There is a long way to go and there will be many difficult decisions still to make and no doubt a number of setbacks along the way, too. However, I think that last week’s autumn statement from the Chancellor of the Exchequer showed that, if we have a plan and a clear focus, and if we stick to it in difficult times and in good times, we get results.
The autumn statement had a positive story to tell about the overall economic picture. It had robust policies to help jobs and the economy more widely, and it was fiscally neutral to ensure responsible recovery so that we do not squander the hard-earned gains of the past couple of years.
Let us look first at growth, because growth has returned. At the time of the budget in March, the Office for Budget Responsibility predicted growth for 2013 of 0.6 per cent; last week, the OBR upgraded that to 1.4 per cent for this year. The OBR also said in March that there would be growth of 1.8 per cent next year; now it says that there will be growth of 2.4 per cent. On top of that, the OBR predicted solid growth for 2015, 2016 and 2017—the largest improvement to any forecast seen in this country for 14 years. Our economy is now growing faster than any other major economy in the industrialised world, apart from that of the United States of America.
Page 96 of this week’s edition of The Economist, which I am holding up, lists 42 economies. Some of them are pretty major, such as those of Japan, Canada and Australia, but the list also includes Chile, Columbia and Malaysia. Of those 42 economies, 28 have growth rates that are higher than the UK’s at this time, so the member’s words in that regard are somewhat hollow.
In a few moments.
We also saw important news on employment. Members throughout the chamber will agree that unemployment is still far too high, but the number of jobs across the UK is now set to rise by 400,000 this year, whereas it was previously predicted to be flat, and unemployment is set to fall by 200,000 over the next six months. Over the forecast period, it is anticipated that business will create three jobs for every one that is lost in the public sector.
In a few minutes.
There was positive news, too, in relation to borrowing. When the coalition Government came to power, the deficit was 11 per cent of gross domestic product. It is now 6.8 per cent. That is a remarkable reduction in just three years. Even better, it is due to drop year on year until it reaches a small surplus in the financial year 2018-19. Back in 2009-10, the country borrowed £158 billion. This year, the figure is projected to be £111 billion, and that is about £9 billion less than was projected in March at the time of the budget. Although I am sure that there will still be some wobbles along the way, the economic picture is looking far better than it was nine months ago, and that is a consequence of the policies and the approach that are being taken over the long term by the coalition Government.
Let us look at some of the policies that we heard about last week, which build on the cuts to corporation tax that we had already heard about. They include the increase in the personal allowance to £10,000, looking at tax-free childcare, and previous policies on national insurance.
I was about to intervene on the member’s intervention. It is simply incorrect to say that the welfare budget is being cut. It rises year on year. What is happening is that it is not increasing at the rate at which it would have increased had there not been a downturn and a recession. The largest amount of money that we spend in the United Kingdom is on the welfare budget. It is the best part of £200 billion of the £700 billion that we spend. We could not deal with the shocks that we had to face without touching the largest overall budget.
Not at this time, I am afraid.
There were positive announcements last week on fuel duty. The planned rise for September has been scrapped and there will be no 2p rise per litre. That means that we will have a freeze for the remainder of the Parliament, and it will have been in force for four and a half years overall, which is the longest freeze in over 20 years. The average motorist will save £7 every time they fill up. While that is good news for motorists, it has a wider impact on the economy as a whole, as it flows through to the prices that we all pay for goods and services.
We heard an extremely interesting announcement on national insurance. The chancellor announced last week that, starting from April 2015, the UK Government will abolish employers national insurance for all employees who are under 21 provided that they earn less than approximately £813 a week. That will apply to existing employees and future ones. It will represent an enormous saving to businesses up and down the country as it is worth the best part of half a billion pounds a year. It is a boost for employers, for young people who have been hit hardest during the downturn, and for the economy as a whole. The Scottish Government ought to welcome that policy when it makes its contribution to the debate.
The UK Government also made big announcements about business rates. We heard about the business rates cap. The UK Government decided that, instead of capping the annual increase at September’s widely predicted retail prices index increase of 3.2 per cent, it will cap it at 2 per cent for the year starting in April 2014. That is an example of a Government that has listened to business. There have been many complaints about increases in business rate, and the Government listened to them and took them on board. It showed leadership when that was required.
The Conservatives therefore welcome today’s announcement from the Scottish Government. Just an hour or so ago, the cabinet secretary announced in the chamber that the Scottish Government would match the UK Government decision. Instead of business rates in Scotland going up 3.2 per cent, they will rise by 2 per cent. We welcome that, but it is incumbent on the Scottish Government to acknowledge that leadership on the issue came from the UK Government. The Scottish Government is following where the UK Government has led. We can be fairly sure that, had the chancellor decided to raise business rates in line with September’s RPI, the Scottish Government would have followed suit. We would have seen a 3.2 per cent rise instead of a 2 per cent rise.
Much as I appreciate hearing the detail that is comprising the debate at this precise moment, I cannot help but think that the Opposition has to come up with an answer to the question that is being asked elsewhere in the United Kingdom: what are we going to do about the cost of living?
The member needs to read the green book that goes with last week’s autumn statement, because it contains policy upon policy relating to the cost of living. Kenneth Gibson is shaking his head, so let me help him by outlining some of those policies.
