Budget (Scotland) (No 2) Bill: Stage 3

– in the Scottish Parliament on 6th February 2013.

Alert me about debates like this

Photo of Tricia Marwick Tricia Marwick None

The next item of business is a debate on motion S4M-05550, in the name of John Swinney, on the Budget (Scotland) (No 2) Bill. Time is very tight, so I will keep members to their time. I am unable to offer any additional time for interventions.

Photo of John Swinney John Swinney Scottish National Party

The Budget (Scotland) (No 2) Bill confirms the spending plans that were set out in the draft budget and underpins the Government’s approach to promote sustainable economic growth, improve public services and support families and businesses at a challenging time. I have engaged constructively with all parties on the contents of the bill and at all times taken into account its financial and economic context.

We continue to face acute challenges to public spending in Scotland. Over four years our budget has been cut by 8 per cent in real terms and within that our capital budget has been reduced by more than 25 per cent. The resources that are available to me to address the issues raised by Parliament are therefore limited.

The latest data shows that the Scottish economy returned to growth by 0.6 per cent in quarter 3 of 2012. Unemployment continued to fall in Scotland over the September to November period, with a significant fall in youth employment. Combined with the encouraging news on growth in export sales, those figures demonstrate that progress is being made on delivering economic recovery.

Despite that welcome progress, we are clear that more needs to be done. The budget bill seeks to accelerate economic recovery by creating jobs and supporting people into employment, particularly our young people, and by supporting Scottish business. The bill provides for the most competitive business tax regime in any part of the United Kingdom; delivers on our commitment to a social wage at a time of significant pressures on household budgets; and provides funding for key measures such as the council tax freeze, free personal care, and free prescriptions and eye tests.

The bill takes forward an ambitious programme of public sector reform, together with our delivery partners, which is based on the four pillars of better partnership working, collaboration and local delivery; investing in the people who deliver our services; a public service culture that improves standards of performance; and, crucially, a decisive shift in favour of preventative spending.

As part of that decisive shift, the Government is taking forward the three change funds that we announced in the spending review, which are worth more than £500 million over three years, including in early years. Later this year the proposed children and young people bill will increase entitlement to early learning and childcare from 475 hours a year to 600 hours a year for three and four-year-olds and looked-after two-year-olds. Those are significant proposals to expand provision, which sit alongside a range of other measures that the Government is taking in the area, such as our investment in family nurse partnerships.

The bill maintains the Government’s commitment to infrastructure investment. We are using every lever at our disposal to mitigate the impact of the severe cuts that the United Kingdom Government has made to our capital budget. Planned capital investment in 2012-13 now stands at £3.1 billion, which is estimated to support more than 40,000 jobs across the Scottish economy. In 2013-14, that figure is planned to rise to £3.4 billion.

Over 2012, nine of the major infrastructure investment plan projects, with a value of over £600 million, were completed and are now in use. We are taking forward major infrastructure projects through conventional capital, such as the Forth replacement crossing and the south Glasgow hospitals. The total value of non-profit-distributing projects—roads, hospitals, schools and colleges—that have entered procurement or have entered development through the hub is now around £1.6 billion. We are on track to meet our target of delivering 30,000 affordable homes.

Photo of Gavin Brown Gavin Brown Conservative

On the NPD point, the cabinet secretary keeps talking about procurement, but how much will be delivered on the ground in 2013-14?

Photo of John Swinney John Swinney Scottish National Party

I said that the total amount of capital expenditure would rise to £3.4 billion in 2013-14, and that is based on a conventional capital budget of about £2.7 billion. The remainder will come from switching resource into capital, NPD and capital receipts.

In total, using all levers that are at our disposal, and through a range of mechanisms, our plans over the three-year Scottish spending review period will support investment of more than £10 billion in the Scottish economy.

With that strategic approach in mind, I have considered again what steps I can take to increase the impact of our capital expenditure programme. I have agreed with Scottish Water to reduce its drawdown of loans next year by £35 million, whilst maintaining its investment programme. During the spending review period, we plan to invest more than £400 million in renewable energy and low-carbon activity. In the short term, demand for financial support from the renewable energy infrastructure fund is lower than expected and I intend to release £15 million in 2013-14 for other projects, whilst ensuring that funding drawn down from the fossil fuel levy surplus will still be deployed in full to support renewables projects.

Our total capital budget has been cut by more than a quarter in real terms, but whenever we have had an opportunity to increase investment in housing, that is precisely what we have done. We have announced additional investment of around £200 million in the past 12 months. The Deputy First Minister and I have agreed to build on that approach with additional investment split between several programmes and designed to achieve multiple objectives.

We will invest a further £10 million in the affordable housing supply programme. We will invest £4 million in preventative adaptations, delivering vital improvements to existing homes. We will invest a total of £24 million in sustainability measures in the housing sector, namely: an additional £10 million for the area-based national retrofit programme; £4 million to extend eligibility for the successor to the energy assistance package; £5 million additional funding for the greener homes innovation scheme; and £5 million additional funding to bring new affordable homes up to silver energy efficiency standard.

Photo of Margo MacDonald Margo MacDonald Independent

Those measures will be felt directly by families who are being badly hurt by the cuts we have already undergone and who will be hurt by the greater number of cuts that are to come. To avoid people having to take out payday loans, the cabinet secretary knows that I favour an expansion of the credit union system. Can he do anything to kick-start that?

Photo of John Swinney John Swinney Scottish National Party

In the past three years, the Government has supported credit unions to the tune of about £1.3 million from the just enterprise programme. Other funding streams have been available to credit unions, and I expect other measures to be made available through third sector funding arrangements that would be suitable for credit unions. I recognise Margo MacDonald’s long-standing interest in those issues.

The combined housing measures that I have announced today will deliver approximately 350 new social and other affordable homes, around 2,000 preventative adaptations, and greater energy efficiency and carbon savings in 8,000 households across Scotland. That represents further substantial, additional investment in housing, providing new homes and improving our existing stock, cutting emissions and supporting an estimated 800 jobs across Scotland with additional expenditure of £38 million. I can tell Parliament that, during the three years of the spending review, the total investment by the Government in housing supply will be £859 million.

Photo of John Swinney John Swinney Scottish National Party

If Mr Rennie will forgive me, I have a lot more ground to cover. If I get a chance, I will give way to him later.

Another significant contributor to economic activity is a balanced package of investment in public transport and roads infrastructure, which will help business and the daily commute. Every £1 that is spent on road maintenance in Scotland gives a benefit of £1.50 to the Scottish economy. I therefore confirm that I will invest an additional £10 million in trunk road maintenance in 2013-14, with direct economic impact.

The Government strives to identify new and innovative means of driving recovery. I am therefore pleased to announce funding for two innovative policies that support growth.

First, we will invest £2 million in a fund that will enable housing providers, whether public or private, to test the development of affordable housing in vacant town centre properties. That ring-fenced competitive fund will help to meet our commitment to deliver quality homes and bring empty homes back into use. It will also support key themes emerging from the town centre review, and help to promote our town centres as attractive places in which to live and work.

Photo of John Swinney John Swinney Scottish National Party

If Mr Baker will forgive me, I will carry on for the moment.

Secondly, Scotland has a reputation for entrepreneurship and innovation in business. We need to capitalise on those strengths. We established the encouraging dynamic growth entrepreneurs fund to support small entrepreneurial Scottish businesses that are ready to grow but struggling to access finance. I have been struck by the large number of high-quality applications that the EDGE fund has received. I confirm to Parliament that I will add a further £1 million to the EDGE fund next year, doubling the amount that the Government is making available to some of Scotland’s most ambitious and creative entrepreneurs.

Photo of Willie Rennie Willie Rennie Liberal Democrat

The additional investment in housing is a welcome development.

The Cabinet Secretary for Finance, Employment and Sustainable Growth referred to childcare and nursery education. I was giving him time in his speech to explore the possibility of additional funding for that area, particularly for two-year-olds. Is he minded to invest more in that area?

Photo of John Swinney John Swinney Scottish National Party

As Mr Rennie knows, I have considered the points that he has advanced to me during discussions on the budget. Given the financial pressures that we face, the Government’s planned approach to expand childcare provision for three and four-year-olds and looked-after two-year-olds is the right way to develop that as part of the Government’s early years agenda.

The Government is proceeding with an ambitious and necessary programme of post-16 education reform. Our objectives at the outset were for a system that was better aligned with jobs and growth, that improved life chances and that was sustainable for the long term. The reforms will ensure that our college sector delivers high-quality education, helps learners get the skills that they need for jobs, and takes account of the changing nature of the labour market.

Those objectives will be met: they will ensure that our colleges deliver an improved student experience, a better service for employers and long-term sustainability. We are conscious of the need to help colleges maintain services for different learner groups—for example, women who want to return to work and those who wrestle with disadvantage. The Government is entirely committed to the process of reform and will ensure that it is implemented. Real progress has been made, and we welcome the positive engagement in the programme of reform from the college sector.

I announce that the Government will make available the best possible deal that we can for colleges. We shall provide an additional £10 million in 2013-14. That increase will establish the college budget at £522 million in the next financial year.

Our plan for 2014-15 would see a further reduction in the college budget to £471 million. The Cabinet Secretary for Education and Lifelong Learning and I want to give stability to our young people and colleges in the final stage of reform. I therefore confirm to Parliament that the college budget in 2014-15 will be set, not at £471 million, not at £510 million—which was the highest-ever figure before we came to office—but at a level consistent with 2013-14 at £522 million. [Applause.] That means £522 million of resource funding each year for the next two years, which is an extra £61 million over these two years [Applause.]. That will allow Scotland’s colleges to go forward with confidence and ambition to deliver the programme of reform.

The Government will discuss with the Scottish Further and Higher Education Funding Council and the sector how best to deploy the funding in a manner that supports reforms and, through it, learners and employers.

In providing that significant additional support, the Government is building on the substantial steps that we are taking to support young people into employment, through our opportunities for all initiative and the abolition of tuition fees.

At a time when we have a record number of Scots in higher education; when we are maintaining the number of college places; when we are investing millions in the college estate; when we are offering a record 25,000 modern apprenticeships a year; and when we are offering decisive extra funding for the sector, this Government is investing in the future to deliver for Scotland’s young people.

The Scottish Government has delivered a budget for growth. We have listened to the views of Parliament and the country and are building on our original spending plans. We are delivering extra funding for housing, to create jobs and to cut emissions; funding to regenerate our town centres; more support for entrepreneurship; investment in our trunk road network; and decisive further investment in our colleges. I believe that the Budget (Scotland) (No 2) Bill deserves support from across the chamber, and I commend it to Parliament and to the people of Scotland.

I move,

That the Parliament agrees that the Budget (Scotland) (No.2) Bill be passed.

Photo of Kenneth Macintosh Kenneth Macintosh Labour

It is difficult to find the words to respond to John Swinney’s budget bill. [Interruption.]

Photo of Kenneth Macintosh Kenneth Macintosh Labour

It is difficult to do other than use the word “disappointing”. John Swinney’s reaction is disappointing. A few announcements have been made, but if he expects the country to be grateful for the fact that he has not quite fully restored the cuts that he made last year, he has another think coming.

Anyone who is looking for something that will revitalise the Scottish economy, get businesses growing again, shake the lethargy out of the country, provide the jobs that we need and create the opportunities for young people that they are crying out for will have greeted John Swinney’s words with dismay. There is nothing new—nothing fresh—in what he has said. We are stuck with the same prescription that the Scottish National Party has offered us for two years running. For two years running, the SNP has promised jobs and growth, yet there have been no jobs and no growth.

We know that the Government’s approach is not working because its own statistics tell us that it is not working. We know that it is not working because construction is in decline, the economy is flatlining and Scottish families across the country are feeling the squeeze. Even if we look at the budget simply as a way of ameliorating the worst of the Tory cuts rather than as an engine for growth, we find that it is doing nothing to protect the Scottish people. The most painful decisions have been left to be taken by public servants working on the front line in our health services or local authorities. The net effect will be the same: cuts to public services; fewer classroom assistants; carers with less and less time to spend with vulnerable elderly patients; and working families who are struggling because their pay has been frozen and the cost of living is increasing.

Scottish Labour did not ask for the earth. We did not indulge in backroom political horse-trading or make unattainable demands. We had three simple asks on colleges, housing and rail. We had straightforward and affordable demands that we believed would make a difference to people’s lives and to the economy.

