeted on the low paid, even the most on-message of Labour MPs must wonder whether their message was not fatally flawed.

Much of the controversy has centred on the abolition of the 10p starting rate of income tax. After all the fuss about it, the chancellor wrote to the Treasury Committee and said:

"The 10p rate was introduced in 1999 as a transitional measure to help low income households"— except that anyone who read the budget speech or any of the associated documents at the time or subsequently would be unable to find any hint that it was a transitional measure. As members will recall, Gordon Brown announced it with some fanfare—not unsurprisingly, as it was a key pledge in the 1997 Labour manifesto, not as a transitional measure but as a long-term commitment.

The scrapping of the 10p rate means that many low-paid workers will be worse off, as their income is taxed at the basic rate. That should come as no surprise to Labour MPs, because it is precisely what happened to low-paid workers in the 1999 budget when Gordon Brown introduced the 10p rate to begin with, because it was used as a cover for a substantial increase in the income that was taxable at the basic rate, which was targeted at the low paid too. There was, of course, no fuss at the time from Labour MPs. Perhaps the political situation did not lead them to take such a keen interest in the affairs of the low paid, but we must surely be grateful that they are now paying closer attention to the impact of their taxation decisions on those who can least afford them.

As well as taxing low-paid workers, the budget contains some ill-considered decisions in other areas. The changes to capital gains tax also impact on many Scottish business owners. As it happens, the taper relief that the chancellor has now abolished was introduced in 1998. The then chancellor—now the Prime Minister—was very pleased with it. He said that it would

"explicitly reward long-term investment"— something with which I am sure we would all agree—and that

"a 10p long-term rate for capital gains tax" was aimed at

"those who build businesses or stake their own hard-earned money in them".—[Official Report, House of Commons, 17 March 1998; Vol 308, c 1101.]

After his recent decisions, rather than paying an effective rate of 10 per cent on any hard-earned money that they raise, those investors will pay 18 per cent. That change was announced with no consultation, no warning and no thought to the impact that it would have on the economy, in particular at this time, when the global outlook is so uncertain, as the chancellor keeps reminding us.

Derek Brownlee is quoting figures from 1998. Perhaps he could shed some light on why Peter Lilley denounced the introduction of taper relief as

"a revenue-increasing measure and a further tax burden".—[Official Report, House of Commons, 29 April 1998; Vol 311, c 348.]

The member will recall that taper relief was substantially accelerated in later budgets, which made it much more attractive. Taper relief is an interesting area, and I know that the Liberal Democrats have previously stated that they do not believe that it is the right way to approach capital taxation. That is a reasonable argument to advance, although I saw in the 18 January edition of Taxation magazine—a magazine that has had its fair share of articles to write since the present Government came to power—an article in which Vince Cable, the erstwhile temporary leader of the Liberal Democrats, attacked the abolition of taper relief. He said that it was "hamfisted", and that

"the Government has been inept in its withdrawal of taper relief".

Perhaps if the Liberal Democrats took a more rounded view of taper relief and were a bit more consistent about it, they would have a bit more credibility on the matter.

One of the unforeseen, or perhaps foreseen, consequences of the reduction—or increase, for those who have businesses—in the basic rate of capital gains tax to 18 per cent was that tax on second-home profits was reduced from 40 per cent to 18 per cent. Even Tony Blair did not try that one.

Let me turn now to excise duty, in particular the impact on the Scotch whisky industry. Tax rises on whisky are nothing new: they were first imposed by the previous Scottish Parliament in 1644 to fund an invasion of England. Even I would not accuse the Labour Party of being to blame for that, but I will blame it for not learning from more recent history. When the Conservatives were last in government, spirits duty fell in real terms, and Ken Clarke made the first cuts to duty on spirits for more than 100 years, in the 1995 and 1996 budgets, which helped the Scotch whisky industry. When tax rates fell, tax revenues rose. The problem now is that the chancellor is using the tax as a cash cow. As the cabinet secretary said, when the industry or the UK Government is negotiating overseas against punitive tariffs, the response will be that the UK Government has done the same thing.

The UK budget increased taxes on the low paid, on small businesses and on the self-employed. In targeting one of our main exports, it was anti-Scottish; in targeting small businesses, it was vintage Labour; in targeting the poorest workers, it was socialism at vindictive best.

I have pleasure in moving amendment S3M-1814.1, to insert at end:

"notes with concern the decision to abolish Capital Gains Tax taper relief, and believes that the increase in spirits duty will needlessly damage the Scotch Whisky industry."

Over the past year, the minority Government has been adept at picking needless fights with Westminster. Ministers tell themselves that it is standing up for Scotland, although most Scots would prefer them to get on with the business of governing responsibly. However, the motion for debate this afternoon provides us all with an opportunity to have a square go at the UK Government. In that I include Labour MSPs, many of whose colleagues at Westminster have been in open rebellion in recent weeks about certain aspects of the UK budget—albeit aspects of a budget that the same MPs were happy to endorse 12 months ago.

The motion correctly identifies a number of ways in which the UK budget fails to address Scotland's needs properly, and I will come on to those shortly. We will doubtless hear suggestions from the SNP back-bench faithful that the shortcomings in the UK budget provide a compelling case for independence—for Scotland to be cut adrift from the rest of the UK—but that argument is grounded more in dogma than in logic. After all, with the help of the Tories, the SNP Government recently secured its own budget. I would contend that, in keeping with Mr Darling's inauspicious debut, and despite what the cabinet secretary himself said earlier this afternoon, Mr Swinney's budget also failed to address many of the needs of Scotland and of the Scottish people. However, I readily concede that the cabinet secretary delivered his budget with a great deal more style. I trust that Mr Swinney will not consider that to be damning by faint praise.

The motion is justified and measured and identifies most of the key failings of the UK budget. Derek Brownlee outlined the reasons why the debate serves another useful purpose. The Liberal Democrat addendum to the motion, in my name, seeks to make small but important improvements by reflecting the impact of the serious problems that are affecting the housing market and the inadequacies of the UK Government's response to dealing with child poverty.

As the cabinet secretary and Derek Brownlee have emphasised, the decision by the previous chancellor to scrap the 10p rate of tax in last year's budget, and the failure of the current chancellor to reverse that, have captured the headlines and created the greatest sense of understandable anger. The injustice of Gordon Brown's initial £7 billion tax grab from some of the poorest in society was highlighted and criticised by the Liberal Democrats at the time.

When I was reading the 1999 budget debate, I was struck by what Paddy Ashdown had to say about the 10p tax rate:

"My hon. Friend the Member for Gordon, the Treasury spokesman, was the first person to propose it, but when we looked at it, we decided that it was nonsense."—[Official Report, House of Commons, 9 March 1999; Vol 327, c 203.]

Did he change his mind on the issue?

The 10p rate was introduced to a great fanfare. There were certainly problems with its introduction, and its removal—as a sleight of hand alongside the reduction of the basic rate of tax by 2p—has proved it to be what Nicol Stephen said that it was at the time: a piece of spin and gimmickry that results in the lowest earners paying more. Oddly, it has taken rather longer for David Cameron and, indeed, Labour back benchers to summon up sufficient indignation to come out against the move.

Now, the Prime Minister has said that he is sorry, and that his Government is listening and learning—a triumph of sorts after 11 years in government. However, the issue has provided further evidence of how out of touch the Prime Minister is, how his indecision and dithering are undermining any residual credibility his Government has, and how ineffective or even damaging has been his obsession with endlessly tinkering with the tax and benefits system. In a Scottish context, the effects of that have been particularly acutely felt, reflecting, perhaps, wage levels in Scotland—not least in my own constituency—compared with those in other parts of the UK.

In a desperate attempt to stave off rebellion, concessions have been offered to help mitigate the effects of scrapping the 10p tax rate. So far, the rebellion has been quelled, but the mess has yet to be cleared up effectively, and we have no details. For example, Help the Aged has identified female pensioners aged between 60 and 64 as being at risk of paying more as a result of the chancellor's actions—or inaction—in the budget. The additional tax that they might end up paying could be as much as £180.

As we have come to expect, the UK budget in March was unveiled amid a great fanfare of rhetoric about poverty and redistribution. However, the substance failed to justify the billing, particularly in relation to poverty.

Last month, Liberal Democrats initiated a debate in the chamber on fuel poverty. Members across the parties rightly expressed concern about the dramatic rise in the number of households that are now paying more than 10 per cent of their income for fuel. I was delighted that Parliament endorsed the Liberal Democrat proposals for a one-stop-shop approach to tackling fuel poverty. Scottish ministers have been quick to point an accusing finger at Westminster, but I would gently remind this Government of its own responsibilities in addressing fuel poverty.

I note that Liam McArthur's amendment does not delete the other reference to fuel, which concerns the SNP's policy on rising fuel prices, namely, the fuel price regulator, which would reduce the tax rate and, therefore, necessitate public spending cuts every time fuel prices rise, which they will, inexorably.

Can the member tell us whether the Liberal Democrats believe that such a policy is consistent with commitments either on public services or on climate change and peak oil? If he does not believe that it is consistent, why does his amendment not try to delete the reference in the motion?

Patrick Harvie makes a number of interesting points, but I point out that my colleague, Alistair Carmichael, has made strenuous efforts over a number of years to press the case for differentials in fuel duty, recognising the punitive impact in parts of the country, including Orkney—my constituency—where the price of fuel has long been far greater than elsewhere.