The green book contains clear, costed and credible policies to reduce the cost of energy bills. We heard about policies in the budget for creating tax-free childcare that will benefit people up and down the country. What about the income tax threshold being increased to £10,000 so that the lowest earners will pay nothing in income tax? What about the council tax freeze that has been introduced south of the border in the past few years? I have also referred to fuel duty. There are many measures for the cost of living. It is right that we should acknowledge that there is still work to be done—I certainly accept that—but the coalition Government is doing a huge amount.
One of the other big announcements that were made last week was about retail premises south of the border. There will be a special discount on business rates of £1,000 to occupied retail and food and drink premises that have a rateable value of £50,000 or less. That is worth about £350 million to the business community, and the Barnett consequentials that will flow from that will be approximately £29 million in 2014-15, and approximately £39 million in financial year 2015-16. That is a big shot in the arm for retail south of the border. It has been widely welcomed by businesses across the land. Our challenge to the Scottish Government is on what it intends to do to help retail in Scotland. Although the small business bonus scheme is an excellent policy, and we support it, premises with a rateable value of more than £18,000 do not get that benefit. South of the border, the threshold will be a rateable value of £50,000 whereas up here it will be £18,000.
We welcome the extension of the small business bonus, as announced earlier, but the cabinet secretary’s assessment is that that would be worth about £3.8 million to businesses in Scotland, while the Barnett consequentials of the UK Government’s announcement are almost 10 times that. What will the Scottish Government do in response to that? What will retailers in Scotland get to match it? Retailers in Scotland have had a particularly difficult time as a sector. The retail levy introduced by this Government makes it even tougher for retailers in Scotland.
I refer Mr McDonald to the growth rates that were announced just last week—enormous increases in projected growth for this year, next year and the years that follow; enormous increases for projected employment; decreases for unemployment; and decreases for borrowing as a whole. From a macroeconomic point of view, the economy is moving entirely in the right direction. The UK Government’s specific policy aimed just at retail and food and drink ought to be matched up here so that retailers up here get a fairer deal.
In our view, as a minority Government this Government started well when it came to helping the high street and the business sector. In its initial budget, it brought in the small business bonus, accelerated by the demands from this party. In 2009, it brought in the town centre regeneration fund—again, something that we had pushed for and which was in our 2007 manifesto.
However, since the Government became a majority Government, things have moved backwards. As we discussed, this Government brought in the retail levy. It brought in huge increases to taxes on empty properties—that was not in its manifesto and not subject to consultation. We see an increasing share paid by business. It was paying £2 billion a year in rates and that is set to rise in 2015-16 to £2.8 billion. We hear the Government complaining incessantly about the powers that it does not have while refusing to use the powers that it does have.
Let us have some more action from the Scottish Government. Let us use the powers that we do have and respond specifically to the announcements in the autumn statement last week.
That the Parliament welcomes the measures to promote economic growth in the Chancellor of the Exchequer’s Autumn Statement 2013; notes that growth projections for the next two years have been revised upward by the Office for Budget Responsibility and that the UK is now growing faster than almost any other major industrialised economy; believes that the Autumn Statement’s measures, including a freeze in fuel duty, the scrapping of employer national insurance contributions for 1.5 million young people, a 2% cap on the business rates increase and granting a special discount of £1,000 to retail premises with a rateable value of £50,000 or below will have a positive effect on the economy; recognises that these measures come on the back of a number of other recent policies implemented by the UK Government, including the cut in corporation tax to the lowest level in the G20; notes with concern a number of measures brought about by the Scottish Government during the current parliamentary session, including the public health supplement and the increase in rates on businesses with empty properties, and calls on the Scottish Government to help the Scottish economy by scrapping the public health supplement, reversing the decision to charge empty properties at 90% of business rates, ensuring that the poundage for business rates does not rise above the level set by the UK Government and implementing a relief scheme for retail properties with a rateable value of up to £50,000.
The Conservative Party motion invites us today to welcome last week’s autumn statement. As the Conservative Party will know, I am always generous in my praise for others in the chamber when they do sensible and welcome things. There are elements of the Chancellor of the Exchequer’s statement last week that I welcome. I welcome what he said on fuel duty. I have welcomed the fact that he has begun to temper the significant and swingeing reductions in capital expenditure that have been applied, although a 26 per cent reduction in capital expenditure rather than a 33 per cent reduction is still a pretty significant blow to the Scottish economy.
It is important at the outset to discuss the issues of economic performance that Mr Brown has put before Parliament today. I think that I would be accepted as an individual who tries to talk about improvements in economic performance that have been made. I did so in the budget statement back in September, when I set out the fact that we were experiencing higher growth, lower unemployment, higher employment and lower economic inactivity in Scotland. All those things remain true today. On all those indicators, we are in a stronger position than the rest of the United Kingdom. There is certainly a more positive outlook in relation to economic performance.
However, we have to look at that in its true and proper context. Mr Brown said that the independent OBR had set out its forecast. In 2010, the OBR forecast that the economy would be 5.9 per cent larger than it is now projecting it to be. Back in 2010, the OBR said that the economy would recover faster and that there would be more growth in the economy—5.9 per cent more growth—than has been delivered. If we are going to rely heavily on the estimates, let us rely heavily on all the information that is put out.