On colleges, in the midst of a recession that has seen Scotland return to unacceptable levels of unemployment, by which the young have been hit particularly badly, I do not think that it is too much to ask the finance secretary to restore the £35 million in cuts that he has inflicted on further education. Is it too much to expect our colleges to provide places for those people who are seeking to retrain and reskill to make themselves more employable in a difficult jobs market? We know that 70,000 fewer students are attending Scotland’s colleges than was the case when the SNP came to power. Despite the denials of the cabinet secretary and the First Minister, we know that thousands more are being turned away from the college places that could help them.

John Swinney used the word “additional” to describe the £10 million that he has provided. It is not additional; it simply represents an attempt to ameliorate the cuts for which he is responsible. He dresses it all up in the language of reform, but it is not reform to turn people away from colleges or to shut the door in young people’s faces.

Photo of Mark McDonald Mark McDonald Scottish National Party

Mr Macintosh will know that, of the consequentials that the Scottish Government has received, some £19 million is earmarked for the further and higher education sectors. Does he stand by his comments in the stage 1 debate, when he said that he would take that money back and allocate every penny of it to the housing sector?

Photo of Kenneth Macintosh Kenneth Macintosh Labour

Mr McDonald should pay a little more attention to what I say in the chamber rather than make up his own press releases. [Interruption.]

Photo of Kenneth Macintosh Kenneth Macintosh Labour

We have a Scottish Futures Trust that was supposedly going to spend £500 million on capital projects but has spent £20 million. [Interruption.]

Photo of Kenneth Macintosh Kenneth Macintosh Labour

Scottish Labour has made it clear that the cabinet secretary has the capacity—the powers and the finance—at his disposal to fund all those commitments and more.

On housing—one of the most important sectors in the economy for sparking growth, creating employment and getting a country working again, as well as addressing a pressing social need—why does the cabinet secretary not use the full £350 million of net capital available to make a real difference and inject some real energy into the market?

Mr Swinney clearly recognises that he has got it wrong because, in the past year alone, he has reversed his cuts four times. Today’s announcement makes it five times. He has revisited the matter five times. How many times does he have to admit that he is wrong? Why does he not just stand up and say sorry? Why does he not do something more: work with colleagues in this party and across the Parliament who have ideas and will make the economy work?

Photo of John Swinney John Swinney Scottish National Party

Is the answer for which Mr Macintosh is searching not the fact that the Government proposes a balanced budget that adds up and he is trying to spend the same amount of money twice? That is what got the country into a mess under the stewardship of Gordon Brown.

Photo of Kenneth Macintosh Kenneth Macintosh Labour

Mr Swinney tries to make a virtue out of the fact that he fulfils his legal obligation to balance the budget and then has the nerve to talk about stewardship of the economy when he has presided over a country that has gone into recession twice and is in the middle of the worst unemployment and a budget—[Interruption.]

Photo of Kenneth Macintosh Kenneth Macintosh Labour

The SNP members clearly do not like to hear the truth when it is given to them. They clearly do not like to recognise the failure of their own actions. [Interruption.]

Photo of Kenneth Macintosh Kenneth Macintosh Labour

We have a cabinet secretary who has promised a budget for jobs and growth and not made one shred of difference to the Scottish economy. The Scottish economy has not improved and is exactly the same as the rest of the UK economy but the cabinet secretary says that he is making a difference with his choices.

I suggest yet again and remind the SNP that all it has to do is deliver on its manifesto promises sometimes. It was the SNP that suggested that it would spend £1 billion on rail infrastructure delivering the Edinburgh to Glasgow rail improvement programme. All we are suggesting is that it deliver on that promise and spend that money delivering jobs, growth and infrastructure to get people into work and to their jobs. That is a simple ask and, yet again, there is no more—

Photo of Kenneth Macintosh Kenneth Macintosh Labour

Mr Stewart should sit down. [Interruption.]

Photo of Kenneth Macintosh Kenneth Macintosh Labour

If I thought that any answers would come from the SNP back benches, I would be absolutely delighted to hear Mr Stewart.

We had three simple asks—on colleges, housing and rail. They have not come out of the blue and we have not sprung surprises on the cabinet secretary. We have argued the case for more than a year and have not been alone. We have been joined by the Scottish Federation of Housing Associations, the Scottish Building Federation, the Confederation of British Industry, Shelter, colleges and the National Union of Students.

We are not trying to create artificial or fictional divisions with the SNP. The point is that the SNP and Labour can agree that they disagree that there should be an austerity approach. However, Scottish Labour believes that the finance secretary has the powers and finance at his disposal to make a difference but is making the wrong choices with those powers. Instead of concentrating on the economy and unemployment, John Swinney is content to sit back and blame Westminster for the cuts. Meanwhile, he fobs off the worst excesses of his decisions on local authorities and lets our councils take the blame.

I will give one example of Mr Swinney’s approach: the huge increase in the amount of severance and redundancy payments over which the Scottish Government has presided since it came to office. It has emerged that, since the SNP came to power, it has allowed more than £600 million to be spent getting rid of people in the public sector. It has spent £600 million pushing people out the door when it should have been finding employment for them.

The Deputy Presiding Officer:

The member is in his last minute.

Photo of Kenneth Macintosh Kenneth Macintosh Labour

One of the most important policies that Labour has been promoting is a Scottish future jobs fund—a flagship wage subsidy programme. We were delighted when we heard John Swinney’s announcement in September that he might be heading in that direction. It was not asking a lot to expect some detail on that programme between September and now, but what have we found? Instead of £15 million on a wage subsidy programme, that figure is totally dwarfed by the amount of money that John Swinney is paying out to get rid of people from the public sector. On colleges alone, when we were asking for £35 million for the restoration of revenue cuts, we found out that he spent £41 million on getting rid of staff and lecturers in our colleges.

All that the Government does is make a series of announcements and reannouncements on projects that are not happening. Instead of shovels in the ground, we have the laughable sight of the First Minister reading out project after project, none of which is actually being built, except possibly in his imagination.

The Deputy Presiding Officer:

I am afraid that you must conclude.

Photo of Kenneth Macintosh Kenneth Macintosh Labour

If the SNP cannot make a difference using the powers of the Parliament, the budget is truly disappointing not only for us as politicians, but for every family that is looking for a job, every business that is looking for growth, and every unemployed person who is looking for help.

The Deputy Presiding Officer:

I must ask you to finish.

Photo of Kenneth Macintosh Kenneth Macintosh Labour

The illusion of independence has blinded the SNP to what it can do here and now.

I urge members to reject the choices that Mr Swinney has made.

The Deputy Presiding Officer:

I remind members that the time in the debate is very tight. Gavin Brown has up to six minutes.

Photo of Gavin Brown Gavin Brown Conservative

The Government was really summed up in the first two minutes of the debate. When the debate started, building work was going on outside quite happily, but it stopped within minutes of John Swinney opening his mouth.

The Government has at its disposal £7 million more next year than it had this year. It has more money to spend in the next financial year than it had this year, so any cuts or changes that it makes are SNP political choices. It does not like that, but with more money to spend next year than it has this year, the choices are entirely its choices.

Let us look at where the Scottish Government says the savings have been made. It says that, through its great efforts, it has got an extra £35 million out of Scottish Water, but what it does not tell us—what we can find only in the small print—is that it gave an additional £50 million to Scottish Water this year through the sleeper project. In the 2014-15 budget, which it seems to be keen to talk about today, £190 million is going to Scottish Water. It tells us that it has saved money on renewables because demand is down, despite the fact that it has whinged and moaned month after month about renewables money not being brought forward to Scotland. When that happens, it seems incapable of delivering on the ground.

Let us look at the announcement on colleges. There was a bizarre situation. A £10 million increase in the college budget for this year was announced. There was a £34 million cut, and the Scottish Government decided to put back £10 million. There was spontaneous applause from SNP members for a £24 million cut for colleges. They will regret watching that back on television. I do not think that there will be any spontaneous rounds of applause outside the chamber for a £24 million cut for colleges.

Photo of Gavin Brown Gavin Brown Conservative

Sure. I am happy to give way to Mr Mason. I have been told that he is not allowed to take part in the debate. He was bumped, but let us have an intervention from him.

Photo of John Mason John Mason Scottish National Party

For the member’s information, I was clapping for the extra £51 million next year.

Photo of Gavin Brown Gavin Brown Conservative

Very good. I can see why Mr Mason got bumped.

Let us consider housing, which the Government has talked about. Again, there has been boasting about all the additional money that is going into housing, but if we tot up all the money that went into housing in 2011-12, including the transfer of management development funding, the amount, according to Scottish Government figures, came out at £360 million.

Even if we add in the previous four tranches and the tranche that the cabinet secretary tried today to make sound like four additional tranches, we have about £300 million, which is still £60 million down compared to 2011-12 for a budget that the Government claims is a priority. The Government asks to be judged on what this budget does for the economy. Mr Swinney said that he would put every single additional pound that he could into the economy but we see disappointing results in colleges, we see disappointing results when it comes to housing and we see more disappointing results when it comes to taxation.

We have seen three strikes against the business community since this became a majority Government: a retail levy, the empty properties tax, and a business rates burden that increases by 7 per cent next year and 9 per cent the year after.

Photo of John Swinney John Swinney Scottish National Party

Mr Brown is moaning on about cuts in public expenditure. What precisely has Mr Brown got to say to the UK Government that has cut our capital budget by 25 per cent?

Photo of Gavin Brown Gavin Brown Conservative

To be accused by Mr Swinney of moaning about reductions in spending has a nice irony to it. [Interruption.]

Photo of Gavin Brown Gavin Brown Conservative

Let us look at what the Scottish Government has done in response.

Members: Answer the question.

Photo of Gavin Brown Gavin Brown Conservative

The vuvuzelas are in full flight this afternoon. If they would be quiet, I would happily answer the question. The Scottish Government’s response to all this is to set up the NPD programme to replace the public-private partnership/private finance initiative programme that it decided to ditch. It told us that in year 1 it would spend £150 million and it spent zero.

Photo of Gavin Brown Gavin Brown Conservative

What about the £20 million? Yes, the Government is spending £20 million this year but it told us that it was spending £353 million when it came to NPD.

Mr Salmond, speaking from a sedentary position, has the audacity to talk about NPD. Last week, I asked him in this chamber not once but twice to give me a list of projects that have been delivered under NPD. Mr Salmond gave me a list of 15 projects. The only problem is that none of those 15 projects has been built and we are struggling to find one that has even a brick on the ground.

Photo of Gavin Brown Gavin Brown Conservative

I am happy to leave it at that and come to it again in closing.

The Deputy Presiding Officer:

We turn to the open debate. Speeches should be of six minutes at the moment, but if members have to be given extra time due to the fact that they cannot be heard, that may change.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

I begin by acknowledging that there is general agreement between the Scottish Government and the Labour Party. That is not normal, but it exists on this occasion, in this Parliament. The SNP and Labour generally agree that the UK Tory-led coalition has set about dealing with the serious economic challenges that it faces in a wrong-headed manner by cutting too fast and too deep. The impact of the UK Government’s chosen direction sees the UK teetering on the edge of a triple-dip recession. The result is prolonged agony for hard-working families trying to balance household budgets and the further stifling of hope for those seeking work.

It is abundantly clear that the chancellor’s chosen direction is having the opposite effect to his stated aims. We need only look at the most recent figures, which show that the UK economy shrank by 0.3 per cent in the final three months of last year, to see that the evidence is staring us in the face.

By comparison, Scotland’s Government has of course long put forward a consistent case for additional capital expenditure to help to boost the economy and create jobs. As we all know, Scotland’s First Minister initially called for an increase in capital spending in 2008 and has been repeating that call ever since. That call was finally heeded by the chancellor in his autumn statement when he announced an additional £331 million of capital spending, taking our cut from 33 per cent down to 26 per cent. Yes, it is a welcome movement in the right direction, but in the teeth of the latest depressing figures for gross domestic product, it is too little, too late.

The comparison between the dithering of the UK Government and the decisive action of the Government of Scotland could not be starker. In February 2012, the Government of Scotland announced a further capital spending package of £380 million until 2015, which focused on housing, transport, health, digital and maintenance projects. In June 2012, the Government of Scotland announced another package of investment: £105 million for shovel-ready projects. Investment in infrastructure is also being boosted through the—much maligned by Gavin Brown—£2.5 billion pipeline of projects delivered through the non-profit-distributing model. Also, despite the Government’s having had to take hard decisions, £700 million has been switched from resource to capital, to support vital infrastructure projects.