The response of UK ministers and, in particular, the chancellor has been wholly inadequate. Mr Brown talks constantly of taking the right long-term decisions, but the decision to increase the winter fuel allowance for only one year looks, for all the world, like a short-term gimmick. Not surprisingly, Age Concern is not impressed. In the context of rapidly escalating fuel prices and their impact across the board on the cost of living, particularly for some of the most vulnerable in our communities, the budget was a grave disappointment.

In my constituency, where paying £1.30 a litre for diesel is already a distant, almost fond, memory, the problems are being felt most severely. A colder climate, a longer heating season and generally poorer-quality housing all contribute to a deeply disturbing situation, which will not be alleviated by a one-off increase in winter fuel payments that have already been more than swallowed up by recent increases in fuel prices.

In the area of child poverty, too, the UK budget has failed to deliver, with serious consequences here in Scotland. It is now fairly clear that the target of halving child poverty by 2010 will not be achieved. By investing less than a third of the amount that is required to halve child poverty, the UK Government has, in effect, abandoned its own target. The modest changes that have been announced to child benefit and child tax credits are further examples of a failure properly to walk the walk.

The motion highlights other shortcomings, notably on the rate of corporation tax for small businesses and alcohol duty. Those are both important issues, not least given the proportion of small and medium-sized enterprises in the Scottish economy and the well-documented importance of our whisky industry.

However, I turn to the difficulties in the housing market. The market in Scotland is proving to be more resilient than the market further south, but Scots have not been entirely abstemious during the recent debt binge. As well as consumer debt, there is estimated to be £74 billion of loans secured on dwellings in Scotland. That is almost three times the Scottish Government's budget. UK ministers cannot be held responsible for the irresponsible behaviour of some lenders and, indeed, some borrowers, but there is public interest in averting a wave of repossessions and an overcorrection in the market.

The motion and our amendment raise legitimate grievances about the approach that the UK Government has taken in its budget. Those grievances are shared north and south of the border. The Tory amendment, however, betrays the now trademark Cameronian opportunism. When Labour brought in taper relief, the Tories dismissed it as a dog's breakfast. Now, it seems that Mr Brownlee and his colleagues are only too happy to tuck their snouts into that breakfast, dismissing Lord Lawson orthodoxy in favour of the dubious radicalism of Geoffrey Robinson.

When business organisations bemoan a missed opportunity and Scottish trade union leaders criticise UK ministers' failure to address the disproportionate tax burden on low-paid workers, it is fair to suggest that the UK Government's budget has failed to deliver.

I move amendment S3M-1814.2, to insert after "10p tax rate":

"deplores the continued failure of the UK Government to provide an adequate package of measures to help families affected by the falling housing market and the absence of sufficient budget provision for the alleviation of child poverty".

I well recall the SNP Government's reluctance to debate its own budget, yet it has brought to the chamber a debate on a budget for which neither it nor the Parliament has any responsibility whatsoever. Despite Derek Brownlee's rather tortuous justification for the debate, the UK budget is a reserved matter and we do not intend to vote on it, just as we did not vote on identity cards, defence or a European referendum.

Is the Labour Party aware that its commitment not to vote on non-devolved matters automatically gives the SNP a working majority in the Parliament?

Our position is exactly as we have set it out. The Tories' problem is that discussion of the UK budget sits properly in a Parliament in which they have a single Scottish MP and therefore no voice.

The Scottish Parliament is a legislative body, not just a debating chamber. I remember that, in its early days, it undertook historic legislation on land reform and abolition of the feudal system, and cutting-edge legislation on incapacity and homelessness. The SNP Government's legislative programme is so light and so slight that the Government has to revert to Opposition tactics to construct its business, posturing where it does not have power rather than delivering where it does.

I do not argue that the UK budget does not have a significant impact in Scotland—of course it does, which is why it has been extensively debated and scrutinised by Scottish MPs at Westminster. Indeed, those MPs are passing more legislation that is relevant to Scotland than the Scottish Government is producing here. The legislation at Westminster includes legislation to protect whisky—our national drink—in global markets. My colleague Jackie Baillie will deal with whisky later, but the whisky industry is doing well, with record exports and new distilleries opening up. There have been no job losses in that industry—quite the reverse. In other industries, however, 2,000 jobs have gone in the past year, to the sound of silence from SNP ministers. Perhaps we should have debated that today, on May day.

Does the member still hold the view that he expressed at the Confederation of British Industry dinner, that the increase in whisky duty was a bombshell and would not raise any additional revenue for Scotland or the Treasury?

I say to Mr Neil, who was not present on that occasion, that I said neither of those things. His informant is incorrect.

Many of the measures in the budget will have a positive effect in Scotland. Some 600,000 families will benefit from increased child benefit, 300,000 families will benefit from increased child tax credit, 750,000 households will benefit from additional winter fuel payments and 87,000 workers will benefit from the increase in the national minimum wage. John Dickie of the Child Poverty Action Group said of the budget:

"This is excellent news for Scotland's poorest children and children facing poverty across Britain."

However, a mistake was made in the abolition of the 10p tax band. The extra support in the budget leaves most of those who paid only or mostly the 10p rate better off. However, it is clear that the abolition would have a detrimental effect on those who are low paid but childless and on pensioners under 65 years. That is wrong, and it should not be allowed to happen—nor will it, because a commitment has been given to compensate those groups and to backdate that compensation to 1 April. Many Labour Party MPs voiced their concern and said that they would reflect it in how they voted. The United Kingdom Government listened and responded.

Mr Swinney is right—we should compare that with what happened with the Scottish budget. Concerns were expressed that budget decisions would have a detrimental effect on some of the most vulnerable groups in society. Every day brings more evidence that those concerns were well-founded. Amendments were moved to stop pensioners paying water rates, to protect women suffering domestic abuse and to support families living with disability. Were those concerns heard? No. Were those concerns responded to? No. Did those concerns come from any of the Government's back benchers? No. SNP members turned up like the claque at the opera and applauded whatever was put in front of them. When the Cabinet Secretary for Finance and Sustainable Growth found additional resources, did the SNP back benchers argue that the money should be used to alleviate poverty or to benefit low-paid workers or hard-pressed pensioners? No. They demanded that it be handed out to small businesses as a quicker, bigger rate cut.

The 10p rate and the impact of its abolition have been exhaustively debated in Westminster. Here is what one MP said about it:

"No one is going to reinstate the 10p band at a cost of £7 billion; we are looking for mitigating procedures".—[Official Report, House of Commons, 28 April 2008; Vol 475, c 106.]

That is a fair point. It was made by Stewart Hosie of the SNP. So SNP London does not support the position in the motion. SNP MPs recognise the compensation that is on offer. The First Minister went all the way to London to vote for it, not a reinstatement of the 10p band.

On fuel poverty, too, the motion fails to recognise what has happened since the budget. On 9 April, the UK Government concluded an agreement with energy suppliers, in line with the budget announcement, to increase support through social assistance programmes by £225 million over three years. On 23 April, the Government, the energy industry and the Office of Gas and Electricity Markets met and prepared further concrete proposals which will be announced when election purdah in England ends. Meanwhile, the fuel poverty forum in Scotland has not met for a year; the SNP housing consultation ignored fuel poverty altogether; the SNP oppose Sarah Boyack's energy efficiency bill; and fewer central heating systems were fitted last year than in any year since 2003, and the waiting time has doubled. Those are the figures, Mr Swinney. What vow of silence have the Scottish ministers taken that has stopped them bringing forward a fuel poverty action plan? The truth is that Labour in Westminster has taken more action on fuel poverty in the past month than the SNP has taken in the past year.

Whether we discuss jobs, child poverty, pensioner poverty or fuel poverty, we should debate the lack of action here, where we can make changes, rather than debate the real action that is happening elsewhere, which we can only applaud by comparison.

I find it strange that Mr Gray still talks about fuel poverty, 10 years after the election of a Labour Government in oil-rich Scotland. That is a damnation of Labour's record.

He says that we will hear from Jackie Baillie on the whisky industry. We have already heard from Jackie Baillie on the whisky industry. She lodged a motion in March 2006, and again in March 2007, welcoming the freeze on whisky duty. However, there was no motion in March 2008.

Let us remind ourselves what she put in her motion in 2006. The motion welcomes a freeze in whisky duty, and

"considers this to be a progressive move which helps support the industry's competitiveness and productivity; notes that a fairer alcohol duty regime helps support a key British industry in its home market and sends a message of tax fairness overseas, as distillers look to develop new opportunities in emerging markets such as China, and congratulates the Labour Government on maintaining this freeze on duty".

I presume, now that Labour has unfrozen the freeze, that all of that no longer stands.

I wonder whether Mr Neil will share with the chamber how many SNP members signed either of my motions congratulating the Labour Government. I suspect that the answer is none.

Yes, because we lodged our own motion at the time. I note that Pauline McNeill and Ken Macintosh both signed Jackie Baillie's motion, but that Mr Kerr, of course, did not.

Any budget has to be measured on two key criteria—growth, and poverty and what we do about it. I am sorry to say that the 2008 budget from Mr Darling fails on both counts.

