There is a Better Way Campaign

– in the Scottish Parliament on 3rd March 2011.

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Photo of Trish Godman Trish Godman Labour

The next item of business is a members’ business debate on motion S3M-7752, in the name of Elaine Smith, on the there is a better way campaign.

Motion debated,

That the Parliament commends the STUC on the launch of its There is a Better Way campaign; believes that deep, savage and immediate cuts are neither unavoidable nor inevitable and that they would actually threaten economic recovery across Scotland and in areas such as Coatbridge and Chryston; further believes that a sensible and sustainable response to the current economic crisis is to promote growth and ensure fairness through creating jobs and protecting services, through fair taxation and a living wage, and *would welcome widespread support for the STUC campaign.

Photo of Elaine Smith Elaine Smith Labour

I thank the members who signed the motion, those who are here today and those who support the Scottish Trades Union Congress’s campaign.

On 23 October, 20,000 people, including MSPs, took to the streets of Edinburgh to protest against the cuts and proclaim that there is a better way. A number of my constituents were on that march. The big unions, such as Unite, Unison, the GMB, the Public and Commercial Services Union and Prospect, represent the majority of public sector workers, who are feeling the pain of savage cuts already. However, all trade unions have members who are affected. I note that the Educational Institute of Scotland has agreed to ballot on the education cuts.

I am aware that folk are coming into the gallery for the debate and that there will be folk here from the wider Labour and trade union movement. I welcome in particular North Lanarkshire trades union council, which is coming to view the debate. I commend it for its active support for the campaign and for taking the message out on to the streets; I joined it in doing that in Coatbridge. We are also joined by the president of the Scottish Trades Union Congress, Joy Dunn, and people from Greenfaulds high school, which is in the constituency of my colleague Cathie Craigie, will come to the chamber for the debate.

Many myths are being peddled about the deficit, the cuts and the need for the cuts, and we need to counter-attack with the truth to dispel them. Cuts are not inevitable or necessary. Britain had a higher deficit in 1945, when the welfare state was introduced. The cuts agenda is simply an excuse to undermine the very fabric of that welfare state. All the myths and counter-attacks are on the there is a better way website, which anyone can access.

We are talking about an ideological attack and a reorganisation of society firmly in favour of big business interests and away from the workers. Let us be clear. The deficit, which can be paid off over many years, is due to the recession and the greed of bankers. It is not the fault of public services or public sector workers, so why should they pay with wage freezes, which effectively mean wage cuts, as my union, Unite, has pointed out?

The general secretary of the STUC, Grahame Smith, has sent a message to councillors in which he said:

“I know that many of you don’t want to make cuts. I know that many of you believe in the public sector and in public service. But if you are not to be seen as coalition collaborators you need to stand with us, like local government leaders did in the 80’s and 90’s, and argue the case against the cuts.”

Photo of Patrick Harvie Patrick Harvie Green

I apologise that I will not be able to stay for the whole of this important debate.

Does the member agree that it is a little disgraceful that members of the political parties that want to make cuts are not even in the chamber for the debate to answer her questions about the basis on which their Government is taking action?

Photo of Elaine Smith Elaine Smith Labour

I absolutely agree with that. Perhaps it would be quite uncomfortable for them to hear this message.

Spending on public services is an investment, not a debt or a drain, and public servants deliver vital services in our communities and to the most vulnerable people. The current campaign of vilification of public services is all about cutting and privatising because of ideology, not because of need. It is no surprise that the Tories are pursuing that agenda, but it is a bit of a shock to many that the Liberal Democrats are aiding and abetting them. Grahame Smith has sent a message to them, too. He said:

“you have not only ripped up your manifesto you have ripped up your credibility. If you want to restore it—stop cowering behind the Tories and stand up and fight these cuts.”

He turned his sights on the Scottish Parliament and said that it must

“ensure that its priorities are our priorities—jobs, services, fair taxation and a living wage.”