Only two weeks after the Chancellor’s autumn statement, the cabinet secretary outlined where £205 million of the £331 million of additional capital expenditure would be allocated.

Photo of Gavin Brown Gavin Brown Conservative

Can the member provide any evidence that the revenue to capital switch that he mentioned has actually happened or evidence of the impact that it has made?

Photo of Bruce Crawford Bruce Crawford Scottish National Party

The evidence is £3.1 billion of expenditure in the next financial year and 40,000 jobs across Scotland, Mr Brown.

The cabinet secretary listened to what stakeholders told him and today brought forward welcome additional capital expenditure in housing-related projects and £10 million for trunk road maintenance. The Government of Scotland is listening and showing itself to be consistent and clear about what it wants to achieve in terms of creating jobs and growing the Scottish economy.

In comparison, the Labour Party’s approach has been at best confusing and at worst deceitful. Those are strong words, but they are accurate. During stage 1, Labour’s stated position on capital, which it confirmed again today, was that the entirety of the additional £331 million should be allocated to the housing sector. On the face of it, that appeared to be a noble gesture in support of housing. However, it did not take long for people to recognise that Labour was playing a cynical game of deception.

Labour raised stakeholders’ expectations of potential additional resources, in the sure and certain knowledge that the projections and proposals were undeliverable, because the removal of £331 million in its entirety would mean that millions and millions of pounds would be cut from transport and regeneration, further and higher education, national health service maintenance, economic development and many other areas that the Labour Party has said are a priority.

The Labour Party’s solution is to pretend that all that expenditure could somehow be undertaken by the Scottish Futures Trust, no doubt from money grown on trees. Labour has refused to tell us which resource budgets would be cut to finance additional capital expenditure of £331 million.

The Deputy Presiding Officer:

You are in your last minute.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

Would the cash that Labour plans to cut—

Photo of Bruce Crawford Bruce Crawford Scottish National Party

I am in my last minute, as you heard, Mr Macintosh, and you have made a disgrace of yourself today.

Would the cash from Labour’s cuts come from education, health or local government? This Parliament and the people of Scotland deserve to know where the Labour axe would fall, to deliver the hard choices that Johann Lamont says that she wants to make. Of course, Labour members will not tell us that, either because they are too confused and do not understand the budget process, or, more likely, because they are prepared to play a shabby game of deceit with the Scottish people. Scotland deserves better from a Labour Party that claims to be better together—with the Tories.

The Deputy Presiding Officer:

I remind members, first, that they should speak through the chair and not directly to one another from the benches and, secondly, that they should be watchful of the language that they use to one another.

Photo of Elaine Murray Elaine Murray Labour

In the budget debate a year ago, I argued that spend on housing should be a priority, on the basis that it is preventative spend. The arguments for prioritisation have not changed. People who live in inadequate, overcrowded or damp accommodation, or who are worried about losing their home, will suffer from stress. They are more likely to suffer from physical and mental ill health, perform less well at work and experience relationship breakdown. Children who live in poor or temporary accommodation and witness the stress that that causes their parents will not reach their potential at school. Stable, good-quality housing is essential for people’s wellbeing. Further, as we have all said, housing expenditure also helps the economy, creating employment and supporting the construction industry.

Despite the importance of housing, the budget for affordable rented housing has continued to reduce. I know that there have been four in-year revisions that placed around £100 million back into the housing budget, and we have just heard about £10 million being returned from a £46 million cut in next year’s budget. However, the SFHA stated in its briefing that the social rented housing sector has been unfairly penalised in this budget. Shelter states that, with 157,000 households in Scotland on local authority waiting lists, the shortage of affordable rented housing is acute and is the most urgent social problem facing us.

I know that the cabinet secretary announced that £859 million will be invested in housing across three years, but that is still £531 million less than in the previous spending review. However, the ability to construct social rented homes is not governed only by the total sum of funding that is available. For housing associations in particular, the issue is whether they are able to build affordable homes for rent with the level of subsidy that is available to them.

I recently contacted all the housing associations in Scotland regarding their plans for building homes for social rent in the next two years. I asked whether those plans had been affected by the reduction in subsidy and how they anticipate that welfare reform will affect their organisation and their tenants. I will not attribute comments to individual housing associations, but I assure the chamber that the quotes that I will read out are genuine and give a flavour of the replies that I have received in the course of the past few days. Housing associations have said:

“because of the association’s tight finances it has ceased to develop for the time being”;

“no plans to develop any new housing over the next 2 years due to unsustainable levels of subsidy to develop new housing and the lack of affordable private finance”;

“Until the last couple of years we were an active developer … We have had to review our strategic position and will not build any new homes in the immediate future”;

“we expect to continue with our programme for the next two years. The position beyond that is uncertain”;

“the reduction in HAG for the construction of social housing has resulted in a reduction in our programme by approximately two thirds”; and

“we have no immediate plans to build new homes over the next two years due to subsidy cuts”.

I will quote from the SFHA’s press release of 21 January, as it is better than anything that I could say. It advised that the SFHA remains concerned about

“the level of subsidy that is now available per new home—cut from approximately £70,000 per house to £40,000 per house on average—as this gives housing associations and co-operatives a real dilemma about how to use this money.”

It continues:

“Many of our members have used sites bought at low prices or given free by local authorities combined with their own cash reserves to carry on building, but these options will run out. The other option is to raise rents for tenants and borrow more private money from banks. However, this hits the poorest in Scottish society at a time when welfare reform is already causing anxiety over issues like reduction in benefits for additional bedrooms and direct payments of benefit to tenants.”

Photo of Elaine Murray Elaine Murray Labour

I am sorry, I want to develop the argument. Shelter also told the Infrastructure and Capital Investment Committee that

“we are heading for a cliff edge with regard to new completions in the next few years.”—[Official Report, Infrastructure and Capital Investment Committee, 24 October 2012; c 973.]

My colleague Richard Baker recently raised that concern with Mr Swinney, who did not seem to believe that there was a problem and stated instead that the Government was driving up efficiency.

I ask the cabinet secretary to accept the evidence that was presented by the SFHA and individual housing associations that shows that they cannot sustain their social rented housing building programme with the current level of subsidy. Most have used up their reserves of funds and land and the bank account is empty.

If Mr Swinney does not believe the housing associations, however, will he examine the figures that were released to me by the Minister for Housing and Transport, to which I referred in my contribution to the debate on 20 December? They showed that housing starts—not completions—for homes for social rent decreased from 7,677 in 2009-10 to only 3,025 in 2011-12. That coincides with the impact of the reduction in subsidy in 2011.

Over the same period, the amount of grant funding that was claimed by housing associations fell by 53 per cent, with housing associations in some local authority areas claiming 10 per cent or less of what they had claimed two years earlier. Surely that indicates that a problem is developing.

In April this year, tenants and providers of social rented housing will be hit by the bedroom tax. Tenants who are defined as underoccupying will lose housing benefit. Surely this is the worst time for housing associations to be unable to build new homes at an affordable rent. I am therefore using this opportunity to urge the Scottish Government to reconsider the level of subsidy that is offered to housing associations during these hard economic times.

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

I congratulate the cabinet secretary on once again ensuring a balanced budget that delivers for Scotland despite extremely difficult and uncertain economic conditions and continuing real-terms reductions in the block grant from the UK Government.

Managing Scotland’s finances with care and competence has been a hallmark of the Scottish Government—getting best value for taxpayers, focusing on economic growth, improving outcomes despite shrinking budgets, and moving towards sustainability through genuine efficiency and a bold pursuit of preventative spending measures. That has all been achieved while maintaining the social contract with the people of Scotland—freezing the council tax, abolishing prescription charges, and reintroducing free higher education.

Today’s budget again focuses on the need to support fragile economic growth and the creation and sustaining of employment. Since 2008, the First Minister has called on Westminster to increase capital spending in order to boost economic growth. To their shame, those calls were ignored by successive Labour and coalition Governments, resulting in thousands of Scottish jobs being lost while the economy slipped into a double-dip recession.

Only in recent months has the penny finally dropped in London that increased capital spending and targeted infrastructure development is the way to pull the economy out of the mire. Nick Clegg has at last admitted that the coalition got it wrong. Ed Balls, from the comfort of opposition, recently called for increased capital spending, even though we know in reality that his colleague Alistair Darling was planning cuts deeper and tougher than those of Margaret Thatcher. Even Boris Johnson has said that the UK Government must abandon its hair-shirt economic programme.

For the unionist Opposition in this chamber to criticise the Scottish Government’s capital spending programme and efforts to boost the economy and create jobs frankly beggars belief and exposes their bare-faced hypocrisy.

The chancellor finally recognised the need to increase capital spending and announced an additional £331 million of capital spending for Scotland. This “improves” matters to the point at which our capital budget has still suffered a 26 per cent cut over the spending period.

Within a fortnight of the autumn statement, the cabinet secretary detailed how the majority of that money would be spent, including £50 million for housing, £22 million each for transport and regeneration, and £19 million for further and higher education.

In his quite remarkable speech during the stage 1 debate, Ken Macintosh sprung on us that Labour’s back-of-an-envelope position was to divert the entire £331 million of consequentials to housing. Although I do not agree with Labour, I am pleased to see at least some progress and economic maturity in terms of highlighting where it would make cuts.

Labour now wants £22 million diverted away from transport projects, and £22 million diverted from regeneration projects—including a £5.2 million investment in the Irvine Bay Regeneration Company, which includes £2.5 million for a new health centre in Ardrossan in my constituency, as Margaret McDougall confirmed last month.

Photo of Kenneth Macintosh Kenneth Macintosh Labour

Does Mr Gibson accept that if the SNP Government did not spend anything on its Scottish futures fund programme last year and has only spent £20 million out of the £353 million that it was due to spend this year, there is abundant capacity in its NPD programme to make up that shortfall?

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

NPD, as Mr Macintosh should know, is attached to projects. If he looked at the Scottish Futures Trust project report, which came out and was sent to his colleagues in the Finance Committee, he would know that that was the position. [Interruption.]

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

I am astonished that Mr Macintosh did not even mention the resource implications in his speech. Last month, he said that resources would be provided through underspend savings and efficiency and Rhoda Grant went on to say that £200 million should be spent on fuel poverty alleviation. That was not mentioned by Mr Macintosh today. I wonder whether Rhoda Grant will mention it—last month she was totally unable to say where that money could come from.

Photo of Rhoda Grant Rhoda Grant Labour

What you have not said is that it is Energy Action Scotland and the like that are pointing out that the Government needs to ensure that at least £200 million is spent on fuel poverty to reach its own targets. The Government is not pointing out how it will do that and if the energy companies do not come up with their share, how will that gap be filled?

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

I thought that Labour might come up with some of the solutions. Labour is supposed to be providing alternatives to the Scottish Government, but it is utterly incapable of doing so.

The cabinet secretary tried to engage with parties across the chamber to find common ground. Clearly he was not able to do so, but he was still able to find an extra £61 million for colleges over the next two years, an additional £40 million for the housing budget and an additional £10 million for investment in trunk roads.

As for the Tories—sadly, Gavin Brown is not in the chamber—how much worse a position would we be in if we implemented the policy that Ruth Davidson, the Conservative Party’s temporary leader, announced on 6 November last year, which was to reduce personal taxation by 1p in the pound? She said:

“I want us to look further to see if 1p in the pound is all we can afford.”

If that change was made, what position would our spending and investment programmes be in, given that every cut of 1p would take £559 million off the Scottish budget?

The Deputy Presiding Officer:

The member is in his last minute.

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

Today, the cabinet secretary has announced a well-rounded and dynamic budget that will help to grow the economy, improve living standards and create and sustain jobs. There is no doubt that, while he remains hamstrung by the regressive and reactionary policies of the UK Government, which the Labour Party appears to want to run Scotland for ever, we will never reach our full potential as a nation.

This Parliament desperately needs the ability to control Scotland’s resources and finances fully, to secure our future prosperity. Nevertheless, today’s commitments to increased national health service budgets, additional house-building projects, a boost in infrastructure spending and improved college funding settlements, and the continued commitment to early intervention and preventative spending measures, are most welcome and will make a positive difference to the lives of tens of thousands of Scots.

The budget helps to protect Scotland’s fragile economic recovery during tough economic times, maintains the social contract with the Scottish people—which Labour has abandoned—and protects the universal services that Scots expect and deserve.

Photo of Michael McMahon Michael McMahon Labour

There is no doubt that, when SNP members have spoken about the budget, they have consistently tried to convey optimism about its capacity to generate growth in the economy. However, after listening to Mr Swinney and his colleagues promoting their conviction about the budget, I am reminded of Voltaire’s view that optimism is

“the obstinacy of maintaining that everything is best when it is worst”.