Let us consider the impact of the UK budget on growth, jobs and investment in the Scottish economy. As Mr Swinney quite rightly said, the impact on small companies—which are the backbone of the Scottish economy—will be adverse, because the corporation tax that small companies pay will be increased. At a time when the tax rate for Shell and BP will be reduced from 30 per cent to 28 per cent, the tax on small businesses will increase from the small business rate of 19 per cent, initially to 21 per cent. It is surely perverse that when companies such as Shell and BP are making record profits on the back of record oil prices, we are imposing additional taxation on the companies that make up the backbone of both the Scottish and British economies.

Let us consider oil and an issue that is much derided by the unionist parties. We may be at or near the peak of oil production in the North Sea, but we are nowhere near the peak of revenues. Indeed, some estimates suggest that the price of oil could go up to $200 a barrel. That will result in a huge revenue bonanza for the UK Treasury, but it should come to a Scottish treasury.

Will the member take an intervention?

I will in a minute, but I add that we have not yet taken into account all the oil that is still to be taken out on the Atlantic side, outwith the North Sea fields.

We should compare how we are being denuded of our oil revenues with how we are subsidising huge investment in the south-east of England. For example, as a public expenditure analysis by the UK Government shows, we in Scotland make a net contribution of more than £500 million a year to the cost of running UK departments. If that money were spent in Scotland, it could, with the multiplier effect, add well over £1 billion a year to the gross domestic product of the Scottish economy.

If we consider just three projects in the south-east—the Olympics, London crossrail and the Channel link—we see that investment from the public sector totals around £40 billion. I do not begrudge investment by people in the south-east, but it is ridiculous that that huge investment is going into the south-east when we are suffering the lowest ever revenue grant for vital services from Westminster, here in this Scottish Parliament.

Another issue is interest rates. If we were in charge of our own economic policy, our rates would be far lower than they are now, compared with the euro zone and the federal funds rate. In the United States of America, the fed rate is now 2 per cent, whereas here the interest rate is two and a half times that, at 5 per cent. A 5 per cent interest rate is not good for business or home owners, or for the Scottish or British economies.

We can reach only one conclusion: the Brown bandwagon has come off its wheels, and the reality is that, far from having 10 years of success, we are now paying the price for Gordon Brown's failure as chancellor and as Prime Minister.

I will draw on some of the positive aspects of the UK budget. The motion deals with reserved matters, which I suggest is merely a diversionary tactic to pull the cover over the SNP's trail of broken promises.

Labour budgets have delivered a strong economy, not just this year but over the 11 years that we have been in power, with 3 million more people in work and 600,000 fewer suffering from child poverty. The winter fuel allowance increases that were introduced in the budget will benefit 9 million pensioner households.

I will cover economic growth, but first I will touch on some of the taxation aspects of the motion and the amendments. The SNP motion comments on the increase in corporation tax for small businesses, which Alex Neil mentioned. However, the rate is lower than it was in 1997, and the main rate has reduced from 30 per cent to 28 per cent. That package of changes, taken together, will contribute to economic growth.

The Tory amendment comments on the abolition of capital gains tax taper relief. The capital gains tax system has been viewed as complex, and a one-system-fits-all policy has been introduced at a rate of 18 per cent. That will reduce bureaucracy and red tape, which I would have thought might find favour among the Tories.

We must consider what the SNP budget has delivered in terms of economic growth. One of its flagship policies is the council tax freeze, but that will deliver cash benefits to those in higher council tax bands.

The member has got that the wrong way round.

The reality is that millionaires such as Brian Souter will benefit more from the policy than will classroom assistants in primary schools in Cambuslang. [ Interruption. ] Please let me make some progress.

The local income tax policy has also been much trumpeted by the SNP, but it will drive up tax and drive talent out of Scotland. Those two aspects—the council tax freeze and the local income tax—will together undermine economic growth.

As my colleague Iain Gray pointed out, there has been positive action on the social tariff at a UK level. I have raised concerns in the chamber about pre-payment meter customers, and I have twice, during debates, asked questions about the Scottish ministers' discussions with Scottish Power on the matter.

Does the member think that it is appropriate that the non-mandatory social tariff allocation of £150 million is a drop in the ocean compared with the £1.275 billion that the energy companies take for pre-payment meters?

I do not think that the member's briefing is up to date. As Iain Gray pointed out, the discussions with energy companies have resulted in £225 million being committed to the social tariff.

I want to hear what positive aspects have come out of the discussions with Scottish Power. I am still waiting for an answer from ministers.

On the back of that, I have to say that the SNP energy policy is a bit of a shambles. SNP members talk green, but they have opposed renewable energy projects totalling 900MW and have supported energy projects totalling only 600MW. They have opposed nuclear power but have supported the extension at Hunterston B. The fact is that their rhetoric does not match up with the reality.

We have to ask why the tartan Tories have been joined in their offensive by the sons and daughters of Milton Friedman on the Conservative benches. I suggest that it is not just a case of getting the SNP budget passed. The SNP's political agenda requires David Cameron in Downing Street, because the SNP thinks that that will increase support for independence from the low figure of 19 per cent, as seen in this morning's poll. The SNP would rather have David Cameron, whose political philosophy was formed in the wine bars of Islington, than Gordon Brown, whose thinking was moulded in a Scottish manse.

Labour has done a lot in the past 11 years. Unlike the SNP, we have a history of delivering lasting policies, such as the minimum wage and the working families tax credit. Labour was building the NHS when the SNP was stealing the stone of destiny. It is time to move forward with progress, forward with Labour.

I begin by saying that James Kelly wouldnae catch me in a wine bar.

Like many members who have spoken in the debate, I find it rather uncomfortable to be here, in the Scottish Parliament, speaking in a debate that has been brought by the SNP Government on a budget that has been set by the Westminster Government. That is foreign to me. Although we often find ourselves on common ground, I will never find common cause with the main thrust of the SNP's policy; yet, I find myself talking about the same things in many respects.

First, I will talk about the decision by the Chancellor of the Exchequer, Alistair Darling, to increase significantly the tax on whisky. Most of what needs to be said on that has already been said, but I make the point that our whisky industry is, among many things, one of the most significant industries in the peripheral parts of the Scottish economy. In areas where wages are lowest and the economy is most rural, a distillery is often a major part of the local economy. Like many of our less significant industries, it is not a huge employer but it is an important employer in some areas. I regret the fact that the chancellor has reversed the practice of previous Governments—especially Conservative Governments—by destabilising the relationship between alcohol taxation on spirits and taxation on wines and beers.

During the days of the Conservative Government—those 18 glorious years that we are so keen to talk about here—the whisky industry underwent a renaissance. During that period, distilleries that had been in mothballs for many years came back into production. We should thank that Government for that.

I move on to a couple of issues that have not yet been raised in the debate, the first of which is the proposed climate change bill—a priority of the Parliament and the Government that may yet find support from the Conservatives—and some of the legislation that will have to be passed in conjunction with it. Some issues that relate to that bill lie under the chancellor's control. That is why I am extremely disappointed that Labour has not taken action to move forward positively on two aspects. First, it has done nothing to encourage the introduction of smart metering. Electricity meters provide an opportunity for us all to see how much energy we use and to exploit it more efficiently. Encouraging electricity companies to support smart metering was in the chancellor's power, but he failed to do that.

Secondly, the chancellor has failed to take the opportunity to encourage the introduction of proper feed-in tariffs, which can give those of us who wish to invest in opportunities to generate electricity domestically through microrenewables a proper return in the marketplace. I encourage the chancellor—should he survive to see another budget—to act on those issues.

The key issue to which I return is transport. I was interested that the chancellor, who represents an Edinburgh constituency, said in his budget speech:

"I am setting aside new funding to develop the technology that could underpin national road pricing, inviting tenders to test this with the results expected next year."

It greatly disappoints many of us that the chancellor seems to believe that the motorist can yield yet more tax revenue in the long term. Having seen the debates about introducing city-entry charges for Edinburgh and about tolls on the Tay and Forth bridges, surely the chancellor should have recognised the evidence on his doorstep that road pricing would not be popular.

Finally, I will talk about fuel duty. Our amendment would add words only at the end of the Government's motion because we do not wish to rule out anything that could deal with the problem of fuel costs in rural Scotland. The chancellor's decision to proceed with a 2p increase in tax on a litre of fuel—albeit deferred until October again—shows that he sees the motorist, the road haulage industry and the economy that it supports as providing a tax-yielding opportunity rather than a means to stimulate development.

Worse still, the chancellor said:

"For environmental reasons we will increase fuel duty by 1/2 pence per litre in real terms from 2010."

I started by talking about peripherality. We in Scotland—particularly in the Highlands and Islands—know that fuel prices here are significantly and artificially higher than those in the rest of the United Kingdom. Even before the industrial action at Grangemouth, that tendency had spread to areas that are much nearer the central belt. Scotland now suffers disproportionately from the cost of fuel. The tax on fuel is so high that it is damaging the whole Scottish economy. We should consider in greater depth how we deal with that before the opportunity arises again to tackle it.

It is inconceivable that the SNP will ever say that a UK Government budget is good for Scotland. I can think of no circumstances in which SNP members would allow themselves to congratulate the UK Government on its budget.

Will the member take an intervention?

I will in a moment.

An SNP minister will never say to the chancellor, "Thanks very much—that's our fair share. It's a good deal. Carry on the good work." However, I suspect that Mr Neil wishes to prove me wrong.