Of course, we know that the Scottish Parliament’s Scottish variable rate tax powers cannot be used at present. The Finance Committee has just reported on that matter. It concluded:

“the SVR belongs to the Scottish Parliament and not to the Scottish Government”, and urged the Cabinet Secretary for Finance and Sustainable Growth to make an immediate statement to Parliament on how the power could be reinstated. I would be grateful for a comment on that from the minister.

SVR might not be the preferred choice of many—like others, I would certainly prefer to make the rich pay more—but at least it is income based and supported by a mandate of the people in a yes, yes referendum. In 1997, Donald Dewar said of SVR:

“It is important to recognise that the power may be used to deal with some special project or difficulty.”—[Official Report, House of Commons, 31 July 1997; Vol 299, c 465.]

The time is coming when members will have to recognise that we are in a period of great difficulty. When the Tory-led slash-and-burn policies begin to impact on our communities, it might be preferable to use tax rather than watch the devastation. I have some sympathy with the Scottish National Party Government telling us that it is bound by the grant imposed by the Tories, but it is simply not true that there are no other choices. Apart from SVR, such choices could include a properly considered large business supplement, business rates on land banks and empty properties, land value tax and a review of current big project spending priorities. There are a number of choices that could better protect us from Tory cuts. The Parliament was established to do just that. It was established to act as a buffer against an attack on the working class by the obscenely wealthy public schoolboys who are now in charge at Westminster.

The Trades Union Congress is sending the Tories a message with a massive rally in London on 26 March to demand an end to cuts and to tell them that there are better ways to save money as proposed by the PCS: employ more tax collectors, not fewer, to gather in evaded, avoided and uncollected tax; dump the renewal of Trident; and end the unwinnable war in Afghanistan, which is costing £2.6 billion a year.

Of course, the Tories are spinning the line that we are all in this together. Guess what? We are not. The top 1 per cent of the population of Britain own nearly a quarter of the wealth and the bottom half own just 9 per cent. The rich just keep on getting richer while the poor get poorer. We are not all in it together and we are not all feeling the squeeze. Very little is being squeezed from the rich.

We do not get out of recession by causing unemployment and making the needy many pay for the mistakes of the greedy few. The GMB tells us that, in Lanarkshire, at least five unemployed workers are chasing every vacancy, and Unison points out that some 60,000 public sector and 65,000 private sector jobs could go in Scotland because of the cuts.

The answer to the economic crisis is to create jobs, not to cut them. We need an economic strategy that is based on public investment, job creation and tax justice. After the economic disaster that we have witnessed, we should be watching the death throes of capitalism. We should be seeing that unfair system, which benefits the minority who have power, wealth and privilege, replaced with socialism providing equality, justice and fairness for the majority.

The left is often—wrongly—accused of seeing the problem but not providing solutions. The people’s charter, which is part of the better way campaign, offers sensible alternatives. I invite everyone who is here to come along, meet leading trade unionists and the actor David Hayman, and sign up to the charter at 5.15 tonight in committee room 4.

In conclusion, the better way campaign really is a them-and-us situation. If we are not with it, we are against it, and silence is simply collaboration. In the words of the STUC general secretary:

“in the run up to the Scottish elections ... join us in targeting the constituencies of those candidates who support the policies of the UK government either actively or by their silence” or, as Patrick Harvie mentioned, by not being here today.

The cuts amount to a cruel attack on working people and the poorest, most vulnerable members of our society. They disproportionately affect women. I fully support the STUC campaign, and I will use my public position to speak out at every opportunity against the vicious, ideological cuts, in favour of the sensible alternatives proposed by our trade unions and the people’s charter committee. I hope that many more MSPs, across the parties, will join me and support the principle that there is a better way. [Applause.]

Photo of Trish Godman Trish Godman Labour

I remind members of the public in the public gallery that it is not appropriate to applaud.

Photo of John Wilson John Wilson Scottish National Party

I congratulate Elaine Smith on securing this worthwhile debate. As per my register of interests, I declare my membership of the union Unite. I have been a trade union member for more than 30 years.