I will not rehearse the argument that I made at stage 1—that witnesses provided no support to the Finance Committee that would allow the Government to maintain its proclamation that this is a budget for growth. Rather, I will convey my own example of why such a gap exists between what the Government asserts and the reality of its failure to deliver.

Back in my office in Bellshill, I keep a glossy brochure that Transport Scotland produced in about 2006. The brochure contains a timetable for the M8 Newhouse to Baillieston upgrade, the Raith interchange reconstruction and the M74 Raith to Maryville expansion plan. The first of those projects was to start in 2009, the second was to start in 2010 and the entire interrelated programme was projected to be completed in 2014. Yet here we are in the second month of 2013 and the only sign of those construction schemes, which are now known as the M8 bundle, remains that sleek Transport Scotland booklet.

Companies that have located in the area remain poised—if not suspended—in anticipation of the benefits that are predicted to accrue from that much-vaunted but delayed enhancement to the motorway network in the heart of Lanarkshire. We are approaching four years after the projects were supposed to start, and we have nothing more than the bloated boasts of the Government and the Scottish Futures Trust that those road projects will be ready to start in 2014—the year when they were due to finish.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

It is incredible that Michael McMahon talks about the “bloated” SFT, yet his front-bench members want to use the SFT in some way to cover up the inadequacies in their budget numbers. That is remarkable.

Photo of Michael McMahon Michael McMahon Labour

What is more remarkable is that Bruce Crawford still refers to the SFT as if it was the money, when it is actually a body that was set up at huge cost to spend money that it does not have.

Even more laughable is the claim of the First Minister and his Government that the works are part of a £3 billion infrastructure contract list that is already with us and is in the budget. If it were not so sad that construction companies—and, more important, their employees—know that the work should already be in progress, it would be hysterical. The projects are not so much shovel ready as shovel rusty, as the tools lie around waiting for the Government to pay someone to pick them up.

Construction output in Scotland fell by an estimated 13 per cent in 2012, which means that the sector will remain in recession even as the wider economy sees some signs of life. Estimates for the sector indicate that, despite the 1.1 per cent growth that is predicted over the next four years, employment will fall by about 1 per cent in the same period—it is expected to stabilise only in about 2016-17.

Economists who are assessing capital investment in Scotland expect growth and employment in the construction sector to fall, which they attribute to the scaling back of Government investment in housing and in spending on public non-housing projects, such as the building of schools and hospitals. That reduction in investment is likely to see a decline of 3.5 per cent in the public non-housing sector in the period up to 2017. If we add to that a public housing sector that is also likely to contract by 0.4 per cent over the same period, we can anticipate a 58 per cent drop in Scotland’s forecast annual recruitment requirement for construction.

I am happy to commend the cabinet secretary for retaining his commitment to training and upskilling. We have to ensure that, as industry crawls back from the recession, it is prepared and ready to cope with the increased level of demand. However, if that commitment to producing the skilled workforce that we need is to be more than rhetoric, we need a reversal of the disastrous cuts that are planned for the education sector, which is best placed to provide the practical skills that industry sectors, especially construction, will need.

At best, therefore, and taking an optimistic perspective on what it contains, this has been a very benign budget. Yes, there were huge challenges to be met because of the cuts from Westminster, but rather than rising to meet the challenge, Mr Swinney has played safe. He has protected the headline-grabbing populist policies that, while bringing short-term electoral success to his party, have diverted resources away from the long-term sustainable spending that Scotland needs at this time.

Photo of Michael McMahon Michael McMahon Labour

We could be forgiven for thinking that the budget is designed not to meet Scotland’s current economic needs but to lay the foundations of the more munificent budget that the SNP Government is preparing to deliver just before the referendum.

While protecting the SNP’s short-term ambitions, Mr Swinney has sought to blame Westminster for the failure of Scotland’s economy to grow. What he has forgotten is that, when someone spends their time blaming others, they give up the power to change things themselves. As there is no strategy for change, there is little prospect of the investment in the right areas of the Scottish economy that we need from the budget if growth is to manifest itself as a result.

Having forgone the opportunity to do what is right by the Scottish economy, the Government has also forfeited the right to our support for the budget.

Photo of Aileen McLeod Aileen McLeod Scottish National Party

I welcome the chance to participate in this afternoon’s debate and support a budget that is focused on jobs and growth and that makes the right decisions in very difficult economic times.

I begin by congratulating the finance secretary on producing a budget that demonstrates this Government’s steadfast commitment to protecting the national health service even in these difficult times, and in the face of the changes to the wider welfare system that are being imposed on Scotland by a Tory-led Government at Westminster. They are certain to increase inequality in our society, including in health, and damage the lives of the poorest and most vulnerable in our society.

In the budget, the Scottish Government honours its pledge to protect health spending for the whole of the current spending review period. Health boards will receive above-inflation increases in funding in the next two financial years, just as they have done in the previous two, while NHS workers will benefit from the lifting of the public sector pay freeze, with a 1 per cent increase for the lowest paid in 2013-14.

The Government is keeping its promise to pass on the full Barnett consequentials for health. By 2014-15, the resource budget for health will be more than £1 billion higher than it was in 2011. Over the next four years, £390 million will be invested in improving NHS buildings and equipment, and the finance secretary announced last June that an additional £10 million will be allocated for additional maintenance spend in the next financial year, rising to £25 million the following year.

The budget reflects the SNP Government’s commitment to increasing and investing in preventative actions and early intervention—a commitment that will not only improve the quality of life for many Scots, but reduce the long-term demands that are placed on our NHS.

The budget will allow the NHS to continue to deliver the detect cancer early initiative for early detection of breast, bowel and lung cancer. It continues the £80 million change fund to support the integration of adult health and social care, which is crucial to our achieving better and more sustainable public services in the longer term. It will allow the early years collaborative to deliver on the priorities of the early years task force. It will deliver the family nurse partnership programme to first-time parents under the age of 19, and it will make further investment in dementia services.

Members will also be aware of other announcements that have been made since the budget statement, including the additional £1 million for recruiting more accident and emergency consultants to back up our A and E action plan. This is a budget for the better health of the people of Scotland now and in the future.

Investment in capital projects continues despite Westminster’s 26 per cent cut in Scotland’s capital budget, a cut that is forecast to reach 33 per cent in real terms by 2014-15. From major projects such as Dumfries and Galloway royal infirmary in my region to smaller ones such as a new health centre in Dalbeattie, which has been 10 years in the making but is absolutely vital to the people who have waited for it, this Government is continuing to invest in modern facilities that are equal to the clinical challenges of the future. Such activity creates jobs, boosts the economy and helps economic recovery.

Prioritising our NHS, as successive SNP Governments have done, is paying real dividends for the ill and infirm in our society. Hospital-acquired infection rates have fallen by more than a third and, since 2007, premature mortality rates have fallen by 6 per cent for cancer, by 27 per cent for coronary heart disease and by 19 per cent for deaths from stroke. Of course, those results are testament to the magnificent work done day in, day out by our NHS staff.

As a member of the Parliament’s Health and Sport Committee, I make no apologies for fully endorsing a budget that is not only designed to protect Scotland’s NHS from Westminster cuts and the cuts that we know the Labour Party here would impose if it were ever returned to Government in Scotland, but goes much further than that and continues this Government’s pledge to invest in our NHS’s future and, in doing so, to invest in and improve the lives of future generations of our citizens.

In health, as in all other aspects of this budget, the SNP Government is once again renewing and reinvigorating the social contract that we struck with the people of Scotland when we came to power in 2007, at the heart of which is an unwavering commitment to social justice—including, I might add, an unwavering commitment to a social wage, part of which includes the universal service provision that has now been abandoned by the Scottish Labour Party.

With this budget, the finance secretary is continuing the journey to deliver a better and more sustainable NHS on which the SNP Government embarked in 2007. However, the stark reality is that the journey cannot be completed until and unless our Government has the full range of powers over the provision of care and welfare that only independence will bring. In 2014 the people of Scotland will have the opportunity to allow us to complete that journey by voting yes. It is an opportunity that I believe they will take.

In the meantime, I urge Opposition colleagues across the chamber to support the Government’s budget for jobs and growth this afternoon.

Photo of Willie Rennie Willie Rennie Liberal Democrat

I get amused by speeches that condemn the Westminster Government for being mean and cutting funds to the Scottish Government but then celebrate the levels of investment in the NHS. It is the Westminster Government, not the SNP, that is making the decisions about the NHS. [Interruption.]

Photo of Willie Rennie Willie Rennie Liberal Democrat

To sound a note of consensus, however, I have to say that I have found this budget process to be open and inclusive. John Swinney and I can work together and discuss priorities for Scotland, and I hope that he shares my ambition of building a strong economy in a fairer society to give people the chance to get on.

Indeed, that is why in the budget process we picked two realistic priorities. First, on colleges, we made quite a bit of progress last year, reversing the £40 billion—I mean £40 million; it feels like £40 billion—cut to their budget. This year, our ambition was to restore the £35 million cut, which would have had a significant effect on colleges that are going through a period of reform. It is difficult to expect our colleges to reform during a period of contraction, especially when we are trying to train not just young people but people of all ages in the skills they will need to fill the jobs that we are working hard to create.

I was therefore astonished to hear celebrations from the SNP benches when the £25 million cut to the colleges’ budget was announced. It is nothing to celebrate. Given the £35 million cut that had been planned, £10 million is nothing. I was really disappointed in the announcement.

Photo of Willie Rennie Willie Rennie Liberal Democrat

Not just now.

Our second priority was nursery education. Mr Swinney has heard me say repeatedly that we want two-year-olds—ideally, 40 per cent of them—to get 15 hours a week of nursery education. In England, 40 per cent of two-year-olds will get that, starting in September. Many people, including Professor James Heckman, have cited that as a great investment, because investment before the age of three has the best educational returns. However, in Scotland, only 1 per cent of two-year-olds will get that, and today’s budget has not changed the situation one inch. Under our proposal, 24,000 of the poorest two-year-olds in Scotland would have received 15 hours of nursery education a week.

We recognise that money is tight and that finances are difficult, but we identified where the money would come from to invest in those areas. That is why I am really disappointed that John Swinney has not taken up our offer. He cites the family nurse partnerships, but those are not unique to Scotland—they are happening in England as well. However, what is unique to Scotland is that only 1 per cent of two-year-olds will get the nursery education that 40 per cent of two-year-olds in England will get. Scotland is being left far behind. James Heckman will be disappointed by the SNP Government’s decision today.

Photo of Joan McAlpine Joan McAlpine Scottish National Party

I understand that Professor Heckman was talking about quality early years education, but that our colleagues in the south are increasing the ratio of children to carers. Does the member not agree that it is better to have high-quality early years care, and that it is generally understood that the care in Scotland is of a higher quality than that in England and Wales?

Photo of Willie Rennie Willie Rennie Liberal Democrat

I am not sure where the member got that fact from. If she checks the announcement of the measure in England, she will find that it is about increasing, not decreasing, the standard of nursery education. She should go back and check her facts, because 1 per cent in Scotland is not an improvement on 40 per cent in England. It is a real disappointment that the SNP has not stepped up to the plate.

The experts have clearly said that that is a good investment. Many SNP back benchers, along with members of all parties, signed a motion on the issue. Many of those SNP members are here today, but they applauded the budget. We should aim for 40 per cent, but we are getting 1 per cent. The budget is letting down 24,000 two-year-olds. James Heckman will be disappointed; John Swinney should be disappointed; and I am certainly disappointed. I thought that we could work with John Swinney and come up with an agreement. Last year, we worked together and came up with an agreement.

Photo of Willie Rennie Willie Rennie Liberal Democrat

Not just now—I am in my final minute.

We worked together last year and we got more money for colleges. I hoped that we could work together again this year, at least for two-year-olds, because they deserve that kind of investment. Our plan was not unrealistic: it set out the investment, which was to be phased up to 2016. We had a plan. John Swinney has time to reverse his decision. He can work to make a commitment for two-year-olds. If he seriously believes that we need to change a generation and improve the life chances of those young people, he should turn back now.