I am simply putting into context the information that Mr Brown shared with Parliament. I am just trying to be helpful to Parliament by sharing objective statistical information with Parliament. That is what I am renowned for in this debate in Scotland.
In the interests of statistical completeness, I point out that the fact that the economy has not grown at that extra 5.9 per cent has resulted in the chancellor incurring borrowing of £197 billion more than he anticipated in 2010. In this debate, since 2010, I have argued for modest changes in capital expenditure. In 2011, I argued for an extra £1 billion of capital expenditure in Scotland, which would have translated into a financial burden of £10 billion across the United Kingdom. I do not have all the quotes in front of me, but I am pretty sure that Mr Brown or maybe Mr Johnstone might have weighed in on that point and said that my proposition would have spooked the markets. However, it would have been only £10 billion, compared with the £197 billion of additional borrowing that has been required to make up for the fact that economic performance has been nothing like it was supposed to have been in 2010.
For the sake of completeness, we must consider all those points of information if we are to examine the financial performance of the UK Government.
As I said, I am delighted that we are in a period of greater economic performance and that the Scottish economy is outstripping the performance in the rest of the UK, with higher growth, lower unemployment, higher employment and lower economic inactivity. The Scottish Government will remain focused on trying to support ways in which we can deliver an even greater performance in that respect.
I have a very basic question, for the benefit of people who might not understand all the high-flown economics. How can we be experiencing growth without the debt getting bigger if we are borrowing more?
Mr Johnstone says that we are borrowing less. I thought that Mr Johnstone did not like it the first time that I went through the figures, but I will go through them again, just to prolong the debate for him. The UK Government is borrowing £197 billion more than it planned to do in 2010. That is not a good result, in my estimation. The simple point that I would make to Margo MacDonald is that, although there is welcome growth in the economy just now, the scale of the damage is enormous.
Mr Gibson, the distinguished convener of the Finance Committee, made the point in one of his substantially evidenced interventions that economic recovery in a number of other countries has been a great deal more dynamic than it has been in the UK. The economies of Germany, Canada and Japan are now in excess of their pre-recession peak. The UK economy is not, and neither is that of Italy, which is also in the G7. We have to keep that context in mind.
The economic performance of Scotland has been strengthening since devolution, and I pay tribute to some of the work that my predecessors did to improve it. Full-time weekly pay has increased from 5 per cent below UK levels to within 2 per cent; Scotland’s unemployment rate has moved from being 1 per cent higher than the UK rate in 1999 to being 0.4 per cent lower in 2013; and our employment rate has moved from a position of 2.4 percentage points below the UK’s to 1 percentage point higher than the UK’s in 2013. Those are all welcome steps under devolution and are examples of how we in this Government and our predecessors have used the powers that are available to us to improve economic performance.
However, we must be mindful that other countries have improved their economic performance by a more substantial degree and that, if we had had more economic powers, we could undoubtedly have delivered stronger economic performance. To address Margo MacDonald’s point, that would have enabled us to make an impact on the living costs and remuneration of members of the public in our society to improve their ability to meet the cost of living, which I acknowledge is a challenge for people today in Scotland.
Mr Brown talked extensively about business rates. In my statement a few moments ago, I set out the Scottish Government’s decision to cap the annual inflation increase in business rates at 2 per cent. Mr Brown can characterise that as he wants, but I am simply fulfilling my manifesto commitment to ensure that business rates in Scotland do not rise faster than business rates in the rest of the United Kingdom, which was not the position that I inherited from my predecessors but which I have been able to deliver as part of the budget settlements.
I would have deployed the normal statutory increase, which is the RPI inflation rate as of September. I noticed that there were no sharp intakes of breath among the Tory members, so that is not a revelation, and it is precisely what I said in the budget statement to Parliament in September. Of course, I should point out that, in every year in which Mr Brown has criticised me for applying the September RPI inflation increase in business rates, the chancellor has done exactly the same thing.
In the 2010 to 2015 valuation period, companies in Scotland that benefit from the small business bonus scheme will have paid up to £15,000 less in business rates than their counterparts in England. That £15,000 over the revaluation period is a tremendous fillip for the business sector in Scotland, as part of the £570 million package of business rate relief that we put in place to ensure that Scottish business prospers in the challenging economic climate.
If Mr Harvie will forgive me, I will give way to him in my closing remarks in the debate, as I have to draw to a close now.
The Scottish Government is doing everything within its powers to strengthen our economic performance and we will continue to do so, but we aspire to have more powers to deliver stronger economic performance in Scotland.
I move amendment S4M-08551.4, to leave out from “welcomes” to end and insert:
“agrees that the UK Government’s austerity drive has resulted in key opportunities for growth being missed; notes that the Office for Budget Responsibility now expects the UK economy to be 5.9% smaller in 2015 than forecast in 2010 and that, as a result, UK Government borrowing will be £197 billion higher by March 2016 than expected in June 2010; notes that the price of the UK Government’s failure to deliver sustainable growth is being paid by households facing rising costs of living at the same time that wages have fallen in real terms; recognises the steps taken by the Scottish Government to reduce the cost of living through the council tax freeze and the social wage, to support the economy through the most competitive business rates regime in the UK and to help people back into employment; notes that Scotland’s economy has grown by 1.8% during the last year, which is faster than the UK as a whole; further notes that Scotland’s performance in employment, unemployment and inactivity rates are the strongest of the four nations of the UK, and welcomes the publication of Scotland’s Future: Your Guide to an Independent Scotland, which sets out the only detailed vision for Scotland’s future and the steps that the Scottish Government would take with the powers of independence to increase productivity, participation and growth levels, to tackle inequality and to improve living standards across Scotland.”