Absolutely. I would be the first to say that Lloyd George's 1909 budget was excellent for Scotland.

Consensus is now breaking out between Liberal Democrats and the SNP. Mr Neil has taken my breath away, because I was just about to attack him. I will do so regardless.

Mr Neil said that, under an SNP Government in an independent Scotland, interest rates would be lower. The SNP's policy is that the Bank of England would continue to set our interest rates until we adopted the euro, so as long as our currency continued to be sterling, interest rates would be pegged. Although I might agree with Mr Neil on the historical matter of progressive Liberal budgets having a positive effect on Scotland, I distance myself from the SNP's current policy.

The public are bored of the UK Government saying that Scotland got a fair deal and the Scottish Government saying that it did not get enough, which amounts to a continual blame game. After blaming the UK Government for not giving it enough money to pay for public services in Scotland, the SNP Government announced nearly £1 billion of tax cuts, which included business rate cuts and the council tax freeze. The cabinet secretary gave us the list.

When parents express their anger about the fact that class sizes are not being reduced, the Government blames councils for not doing so, especially now that we have the historic concordat, which means that year-on-year progress should be made. However, information released under freedom of information provisions shows that 15 local authorities in Scotland do not even have a strategy for delivering the policy, never mind one for doing so within the present parliamentary session. That must be the councils' fault. Such problems are either the UK's fault or the councils' fault—members can choose—but I doubt that they will ever be the SNP's fault.

Let us consider some of the choices that the Government has made to meet its purpose, which, as the cabinet secretary said, is to produce economic growth. In the Borders, Scottish Enterprise Borders and the local VisitScotland team are no longer Borders services; they are now a generic service for the south of Scotland. The office of Careers Scotland in Galashiels does not know whether it will form part of south of Scotland provision or part of provision for Edinburgh and the Lothians under the new national organisation, Skills Development Scotland. The business gateway service has been transferred to a highly reluctant local government sector.

In addition, under the SNP the threshold for Scottish Enterprise to give support to small businesses has been hiked up to a turnover forecast of £1 million. In written evidence to the Education, Lifelong Learning and Culture Committee this week, Jack Perry said:

"With the move of Business Gateway functions to Local Authorities we will no longer proactively support businesses that primarily service local markets."

On page 9 of the glossy brochure that it provided us with this week, Scottish Enterprise boasts that it will work with a much smaller number of businesses. The cabinet secretary lauded the rates reduction for small businesses, but the corollary of that is a massive reduction in small business support through our enterprise structure.

It is appropriate to hold debates in the Scottish Parliament on decisions that the Government takes but, as Derek Brownlee rightly said, it is also appropriate for the Parliament to debate the implications for Scotland of decisions that are taken by the chancellor. I recall as vividly as Mr Brownlee will David Cameron's reaction when Gordon Brown announced his decision to remove the 10p tax rate in his 2007 budget. When Gordon Brown sat down, David Cameron's first sentence was:

"Well, the Chancellor has finally given us a tax cut."—[Official Report, House of Commons, 21 March 2007; Vol 458, c 829.]

Mr Brownlee usually uses quotations from a number of highly specialist publications, but today he seemed to omit to quote the leader of his own party.

The UK is the most centralised fiscal entity in Europe. In effect, the Scottish block grant operates as a UK departmental budget. The Steel commission set out proposals to establish a structure in the UK that was more open and transparent, whereby this Parliament would be responsible for raising the budget that we are responsible for spending. It is not sustainable that candidates for election to the Scottish Parliament campaign on how we divide up the cake when candidates who are successful in a UK general election have a greater say on the ingredients that make up that cake.

Some SNP members insist that their budget is a tax-cutting budget and deny that it takes money away from public services. Others claim that there is huge growth in public expenditure in Scotland but say that they have not received enough money from the Westminster Parliament. The present constitutional framework allows that deception to continue. I hope fervently that as a result of the principles that the Steel commission has outlined and those that will be outlined in the constitutional review, consensus will develop among parties in the Parliament that it is not sustainable to allow the current constitutional framework to continue. It is no good for any UK Government to stand in the way of further constitutional change that gives this Parliament power over how we raise our budgets in addition to the powers that we have under devolution to hold the Scottish Government to account for the decisions that it takes.

Today is a good day for this debate. In watching events down south, we see a Labour Government that has lost its way and is being punished at the ballot box. However, Jeremy Purvis will be delighted to know that I welcome some of the positive aspects of the UK budget: the increase in the national minimum wage, the increase in the winter fuel allowance and the increase in tax credits, as well as the increase in social tariffs on energy bills.

However, that is not nearly enough. Tax credits encourage employers to pay low wages, because they know that the Government will subsidise poverty wages and keep people in the benefits trap. Social tariffs are a weak agreement; they are not mandatory and the amounts that the energy companies are being asked to put in are tiny. It is good that the winter fuel allowance is going up, but its existence indicates that our pensioners are not getting a fair deal from the pensions that they paid for.

The lack of a policy on full employment from the London Labour Government means that the minimum wage is not enough to lift people out of poverty. Perhaps that is why Gordon Brown did not vote for its introduction, why Malcolm Chisholm missed the debate in 1998, and why Alistair Darling, Donald Dewar and Douglas Alexander missed that important vote.

Will the member take an intervention?

I could say much more about why the budget was disastrous for the poor, weak and vulnerable, but I am sure that my colleagues will describe the disastrous effects of the doubling of the tax on Scotland's least well-paid workers.

Wendy Alexander calls it socialism. It is just as well that Scotland has an SNP Government saving hospitals, and getting rid of prescription charges, the council tax and the graduate endowment. That is neither light nor slight.

Will the member give way?

Saddest of all is the fact that, during the eight years between 1999 and 2007, that could all have been done by a socialist Labour Party, or by a Scottish Labour Party, or even by a Labour Party that believed in social justice and did not need to wait for London's permission. Wendy Alexander could have done some of it when she was a minister. Jackie Baillie and Margaret Curran could have done some of it, too. What about Andy Kerr? He was shutting down the hospitals.

The SNP Government was elected on its promise to serve the people, and it is delivering on that promise day after day. The SNP Government is fulfilling its manifesto pledges and, quite simply, making Scotland better.

London Labour's budget is dreadful. Having been designed by Gordon Brown and delivered by Alistair Darling—two of Labour's finest, who are letting Scotland down—it is damaging Scotland. If I may quote a Labour councillor, "God bless the SNP".

Derek Brownlee should not underestimate the electorate. It expects this Parliament to get on with its own work and acknowledge that we elect 59 MPs. I understand that Scotland has only one Conservative MP, but I welcome Derek Brownlee's candour in suggesting that David Mundell is a waste of space.

We elect 59 MPs to work in the interests of the people of Scotland. Today, they are debating child poverty and how to tackle it, while we are debating something for which we have no direct responsibility.

Will the member take an intervention?

I am still in my first minute.

We would find it unacceptable for Westminster to debate Scottish education or the Scottish justice system. A degree of consistency from the SNP and others would be refreshing, but I do not anticipate it. Of course, the SNP's programme is legislation light—only four bills have been introduced this year.

Will the member give way?

I want to make some progress.

All we have are debates about issues for which the SNP Government has no responsibility. Perhaps it does not want us to look too closely at its programme. Despite what the Deputy First Minister or the First Minister might assert, we have witnessed a plethora of broken promises. The promises on class sizes and school buildings have been dropped. Not one proposal has been made directly by the SNP. The £2,000 home buyer grant has been dropped. The commitment to nursery teachers has been dropped.

Before Christina McKelvie gets too excited, let me remind her that not one SNP MP bothered to stay up to vote for the introduction of the national minimum wage.

rose—

Christina McKelvie would not take any interventions so I will not give way in return.

John Swinney invited us—quite rightly, I think—to compare the UK budget with the Scottish budget, so let us compare what the two budgets do for children, who are the future of our country. The UK budget provides an increase in child benefit so that the first child is £20 a week better off, which will help something like 600,000 families in Scotland. The £50 a year increase in child tax credit will help 301,000 families in Scotland. Compare that with the Scottish budget: 5 per cent in the schools budget has been cut; 20 per cent in the children and young people budget has been cut; no provision for the nursery teachers that were promised; education maintenance allowance scrapped; no reduction in class sizes; and a failure to match Labour's commitment to new schools. The real contrast is that, with the SNP, we get cuts in services for our children and young people.

Like my colleague Iain Gray, I remind members of the comments of Stewart Hosie, who is not in favour of the reintroduction of the 10p starting rate of tax. In the only SNP contribution to the debate this week, he said:

"No one is going to reinstate the 10p band".—[Official Report, House of Commons, 28 April 2008; Vol 475, c 106.]

Frank Field, who has worked hard with other MPs—including my MP, John McFall—to ensure that mitigation is provided for low-income households, said:

"It has already been an extraordinary debate in that the public have learned something that they did not know before today. It is that no party"— including the Tory party—

"proposes the reintroduction of the 10p tax rate." —[Official Report, House of Commons, 28 April 2008; Vol 475, c 111.]

An essentially dishonest position has been taken by SNP members in Scotland and by their friends on the Tory benches. I also understand that, back in 1999, SNP MPs did not even bother to vote on the third reading of the Finance Bill that established the 10p tax rate. Such rank hypocrisy is, frankly, breathtaking.