Photo of Kevin Stewart Kevin Stewart Scottish National Party

When I was first elected to Aberdeen City Council in 1999, a wise man—one Brian Adam—said to me, “You know, if you ever aspire to govern, you have to have a budget in opposition.” I stuck to that when I was on the council; Brian Adam did it when he was the sole SNP councillor on Aberdeen City Council; and Mr Gibson did it in Glasgow. We produced a line-by-line budget. I just wish that some of those SNP budgets had actually been passed at the time—we might not have been in the mess that we were in by the time that we came to power.

I think that it is really diabolical that any Opposition party should come here today without an alternative budget. It is unbelievable—the people out there will find it hard to believe—that the Opposition parties have failed to do that. Having heard Mr Macintosh both today and previously propose the double counting of spend, I think that he may be a little out of his depth in his current portfolio.

Turning to points that other members have raised, I want to start with investment in housing, which Dr Murray mentioned. I welcome today’s announcement from the cabinet secretary on additional investment in housing, which will mean 350 new homes and a huge amount of adaptations and retrofitting. That will be good for all in the social housing sector.

More money for such projects could be found, not necessarily from the Scottish Government—obviously, we face cuts to our capital budget from Westminster—but by accessing investment from pension funds to increase the amount of social housing that we can build. On numerous occasions, my colleague Mark McDonald has written with such proposals to the Aberdeen City Council leader Councillor Crockett, who is also convener of the council’s pensions panel, but he has not even received the courtesy of a reply. If the Labour Party is truly serious about these issues—

Photo of Kevin Stewart Kevin Stewart Scottish National Party

Not just now, thank you.

If Labour members are truly serious about these issues, they will get together with others to find solutions to move things forward.

Photo of Margo MacDonald Margo MacDonald Independent

Does the member trust any Treasury in London to see through the measures that he is suggesting?

Photo of Kevin Stewart Kevin Stewart Scottish National Party

Ms MacDonald knows full well that I do not trust any Treasury in London. I will come back to that at the tail-end of my speech.

Turning to welfare reform, in recent times we have heard lots from folk from across the chamber about what the Scottish Government is doing about welfare. Let us be honest: the welfare reforms that are being introduced are Westminster reforms. The Scottish Government has tried to mitigate the impact of a number of those measures through the Scottish welfare fund, moneys for advice services and mitigation for council tax benefit, but we cannot do it all. There is no way that the cabinet secretary can find the money to mitigate the impact of all the disastrous policies that are coming into play.

In some regards, I am amazed at what Mr Rennie said. I do not disagree that we would like to spend money on increased day care for children across the board, but the reality is that the money is not available. We are about to see one-year-olds, two-year-olds, three-year-olds and four-year-olds being kicked out of their houses because there is an extra bedroom in the house. Mr Rennie should try to sort that out before he lectures anyone else.

Turning to what I believe is good news, I think that the pilot for town centre regeneration, which seeks to turn empty properties into housing, is an absolutely fantastic idea that will be welcomed in many communities throughout the country. I hope that the pilot is successful in bringing about real and dramatic change in our town centres and that it can be rolled out.

The Deputy Presiding Officer:

You are in your last minute.

Photo of Kevin Stewart Kevin Stewart Scottish National Party

Thank you, Presiding Officer.

The extra moneys for trunk roads will also find a great welcome out there. The EDGE fund is also well worth investing in.

From the Opposition today, we have seen fantasy finances of the first order. I do not trust the London Treasury because we have seen those fantasy finances before, under the auspices of Gordon Brown as Chancellor of the Exchequer and then as Prime Minister. One reason why we have the tough budget that we face today is because we are having to deal with the aftermath and sotter of that Labour Government.

Photo of Patrick Harvie Patrick Harvie Green

Here we are, as we are year after year, for stage 3 of the budget. Mr Swinney uses this day—as his predecessor finance cabinet secretaries used it—to dig a little deeper and find some last-minute flourish with an announcement about a new spending priority. Coalition Administrations, minority Administrations and majority Administrations all want to make a few more good-sounding announcements on the last day of the budget process.

If Kevin Stewart had had the pleasure of a seat in the Scottish Parliament when the SNP was in opposition, he would know that the budget is always a process of negotiation between Opposition political parties and the Administration. In the Parliament, Opposition parties are not able to propose alternative budgets—there is a difference between the council process and the parliamentary process.

Photo of Kevin Stewart Kevin Stewart Scottish National Party

Many times in Aberdeen, opposition parties supported administration budgets because there was that negotiation. However, they had to be realistic. If the Opposition wants to spend money, it has to tell Government where that money will come from. That is where the process fails.

Photo of Patrick Harvie Patrick Harvie Green

I will address that point, although perhaps not to Mr Stewart’s satisfaction.

I acknowledge that this year, the cabinet secretary has a harder job than in most years. I agree with his views—which I think most members share—about the UK Government’s austerity agenda and our opposition to it. I take that as read.

However, the cabinet secretary is making his job this year even harder than it needs to be in some respects. For example, we could provide a pay increase of almost inflation—or at least one closer to inflation—in the public sector. We could prioritise other public services through the revenue side of the budget, were it not for the shift from revenue to capital, which is to pay for some very positive programmes—and some things that I do not support. When the UK Government gave its autumn budget statement, additional money was made available that could have offset some of that revenue-to-capital shift. We could have made sure that public sector workers got a fair deal instead of a real-terms pay cut.

There has been a reversal of £10 million in the colleges’ budget cut. That issue has been raised by every single Opposition party in the budget process. Reducing funding by £34 million or £35 million and then reversing £10 million of that still leaves a substantial cut. The issue is about the choices that we make with the resources that are available to us.

Transform Scotland’s briefing highlights that, even going on the Government’s own figures, just 3.6 per cent of the transport budget will go to projects that reduce CO2 emissions from the transport sector, whereas 96.4 per cent will go to projects that increase those emissions. Some members may be comfortable with that balance. Some—perhaps Michael McMahon—would not mind getting rid of that 3.6 per cent so that a few more motorways could be built in Lanarkshire. Mr McMahon is nodding his head.

Even if some members take that view, every single member of this Parliament has voted in favour of the climate change targets that we have set ourselves. Every single SNP member who I have heard talking about them talks in glowing terms of global leadership, yet every member who takes a look at the draft RPP2—the second report on proposals and policies—on climate change will see that, even just in the 2013-14 financial year that this budget will cover, there will be a dramatic reduction in the scale of ambition in the proposals and policies for transport. By the end of 2014, there will be an additional 0.5 million tonnes of CO2 on the figure in last year’s RPP.

Photo of Michael McMahon Michael McMahon Labour

Let me make a serious point about the M8 bundle. One of the key reasons why the M8 has to be extended is to allow goods to get to the Mossend rail freight terminal so that we get them off the road and on to trains. That is the intermodal shift that we need. In the longer term, some of those infrastructure projects will achieve the outcomes that Patrick Harvie wants.

Photo of Patrick Harvie Patrick Harvie Green

That might happen if it is done in association with demand management on the roads, but all too often, projects that have been justified because they will achieve modal shift end up achieving modal spread, and we get more of everything. We will debate that another day.

We heard some announcements about additional spending on housing, including on energy efficiency measures, yet those announcements come just a week after the figures on emissions from homes and communities show a dramatically lower level of ambition in 2013 and 2014, with an extra 200,000 tonnes of CO2 equivalent in those two years.

Whether it is reversing part of a cut in college provision or saying that we are doing a little bit more on transport or housing when last week we said that we would do so much less, I am reminded of nothing more than a shop window emblazoned with a great sale sign proudly displaying a 10 per cent cut in prices when the shop quietly hiked the prices by 20 per cent last week. The customers are still being fiddled.

We need to do a great deal more in the long term as we face even deeper cuts from Westminster. After the budget has been passed, I urge the cabinet secretary to revisit his opposition to reviewing local government revenue. We need to be willing to raise revenue from those who can afford to pay more if we are going to offset those Westminster cuts and make future budgets easier to bear.

Photo of Rob Gibson Rob Gibson Scottish National Party

The budget underpins the sustainable development of our economy in many ways. It supports the hugely successful food and drink industry, manufacturing—which is taking us further out of the recession—renewable energy, and oil and gas. It also supports many of the sectors that are creating the jobs that will give the country a sustainable economy into the future. The budget takes us in that direction, and I welcome its thrust.

Photo of Rob Gibson Rob Gibson Scottish National Party

I will certainly give way to the other Mr Gibson.

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

The member talked about sustainability. Does he share my delight that today SSE Renewables announced a £212 million private investment to build an undersea electricity cable from Kintyre to Hunterston in my constituency?

Photo of Rob Gibson Rob Gibson Scottish National Party

I thank Mr Gibson for his intervention. There are excellent examples across the country of investment in renewables—investment that makes sure that many of the far-flung parts of our rural economy can contribute to the whole economy. It is on that specific point that I want to make some points.

Rural poverty is being addressed by some of the means provided in the budget, including the retrofit programme for hard-to-heat and hard-to-treat houses. That programme is a vital part of making sure that the people who live in the poorest of areas and often in the poorest of housing have a chance to contribute to our economy.

There is also the next-generation funding that will take broadband to rural areas. Highlands and Islands Enterprise has a project to bring that about. That will give people a better chance of taking part in our economy.

Alongside the land fund, the land reform review group’s work could mean that we put more people in charge of the acres on which they live and allow them to develop a new economy, which might include ideas from renewables, tourism and many other areas.

All those enabling factors are underpinned in the budget.

Photo of Rob Gibson Rob Gibson Scottish National Party

Not at the moment; I want to develop my point a bit further. I might take an intervention later.

The rural economy supports 68,000 jobs in agriculture and fishing. In answer to a question from my colleague Graeme Dey, the cabinet secretary pointed out how many hundreds of millions of pounds are involved in supporting sectors such as farming and crofting. If we decided to have other priorities, we could just close down the rural areas. The SNP is an all-Scotland party. I never hear a word from the Labour Opposition about anything that would help rural Scotland.

Photo of Neil Findlay Neil Findlay Labour

Will the member take an intervention on that point?

Photo of Rob Gibson Rob Gibson Scottish National Party

No, I will not give way to the Punch and Judy show that is going on on the other side of the chamber.

Photo of John Scott John Scott Conservative

The member is not taking an intervention at this time.

Photo of Rob Gibson Rob Gibson Scottish National Party

I welcome the £522 million that is going into colleges this year. Some of those colleges teach many of the rural skills that we require to underpin the transformation of the rural economy. Many young Scots can train to get skills in environmental and rural business at all levels—skills that are underpinned by modern colleges in the regional model, such as the University of the Highlands and Islands.

I suggest to members that we are looking for the cabinet secretary to help rural businesses, as the Rural Affairs, Climate Change and Environment Committee said in its report to the Finance Committee on the budget. The committee said that the Scottish Government needs

“to consider allowing rural businesses to take up modern apprenticeships in a more flexible way, permitting, for example, an apprentice to work for a range of businesses throughout the term of the apprenticeship. This should also enable apprentices to acquire the range of skills needed to better equip them for sustained year-round employment.”

I hope that we can find that flexibility in the budget because the colleges that aim to do those things are capable of providing such training. Modern apprenticeships, which can be set up in rural businesses, ought to be able to find that flexibility in the budget. We need to ensure that we make the best of young peoples’ skills, and that we let them live in the country in which they were born.

I turn to preventative spend. Patrick Harvie mentioned the draft second report on proposals and policies, which we are starting to discuss. We are working on climate change activities that are among the most advanced in the world and the most difficult to achieve. We are talking about an economy in which the Government has only some of the powers and not all the means to change people’s behaviour. Fuel tax duty and the like are reserved to London. We need to move away from those things.

I am sure that Patrick Harvie welcomes today’s announcement on the free installation of home charging points for electric cars.

The Deputy Presiding Officer:

You should be drawing to a close.

Photo of Rob Gibson Rob Gibson Scottish National Party

Although Patrick Harvie may not want roads, people most certainly must be able to get around our country so that they take part in the economy. The purpose of much of what we are talking about in the budget is to make sure that that is exactly what happens.

The Deputy Presiding Officer:

You must close, please.

Photo of Rob Gibson Rob Gibson Scottish National Party

We have an opportunity to ensure that many of those things take place by supporting the budget.

The Deputy Presiding Officer:

I call Malcolm Chisholm. You have up to six minutes—less would be more.

Photo of Malcolm Chisholm Malcolm Chisholm Labour

Labour is taking a focused approach to the budget by concentrating on two areas: colleges and housing. We are doing that not only because the economy and social justice require it but because the cuts to the college budget have been much bigger than the average cuts to the resource budget and the cuts to the housing budget have been much bigger than the average cuts to the capital budget. That was pointed out by, for example, the Infrastructure and Capital Investment Committee in its budget report. It said that, over the spending review period as a whole, the average cut to the capital budget is 33 per cent but the cut to the housing budget is 45 per cent.