Today’s debate is an attempt by the Tories to bask in the glory and success of George Osborne’s autumn statement a week ago, when the chancellor declared that the economy has recovered and that his austerity plans are bearing fruit. It is a pity for the Tories that the rosy glow did not last very long during the week and that the chancellor’s statement was pretty much unravelling before he even sat down. In fact, given the level of pre-statement briefing, some of it was unravelling before he had even stood up in the House of Commons.
Mr Swinney says that he always looks for the opportunity to agree across the chamber, and I like to think—although others might not—that I try to do that, too. I cannot quite achieve Mr Swinney’s practised tone of incredulity, which he does so well, but he is right that, over the current Westminster Parliament, the UK Government’s borrowing will be almost £200 billion more than George Osborne had planned. As for growth, it is good that there is some, but the chancellor’s plans in 2010 promised that the economy would grow by 7.7 per cent by now. In fact, it has grown by just 2.5 per cent, which is far less than the economies of the United States or Germany.
Chancellors of all political stripes have been cancelling fuel duty increases for some time now, so it is not something that we find particularly surprising.
To give credit where it is due, we must acknowledge that Mr Osborne’s recovery is a record of sorts—it is the slowest economic recovery that the country has seen in 100 years.
If a group of people is even more incredulous than Mr Swinney, it is the British public. After three years of damaging austerity and a flatlining economy, working people are on average £1,600 a year worse off than they were when George Osborne came to power. Prices have risen faster than wages in 40 of the past 41 months.
It is no wonder that the polls that followed the autumn statement showed that 70 per cent of the public believe that there is no recovery at all and that 51 per cent believe that they are worse off. I say to Mr Brown that perhaps they, too, have failed to read the green book, but they can read their own bank account statements and they know what the effect of the UK Government’s policies has been.
Last week’s statement posed challenges for the Scottish Government. For example, the much-trailed shift of so-called green levies from energy companies to the taxpayer is exactly the same as the plan that the Deputy First Minister announced with great fanfare at the Scottish National Party conference, although the idea comes from the energy companies, as it serves their interests rather than those of consumers. Not only is that a flagship white paper policy being delivered by the Tories but it has also fallen flat. The public understand the meaning of a £50 cut in bills as they see bills rise by £120 a year: they understand that the market must be controlled so that such unfair price rises cannot happen.
Does the member agree that the big six energy companies understand that rapid investment in demand reduction is the most sure-fire way for them to lose their profits, which is why they are driving the scurrilous campaign against investment in the retrofit programme?
The companies certainly do not want to carry the burden of what have become known as green levies, which are partly designed to reduce the requirement for the product that they provide. I see the contradiction in that for companies but, like Mr Harvie, I also see the benefit for the country’s future. I do not see the benefit of shifting the burden from the consumer to the taxpayer if there is no control on prices.
The greatest challenge for the Scottish Government that arises from the autumn statement is that the resulting consequentials of £308 million for the Scottish block leave the Scottish Government with no excuse for not pressing forward with its declared priority of increased childcare provision. That is the flagship of the flagship—the transformation that the white paper on independence promised when it was launched.
It is true that the process is staged, as described in the white paper.
I am sorry.
Stage 1 is the extension to half of two-year-olds of the 600 hours of childcare that is being delivered for three and four-year-olds. When it was pointed out to the Scottish Government that it has the power to do that now, it said that it does not have the money. However, the consequentials give it the money next year and the year after if such an extension is really the Government’s priority.
The Government also said that it would not extend provision because, when women went back to work, the tax that they paid would not help John Swinney’s budget. Is it not more important that the wages that those women would earn would help their families’ budgets? Are many working women not struggling with childcare costs? Do they not need help with their budgets now? The extension of childcare could provide that.
The Scottish Government has the power and the money to deliver the childcare extension. The only question is whether it has the will to begin to transform the lives involved. Will it really tell 30,000 Scottish families that they must vote yes in the referendum before their children can get a nursery place?
Alternatively, will the Scottish Government seize the opportunity and do the right thing now?
I move amendment S4M-08551.1, to leave out from “welcomes” to end and insert:
“notes the Chancellor of the Exchequer’s Autumn Statement 2013; further notes the Barnett consequentials for the Scottish budget, and calls on the Scottish Government to take this opportunity to extend early learning and childcare to 50% of two-year-olds by using these funds to deliver this ambition for families in Scotland.”
I will allow speeches of a maximum of six minutes in the open debate, but shorter speeches would be helpful as, otherwise, we might have to reduce time later or lose speakers from the debate.
Today’s Conservative motion is frankly nothing more than a celebration of mediocrity and a blind refusal to recognise the depressing reality of the UK’s current economic position. The plight of thousands of people across Scotland as a direct result of the UK Government’s—[Interruption.]
The plight of thousands of people across Scotland as a direct result of the UK Government’s wrongheaded austerity agenda and its calamitous mismanagement of the economy has been handily ignored in a motion that unashamedly lauds a deeply unpopular UK Government.