I realise that the emphasis in members’ business debates is usually consensual. However, I have some serious issues that I feel should be aired.

The campaign by the STUC and the unions is worthy. The protection of front-line jobs and services is vital not only for the people who work in them but for the people who rely on the vital support that they provide. Let us look at what has happened in the past decade to the lowest-paid local government workers and, in particular, the women workers who were promised equal pay by both the Labour Government in Westminster and the Labour Executive in Scotland. A decade later, we still find that many women have been denied their right to equal pay because local authorities have failed to settle within a reasonable period.

The situation has been further compounded by the single status debacle, which once again failed spectacularly to defend and enhance the position of the lowest-paid front-line staff who provide so many vital services. At the same time as equal pay and single status have failed for front-line council staff, we have witnessed the earnings of senior officials within local authorities increase through reorganisation and rationalisation. In one year alone, senior council staff were awarded a 13 per cent pay increase, on top of a 2.5 per cent increase already awarded that year. That, let us remember, happened at a time when poorly paid women were being denied equal pay settlements.

I fully support the campaign to retain front-line services, but I object to the defence of enhanced salaries and performance-related pay for senior members of staff at the same time as terms and conditions and overall incomes are being cut for front-line staff.

Photo of Cathy Peattie Cathy Peattie Labour

Does the member not agree that freezing the council tax has had a major effect on women and other low-paid workers whose jobs are under threat? Is that really good enough?

Photo of John Wilson John Wilson Scottish National Party

I will deal with that later in my speech.

In February 2011, Unison could not provide a full-time official to attend a meeting of members in St Andrew’s high school in Coatbridge to discuss changes to the terms and conditions of low-paid council employees who are facing the threat of redundancy and cuts in their earnings.

Many Labour Party members and trade union leaders cite Keir Hardie as the leading light of the movement founded to represent and protect the working class. What would he say to this union leadership and this Labour Party, which are claiming to carry the tradition from the men and women who founded the Labour movement? Yes, we are in a financial crisis and yes, we are being asked to sacrifice jobs and services to bail out a failed financial system. However, my plea to the union leadership is that it meaningfully consults its membership and protects the interests of the members who most need its protection—the lowest paid and those who are facing the worst cuts to their terms and conditions—instead of glibly accepting that the only solution is to tell them to vote Labour and everything will be all right. Tell that to the women who lost out on equal pay, the people who lost out on single status and the many thousands of workers who are forced to work for the minimum wage.

What we need now is a realignment of political and trade union ideas that will ensure that the most vulnerable, the disadvantaged and those in poverty are given the help and support that they not only need but deserve. We have to get away from the narrow protectionism that persists in council services and departments that, in the words of that trade union stalwart and Labour figure, Lord Reid of Cardowan, are not “fit for purpose”. We should use this debate and any opportunities that lie ahead to create service delivery mechanisms that truly provide the front-line services that we need and deserve in Scotland.

I hope that there is cross-party support for working towards the objectives of the there is a better way campaign to deliver a better way for all in Scotland, particularly the front-line workers who are low paid and whose conditions, which are already poor, are being slashed daily. If that support does not exist, can we actually provide a better way for all in Scotland?

Photo of Marlyn Glen Marlyn Glen Labour

I thank Elaine Smith for securing this debate and restate the welcome that she gave to the people in the gallery. I think that some of them might have missed it.

This very worthwhile debate, which has taken some time to get to the chamber, was originally initiated to link in with trade union week, an event of ever-growing importance in our calendar. At this point, I should say that I really cannot agree with John Wilson’s general criticisms of unions.

During trade union week, I was impressed in particular with Mark Lynch from the STUC youth committee, who took part in one of the excellent meetings in which the STUC’s equality committees came together to promote equality in the workplace and to discuss the work on the issue that is being carried out throughout Scotland. The unions into schools briefing was also excellent and gave hope to a new generation of trade unionists. Of course, it also reminded us of worries for the future of young people in this economic climate.