Of course, we should acknowledge that some improvements have been made. The total budget for housing over the spending review period, as announced by the Cabinet Secretary for Finance, Employment and Sustainable Growth, is £859 million compared with £1.39 billion in the previous spending review period. That amounts, roughly speaking, to a 40 per cent cut. Some of the gap between the 45 per cent and the 33 per cent has been closed following the Infrastructure and Capital Investment Committee’s recommendation. However, it would be much better to follow the Labour proposal because that would close the gap completely and a little bit more.

I accept that it is a little bit unusual to say that all the consequentials could go to one area, housing, although that is not so strange for me because I have been arguing for several years in budget debates that housing should be the number 1 priority for capital expenditure. That is a proportionate and sensible response to the scale of the housing crisis.

Shelter has already been quoted as saying that we are

“heading for a cliff edge with regard to new completions”.—[Official Report, Infrastructure and Capital Investment Committee, 24 October 2012; c 973.]

The Government recognises that, because it has made five separate additions to the housing budget over the past year, while changing the original target only marginally today, by 350.

Although the Government recognises the problem, it is not dealing with the heart of the matter, because it will not address the fundamental problem of the big reduction in the subsidy level for each social rented house, which is manifesting itself in 3,000 starts a year. The Government quotes the completion rate, but that is based on the old subsidy levels. We now have a problem of many housing associations building few, if any, new social rented housing.

That was brought home to me very forcibly at a briefing by the City of Edinburgh Council on Monday, when I was told that its projections over the current spending review period and beyond are that it will not increase the number of social rented houses in Edinburgh. That is not to say that a few additions will not be made by particular housing associations, but they will be netted off by some demolitions. There will be no increase in the social rented stock in Edinburgh, even though the level of social rented stock there is already among the lowest levels in Scotland. I was told that the social housing model is broken.

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

How much of the additional money that Malcolm Chisholm would like to be spent on housing would be spent on increasing the housing association grant and how much of it would be spent on building additional units?

Photo of Malcolm Chisholm Malcolm Chisholm Labour

We have to do both. We need a significant injection of new money into housing because so many different actions have to be taken in this area. I am arguing that if the Government does not grasp that nettle, it will not solve the housing crisis.

I realise what a crisis we have in Edinburgh, where 3,000 people are in temporary accommodation at any one time. That represents a 15 per cent increase in five years, and that is before the 2012 commitment kicks in. As I have indicated, Edinburgh has one of the lowest levels of social rented housing in Scotland. In addition—not many people outside Edinburgh realise this—it has one of the lowest levels of owner-occupation in Scotland: the City of Edinburgh Council is fifth lowest out of the 32 authorities in Scotland for owner-occupation. People will be surprised to hear that. I have offered an Edinburgh angle, which it would not be appropriate to go into in more detail now.

The college cuts have also been bigger than the average resource cut, although next year’s cut is now £25 million instead of £35 million. I congratulate the NUS on its splendid campaign. I am sure that some members might have felt that they got rather too many emails, but it was all in a very good cause. It was certainly an excellent campaign. However, I have to say that I do not think that the NUS and its thousands of members and supporters will be dancing in the streets tonight, because the college sector still faces significant cuts, which come on top of the 70,000 reduction in the number of students at colleges and the concerns that exist about provision for the over-24s.

Photo of Willie Rennie Willie Rennie Liberal Democrat

Mr Chisholm is spot on about the NUS, because Robin Parker has just said that the NUS cannot accept a cut of £24.6 million to colleges, on top of the huge cuts that have been made over the past few years.

Photo of Malcolm Chisholm Malcolm Chisholm Labour

It is not just the NUS that feels that way. In its written submission to the Education and Culture Committee, Edinburgh College—which gave oral evidence at yesterday’s meeting of the committee—said:

“Colleges will have to reduce costs rapidly to remain financially sustainable and there is a risk that opportunities for our students and our communities will be compromised. We believe savings and efficiencies can be achieved but the current pace of financial cuts runs the risk of creating a funding crisis”.

As far as the economy and social justice are concerned, colleges and housing are the right areas to focus on. Labour’s proposals for funding those areas have been criticised, but the Scottish Government supports the use of revenue for capital—that is exactly what the NPD model does. Labour’s proposals involve using a little bit more NPD, but they fall well within the 5 per cent cap for revenue-financed projects. The most recent answer to a parliamentary question that I saw on that from John Swinney said that the payments for revenue-financed projects would amount to 3.3 per cent this year. Therefore, Ken Macintosh’s funding proposals are perfectly feasible.

Photo of Jamie Hepburn Jamie Hepburn Scottish National Party

I very much welcome the budget that is before us. I want to talk about some of things in it: the £180 million that is to be provided over two years for investment in construction, skills and the green economy; and the £80 million of planned investment in the schools for the future programme, which will increase the number of schools being built from 55 to 67—I am delighted to say that one of those will be a new Greenfaulds high school.

In addition, commitments have been made to a wage increase for most public sector employees and to no compulsory redundancies. I say gently to Mr Macintosh that it is somewhat galling to hear criticism of the amount that is being spent on redundancies when Labour-controlled Glasgow City Council made a pay-off of £500,000 to the head of the Glasgow East Regeneration Agency. The Labour Party should do more to get its own house in order instead of criticising others.

Photo of Kenneth Macintosh Kenneth Macintosh Labour

Why is exactly the same trend evident across every public sector organisation in every area? Why has there been a huge increase in redundancy and severance payments in every area under the SNP Administration?

Photo of Jamie Hepburn Jamie Hepburn Scottish National Party

Perhaps it is because organisations such as Glasgow City Council are paying £500,000 to certain individuals. The key point, of course, is that the Government has a policy of no compulsory redundancies.

Photo of John Mason John Mason Scottish National Party

I make the point that £270,000 of that was according to contract but £230,000 was extra, which is why the Labour councillors were guilty of misconduct.

Photo of Jamie Hepburn Jamie Hepburn Scottish National Party

That is a useful clarification from Mr Mason.

Let us talk a little more about what the Government is doing. It is delivering free university tuition. It is keeping the council tax down, delivering free prescriptions and supporting concessionary travel. In Labour’s cuts commission, none of those are off the table. In December last year, the Government also announced an additional £205 million package of capital investment.

Rather than welcoming those initiatives, Ken Macintosh demanded that all the money be spent on housing. We hear demands from Labour members for support for the further education sector. Ken Macintosh will have to explain to them why he would want the £19 million support for capital investment in that sector to be cut. We also regularly hear Labour members decry the condition of the NHS. Ken Macintosh will have to tell them why he wants the £10 million for health maintenance to be cut.

Photo of Jamie Hepburn Jamie Hepburn Scottish National Party

No, I will not. I have already taken an intervention from Mr Macintosh and he would do well to remember that he did not take a single intervention during his speech.

I point out the other areas of investment that Mr Macintosh wanted to be cut. They include the £4.6 million of investment in Scotland’s canal network. That represents regeneration at Pinkston basin, Bowling, Port Dundas, Spiers wharf, Sighthill, Applecross, Grangemouth and seven locations along the Caledonian canal. There is also £21 million for regeneration projects in Dalmarnock, Irvine and Ardrossan. Those are all projects that Mr Macintosh presumably wanted to be cancelled.

Photo of Willie Rennie Willie Rennie Liberal Democrat

I do not want to interrupt Jamie Hepburn’s self-congratulatory list, but will he express any concern about the NUS’s comment this afternoon that it cannot accept the £24.6 million cut?

Photo of Jamie Hepburn Jamie Hepburn Scottish National Party

I was going to turn to that a little later, but I will turn to it now. I very much welcome the £61 million of funding for colleges in addition to the budget that had been set. It is surely good news.

When Mr Parker came before the Finance Committee, of which I am a member, the convener asked him to say where, if he did not want the settlement, the money should come from, but, as in the chamber, answer came there none. I can see Mr Rennie’s reaction. I will not criticise Mr Parker for that because it is his role to advance a proposition for his interest group. However, to be frank, if the other parties in the Parliament aspire to government, they must raise their game and tell us where the money will come from, but they never do.

What is particularly welcome about the college settlement is that it is a two-year settlement. When I am in discussion with my local college, one of the concerns that it expresses is about looking further ahead. To be frank, I would have thought that the fact that there will be sustainability and a level of stability from the coming year to the next would be welcomed across the board. It is unfortunate that that is not the case, because the college sector will welcome the investment.

We would also do well to remember that, as the cabinet secretary pointed out, the highest-ever level of investment in the college sector before the SNP came into government was £510 million. To be frank, the calls from the other parties sound hollow to me.

The additional £40 million for housing is also welcome. Two aspects of that in particular are welcome. The £4 million for preventive adaptations is hugely welcome, because one of the key themes that have come out of the Finance Committee’s changing demography inquiry—the report will be published soon—is the need for such investment.

Also, like Mr Stewart, I hope that the £2 million pilot on regenerating our town centres—finding ways to get people to live in them and to increase activity in them—will be a huge success. The town centres in my constituency could do with some attention.

It was interesting to hear Mr Rennie having the audacity to bemoan SNP members’ welcome for the budget. Let us consider what his party’s Government has done. It has cut capital spending and only belatedly reversed a little of that cut. Even then, Nick Clegg—his party leader—has admitted that the UK Government had cut too far too fast. His party is also introducing austerity budgets, cutting investment and hurting growth and families. That is before we even get to the UK Government’s draconian welfare reforms. SNP members can be proud of their Government’s budget. Willie Rennie should be ashamed of his.

Photo of Murdo Fraser Murdo Fraser Conservative

Across the western world, Governments are having to deal with difficult financial situations as a result of excessive borrowing in the past and the economic crisis of 2008, and they are having to make tough choices. Despite his protestations, John Swinney is actually better off than most, if not all, of his contemporaries. In cash terms, the Scottish Government’s budget this year is higher than it was last year, albeit by a mere £7 million. Nevertheless, it has increased, and we need to see it in that context.

We have heard from SNP members that Mr Swinney is to be congratulated on delivering a balanced budget. They seem to forget that that is a legal requirement for the finance secretary. It is a bit like congratulating him on paying his taxes on time or driving at the speed limit. I am sure that, as a responsible citizen, Mr Swinney does both those things, but they are not causes for congratulation.

Mr Kevin Stewart made an interesting point about the need for the Opposition to bring forward alternative budgets. I know that he was not in Parliament when the SNP was in opposition but, before he made that comment, he might have checked with his front bench what the SNP’s custom was in the Parliament when it was in opposition. Unfortunately, he has dug a rather large hole for himself as a result of not doing so.

Mr Swinney said that the budget is about assisting economic recovery and supporting business. He is right to say that the recovery will come only through a growth in business. That is why it is so important to listen to businesses’ concerns. If he had listened to businesses’ concerns in drawing up the budget, he would have heard them say that this is not the time to increase the tax burden. The retail levy will raise an additional £30 million from the business sector, and the reduction in empty property rates relief will raise an additional £18 million from it. There is a proposed increase in business rates revenue of £400 million across two years, and a rates revaluation has been put back two years, to 2017. That will leave businesses paying rates on valuations that were set for 2010, when the economic situation was much better, of course. Before any member mentions the comparison with England, I gently point out that England and Wales have a transitional relief scheme, of course, and that such a scheme does not exist in Scotland.

Let us consider the vexed issue of capital spending. The SNP would be on stronger ground in demanding additional money for capital spending if it were able to demonstrate a stronger track record with the money that it has had. Over the past few weeks, the failures of the NPD private finance model so beloved of Mr Swinney have been exposed. In the current year, instead of spending £353 million on vital projects, the SNP has spent just £20 million. Last year, it promised to spend £150 million, but it spent nothing, so at least things are getting better. That means that, in the current year, £119 million has not been spent on new schools, £65 million has not been spent on colleges, and £27 million has not been spent on roads. A couple of weeks ago, the First Minister told us that it was all the fault of the Aberdeen western peripheral road. We know now that that is not the case.

It is extraordinary that the Scottish Government is always lecturing us on the need for more capital spend, but it fails to deliver vital projects with the cash that it has. Mr Swinney’s own paper to the Finance Committee said that the delays had cost 6,700 jobs in the construction sector. Much-needed and much-hoped-for jobs in construction have not been delivered because of the failures of his particular project. Before he demands more money for capital projects, he must demonstrate the ability to spend the money that he currently has.