Let me turn to whisky, in which I have a particular constituency—not, as some unkind members suggested, personal—interest, given that the industry is a key local employer. The rise in spirit duty must be set against the background of a decade of no increases. I invite Alex Neil to consider supporting me the next time that I lodge such a motion. Let us also not forget that 90 per cent of our whisky is sold overseas. When the SNP realised that incidental fact, it shifted its attack by suggesting that the duty increase would lead to swingeing tax increases in our export markets.

Will Jackie Baillie reflect on the fact that the Scottish Government's position—that the increases in whisky duty might lead to punitive taxation overseas—is the position that has been advanced by the Scotch Whisky Association?

The evidence so far is entirely to the contrary. I hope that Mr Swinney will join me in welcoming the fact that, in recent weeks, the Delhi Government has moved away from introducing a planned increase in whisky duty.

The Chancellor of the Exchequer made it clear that the rise in duty was a revenue-raising measure that is designed to pay for the additional winter fuel payment of £100 for pensioners over 80 and £50 for pensioners over 60.

There is a clear contradiction in the SNP's policy. The SNP argues that duty should be levied on all drink per unit of alcohol, but it surely cannot mean to reduce the price of all spirits. The Cabinet Secretary for Justice, Kenny MacAskill, is clear that he wishes the price of drink to increase to discourage underage and binge drinking. However, the First Minister's oft-repeated phrase that the youth of Scotland are not bingeing on 10-year-old Glenmorangie is, frankly, facile. The First Minister must know—perhaps he does not—that cheap vodka and vodka-based drinks play a role in underage drinking. He must know—it may be that he does not—that Scotland has a spirits industry rather than just a whisky industry. The industry earns more than £3 billion each year in exports, of which at least a third comes from other spirits. The Government will not solve Scotland's drinking problem with a simplified pricing policy, although that seems to be the SNP's approach. I invite the Government to look abroad—to Portugal, Spain, Italy and France—where there is a mature approach to drinking, with no binge drinking and no drunks staggering around the streets, but the alcohol is very cheap.

I want to correct some misinformation that we have heard, as usual, from Labour members. I will deal with just two of the many falsehoods that we have heard so far. The first is Iain Gray's assertion regarding central heating systems. A parliamentary answer of 24 April by Stewart Maxwell made clear that the number of central heating systems installed in the last year of the Labour-Lib Dem Executive was 10,238 and that the number of systems installed in the first year of the SNP Government was 14,377.

The member must allow me to intervene on that point.

I do not have to allow it, but I will.

I have with me figures from the Scottish Parliament information centre for the number of central heating installations carried out in the past four years. In 2006-07, there were 14,425. In the two years before that, the figures were 16,002 and 15,207 respectively. In 2003-04, the figure was 16,788. In order to spin the figures, the SNP Government is not counting central heating systems that are installed in the social rented sector.

It is interesting that Iain Gray did not refer to the figure for the last year of the Labour-Lib Dem Executive, which was correctly stated as 10,238, compared with 14,377 under the SNP.

The other piece of misinformation that I would like to correct relates to the minimum wage. It was wrong of Jackie Baillie to say that SNP members did not support the introduction of the minimum wage. On 16 December 1997, John Swinney and Roseanna Cunningham, who are both in the chamber, voted for the National Minimum Wage Bill at second reading, along with Margaret Ewing, Alasdair Morgan and Andrew Welsh. Alasdair Morgan was a member of the committee that considered the bill and spoke in the debate at second reading. Let us have less misinformation and more facts.

I pay tribute to the previous Administration, which, in partnership with all Opposition parties, made commendable progress in tackling fuel poverty and child poverty in Scotland by using the economic powers that are available to us here at Holyrood. Our SNP Government has also taken advantage of the powers that are available to the Parliament. In the past year, it has implemented a raft of changes, which Christina McKelvie mentioned. It has moved to abolish prescription charges, scrapped the graduate endowment fee, frozen the council tax and increased payments for free personal care. Together, those changes are making most Scots better off.

Although, as has been shown, the Parliament has its hands on some of the levers of power and can make a big difference to the lives of the people of Scotland, the current constitutional set-up means that the UK budget has huge ramifications for Scots. Although there was not one mention of Scotland in the budget, it made 500,000 Scots households less well-off. The union dividend is often cited as the main argument against independence for Scotland, but it means that Scots are paying some of the highest petrol prices in the world and that our pensioners are dying of cold each year in Europe's most energy-rich country. The same union dividend cut the pay packets of a quarter of Scottish households to appease middle England in the budget.

This week there was disturbing news from the European Commission. In its latest six-monthly economic forecast, Brussels estimated that the UK's budget deficit would rise to 3.3 per cent of GDP in 2008-09, which would mean that the UK was in breach of the 3 per cent limit that has been set by the EU stability and growth pact. That is not the prudent approach to the economy that Gordon Brown promised us. It comes at a time when the UK's growth rate is expected almost to halve in the next year.

The EU is not alone in thinking that the UK economy is heading for trouble. David Blanchflower, a member of the Bank of England's monetary policy committee, warned only yesterday that a UK recession is on the way. It is not clear whether things are as bad as he suggests, but it is clear that the situation is not good.

Last month the FTSE 100 company Shire Pharmaceuticals announced that it will relocate to Ireland, where it will join firms such as eBay and Google, which enjoy a corporate tax rate in Dublin that is less than half the UK rate. It is likely that Ireland's competitive taxation regime was a major factor in NCR's decision to locate its European headquarters in Dublin rather than in my city, Dundee.

Does the member realise that the gentleman who established Shire Pharmaceuticals also established ProStrakan, in Galashiels in the Borders? The company was supported by Scottish Enterprise Borders, so does the member share my concern that his party's Government has abolished that organisation?

We want as much industry in Scotland as possible, and if we had the full levers of power we could encourage more pharmaceutical and biotechnology industries to stay in Scotland. We want to provide Scottish industries with a competitive edge that will give Scotland an advantage over other countries. We can deliver that only when we have become independent and have full powers.

It is not all doom and gloom. Scotland's growth rate historically lagged behind that of the UK, but the most recent figures show that for the third and fourth quarters of 2007, under the SNP Government, the growth rate in Scotland was higher than that of the UK. That is the first time—at least since devolution—that Scotland's growth rate has exceeded that of the UK in two consecutive quarters. We should be proud of those figures, which are a pointer to the future.

The actions of the Scottish Government are making a big difference. We can imagine what we could do if we had the full powers of an independent country. What a contrast there is between the achievements during 11 months of SNP Government and those during 11 years of the dead hand of Labour at Westminster.

I am astounded that Mr FitzPatrick appears to believe his own rhetoric.

I begin with the usual courtesy of thanking the cabinet secretary for bringing the debate. I do so not because I think that we should debate reserved issues—as my colleagues said, doing so is either an abuse or a misuse of our mandate—but because the debate gives Labour Party members an opportunity to welcome members who have joined us in the pursuit of social justice. Surely the debate is not a nakedly opportunistic attempt to undermine our Labour Government at Westminster but a genuine cry from the heart from socially democratic parties that are committed to progressive policies on behalf of low earners, the poor and the vulnerable. After all, who would stand up for the low paid and the vulnerable in this country if it were not for the SNP and the Tories?

I hope that I have not been overgenerous. Some members suggested that the debate is an attempt to capitalise on public concern over the abolition of the 10p rate of income tax. If that is so, the SNP and the Tories appear to have missed the boat. Events have moved on since the debate was scheduled. This week we witnessed the Prime Minister's remarkable willingness not just to listen to but to act on public concern. Despite the clear benefits of the UK budget for many people, the abolition of the 10p rate was seen to be damaging some of the very households that the Labour Government wants to protect. The Treasury announced that it would take action to address the issue and to compensate the worst off, in particular people on low wages, people with no children and pensioners under 65.

The Institute for Fiscal Studies estimates that about 5 million people in the UK will lose out as a result of the abolition of the 10p rate. How many people will be compensated?

An interesting contrast can be made between the debates that the Scottish Parliament can have and debates at Westminster, but I think that there will be an attempt to compensate all who have been badly affected—that is what the Treasury is committed to doing. I welcome the comments of the Institute for Fiscal Studies, which demonstrated that the people who are worst off in our society have benefited hugely from the UK budget. We should not forget that.

Perhaps I am too sceptical about the motivation of the people who wanted this debate. Perhaps the SNP's commitment to low earners can be illustrated by its spending priorities. The UK budget sets our spending, but we should consider where we spend the money. Mr Swinney set out some of the areas of spend. The SNP mantra usually starts with the abolition of bridge tolls. The policy has benefited many people in Fife and beyond, but it was not exactly targeted at the least well off. Nor was it motivated by a desire for environmental justice, never mind social justice.

What about cuts in business rates? Such cuts are good for small businesses but they are not exactly an anti-poverty measure. Of course, there is also the abolition of the graduate endowment. We all know that the SNP promised to tackle student hardship, widen access, and dump student debt. Instead, it has directed limited resources at a specific cohort, the majority of whom tend to come from the most educated and prosperous backgrounds. Populist those policies may be, but the SNP should not try to say that they are progressive. Its members should not pretend that their party's decisions are motivated by concepts such as fighting inequality, standing up for the underprivileged, or just plain social justice.

Does the member agree that anything that helps small businesses to flourish is good for employment? I am thinking in particular of those who are seeking employment. Surely anything that helps in that regard is of benefit to those who are unemployed or low paid.