Although it is true that there has been some growth in the economy, the rate of growth has been sluggish to say the least and far below the chancellor’s own predictions or those of the OBR. Yesterday, the OBR forecast that, by 2015, the economy will be 7.5 per cent larger than in 2010. However, that compares poorly with its original forecast of June 2010 that the economy would grow by 14.3 per cent over that period.
The same 2010 OBR report suggested that public sector debt would be 70.3 per cent of gross domestic product this financial year when, in reality, the most recent forecast puts that figure at 75.5 per cent. The story concerning borrowing, as we have already heard, is perhaps the most shocking of all. It is expected to be a colossal 159 per cent higher than the original projection.
On growth, let us look again at this week’s The Economist, which I mentioned in my intervention to Gavin Brown’s speech. On page 96, it publishes economic data for 42 countries, as I mentioned—not just European countries, the USA and Japan but Chile, Malaysia, Israel and so on. The UK comes 28th on that list in terms of growth. Egypt—beset by troubles this year that greatly hit its tourism industry—will grow one and a half times faster than the UK. If we look at other indicators such as inflation, the UK comes only 25th.
In response to the autumn statement, the Institute for Fiscal Studies reported that the pace of cuts in public service spending will accelerate from 2.3 per cent a year between 2011 and March 2016 to 3.7 per cent a year until early 2019. The IFS pointed out that only a third of the promised spending cuts had yet been implemented.
The IFS also noted that even further austerity will be required to meet George Osborne’s various promises in the autumn statement, including those on marriage tax allowances, while also meeting his pledge to balance the budget by the end of the next Parliament without raising taxes.
“The chancellor continues to make specific promises on spending increases whilst stating that he will keep total spending at the same level. He can’t keep doing that.”
On the cost of living, Mr Johnson stated that the general standard of living will
“surely still be below its 2010 level” by the general election.
Indeed, page 16 of chart 2.1 of the Treasury’s distributional analysis that accompanied the autumn statement shows that all households will be worse off in 2015-16 relative to 2010-11, taking into account direct, indirect, tax credit, benefit and public spending changes as a percentage of net income. The poorest quintile will be 3.7 per cent worse off.
Earlier this year, the Office for National Statistics published a report showing that real-terms wages are now at roughly 2003 levels. The OBR paints a similarly glum picture, predicting that cuts in Government spending over the next six years will shrink spending back to a level not seen since 1948.
In the statement itself, table 1.3 shows a 5.5 per cent decrease in business investment this year and shows net trade either falling or stagnating in six of the seven years from 2012 to 2018 inclusive. In 2015, it will grow by an abysmal 0.1 per cent.
Of course, the approximately £232 million in departmental expenditure limit consequentials that the Scottish Government will receive as a result of the autumn statement will be put to good use by the finance secretary, but when the Scottish budget is already being cut by £3.1 billion and capital spending has been cut by 26.9 per cent over the piece, those additional funds are frankly derisory and it is insulting to expect the people of Scotland to be grateful.
On the contrary, the chancellor would do well to follow the lead of the Scottish Government and recognise that an increase in capital spending would bring jobs and prosperity to all parts of the UK by helping to stimulate an economy that has a long way to go before living standards approach pre-recession levels.
I am very grateful. The member may be aware that there were huge increases in capital spending in last year’s autumn statement but it turned out that a number of the apparently shovel-ready projects did not even have planning permission.
According to the Financial Times, it is making minimal progress on that plan.
The Labour Party has already pinned its colours to the mast in terms of continued austerity, with Ed Balls claiming that he will be “ruthless” about cutting public spending beyond 2015, further cementing the Labour Party’s undignified lurch to the right. However, the prospect for Scotland could be even worse in the not too distant future.
A week past Monday, the Westminster All-Party Parliamentary Taxation Group issued a report that said:
“In the case of a No vote, the Barnett Formula must be replaced as a priority, with a needs-based formula for inter-regional resource allocation the best alternative, using the seven indicators of relative need identified by the Holtham Commission.”
The report is hugely significant and would, based on the Holtham commission’s findings, see Scotland’s budget cut by a further £4 billion—equivalent to £1,600 for every income tax payer in Scotland—while our oil, gas and whisky revenues continue to head south.
The behaviour of the unionist parties on the issue is nothing short of shameless and entirely Janus-faced. I tell the Scottish people who say that we are better together as part of the UK that at Westminster they are plotting to slash Scotland’s budget even further than they already have.
There is a better way for Scotland. By securing the economic levers of power for this Parliament; harnessing our vast natural resources; growing our working population; making Scotland a more attractive place in which to do business; and ceasing Scottish subsidies to Westminster, we can pursue a fairer and more aspirational future for Scotland.
While I have absolutely no sympathy for the Conservatives’ predicament, I appreciate that it must be difficult being a Tory in Scotland. It seems from the array of arguments that they have to deploy in trying to defend the coalition Government’s record that doing so cannot be easy for them—or, for that matter, for their partners in crime the Liberal Democrats.
I can only imagine that it is due to the Tories’ desperation in the face of the overwhelming rejection of the contents of George Osborne’s autumn statement that they have chosen to ignore reality and bring to the chamber this delusional and perfunctory debate. I applaud Gavin Brown’s attempt to validate his Government’s economic analysis in his party’s self-congratulatory motion, but I remind him of the words of that committed Tory Dr Samuel Johnson, who said:
“He that applauds him who does not deserve praise, is endeavouring to deceive the public”.