At a time of economic difficulty, it is vital that colleges are properly funded. That is important because young people are leaving school and looking for the training that they need to get into the workforce. Many of them are not able to find jobs and are therefore looking for an alternative. People who are being made redundant and people who are underemployed are looking to retrain and get skills to get back into the workforce, so we need a good deal for colleges.

Mr Swinney said that the Government has delivered the best possible deal for colleges. He has reduced the size of his cuts. That is what he has done. In 2013-14, the cuts will be only £25 million; the year after that, they will be only £26 million. Never have savage cuts been announced with such flourish to such acclaim from the SNP benches as they have been today.

The issue of where to cut is entirely a political choice by the SNP. I am not surprised at the negative reaction from Robin Parker of the NUS. I imagine that he will be getting a call from the First Minister before the day is out.

The Government has more money to spend than it had last year and it has made the wrong choices. It made a choice to make savage cuts to the further education budget. It made a choice to tax Scottish businesses more. It has presided over the dismal failure of the NDP funding model for capital projects—

Photo of Murdo Fraser Murdo Fraser Conservative

The NPD model.

It has failed to deliver the 6,700 jobs that could have made a difference to improving the Scottish economy. The SNP has made the wrong choices today and the Scottish economy will be poorer as a result.

Photo of George Adam George Adam Scottish National Party

I welcome the budget and the fact that, even in challenging times, and despite the claims of the Opposition, the Scottish Government still keeps delivering a bright future for the people of Scotland. I find it ironic to hear from the Tory benches about massive cuts when part of the reason that we are sitting here is the cuts made by the Liberals and the Tories at Westminster. It is a two-sided argument—they are willing to say one thing here and another down south.

Despite the cuts made by the two-faced Tories, cutting and slashing in their wake, this budget is about jobs and growth. The Scottish Government’s draft budget has jobs and economic growth at its heart. The important thing about this budget is that, at its heart, it remembers the people of Scotland whom we serve and considers how we can make their lives better.

I sometimes sit here listening to debates that are almost university-like, in which it sounds as if the people that we represent, and the fact that we should be doing things for them, has been forgotten. This is about real people and real lives.

The SNP Government has consistently taken action to make full use of its limited powers over the economy to try to mitigate the impact of Westminster’s austerity agenda. Our continued commitment to the social wage will deliver benefits to everyone in Scotland. I am talking not just about the social wage but about people’s families—mums, dads and children. We are maintaining the council tax freeze, keeping higher education and prescriptions free, and supporting concessionary travel. Those are important issues to the public. They are issues that we should remember when we are having debates such as this, even given our limited powers and the attacks made by the dark cloud of Westminster.

There is a better way. The better way is independence. Opposition members can laugh all they like. If we have independence, we can make decisions here, in this Parliament. With the moneys available to us, we can make things better. On the back of what Mr Swinney has delivered over the past five or six years, we can see that the SNP offers the dynamic future that the unionist parties do not.

What is Labour’s future? It talks about its cuts commission and the something-for-nothing society. It does not want to talk about people and their lives and how we can make a difference. Where is the ambition? Where is the idealism? Where is Labour’s belief in the people of Scotland? It is no longer there. Labour’s cynicism has got so much that it is just a political game for Labour.

Much has been said about college numbers and education. Again, the SNP Government keeps delivering: 10,000 young people could benefit from support for jobs; the 2013-14 education and lifelong learning budget includes £50 million for the early years change fund; there is continued investment to raise attainment through curriculum for excellence; and there is the delivery of 67 new or refurbished schools. The early years fund is giving families an opportunity to find out the support that they need in order for us to help them in future. Again, the Government is listening to the public as opposed to telling them what they should expect.

A number of comments have been made while the debate has been going on. Mr Rennie mentioned a couple of things. There was a tweet—Presiding Officer, I did not see it online in the chamber—

Photo of George Adam George Adam Scottish National Party

It was given to me outwith the chamber. Seonag MacKinnon, from the BBC, tweeted:

“Scotland’s Colleges say delighted with £61m more than expected over 2 years. Says can complete reforms and offer students wide range courses.”

Now the truth comes to fruition and we see the difference between the Opposition parties and the SNP. We are delivering for students in Scotland and giving them an option for the future. Post-16 reform and regionalisation enable all the colleges to focus on jobs and ensure that all our young people have a future in which they can be prosperous and can move forward with their lives. If Colleges Scotland says that, and people out there are saying that, it appears that only the Opposition parties think that things are not going right.

I know that I have only five minutes, so I will just say that the future that the SNP offers Scotland through independence is bright. Nothing has come from any Opposition member in this debate.

Photo of Richard Baker Richard Baker Labour

There seems to be little room in political discourse in Scotland for any issue other than the Scottish Government’s plans to break up the United Kingdom, but for people in Scotland—our families, our trade unions, our businesses and our civic groups—the issues that we are debating today are the most important ones.

The Scottish Government’s greatest task and ambition should be to get our economy growing again, but in too many areas of the budget, the Scottish Government is either not doing enough or is making decisions that damage our chances of growth rather than improve them. We have focused on the three areas in which we think the Government is making the biggest mistakes.

First, on college funding, from which tens of millions of pounds are still being cut, the Government’s actions are damaging chances for our young people. When we in Aberdeen hear that we will need 120,000 new employees for the oil and gas industry at a time when millions of pounds are being cut from our local colleges’ budgets, it becomes more clear that the Scottish Government’s approach does not make sense.

Secondly, on housing, the cabinet secretary appears to think that more homes can be built even though he keeps cutting investment. Many of the new homes to which he has referred in the past were built under the previous housing association grant regime, not the current regime. Housing associations have had to dip into their reserves to enable them to build new homes and in many instances the reserves have been exhausted and associations do not have the funds to build the new homes that we need. Today’s announcement will not change that.

If the Scottish Government will not take my word for that, it should look at the briefing from the SFHA, which says that the level of housing association grant must increase. That measure was absent from the cabinet secretary’s speech. The Government should also note that Shelter endorses our proposal for the allocation of all the consequentials to housing, not only to address housing need—which remains acute—but to deliver speedy investment in infrastructure and to support our struggling construction industry. If the Scottish Government fails to do that, we will face a housing crisis, as Elaine Murray said.

Finally, on infrastructure, we have highlighted the cut of £350 million from the budget of the Edinburgh to Glasgow rail improvement programme. That decision was particularly poor because the project was going to take advantage of Network Rail borrowing, because the full benefits of the scheme will not now be realised and because EGIP was that cherished thing—a shovel-ready project. There is a clear gap between the rhetoric and the reality when it comes to ministers’ stated goal of investing in infrastructure to stimulate the economy.

Photo of Richard Baker Richard Baker Labour

I apologise to Mr Crawford; my time has been cut.

We have reminded ministers that investing in infrastructure is the right approach, but they are not delivering. On Monday, the Cabinet Secretary for Infrastructure, Investment and Cities announced a refreshed infrastructure investment plan but neglected to mention that the Government’s flagship programme of projects that would be funded through the NPD funding mechanism has failed to deliver investment at the very time when it has been needed most. We know that, because although we were told that £353 million would be invested in 2012-13, only £20 million was spent.

The figures that the Scottish Futures Trust released yesterday show that that is not the end of the problem. We were told that £686 million would be invested next year, but now we know that there will be only £338 million of investment. We have been given no clear explanation for the delay in all those projects. We have not been told why, of the £119 million that was meant to be invested in schools through NPD, nothing was spent in this financial year, or why next year, when £150 million was to be invested in schools, new plans allocate only £62 million. How many job opportunities were lost last year because of the delays to key projects?

Even when its projects proceed, we believe that maximum economic benefit to our economy is still not being secured because of the Scottish Government’s failures in procurement. Too often, there is no level playing field that would allow Scotland-based firms that could employ people locally to compete with big multinational companies, because the Scottish Government has not done what other countries have done—within EU rules—to ensure that contracts include community benefit clauses and other provisions that would mean that local firms could compete. We have to look only at the debacle of the Forth replacement crossing contract to see how our economy has lost out. We hope that that will be changed through the forthcoming procurement reform bill, although we still await details of when it will be published.

The cabinet secretary has said that the budget is firmly focused on growing the economy. However, in making the wrong decisions on colleges and housing and in failing to deliver on infrastructure plans, it does not live up to that billing. It is, rather, documentary evidence of a Government with its eye off the ball at the worst possible time for our economy. That is why the budget should not be supported by Parliament today.

The Deputy Presiding Officer:

We move to closing speeches.

Photo of Gavin Brown Gavin Brown Conservative

When the draft budget was presented in September, the Scottish Conservatives believed that it was not a budget for the economy. We took the same view when we debated it in December, we took the same view when we debated it at stage 1 two weeks ago and, I have to say, we take the same view today. The Government wants to be judged by what it does for the economy; in our view, it has simply not done enough.

Just under a month ago, the cabinet secretary gave evidence to the Finance Committee, at which he said:

“An assessment of the 2013-14 budget against what I set out in the spending review in 2011 demonstrates that changes to the budget are pretty peripheral.”—[Official Report, Finance Committee, 9 January 2013; c 2008.]

I challenge the cabinet secretary to say something more than that in his closing speech and to tell us that the changes that he has announced today are anything more than “peripheral”.

We have had an interesting debate. We heard Bruce Crawford boast about what the Government is doing in relation to the switch from revenue to capital, but when he was asked—as I have asked a number of ministers in recent months—whether that has happened and what impact it has had on the ground, the answers were pretty barren. The Government keeps changing its view on where it has happened and is unable to provide evidence that it has made any impact whatever on the ground.

We have heard back bencher after back bencher praise the Scottish Government for the excellent work that it is doing on capital spending and on driving forward our economy, with particular reference to the announcements that were made last February and last December. However, as they criticised the UK Government, none of those members acknowledged that those announcements last year came about as a direct consequence of Barnett consequentials flowing from the UK Government. They criticised the UK Government for—in their view—being slow, but because the Scottish Government spent some UK Barnett consequentials, they said that it was fast, effective and fleet of foot. In response, Jackson Carlaw said—from a sedentary position, I have to say—that Barnett consequentials come from the UK Government and not from any other third-world country. [Interruption.] That got them excited, didn’t it?

We heard from George Adam, for whom the future is bright, apparently. He failed to acknowledge the point about colleges when he blamed on Westminster the SNP’s decision to dramatically cut the college budget. However, the reality is that, in the next financial year, there will be a cash-terms increase of £7 million to the overall Scottish budget and a cash-terms cut to colleges of £25 million. The Scottish budget is going up in cash terms and the college budget is going down in cash terms. That cut is due entirely to a decision of the Scottish Government, not of the Westminster Government.

Photo of Mark McDonald Mark McDonald Scottish National Party

Richard Baker makes it sound as though a £7 million increase in the face of inflationary pressures is something for which we should be grateful. Perhaps he would like in the remainder of his speech to reflect on the following question: if the college budgets in Scotland are being cut “dramatically”, what is the situation in England? That situation has, of course, a direct bearing on the funding that is received by the Scottish Government?

Photo of Gavin Brown Gavin Brown Conservative

That is absolutely desperate stuff from Mr McDonald—anything to take the focus away from the Government, its priorities and the choices it has made. Nobody on this side of the chamber has said that a £7 million increase is generous, but it is a cash-terms increase compared with a cash-terms cut for colleges, which again makes it this Government’s choice and its decision.

We heard ridicule of Mr Fraser for talking about “NDP” instead of “NPD”, as if that is the most ridiculous thing that has come out in the past couple of weeks in relation to that particular project. Mr Fraser, of course, made the mistake of thinking that it stood for “non-delivery profit” model as opposed to “non-profit distributing” model, which is an easy mistake to make—or so it seems.

Not only is there more money next year, but I found a letter from John Swinney to Andrew Welsh, the then convener of the Finance Committee, from January 2011, which was just a couple of months before the election and just a couple of months before the SNP manifesto was finalised. Mr Swinney told Mr Welsh that he predicted that for 2013-14, he would get £28.2 billion to play with. The Treasury allocation that he has to play with is £28.6 billion—almost £400 million more to spend than he thought he would have when he wrote his manifesto and when the SNP was elected on that platform in 2011. The only people who can be blamed for the choices that have been made today are the people in the SNP Government.

Photo of Rhoda Grant Rhoda Grant Labour

This has been a very disappointing day. We put forward suggestions—[Interruption.]