I am not going to rebut Mr Don on the point. The SNP can and does make claims of dubious standing. My point is that the SNP should not pretend to the chamber that it is somehow motivated by standing up for the underprivileged, the weak or the vulnerable. That is neither the aim nor the benefit of its policy and I particularly resent that claim in this attack on the abolition of the 10p rate and on the UK budget.

The SNP cosied up to its traditional and natural bedfellows, the Tories, to get through a Scottish budget that does nothing for the low paid and throws into reverse Labour's commitment to tackling child poverty. SNP members are again in the chamber, shoulder to shoulder with the Tories, the supposed friends of the poor and underprivileged. Why are we not debating new school buildings, how to give our probationer teachers a secure job at the end of their probationary year, or the SNP's promise of a teacher in every nursery? The Scottish Government has the largest budget that we have ever known. Those who repeatedly complain about the tight settlement add the hypocrisy of making no link between that settlement and the taxes that are raised to pay for it.

The self-styled left wingers on the SNP back benches have been allowed free rein today. At last, they have been given an opportunity to salve their troubled consciences. They are happy to speak up now, but where were they when their own party—their own Scottish Government—put through a right-wing budget on the back of a deal with the Tories? Where was the outrage when their ministers decided on a reactionary, public service-stripping agenda that was disguised with a little sprinkling of populist SNP fairy dust?

All that, and yet the SNP expects us to believe that they are the champions of the low paid and the vulnerable. Did they think that no one would notice? Do they not realise that people understand exactly what a deal with the Tories signifies? Did they believe that everyone would think, "Oh yes, the SNP has managed to persuade the Tories to vote for a programme of investment in public services. After all, the Tories have long been the champions of the low paid and of social justice"?

I remind some of those back benchers that before they take the speck of dust out of someone else's eye, they should first take the plank of wood out of their own. Teaching posts are being lost in Renfrewshire, schools are being closed in Aberdeen, classroom assistant posts are being cut in my constituency and voluntary sector posts are being lost up and down the country. Does any SNP back bencher believe that that will help the low paid?

If the SNP and its Tory friends want to try to make mischief out of a Westminster decision, they can do so—that is politics—but let them not pretend for one second that that is about standing up for the low paid. There is a right-wing alliance at work in the Parliament. We are feeling it already in our schools and local services and in the voluntary sector. No amount of misdirection will hide the long-term impact on Scottish public services. We need to stop discussing budget decisions that are taken elsewhere and try to get right the budget decisions that are taken in this place.

With respect, I say to Kenneth Macintosh that my only natural bedfellow is my husband.

On a more serious note, the motion gives the Parliament an opportunity to follow the lead of the cabinet secretary, stand up constructively for Scotland and defend, as and when appropriate, the interests of the people of Scotland.

As other members have said, the abolition of the 10p tax band will leave half a million households in Scotland worse off. Anyone who earns less than £19,500 and is ineligible for tax credits will be worse off. Those who earn £17,000 or less will face a higher effective income tax rate in the current financial year as a direct result of the 2007 budget. Any taxation should, of course, be progressive and based on the ability to pay. That is a fundamental principle that the SNP holds dear. The regressive move by the former chancellor and current Prime Minister has resonated sourly in my constituency of Livingston. For example, a receptionist who earns £14,000 will be a net loser while MSPs and MPs will be net gainers.

Although Livingston and West Lothian are fortunate enough to have a relatively good array of employers compared with the rest of Scotland, companies associated with silicon glen have been lost and replaced by McArthurGlen and a reliance on the retail industry. Consequently, incomes are relatively low. The 2007 "Annual Survey of Hours and Earnings" demonstrates that, as the median income in my constituency is just over £17,500. Another factor is that, according to the last Scottish house conditions survey, 8,000 homes throughout West Lothian are fuel poor. Social tariffs are all very well, but they are not mandatory. Winter fuel payments are welcome, but they now cover less than 20 per cent of a pensioner's fuel costs. Four years ago, the winter fuel payment covered approximately a third of a pensioner's fuel costs.

The term "compensation package" says it all. Surely, if people require to be compensated for a Government decision, the original decision must have been wrong. No Government likes to lose face by doing a U-turn, but sometimes that may be the best option and the right thing to do. Instead, a bungling Mr Brown and Alistair Darling are trying and failing to compensate for bad decisions.

The Social Market Foundation rightly points out that the compensation package will compensate only one in five of those adversely affected. To add insult to injury, the chancellor, with his talk of average losses being offset over the year, has failed to give explicit reassurances and guarantees to vulnerable Scots.

Does the member agree that it would be welcome if the SNP Government did a U-turn on the reallocation of £34 million for disabled children in Scotland, who are—as she says—vulnerable?

I will speak about my experience in West Lothian. We have delivered, on the back of the historic local government concordat, record levels of investment for disabled children. That is before we even get on to reducing class sizes, on which we are making significant progress in West Lothian and in doing so are prioritising areas of deprivation. I hold up West Lothian Council as a positive example to other councils in other areas, which I could not possibly comment on.

Surely good government has to be about improving the lot of the less well-off and helping people to move forward rather than guddling about with the intricacies of an income tax and tax credit system that are surely complex enough. The sheer lunacy is that in his last budget Gordon Brown unpicked a measure that he introduced. The implementation of the 10p tax band was widely welcomed. In 2000, when Wendy Alexander was the Minister for Communities, she described it, among other measures, as putting money in the purses of mothers.

I do not often find myself quoting the former Labour minister Brian Wilson, but on this occasion I will. He stated:

"The most problematic conundrum is why a Labour government should be penalising some of the lowest-paid wage earners in our society by abolishing the 10p tax band. As with the poll tax in days of yore, this succeeds in offending not only the victims, but also a large body of opinion that does not wish to benefit at their expense."

So much for London Labour; it has lost its way and its focus. As Christina McKelvie correctly highlighted, it is now left to the SNP to put money in the purses of ordinary Scots through the council tax freeze, the reduction in prescription charges—they are soon to be abolished—and increases in free personal care and nursing home payments.

I realised a long time ago that if you want social democracy you have to be able to pay for it. The SNP Government is rightly focused on growing our economy to meet our social democratic aspirations. Therefore, it is highly disappointing that the London Government's budget undermines our efforts to support small businesses. If we want compassion, we certainly need enterprise; they are two sides of the same coin.

Of course, it is hard for me as a nationalist to be dispassionate about Scotland and our desire for full self-determination but, as we are all agreed, we cannot turn the clock back and there is only one direction of travel. I look forward to full fiscal autonomy at very least.

The debate has perhaps cast more heat than light on some of the arguments that are before the Parliament. I will highlight positively only two points from the speeches. One is Alex Johnstone's valid point on smart metering and the other is Jeremy Purvis's reference to the reduction of support for small businesses.

I will spend a moment making a couple of slightly more critical observations on some of the speeches starting with Alex Neil, who spoke about the lowest ever revenue grant from the Treasury. Of course, that is wrong: it is the highest ever revenue grant from the Treasury. He also spoke about lower interest rates in an independent Scotland. Jeremy Purvis dealt with him adequately on that matter.

In a slightly different context, we heard James Kelly talking about the constancy of the Labour Government. As the bulk of this debate has been about the abolition of the 10p rate that the Labour Government introduced in the first place and a number of other issues of the same sort, it seems a bit odd to talk about the constancy of the Labour Government.

A number of nationalist colleagues referred to London Labour. When we have a Scottish Prime Minister, a Scottish chancellor and Des Browne and Douglas Alexander as senior members of the Government, is there not something a bit odd in talking about London Labour? The focus of that is not quite right.

There are two political contexts in which the debate takes place. The first is the future of the Labour Government, which the voters in the local elections in England and Wales may be determining as we speak. Every Government starts off with high hopes but gets damaged by the accumulation of events—something that the SNP should think about in its excitement at opinion polls—and ends up with a loss of momentum and direction. The Labour Government was buttressed by the sheer awfulness of the Conservative Governments that went before it but, nevertheless, there has been a growing sense in recent weeks that it has a death wish and that a long-serving chancellor is somehow diminished and forlorn as Prime Minister.

The second context is arguably more important to us: the relationship between Scotland and London. Jeremy Purvis spoke about that when he outlined the need for a new fiscal relationship, more substantial tax-raising powers for our Parliament and a new sense of partnership in Britain. Liberal Democrats support the Government motion's criticisms of the UK budget, but we do so knowing that the SNP would criticise any conceivable UK budget—with the exception of Lloyd George's 1909 budget, I accept—not because it is wrong but because it is British.

The central dispute has been the abolition of the 10p income tax rate. Liberal Democrats criticised that last year when it was announced—I did so myself—because it seemed to us to be an obvious attack on the poorest people and those in the lowest income brackets. In fairness, nobody listened at that time.

A year later, when the 10p rate abolition was due to come into effect, Labour MPs suddenly rediscovered their social consciences and a full-scale rebellion was in train. The reality is that abolition was always a disastrous and socially divisive policy but, last year, there was time to sort it, whereas, this year, there is an almighty political and administrative mess.

I cannot believe that nobody listened to Robert Brown a year ago.

The Lib Dem amendment focuses on the housing market. What specific proposals do the Liberal Democrats have on that?