Although I welcome the Government’s attempts to strive for no compulsory redundancies, I think that it has always been unclear how the terms of the concordat would support such an endeavour. The aim might be laudable but, as we have seen this week, it is not particularly easy to achieve. The Christie commission will present opportunities for examining how public services will be delivered in future but there will have to be a balanced and true partnership with trade unions if it is to deliver realistically.

Sadly, we are now beginning to realise and understand the effects of the UK Government’s cuts on people’s standard of living, particularly those on low-to-middle incomes. The problem for people on low incomes is just that: they have low incomes. Any rise in costs, whether through regressive VAT rises or increasing prices, means that they have to pay more with less money, particularly given the planned cuts in benefits. For so many, the situation is impossible.

I agree with John Wilson on the disproportionate effect of budget cuts on women. Given that more women work in the public sector and use public sector services, they suffer a double whammy when cuts are made. It is therefore increasingly important that gender analysis is undertaken of key budget proposals. We need decisions to be published so that we can track and measure the outcomes.

The STUC’s there is a better way campaign involves workers, employers and community groups in campaigning to retain quality services. The campaign points to a different way—a better way—in which public spending, the public sector and the public sector workforce are seen as neither at fault for the deficit nor the target for its reduction.

From the Communication Workers Union’s call to retain vital universal postal services to the EIS’s campaign to protect our children’s education, we are working to convince people that there is indeed a better way. The cabinet secretary, Mike Russell, was nominated for the wooden heart award for the most callous cuts—and that was before the EIS’s decision to ballot members on whether to accept proposed changes to their pay and conditions.

I am sure that the march and rally in London on 26 March will be huge and that many of us will join it. However, here in Scotland we can make a difference, too. In particular, I ask the Scottish Government what action it will take to protect the one-price-goes-anywhere, six-days-a-week universal postal service obligation—a service that is essential for communities in Scotland. How will the Scottish Government lead people in a better way?

I commend the work of the STUC.

Photo of Hugh Henry Hugh Henry Labour

I was puzzled by John Wilson’s curious speech because I was unsure what he was trying to portray to us about the better way campaign. I have respect for him and the work that he has done over many years. He has deeply held and sincere views. However, if he wants to question credentials on a party-political basis, I would be interested to know what some of the major supporters of his party would say about a campaign such as the there is a better way campaign. What has Sir George Mathewson, the financier, banker and would-be Tory—now finding respite with the Scottish National Party—got to say about the better way campaign? What would Sir Tom Farmer’s view be of the better way campaign? What would Sir David Murray think about the attitude of trade unions in standing up to protect ordinary working people? We should be careful before we start to level criticisms.

If there was ever any doubt among ordinary working people about the need for an organisation such as the STUC or about the need for trade unions, what is beginning to happen in this country should ram it home to them. I cannot understand the philosophy in this country that says that someone who is rich and powerful needs to be incentivised to work—they need bonuses and high pay—but that the way to get the economy going again is to cut the wages and terms and conditions of ordinary working people and impoverish them. That approach is inconsistent.

Elaine Smith pointed to the people who caused the crisis: the bankers. They are now doing very well, thank you, and are back to the extreme and excessive bonuses that they previously enjoyed. Why do some in society try to defend the excesses of the City of London? I thought that the previous United Kingdom Government was wrong in its approach of light-touch regulation of the City. It made a major mistake, and to some extent we are paying for that mistake. However, we should learn from our mistakes. The First Minister of this country was profoundly mistaken when he said that what we need in relation to bankers is lighter regulation.

Photo of Jim Mather Jim Mather Scottish National Party

There is a big difference between light touch and no touch. The Treasury, the Bank of England and the Financial Services Authority let this country down enormously badly.

Photo of Hugh Henry Hugh Henry Labour

Jim Mather may wish to reflect on the fact that the First Minister wanted an even lighter touch taken to what was, at the time, no regulation. That is bizarre.

We need a proper set of regulations so that bankers in this country face up to their responsibilities.