Photo of Rhoda Grant Rhoda Grant Labour

We put forward suggestions that were modest and deliverable and that could have made a difference, but this Government has proved that it does not listen. So much for governing like a minority.

We asked for the FE cuts to be reversed. We welcome the £10 million that has been reinstated, but it is not additional, it is not improved, and it is not extra. It is a cut of £24 million to the FE budget. That is why people including Robin Parker, the NUS Scotland president, are expressing their disappointment and pointing out that it is still a cut, and it is why Malcolm Chisholm talked about how Edinburgh College feels that it is facing a funding crisis. This is not going to go away.

Why do we in the Labour Party want more money for colleges? We want it because unemployment is high for 16 to 24-year-olds. Many people in that generation are facing a lifetime on the dole—another lost generation—but the Government is cutting money to colleges to stop that group having a future.

Underemployment of graduates is taking the jobs that would be available at entrance level for young people who do not have skills. Those unskilled young people will become that lost generation, so we need to ensure that they are skilled and ready to take jobs at the upturn. We also need to ensure that those who are underemployed—the graduates who are working in filling stations and supermarkets—have their skills updated so that they will be ready to take up other jobs when those jobs eventually come along.

Photo of Margo MacDonald Margo MacDonald Independent

I thank Rhoda Grant for taking an intervention. I will try to make it brief. I agree with every word that Rhoda Grant has said, but she must say where she would get the extra money to put into the colleges.

Photo of Rhoda Grant Rhoda Grant Labour

Maybe Margo MacDonald was not in the chamber when we explained how we would find that money. [Interruption.] From the noise that they are making, it seems that none of the SNP back benchers was in the chamber then, either. Perhaps we should look at such things as the Ryder cup, on which the Government spent £470,000, or the Scotland House fiasco, when it spent £400,000 at the Olympic games. [Interruption.]

Photo of Rhoda Grant Rhoda Grant Labour

That is not to mention top salaries and the 16 referendum workstreams on which the Government is wasting our money, instead of spending it on young people who need skills and need to be trained to take the jobs that are available for them—[Interruption.]

Photo of Rhoda Grant Rhoda Grant Labour

Richard Baker talked about the skills shortages in the oil and gas industry. We need funding for colleges, so that people can be trained to fill such skills gaps. It is wrong that people are sitting at home and are not even getting unemployment benefits when they could get jobs if training in colleges was available to them. They are real people—they are not the people who are sitting in this chamber navel gazing. They are people who are thinking about their opportunities, their career chances and their life chances.

Rob Gibson said that the Labour Party does not want to do anything for rural areas, but he forgets North Highland College, which is in his constituency. The funding formula already damaged it; how much more damaged will it be by the funding cuts? Colleges operate in both rural and urban areas and they create skills and help people to maximise people’s life chances, which is why we need to fund them properly.

The SFHA has stated clearly that social rented housing has been unfairly penalised. I am sure that it welcomes, as everybody else does, the additional money that was announced today, but £10 million for the affordable housing budget is a drop in the ocean and is far too little. Elaine Murray talked about the housing associations that responded to her, which said that building had stalled in their areas. She pointed out the effect of bad housing on people’s life chances.

Photo of Rhoda Grant Rhoda Grant Labour

I will not take an intervention. I need to make progress.

The housing association grant has been cut by £30,000 a unit, which means that it is impossible to build units—even more so in rural areas. I remind Rob Gibson that a rural house cannot be built on a £40,000 subsidy. A lot of the housing associations in my area cannot build because of the subsidy level.

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

Will the member take an intervention?

Rob Gibson rose—

I appreciate Rhoda Grant taking an intervention. Given what she has said, what should the HAG level be?

Photo of Rhoda Grant Rhoda Grant Labour

The HAG should be at a level that allows people to build housing units. Rural housing associations used to attract more HAG because they could not achieve make economies of scale. We need to set the HAG at a level that makes building sustainable, otherwise no houses will be available.

We face a crisis in housing. The bedroom tax will affect 100,000 Scottish households. We need to build smaller homes to help families to avoid that tax, because families—real people—are facing poverty or homelessness, and the Government has done nothing but cut the funding that would build homes in which they could live.

Shelter has said that we face a cliff edge in house building and it has backed our policy of investing consequentials in housing. However, the Government has not listened.

Photo of Rhoda Grant Rhoda Grant Labour

A measly £10 million for housing will do nothing for people who are facing homelessness.

Photo of Rhoda Grant Rhoda Grant Labour

We welcome the £10 million for the retrofit programme, but for people who are living in fuel poverty, and if we need to spend £200 million to combat fuel poverty and to meet the Government’s targets, £10 million is but a drop in the ocean. It was sad that the SNP used its majority on the Economy, Energy and Tourism Committee to stop the committee reiterating its recommendation that the Government invest no less than £100 million in dealing with fuel poverty. Members of that committee are not carrying out their duty to scrutinise the Government; indeed, they are a sop to it and are giving it cover. However, the people of Scotland will not afford them such cover.

This is not a budget for growth and it does nothing for jobs. There are cuts to the Edinburgh to Glasgow rail improvement programme and the M8 bundle that Michael McMahon discussed, which are cuts to jobs and our economy. NPD is not working; it has been either mismanaged or misused. The figures show cuts of £333 million this year and £348 million next year but—guess what?—in 2014, £199 million will go into NPD, to coincide with the referendum. I do not think that the Scottish people will be bought in that way.

The Government has also failed in procurement. It is creating leakage within capital spending programmes.

The budget is a missed opportunity to create jobs and homes, a missed opportunity to cut carbon and poverty and a missed opportunity to save the next generation from the scrap heap. The Scottish people will not be bought by the Government.

Photo of Tricia Marwick Tricia Marwick None

It would be courteous to members if other members ceased to turn their backs on the chair.

Photo of John Swinney John Swinney Scottish National Party

The test of a stage 3 debate and the process that leads up to it is whether there is a reasoned fair wind to consider the proposals that the Government has put forward in response to the arguments that have been marshalled by other stakeholders and other political parties. In that respect, Mr Rennie makes a fair distinction in the sense that he and his party have marshalled to me a proposal to extend childcare support to a significantly larger number of two-year-olds than the Government is prepared to do because of the policy choices that we have made. Essentially, I assess those two respective positions as a fair acknowledgement of the fact that Mr Rennie wants to do one thing in the budget and we want to do another. That is an honest disagreement about where the focus should lie.

When it comes to some of the other issues, around colleges and housing, I am genuinely staggered by some of the things that I have heard from some of the Opposition members who have been involved in dialogue with me about the issues in the budget. However, before I get on to those questions, I want to take a moment to discuss an issue about welfare reform that has percolated through the debate. It was commented on by my colleagues Bruce Crawford, Aileen McLeod, Jamie Hepburn and Kenneth Gibson, and also by Dr Murray, Malcolm Chisholm and Michael McMahon.

I unreservedly accept the difficulties that are coming our way as a consequence of welfare reform. I and the Government find it an unacceptable agenda. We and our local authority partners are going to face much greater burdens and pressure as a consequence of the welfare reform agenda that is being pursued by the United Kingdom Government. Nobody in the chamber can dissent from that view.

The Scottish Government has acted in a number of areas—including on council tax benefit, again working with our local authority partners—to try to ameliorate the arbitrary 10 per cent reduction in council tax benefit by the United Kingdom Government. The Deputy First Minister has established a £9.2 million Scottish welfare fund and we have put in place advisory service support to try to deal with the issues.

However, I will not in any way stand here and be accused by members of misleading Parliament and suggesting that, somehow, what we have done can tackle the significance and scale of the welfare reform problem that is coming our way. We have done what we can, within our resources, to tackle it. That is inherent in the budget, which is another reason why it is worthy of support. However, we cannot pretend that we can make all the difficulties go away. That is why this Government wants to do something about them by acquiring the powers over welfare that will enable us to tackle the issue.

Photo of John Swinney John Swinney Scottish National Party

I ask Mr Rennie to forgive me for a moment.

If Rhoda Grant seriously expects us to be able to tackle the full effects of the bedroom tax by building one-bedroom houses between now and 1 April, when the changes will kick in, it highlights the total mental paralysis that exists in the Labour Party on the whole issue. The idea that it would be possible to build a phalanx of one-bedroom houses before 1 April to try to deal with the issue highlights the absurdity of the do-nothing position of the Labour Party—well, it is actually not the do-nothing position of the Labour Party, but the better-together position of the Labour Party and the Conservatives.

Photo of Kenneth Macintosh Kenneth Macintosh Labour

Instead of grossly distorting the—[Interruption.]

The Presiding Officer:

Order!

Photo of Kenneth Macintosh Kenneth Macintosh Labour

Instead of grossly distorting my colleague Rhoda Grant’s measured contribution on housing and sitting back with his complacent attitude that the Scottish Government is doing everything it can when it clearly is not, will the cabinet secretary recognise that although putting additional money into housing would not ameliorate everything it would make a difference and that putting in £350 million would make a bigger difference?

Photo of John Swinney John Swinney Scottish National Party

I am putting more money into housing and have done so over the past 12 months. What I will not do is try to con the people of Scotland by spending the same money twice. That I will not do.

Capital expenditure has been a major issue in the debate. I asked Gavin Brown, who was complaining about our decisions and the fact that not enough progress has been made on NPD, what he thought of the UK Government’s 25 per cent cut in capital budgets. For all his great debating prowess, not a stitch of an answer came forward from him.

Photo of Gavin Brown Gavin Brown Conservative

I am grateful to the cabinet secretary for giving way. He knows full well that we would pay for the housing through Scottish Water’s mutualisation, which would save £100 million a year. However, will he finally admit that what he told this chamber in September about accelerating NPD was not quite right?

Photo of John Swinney John Swinney Scottish National Party

I note that for the second time there was no answer to the 25 per cent question. That means that Mr Brown is a hypocrite, because he says one thing here and then defends other things in terms of the UK Government’s position in the House of Commons.

Mr Brown asked me how much of the resource-to-capital transfer had taken place. I can tell him that I have reported to Her Majesty’s Treasury that from 2012 to 2013 the Scottish Government will have transferred £227.6 million from resource to capital. My planned transfer was £206.6 million but the transfer from revenue to capital DEL has been £227.6 million.

Mr Fraser said that I should not be allowed to have any more capital money because I cannot spend the capital money that I already have. It was part of his big attack on NDP—or, to correct him, NPD. The capital underspend in 2007-08 under my stewardship was £2 million; in 2008-09, £3 million; in 2009-10, £3 million; and in 2010-11, £2 million. In 2011-12, the underspend was £30 million, because of project costs in relation to the Forth replacement crossing. I know how to spend capital budgets efficiently and effectively; I do not waste money on the PFI schemes on which all my predecessors wasted money when in office.

We have heard many comments about the issues surrounding the college budget. I gently point out to Parliament that the college budget for the next two years is going to be £522 million, which is higher than any college budget ever was before I came to office as finance minister. It was £510 million and it is now £522 million. Let me—

Photo of Neil Findlay Neil Findlay Labour

Given what he said to Mr Brown, can Mr Swinney tell us whether he and the rest of the glee club on his back benches are hypocrites for cheering a £25 million cut over the next two years? [Interruption.]

The Presiding Officer:

Order!

Photo of John Swinney John Swinney Scottish National Party

We have been waiting all afternoon for someone to accept Mr Findlay’s intervention—and I am so glad that I did.

Let me read to Mr Findlay—[Interruption.] If we could all settle down for a moment, we will all be able to hear this. I want to read to Mr Findlay the words of John Henderson of Scotland’s Colleges—[Interruption.]

The Presiding Officer:

Order!

Photo of John Swinney John Swinney Scottish National Party

—in a message relayed by Twitter that has been printed out for me. He says:

“We are delighted. This is welcome—hugely welcome. The picture has changed significantly.”

That comes back to my first point. Are the Opposition parties being reasonable about what the Government is trying to do in difficult financial circumstances? The answer is no; they are being utterly unreasonable about what the Government is doing.

The Presiding Officer:

You need to bring your remarks to a close, cabinet secretary.

Photo of John Swinney John Swinney Scottish National Party

The Labour Party has told us that, throughout the process, it has focused on housing, colleges and rail, but then Ken Macintosh started wittering on about the issues to do with voluntary severance, with some Alice in Wonderland view that somehow we can keep on more staff than we actually have the money to pay for. That not only illustrates his financial inability to deal with the issues, but perhaps explains why he cannot understand the project finance model. Thank goodness that he is not sitting where I am today.