If I may, I will come to that a little bit later in my speech. I will stick with the abolition of the 10p rate, because it is the central point of much of the dispute about the budget.

The reality is that the whole tax system has become silted up, not least by the administrative complexities introduced by Gordon Brown. It no longer fulfils the social reform purpose that it has sometimes been suggested that it did. The Labour Government promised to eradicate child poverty by 2020 and to reduce it by half by 2010. It has made modest progress but is on course to miss the 2010 target by 1.1 million children.

We all saw the painfully damaging attacks that Vince Cable made on the Prime Minister on other issues. He warned the Government five years ago that there was a growing problem of personal debt, much of it secured against a dangerous bubble in the housing market. He spoke about the economy being sustained by binge lending. So, indeed, it has proved to be.

The whole country is now paying the price of the Government's negligent inaction in those areas. We cannot, and should not, stop lenders readjusting to higher standards of risk management, but we cannot individually or collectively afford the concomitant increase in homelessness and repossessions that has taken place in England, which will have an effect—hopefully at lesser force—on Scotland, too. Government must play its part in requiring the banks to face up to their social responsibilities. Alistair Darling's budget is practically silent on those matters, overwhelming and vital as we know them to be. The economic ills are not all caused by the Labour Government, but the UK Government does bear a significant degree of blame, and it is its responsibility to provide remedies for them and to steer the ship of state away from the icebergs. The charge against the UK Government is that it has not been up to the job in that respect.

In Scotland, we have a Government whose declared policy—albeit rejected by the Parliament and, as far as we can tell according to most opinion polls, by the people—is one of independence for Scotland. We have seen in dramatic fashion in recent days how a strike in a crucial place can halt fuel supplies and threaten the economy of the country, which has had to be rescued by alternative supplies from England and abroad. During the Northern Rock crisis, we saw how the UK Government could bring to bear resources three or four times those of the whole Scottish budget. It is a nice point to consider what might happen if similar problems were to afflict the Royal Bank of Scotland, say, in an independent Scotland, as no Scottish Government could secure resources of that size.

Scotland is not helped by the dithering and uncertainty that is increasingly the hallmark of the Labour Government. The budget was a failed budget from a chancellor with a bit of an economic mess to clear up, which was contributed to by his predecessor. The criticisms made in the motion and in the Liberal Democrat amendment are entirely justified, and I urge the Parliament to give a united response to the UK Government's budget by agreeing the motion and the Liberal Democrat amendment.

We have learned during the debate that the Labour Party in the Scottish Parliament does not like to debate reserved issues. That was clearly on Labour members' crib sheets, because Labour members consistently mentioned it. What an irony it is, however, that one Labour member announced a fresh Westminster policy, hot off the press, that has not been announced anywhere else in the country. According to Ken Macintosh today, every single one of the 5.3 million people who have been hit by the abolition of the 10p tax rate will be compensated. We heard it here first. I would love to know whether they will be compensated retrospectively to when the decisions were made.

Can Gavin Brown cast any light on why it is only this year that the Conservatives have discovered a social conscience on the issue of the 10p rate?

I am glad that Robert Brown asked that question. Let me read from the Conservative party's press release from five minutes after the budget in 2007. It says:

"Gordon Brown's last Budget is a tax con not a tax cut. In his stealthiest tax yet, he has paid for his 2p cut in income tax by abolishing the 10p rate ... Buried in the small print are new stealth taxes which will hit low earners by doubling his 10p tax band."

That was the very first press release following last year's budget, so we have not suddenly "discovered a social conscience".

As I was saying, we heard a fresh announcement today that all 5.3 million people who were hit by the abolition of the 10p tax rate will be compensated. I am desperate to find out how they are to be compensated.

Does Mr Brown accept that it is a little bit rich of him to ask us to debate a reserved matter, and then to ask members of this Parliament, who have no locus on the matter, to give a commitment?

In the interests of enlightenment, however, I will quote Jane Kennedy in Hansard. She said:

"The Chancellor made a commitment in his letter that there are households that we want to do more to help. It would not be appropriate for the Government to commit at this stage to the detail ... However, I have taken note of the concerns that have been raised on the issue today and I will ensure that they are considered".—[Official Report, House of Commons, 28 April 2008; Vol 475, c 126.]

That does not sound to me like all the 5.3 million people concerned are going to be compensated. I did not expect Mr Macintosh to make a policy commitment today, but the fact is that he did. We look forward to hearing how it goes.

The Institute for Fiscal Studies makes it quite clear that, given the package of measures that we have heard about so far—tax credits and additions to the winter fuel payment—the absolute maximum number of people that can be compensated in relation to the objectives that we have been told about so far, is 1.5 million out of the 5.3 million. Perhaps Mr Kerr will tell us, in his closing speech, how the rest will be compensated.

What else came from the Labour benches? James Kelly talked about the changes to taper relief. I was a little confused by his argument, but the gist of it seemed to be that the changes are good because they reduce a bit of bureaucracy. I suggest that Mr Kelly tell that to the many hundreds of thousands of businesses that will now be paying 18 per cent capital gains tax instead of 10 per cent. I doubt that there is any business in the UK that would be happy to pay 18 per cent instead of 10 per cent because it cuts down on a little bit of bureaucracy.

I was excited to hear that Jackie Baillie was going to be giving us some fabulous announcements on whisky. Boy, did we get them! She stated that all the evidence goes against the view of the Scotch Whisky Association, which is legitimately concerned that governments in overseas markets might decide to increase their tax revenues as a result of the recent change. I suggest to Jackie Baillie that, given that the announcement was made on 14 March, to say that in the course of six weeks great evidence has been gathered to suggest that the opposite is true is patent nonsense.

Will the member take an intervention?

Jackie Baillie does not take interventions from people who did not take them from her, but I am different from Jackie Baillie, and I am happy to take her intervention.

I have to confess that I was saving myself for the cabinet secretary, whose intervention I took.

Gavin Brown might not read the newspapers from India, but in the past few weeks the Delhi Government has decided not to increase the duty on whisky.

Well—that is Jackie Baillie's case conclusively proved. What on earth is the Scotch Whisky Association worried about? In passing, I note that Jackie Baillie does not have time to debate reserved matters, but she has time to read Indian newspapers of a weekend.

The Liberal Democrats did not address their own amendment in any great detail, other than to say "housing market" and "child poverty" a couple of times. I suggest to Jeremy Purvis, who excitedly quoted David Cameron's words in Hansard, that the tone and the body language of Mr Cameron, as he made those comments, are far more important than what he actually said. In simply reading Hansard, it is important to remember that Mr Cameron was being sarcastic, as the subsequent press release proves.

It was not a great budget for the people of Scotland. It was not great for the economy as a whole and it arrived on the back of a poor budget from last year and a poor pre-budget report. We want the best for Scotland in 2008, but that will happen in spite of the Labour Administration in Westminster.

I hope that the Official Report staff get my tone and my body language correct as they report my words.

I will start by dealing with Mr Swinney, and the rank hypocrisy of many of the things that he said. He talked about the social democratic contract—a contract that we know has been broken for first-time home buyers, for those expecting new schools in their communities, for those expecting smaller class sizes in primaries 1, 2 and 3 and for those who have an interest in student debt and local income tax. Promises were broken in all those areas in the early months of this Administration.

The Institute for Fiscal Studies has been quoted quite a lot today, so I will point out that it said that, across the UK, 16 million households benefit from the tax and benefit measures in the budget, with the biggest gains going to the poorest 30 per cent of people. We hear a lot about upwards redistribution, but the Institute for Fiscal Studies clearly states that the least well-off gain most from the budget.

If that is the case, why were the back-bench Labour MPs at Westminster so unhappy with the budget?

That was a beautifully posed question. I will come to that point in a moment.

We have had a lot of discussions about the 10p starting rate of tax. Iain Gray made the point to Mr Swinney that none of his back benchers has had the gall to stand up and say anything while the SNP are making cuts throughout Scotland. They did not have the guts to tell Mr Swinney to change his decision. However, when Labour MPs and others commented on the abolition of the 10p rate, the chancellor and the Prime Minister were willing to listen and take the required action to ensure that the effects of the measure will be ameliorated in due course.

We also heard about the great social justice element of the SNP, but in relation to the graduate endowment, free prescriptions and free personal care, there is no targeting of the needy, and learned professors say that the council tax freeze will be a disbenefit to the poor while the rich will gain. Mr Swinney says that we must assert the Scottish interest, but we are part of the UK economy, which has the second-lowest inflation in the European Union. Unemployment is at its lowest since 1974 and employment is at a record high. The UK budget has delivered those benefits to the Scottish interest for many years during the lifetime of the Labour Government.

The resilience of the UK economy is envied throughout the world. We have seen our way through the Asian financial crisis, the Russian debt crisis and the dot-com bubble. As James Kelly said, Labour's stewardship of the economy in budget after budget has secured for the UK economy a position above every other economy in the world. Our economy leads the G7 group, having had consecutive growth for 62 quarters. There is no going back, unlike for other members of the G7. That is Labour in action. As an SNP member said during the debate, economic growth and social justice go hand in hand: Labour has delivered both.

Liam McArthur mentioned child poverty. Under the Tories—let us not forget them—child poverty doubled, and in 1997 it was the highest in Europe. If Labour had done nothing, 1.7 million more children might be living in poverty today. Of course, Labour did not do nothing. We stopped the increase and reduced the number of people living in relative child poverty in Scotland by 90,000. That is a faster rate of reduction in child poverty than any other country in Europe has achieved.