The issues are not just in the public sector. Marlyn Glen is right to point to the threats to the universal postal service from some of the cuts, but there are issues in the private sector, too. The First Minister today praised the jobs that Amazon is bringing to Scotland. I welcome jobs coming to Scotland, but I read that, just before Christmas, Amazon took on temporary workers at one of its depots in Scotland and, in the middle of the night in the run-up to Christmas when it no longer had work for them, Amazon told them, “You’re off the clock—you’re not getting paid, so you can go home.” Many of those temporary workers on low pay could not afford a car, so they either had to find taxi fares to go home or stay in the depot until the buses came back on in the morning. That is happening in 21st century Scotland.

Some people seem to think that impoverishing workers is the way forward. The trade unions, with a measured, sensible and hard-hitting campaign, are doing a favour to all of us who say that ordinary working people deserve respect. I wish the trade unions well with their campaign.

Photo of Jamie Hepburn Jamie Hepburn Scottish National Party

I am tempted to begin by listing a number of individual backers of the Labour Party and wondering what their position might be on the there is a better way campaign. However, that would not be a particularly useful beginning, so instead I will congratulate Elaine Smith on securing a valuable debate. It was delayed, but I am glad that it has come back. I am pleased to support the STUC’s campaign. STUC representatives gave a useful presentation to the SNP group at the Scottish Parliament. I am supportive of the general thrust of the campaign. On a related matter, Elaine Smith knows about my support for the people’s charter, because I have shared a platform with her in support of it, but I will not be in committee room 4 tonight. However, I have signed up in support of that charter.

A useful starting point is to assess whether the UK Government’s cuts agenda is necessary. The Government talks about there being no other alternative, but we should consider whether that is true. It is a matter of regret that no Tory or Liberal member is here or is brave enough to stay to make their Government’s case. In the Chancellor of the Exchequer’s budget statement to Parliament last year, he described the budget using terms such as “unavoidable”, “fair” and “progressive”. He said that, although the budget was tough, it would be implemented in a progressive and measured fashion.

Let us examine those assumptions. First, is the budget unavoidable? Elaine Smith usefully remarked that the significance of the deficit now is proportionately nowhere close to that of the deficit that we had in 1945. Further, the projected size of the 2010 deficit was £178 billion, but the actual figure was £156.1 billion, which was still a significant figure but not as big as had been imagined. That is instructive in considering whether the budget is unavoidable.

Is the agenda fair or progressive? The STUC has useful information on that. It states:

“Low-income households of working age lose the most from the ... Budget reforms because of the cuts to welfare spending.”

The Scottish Government’s assessment has indicated cause for concern. For example, it estimates that the freeze in child benefit for three years will reduce the income of around 621,000 families in Scotland, with the greatest proportionate impact on low-income families. There are also concerns about changes to disability living allowance, with an estimate that 10,700 people in Scotland will lose their entitlement to DLA in 2013-14, rising to 31,700 in 2014-15 as a result of changes in the assessment criteria. That does not show the budget to be particularly fair or progressive.

Will the path that has been chosen work? The comments of Paul Krugman in that regard are instructive. He has said:

“Why the wrong turn in policy? The hard-liners often invoke the troubles facing Greece and other nations around the edges of Europe to justify their actions. And it’s true that bond investors have turned on governments with intractable deficits. But there is no evidence that short-run fiscal austerity in the face of a depressed economy reassures investors. On the contrary: Greece has agreed to harsh austerity, only to find its risk spreads growing ever wider”.

Therefore, it might not even work in the long run.

I am very supportive of the STUC’s there is a better way campaign. I have been working locally with the Cumbernauld and Kilsyth campaign to protect jobs in public services, and I will keep doing so.

I congratulate Elaine Smith on securing the debate. This is probably an area where we will not all agree. No one can deny that there is a huge challenge as far as the Scottish Government’s approach is concerned, with a £1.3 billion withdrawal from the Scottish budget as a consequence of the decisions of the UK Government. Despite those challenges, which I accept exist, the Scottish Government has delivered a fairer, more progressive budget than could ever be imagined under the UK Tory-Liberal Government.