Despite the case that is proffered by members on the Tory side of the chamber, the OBR has refused to endorse the chancellor’s self-assuredness, and it has instead contended that any recent economic and fiscal improvement is entirely cyclical and that growth will slow again significantly in 2014.
I am always looking on the bright side, Mr Rennie—I am just about to come to that.
The OBR accepts that the economy has expanded by 2.6 per cent in the year to the fourth quarter of 2013, far ahead of its own 1 per cent March projection. However, it does not believe that that improvement in growth will carry over into next year with any impetus. Instead, it continues to hold to its prediction that we can expect quarterly growth of 0.5 per cent during 2014. That suggests that the annual GDP increase will peak at 2.7 per cent in the first quarter and slow to 2 per cent by this time next year.
While the coalition partners try to talk up the country’s economic position, the country’s independent fiscal institution maintains that the chancellor’s claims for the success of his economic strategy are unsubstantiated, and that the change that he cites in his defence can be ascribed entirely to nothing more than cyclical strength, with no contribution from better supply-side performance. That in turn means that the structural budget deficit forecasts are no better—and are in fact slightly worse—than they were in March, despite falling headline borrowing.
Despite what the Tories say, the OBR analysis indicates that the chancellor is barely meeting his medium-term fiscal mandate while balancing the cyclically adjusted current budget five years ahead. Indeed, the OBR predicts that the economic situation will become less favourable, with growth slowing and unemployment levelling off at 7 per cent.
Because the rate of growth will be slowing down—that is not a difficult concept.
We need counter-cyclical measures in a period of economic downturn, and not self-delusional back-slapping for an economy that is doing what most economies would be doing at this point in the economic cycle, regardless of Government policy.
So much for the Tories’ position—what about the Scottish Government’s position? Predictably, the Scottish Government’s counter-argument to the Tory motion is to resort to the tried-and-trusted excuse that any economic woes facing Scotland are all the fault of the constitution and that only constitutional change will fix the problem. Ministers sit there twiddling their thumbs and hoping that economic misfortune will drive Scots into the yes camp next September.
We know that that strategy is not working, but that gives me no pleasure because it means that Scotland’s workforce, its unemployed and its households are not being properly defended from the Tories. A cynical short-term political strategy is hurting Scots and there is a failure to protect them from the damage that is being inflicted on them.
That need not be the case. Under current devolved powers, the Scottish Government has the ability to support the long-term future of important industrial sectors such as manufacturing, and in vital areas such as education and skills the Parliament already holds full powers. Public procurement could be better used to enhance Scotland’s economy, as it is not Westminster but European Union directives that impose limits on what the Scottish Government can do.
That is the case now, and the same circumstances would prevail in an independent Scotland, so it is simply not credible to argue that constitutional change in and of itself will boost Scotland’s economic prospects, as the SNP amendment claims. Global economic forces have acted on all world economies and will continue to impact on Scotland, whether or not it is independent.
Bad policy decisions from Westminster and the Scottish Government are adding to our problems, so let us start to address them now. For a start, we need an end to the Tory-SNP alliance—[Interruption.]
We need an end to the Tory-SNP alliance against Labour’s plan to freeze gas and electricity bills—members might as well accept that that is the one thing that they agree on. In addition, it is not too late to support the long-term change to the energy market that is needed if we are to stop bills rising this winter.
Rather than make uncosted promises of jam tomorrow, the Scottish Government could start its transformational change in childcare now. We need long-term planning if we are to tackle the cost of living crisis, and we need genuine transformational change in areas such as house building, skills development and childcare.
All afternoon, Tory and SNP members have patted themselves on the back and congratulated themselves without having any right to the praise that they afford themselves. As people say, self-praise is no praise.
No, thank you.
When I read the motion, I thought that it seemed quite upbeat, but then I remembered what the people of Scotland have long since learned: to beware of Tories bearing gifts. Further scrutiny proved interesting. The Institute for Fiscal Studies has branded Mr Osborne’s business rate changes a “deadweight ... giveaway”, which will deliver no new developments, so it is not clear what advantage there would be in our following Mr Osborne’s example, as Gavin Brown suggests that we should do. Surely it would be better to consider John Swinney’s package of expansion of the small business bonus scheme, which is targeted on the smallest premises and businesses.
No, thank you.
The national insurance changes for under-21s sound sensible on the surface, but 20 per cent of our young people are unemployed and the changes will not start until 2015. The lack of urgency on youth unemployment is another example of the UK’s failure to engage with the challenges that face Scots.
On corporation tax, the issue that is not being tackled is that the biggest companies seem to pay none at all. Vodafone gained more than £80 billion on a United States share disposal but paid no UK tax on the profit. Given that Vodafone’s chief financial officer is one of Mr Osborne’s tax advisers, it is unlikely that Mr Osborne will move to close the loophole—and given that Gordon Brown, with Ed Balls as his adviser, created the loophole, I would not hold my breath waiting for Labour to do anything about it.