The statistic for child poverty in Germany is 9 per cent. Under Mrs Thatcher, child poverty in Britain was upwards of 20 per cent, but it has only just come down to 20 per cent.

The facts are there for everyone to see. Under the Tories, child poverty went up by 1.7 million. Under Labour, it is reducing. That is the point of Government, and that is the action that UK Government budgets have delivered for those in Scotland.

I am sure that we all agree that the best route out of poverty is employment. As I said, unemployment is at its lowest since 1974 and employment is at its highest-ever level. Tax credits are working for many families throughout Scotland.

Labour's strategy at UK level—and what we advocate in the Scottish Parliament—is to increase employment, increase incomes, ensure that there is financial and material support for people, ensure that communities are safe for families, and improve children's life chances. That is exactly what Labour has been doing both here in the Scottish Parliament—in opposition and in government—and at UK level. Child poverty is a complex and challenging issue, but I advise Robert Brown that we have made substantial progress, contrary to what he said.

I turn to the Tories. Economic stability is at the heart of Labour's UK budget strategy. The Tories' spokesperson George Osborne said:

"every spending commitment that you will hear from the Conservative party is fully costed and paid for".

Of course, we know that some of Mr Swinney's commitments are going wrong. The Tory party has made many commitments, including a 25 per cent cut in corporation tax, a transferable marriage tax allowance, an increase in working tax credit, an increase in inheritance tax threshold to £1 million, and a national school-leaver programme. However, none of those commitments has been costed. Our economy and its stability are at stake.

On the 10p tax rate, let us acknowledge that the chancellor and the Prime Minister have ensured that they will reverse and deal with the particular challenges that families face. The rate was introduced to help to tackle poverty when the child tax credit system was getting up and running. Of course, the child tax credit system now supports families in need. We will use such measures to ensure that we have the fairness that we seek to achieve.

I return to the point about the SNP's position.

"No one is going to reinstate the 10p band at a cost of £7 billion".—[Official Report, House of Commons, 28 April 2008; Vol 475, c 106.]

Those words were spoken not by a Labour MP or MSP but by Stewart Hosie. The SNP is left with few options in relation to the so-called rediscovery of conscience on the 10p tax rate, given that SNP MPs are not advocating it in Parliament.

The Government should take advice not just from me but from others. We talked about the council tax freeze and how great that is for Scotland. The editorial in today's Edinburgh

Evening News states:

"The decision by Scottish councils to take a share of the government's ... "bribe" in return for freezing council tax was accepted without ... thought for the consequences." What are the consequences? The editorial states that

"the chickens have come home to roost" and that,

"the length and breadth of the country", councils are cutting services. Administrations are moving in not on high-profile services but on services that we care about, such as crèches, care for the elderly and facilities for our schoolchildren. Such services are social justice in action, and the SNP is removing social justice from Scotland.

The by-products of the debate are significant. As the message gets out that Scotland is more and more in favour of controlling its own affairs, more members in their heart of hearts will have a strengthened realisation about the need for financial powers here in Parliament. It was interesting that there has not been a word from Labour members about levelling the playing field for Scotland versus the rest of the UK. Anything that I heard about the economy was myopic and focused on the UK economy—ignoring Scotland's relative lower growth. Over my entire business career, which spans up to 40 years, there has been lower growth, a declining population and lower life expectancy in Scotland. None of that was properly addressed or put in context.

Meanwhile, John Swinney spoke about our commitment to the Scottish people, which is being honoured across the board. We are seeing that reflected in the attitude of the people of Scotland. That approach is working at a time when people in Scotland are very much aware of rising food prices, rising energy prices and when housing costs are going up. The irony is that the UK budget that is doing nothing to level the playing field is being bankrolled by North Sea oil revenues, which are propping up Westminster's finances. Scotland is being let down by a lack of alignment with Scottish interests and a lack of benefit to give Scotland a competitive edge. I was very taken by what Derek Brownlee said.

Will the minister give way?

Let me develop the point. The key matter that Mr Brownlee spoke about was, in essence, the rights of Parliament to take a rational approach to consideration of reserved matters as well as devolved matters, to take steps here— such as what we have done with the small business bonus—to mitigate moves down south, and to argue the case for Scotland on whisky, economic powers and so on. He welcomed the openness of the Government in doing that. I welcome it, too. What we are seeing is the 5.1 million people of Scotland coming on board—confirmation of that is in the approach's popularity. The necessity of standing up for Scotland is being endorsed in the polls. Mr Brownlee also exposed the nature of the abolition of the 10p rate and the chancellor's comment that it was a transitional measure.

Mr Mather stated that the agenda of the SNP and Mr Swinney is being supported in the polls. However, we have seen a poll this week that shows that their ultimate objective of independence—or is it separation? We are not sure—is supported by only 19 per cent of Scottish people. That seems to contradict his point.

A poll last week showed a markedly different result. One can phrase questions to get certain results. There has been substantial debate about that.

What I know is what I see; we are seeing from Labour inability to deliver lasting fiscal benefit for low-paid people. The abolition of the 10p tax rate is a major issue. The true and fair view on that comes from Jim Cousins, a Labour member of the Treasury Committee, who said:

"There are millions of low-paid" people

"who are not entitled to tax credits and millions more who are but don't claim it, and they have got to face food and fuel and rent increases this month. They cannot wait for a package in 2009; they need it in 2008."

Therefore, we must see the detail and it must be effective.

Does Jim Mather believe Stewart Hosie, whose name has come up a few times in the debate? According to the Edinburgh Evening News ,

"Even core services like education have not escaped the axe. At a time when there is growing concern that children leaving school are not able to read and write properly individual schools were each asked to cut their budget by 1.5 per cent."

Despite a tight settlement, we have boosted funding for local schools, delivered a council tax freeze, reduced prescription charges, removed the student endowment, increased free personal care payments and delivered the small business bonus.

It was interesting to hear the anti-business rhetoric from members on the Labour benches, which is compounded by what Labour at Westminster has done on corporation tax and capital gains tax. Labour is unable to see that viable local shops can improve people's quality of life. They create competition, drive down local prices and create new job and business opportunities. For Ken Macintosh not to see that, and for him not to see the two sides of the coin that Angela Constance talked so eloquently about—in terms of compassionate enterprise—was disappointing to say the least.

I met representatives of the Headteachers Association of Scotland at lunch time, and they itemised cuts that are being made in schools across Scotland. Staff are not being told that they are being made redundant, but are being described as "surplus to requirements". Is that the fault of councils, or is it the fault of the Government?

We are putting money in. The efficiency savings that you guys wanted, and that Labour wanted, were liable to have had a much more detrimental effect.

We are now addressing problems and identifying issues that Labour does not want us to identify. Moves that are being made at Westminster are having a negative effect on Scotland as we speak. the small companies' corporation tax rate, coupled with capital gains tax changes, is having unintended consequences—it is making more people sell their businesses and causing a loss of continuity in the Scottish economy. A disproportionate number of companies are now in that position.

Alex Neil's useful speech pointed out that oil-rich Scotland still has work to do on poverty and fuel poverty after 10 years of Labour. With its oil reserves and the trajectory that it is on, this country is well able to start addressing such issues. However, support for people by the Westminster Government is falling apart. That Government is losing its way and its sense of purpose.

In his speech, Jeremy Purvis was gloriously speechless for once. I believe that the ghost of Lloyd George did it. What disappointed me about Jeremy's contribution was that he ignored the new cohesion that is within our grasp in Scotland. Government, councils, the enterprise networks, VisitScotland and the business gateway can work together with the business community at local and regional level. I am sad that Jeremy has declined the opportunity to be part of that.

I listened with great interest to James Kelly's speech, which was a victory of assertion over argument. He should get out more often and talk to people in the business community about the effect that moves in Westminster are having on them. Negative material effects are manifest.

Whisky is a major totem in the Scottish portfolio of industries; it carries subliminal messages about Scotland, and the health of the industry is vital. It is a key economic engine in the Scottish economy. [Interruption.]

Order. Far too many conversations are taking place.

It is clear that moves at Westminster have harmed a vital Scottish industry. Westminster did not send a signal on solving binge drinking, neither did it send a message on tax fairness. The message that is being sent overseas is totally at odds with the motion that Jackie Baillie lodged in 2006. [ Interruption. ]

Order.

The message that is being sent out on whisky is unacceptable: it damages Scotland's interests and it is very similar to the message that is being sent out on North Sea oil and the development of our oil reserves. Those crucial industries have to be looked after productively. However, despite what is happening, the industries are thriving and will continue to thrive. The contribution of the new independents in the North Sea is improving the trajectory of oil production at a time when the oil price is going through the roof.

In 2000, Donald Dewar said here that Scotland could not be independent because oil would never again reach the dizzy heights of $18 a barrel. What would he say now, with oil at $112 a barrel, with a new sense of purpose and a unifying goal in Scotland, and with evidence from the budget that Westminster will never do anything to level the playing field? That will be down to us, and it is exactly what we are doing.

We are galvanizing Scotland, making it a more cohesive place and bringing the different sectors of Scotland together. We are bringing our councils and our enterprise agencies together into a new cohesive whole that can take us to a brand new future. I look forward to that day.