Photo of Pauline McNeill Pauline McNeill Labour

I support the motion in Elaine Smith’s name and the STUC’s there is a better way campaign. Those who support the notion that there is a better way should unite behind the campaign. There might be criticism, as the forces against the campaign are strong, so there is a need for unity among all parties and members who really and truly believe that there is a case to be argued here.

There is an economic crisis, with high and rising unemployment and stagnant growth but, as Elaine Smith says, it is not a crisis of the public finances. The recession that we are now in was not caused by control of public spending. History does not support the coalition’s assertion that cuts would be good for growth and jobs. Many economic experts, to whom Jamie Hepburn referred, say this. A budget that is aimed to please the markets is folly and will not necessarily please the markets at all. Plenty of commentators who know about economics say that deep, premature and unnecessary cuts will lead to persistently high unemployment. The strategy is seriously misguided for the whole of the country.

Youth unemployment is now up by nearly 80 per cent since the beginning of the recession, yet one of the first acts of the coalition was to cut the future jobs fund, denying employment to thousands of Scots. How do we get our heads round that? It was a staggering decision.

As other members have said, cuts in services will impact hardest on the poorest and most vulnerable people in our society. Prolonged unemployment will add to the thousands of people who are already among our most vulnerable and will cause deep-rooted social problems in our society, the likes of which we saw in the 1980s. It will take decades to recover.

The emergency budget of 22 June last year was a bleak day for ordinary people, with massive cuts over such a short time. The pace of fiscal consolidation is positively reckless. The attempt to eliminate the deficit over a single parliament is the direct cause of the excessive cuts. No wonder people are beginning to question the motives of the coalition Government, suggesting that it perhaps has an ideological commitment, rather than a commitment to putting the country’s finances in order.

The pain that is being inflicted by the decisions goes much wider than the poorest and most vulnerable people in society. The increase in VAT to 20 per cent affects the cost of living for ordinary families. We discussed petrol prices in the Parliament yesterday, and I am pleased to know that we united behind a position. The Government should recognise the impact of higher prices on ordinary families. Carers need their cars to look after members of their families. People who do not have access to public transport will struggle to get to work. People on moderate incomes are being severely affected by the budget.

Hugh Henry makes some key points, which we should be talking about beyond today. The proposals to remove employment protection come at a time when people feel that security of employment has never been more under attack—and the trade unions are needed more than ever.

It is shocking that, in a period of austerity, there seems to be some support among employers for reducing employment rights. I have spoken to some well-known employers who have said that they would not have made such hard cuts in employment if there had been better statutory terms for redundancy. I am in favour of improving employment rights in a period of austerity to give ordinary people better protection in their employment.

The behaviour of our banks, which we have probably not debated enough in the Parliament, is appalling. They have not put products on the market that are suitable for first-time buyers, and small businesses, which are the backbone of our economy, are still not getting the lending that they deserve.

I support the living wage, but not only for the public sector—

Photo of Trish Godman Trish Godman Labour

You should finish now, Ms McNeill.

Photo of Pauline McNeill Pauline McNeill Labour

It is important that there is a bar for those who are working for poor pay in the private sector, too. By supporting a living wage, we can make it the bar for all workers.

Women will be disproportionately affected by this budget. There are many statistics to prove that, and we must stand up for women in the campaign. There is a better way, so I support the motion.

Photo of Cathy Peattie Cathy Peattie Labour

I thank Elaine Smith for bringing the debate to the chamber. As Pauline McNeill said, we should have discussed these issues before. I, too, thank the STUC for its campaign, and I hope that many people here and outwith the Parliament can support it.

There is a better way. In some ways, that is stating the obvious, when we consider the devastation that is planned for our economy and our public sector, and the poverty that will be inflicted on the most vulnerable. I echo the views of Marlyn Glen and Hugh Henry on the proposed changes to universal postal services, which will have a devastating effect on the poorest in our communities.