As we watch the effects of the autumn statement unfold and as we see the spring budget, we will be able to see what Scotland’s direction of travel will be if we vote no. It is already clear that there is no appetite in Westminster for tackling the growing dominance of London and the south in the United Kingdom economy.
The message that is coming through in the press is clear. The Daily Telegraph said:
“London’s astonishing boom can lift the whole of Britain”.
The Guardian said:
“London’s economic boom leaves rest of Britain behind”.
A headline that I thought was certainly true was this one, in Estate Agent Today:
“London’s house price boom is outstripping 2007 bubble”.
That is worrying—look what happened the last time. When Osborne says that the UK is booming, he means that he has turned the tap on for a property boom in London and is pretending that that benefits the rest of the UK. That is his strategy to win in 2015.
By contrast, Labour seems clear on just one thing: it does not believe that it can win power in the UK without Scotland’s help. However, Labour’s message to Scots has changed. Until fairly recently, we were told that we were too vulnerable for independence. Now, Anas Sarwar and Douglas Alexander are telling the opposite story and saying that we are too wealthy for independence. They are trying to convince Scots that we would be callous to leave the poor of Preston to get by without our money.
The problem for Messrs Sarwar and Alexander is that there is an absolute lack of evidence that Scotland’s extra taxes ever get near places such as Preston. The Treasury and successive UK Governments have ensured that Scotland and many other parts of the UK have lost out, whether by bending the rules to spend billions of pounds on regenerating London under the Olympic banner or by keeping expenditure off tax and putting it on to energy bills.
Members here are in denial about losing £4 billion a year if we vote no. If we look back, we see that we are already heading that way. In 2007-08, 9.9 per cent of identifiable public expenditure came to Scotland, but in 2011-12 we got less than 9.6 per cent. In 2011-12, every part of the UK with the exception of London and the south got a lower proportion of identifiable expenditure than it had received in 2007-08. In real terms over that period, Scotland lost more than £8 billion and the north lost over £0.5 billion while London and the south received an extra £11.5 billion. Is it any wonder that Boris Johnson is backing the better together campaign?
Talking of the better together campaign, I was appalled to see that the Labour amendment contains absolutely no criticism of the Tories and simply has a go at the SNP. It is about time that Labour realised that Scotland taking control of its own resources will mark a break with the UK economic policy that has seen an increasing gap between rich and poor and between the wealthy south and the rest of Great Britain, let alone Scotland. It is time to tackle the paradox that Scotland has a higher GDP than the rest of the UK but has more poverty and less wealth.
I believe that, despite that paradox, the Cabinet Secretary for Finance, Employment and Sustainable Growth has steered Scotland well with limited powers and resources. I say that we should look to Scotland’s future as an independent country, so I support John Swinney’s amendment.
I commend Gavin Brown for his characteristic generosity. He has given Labour and SNP back benchers the opportunity to speak up for the solid progress that has been made in the UK economy. We would have been denied that opportunity to debate the autumn statement if it had been left up to the Government’s business managers. Thanks to Gavin Brown, we have that opportunity.
I have to say, however, that most back benchers do not seem to have seized the moment to recognise that significant change. The exception is Linda Fabiani, who seems to be using the opportunity to distance herself from the SNP’s corporation tax policy right in front of the finance secretary’s eyes. I wonder whether she is going to join others on the back benches nearer to Patrick Harvie than to the finance secretary.
We should recognise that the UK coalition Government has stuck to the economic plan that was set down three years ago despite the foreign-debt crisis abroad, the problems with the EU economy and the denunciation of others—many of whom are in this chamber—who said that growth would return only if we spent more. Because we stuck to the plan, we are building a stronger economy. Growth this year is predicted to have doubled to 1.4 per cent, is forecast to rise to 2.4 per cent next year and is expected in the following four years to be 2.2 per cent, 2.6 per cent, 2.7 per cent and 2.7 per cent.
I will give way in a second. The finance secretary might like to take the opportunity to acknowledge that all the warnings that he gave us years ago—that we would not be able to grow the economy without spending more—were not true, and that he should have believed in us more than in what he was saying.
In a sense, that is the ground that I want to cover with Mr Rennie. He ignores the fact that £197 billion more borrowing has been required than was set out in the 2010 plan. To be fair—I am always fair in the chamber—the chancellor is spending more money on capital than he planned to spend in 2010 but is, in doing so, guilty of breaching Mr Rennie’s golden rule that there was to be no spending beyond what was set out in 2010.
The chancellor stuck to the plan, but the finance secretary wanted him to deviate from it and to spend an additional £10 billion on top of the extra spending that he had condemned previously. However, the finance secretary now wants to take the credit for what is happening in Scotland while saying that nothing that the UK Government has done has worked in Scotland. He lacks credibility on that matter in all ways. I urge him not to intervene again in case he falls into a similar trap.
Employment is up to 400,000 extra jobs this year. Unemployment is also lower than it was in 2010, despite Mr Swinney’s advice. In 2018, it is expected to fall further to 5.6 per cent, which will match where Scotland is, so right across the UK we are getting the benefits of the economic growth. We have the lowest proportion of workless households for 17 years, businesses have created three jobs for every one that has been lost in the public sector, and it is predicted that 3.1 million more jobs will be created by business in 2019. Far from the mass unemployment that has been predicted by Mr Swinney, we have a record number of people in work.
I accept that there is much more to do—
No—not just now.