We can compare that to the protection that is afforded to those who caused the economic woes, and the privileged background of those who are wielding an axe to services on which they do not depend. It would be hard, unless you are one of the protected and privileged few, to come to any conclusion other than that there is a better way.

There is a better way is a rallying cry for those who want a fairer and more equitable society in which those who have the greatest wealth contribute the most; in which services for those in the greatest need—not bankers’ bonuses—are protected; and in which people reject the daft idea that the deeper the cuts, the better it is for jobs and growth. We know that that is a daft idea, and we should never support it.

The burden of the current policies falls heaviest on the poorest. In the words of Mary Brooksbank, which can be seen on the Canongate wall,

“the warld’s ill-divided; them that work the hardest are aye wi’ least provided”.

I am sure that she would have agreed that there is a better way.

The UK debt, which is currently 78 per cent of gross domestic product according to the Economist debt clock, is used to justify the savage cuts. It is certainly more than the Maastricht treaty allows for, but then we are in interesting times. How does our debt compare with that of other countries? It is higher than that of the USA, which stands at 65 per cent, and similar to Germany’s 76 per cent. However, it is not as high as the debts of Canada, Ireland and France—which are all in the 80s—and nowhere near the debts of Italy, Iceland and Greece, or the highest of them all, Japan, at 198 per cent.

If we consider the figures in terms of debt per person, we are again similar to Germany and lower than the USA, Canada, Ireland, France, Norway, Japan and so on. Among the developed countries, our debt is not exceptional—indeed, it is lower than that of many countries.

The debt justification is simply a myth. The financial crisis has been used as an excuse to attack the public sector and the working people, while the perpetrators of the debt are protected by their public school pals.

Members may find it an inconvenient truth, but it is not just Labour and trade union voices that are highlighting the devastating economic and social impact of the current policies. Many prominent independent academics and commentators have reached the same conclusion.

Contrary to what we have been told by the Con-Demolition and their friends in the media, there is no consensus on the need for the deep cuts that are being made. There are many people from many sectors of civil society who recognise the harm that is being done, and they agree that there is a better way.

Photo of Jim Mather Jim Mather Scottish National Party

I thank Elaine Smith for securing the debate. Viewed in the wider context of the increasingly extreme political and economic challenges that are being faced by other eurozone nations, it is even more important that the Parliament focuses on the economy and how we can act collectively in the best interests of the people of Scotland.

Before I turn to some of the specific points that have been made in the debate, I will say a bit about the STUC’s there is a better way campaign, the budget, the common ground that the STUC shares with us, and the Scottish common good. The Scottish Government has long recognised the convergence of interests and is committed to working closely with the STUC. It represents more than 640,000 people across Scotland and its campaign is also an important contribution to the debate that we need to have about how best to support businesses, communities and the people of Scotland.

The campaign has four elements. The jobs element looks at investment in manufacturing skills, infrastructure and the green economy to help to support job creation. The services focus is about keeping spending at decent levels to protect public services and drive the economy forward. There is a fair taxes element. Essentially, the proposition is that raising taxes when the economy recovers is a more efficient and fair way to reduce the deficit. Finally, the focus on a living wage recognises that low pay remains a problem for many workers in Scotland.

Let us compare each of those elements in turn with the budget that the Scottish Parliament has just agreed. The budget recognises the link between investment and jobs and, in the face of massive reductions in our capital budget from the UK Government, we have taken decisive action to boost capital spending next year and in subsequent years. We will transfer £100 million from this year to 2011-12 to supplement our capital budget. We have also launched an additional £2.5 billion programme of infrastructure that will be delivered through not-for-profit distribution models to boost investment in public works. Those measures enable us to confirm that our capital programme will include the construction of the new Forth crossing, the new south Glasgow hospitals project and our ambitious schools programme. We will also create 25,000 modern apprenticeships, which is a record, and a further investment of £10 million will support employment creation by focusing on new starts and encouraging small companies to expand their business base. We have asked public sector workers to accept pay restraint to protect jobs and maintain demand in the economy.

On services, we agreed a local government settlement with the Convention of Scottish Local Authorities. The settlement reflects our joint determination to improve outcomes for the people of Scotland and local government’s key role in the economic recovery of our communities. That agreement will enable local authorities to maintain delivery of shared commitments that impact on households throughout the country, to maintain the council tax freeze, to keep 1,000 police officers on our streets, to meet the needs of the vulnerable and elderly through the councils and the national health service working together to improve adult social care, to continue with the curriculum for excellence, and to protect teaching jobs, and so on.

On tax and using economic growth to reduce the deficit, I simply stress that we are required to operate within a housekeeping allowance that is imposed by the UK Government.

Photo of Elaine Smith Elaine Smith Labour

As John Wilson did not respond to Cathy Peattie’s point about the council tax, I will ask the minister. Does he not recognise that the council tax freeze results in cuts to services and that, although it puts a few extra pennies into individuals’ pockets, it affects us as a society?

Photo of Jim Mather Jim Mather Scottish National Party

The big prize is cohesion. Local government is compensated for the council tax freeze. This is an issue on which we can avoid polarising the argument, albeit that some have polarised it through their absence. We should look to take the moral high ground here. The climate is right. We are in a difficult position and inconvenient truths include the fact that we do not have the tax powers that we would like to help us to get through this difficult time, and the fact that income inequality in the UK is at its highest level since 1929.

Our income inequality leaves us at the top of the league table. The three countries with the highest income inequality are the United States, Portugal and the UK. There is a big opportunity to come together around issues such as the living wage. We are contributing to that by introducing a living wage for all Scottish Government staff of £7.15 an hour. That measure was welcomed by Grahame Smith of the STUC, who said:

“STUC welcomes ... an extension of the Scottish Government’s Living Wage pledge to NHS Scotland staff, a position for which it has long campaigned”.

There is an issue about going beyond that.

I have great faith in Scotland and its natural cohesion. We are starting to see people in other countries beginning to question how the modern capitalist system works. We must nurture that approach in Scotland.

Michael Porter, the former high priest of cut-throat competition from Harvard Business School, is calling for a new definition of profit and a new concept of shared value whereby the corporation seeks to benefit not only its management and shareholders but its customers, employees, suppliers, community and taxpayers. Even in the UK Government, we have Stephen Green, who will be mortified that the Conservatives did not turn up for this debate. Lord Green is an ex-chairman of HSBC and an ordained Church of England minister and he has a book out called “Good Value: Reflections on Money, Morality and an Uncertain World”, which also calls for a new beginning and a sense of social cohesion.

We also have people such as Richard Wilkinson, who wrote “The Spirit Level: Why More Equal Societies Almost Always Do Better”, which exposed all the negative implications of income inequality. He has a different proposition to put to those at the top end of the scale. Rather than saying to them, “Just do the fair thing,” which they should do, he says, “Do you want to have higher growth, safer streets and more people in your society with fulfilled lives?” There is a debate to be had on that.

We can also tap into things that are happening in the States, whereby thinking, cerebral Americans, many of whom are in the universities, are beginning to question the inequality of great divergences in income.

Photo of Jim Mather Jim Mather Scottish National Party

No. Time is against me.

There are two-parent families that are struggling, which means that both parents must work where only one had to before.

I say to Hugh Henry that this is not an issue for us to have a spat and a split on and to poke each other in the eye about. The situation is so serious that Scotland must come together to address it. I agree totally that the chancellor’s approach of deflating Scotland is entirely wrong and that we should be reflating. We have always argued that the spending cuts are too far, too fast. Now is the time for humility and coming together. If we do that, we can have a new beginning and make it happen in Scotland in a way that I think will take it across borders and help others to find a better way.

13:17 Meeting suspended until 14:00.

14:00 On resuming—