The UK Government has put in new measures, including the abolition of national insurance contributions for under-21s, extension of the city deal to Glasgow, which I hope the Scottish Government embraces, £10 million for the Shetland Islands, £10 million for the Higgs centre for theoretical physics in Edinburgh, and money for the huge wind farm in the outer Forth Estuary, for the Ineos plant at Grangemouth and for Countesswells in Aberdeen.
Not just now.
Those measures are on top of the cancellation of Labour’s fuel duty rise, the money for free school meals, the £50 reduction in energy bills and so much more, including the tax threshold increase that has reduced the tax for hardworking people.
The crucial opportunity that the autumn statement has given is to two-year-old children.
Everybody in this chamber now supports expanding quality early education for two-year-old children. A year ago, I was not so sure that that support existed, although some farsighted individuals on the SNP back benches, including Bob Doris, spoke up for that change. For last year’s budget, I prepared my costed plan and went to Mr Swinney to try to persuade him of the case’s merits. I admit that I was despondent when he did not agree to those reasonable plans. He described it as
“an honest disagreement about where the focus should lie.”—[Official Report, 6 February 2013; c 16526.]
Therefore, members can imagine my genuine delight with the change of approach in the Government’s white paper. What Bob Doris and I have been saying for some time has been endorsed.
With perfect timing, the coalition Government provides the money to fund that through the Barnett consequentials. We do not even need to wait for the taxes to come in; we can get on with it now.
We certainly see a lot of optimism in the Conservatives’ motion, but there is very little evidence or hard facts to back up that optimism. We will see what happens in due course.
The motion suggests that the UK economy is growing faster now and that it will do so in the future, but that means little when it started off in a worse position and—as we have heard—it is not growing as fast as other countries’ economies. The UK economy was damaged more than those of other countries and, unlike in the UK, gross domestic product is back at pre-recession levels in Canada, Japan, the United States, Germany and elsewhere.
As well as looking forward to what might happen, let us remember to look at the facts of what has happened. Population is a key factor in the economy. When we joined England in the union in 1707, its population was about four times the population of Scotland. Now England’s population is about ten times ours. Surely that has been hugely damaging to our economy. Over the years, people have left Scotland because they saw little future here under the UK, and our economy has suffered as a result.
Since devolution, that problem has been taken much more seriously by all Administrations and there are signs of improvement, but we still have a problem when we have engineering vacancies that cannot be filled and low business start-up and growth rates. That could be addressed—partly, at least—by allowing talented young overseas graduates who have studied in Scotland to stay on for a few years and contribute to the economy.
The motion mentions national insurance. A break for employers for the young people whom they take on is certainly to be welcomed, but we are still left with a UK tax system that is highly complex. What do the UK parties intend to do to simplify the system? For example, would they consider combining national insurance and income tax?
On corporation tax, of course taxation of company profits is basically a good thing, but we are in a competitive situation internationally. We want to attract investment and jobs here, and it is clear that cutting the rate of corporation tax can increase the tax take overall. The risk that Linda Fabiani highlighted relates not to the rate that companies are paying, but to the fact that some companies are not paying any corporation tax at all, or are paying it in the wrong places. As she said, the fact that some companies are paying hardly any corporation tax is not to do with the rate; it is because the regime that is in place is slack. If we tax salaries and dividends that come out of companies, and if there is transparency internationally on transfer pricing, where the profits are made and where the tax is paid, we should see movement on that front. That might be as important as the rate.
I am not here to speak for anyone else. If Mr Macintosh wants someone else’s opinion, he can ask them. I am here to give my opinion.
The public health supplement targets sales of alcohol and tobacco. We cannot tax those products specifically, even if we might like to have the powers to do so, but we know that they cause harm and result in extra costs for the national health service. Therefore, the imposition of such a targeted rates charge is surely the best thing to do. That is an example of using the powers that we have, even if they are not ideal.
As I understand it, the NHS is the one sector that has had its funding protected. I am not entirely convinced by the argument for ring fencing. The whole point of raising tax is redistribution and helping those at the bottom. Too much ring fencing brings dangers.
The Conservative motion uses the phrase “help the Scottish economy”. To me, it suggests that any increase in economic activity is good, but surely we must accept that there is good economic activity and bad economic activity. If we all drank twice as much whisky, that might help the economy, but it would damage our health and it would cost the NHS. Instead of taking the Conservatives’ simplistic view, we need to think through potential economic activity and its likely impact.
I am sorry, but I am pushed for time.
If we are to have minimum pricing for alcohol, larger shops might make higher profits. Surely they should pay tax on those.
We have debated business rates and empty property relief previously, and I am not sure that we need to debate them again. However, we have had examples—in smaller towns and in cities such as Glasgow—of cases in which it appears that developers have deliberately sat on property in the hope that its capital value will increase. The result was a shortage of property to let in some locations. I have previously used the example of the old post office in George Square in Glasgow, which sat empty for years and was a serious blight on a key part of the city centre. Are the Conservatives seriously suggesting that such owners should not pay rates?
The motion is about finance. I accept that that is a broad topic and that the focus has been on the economy and its recovery, but there seems to have been a glaring omission. Who will benefit from any economic recovery? We know that the UK is one of the most unequal societies in the developed world. Are the Conservatives satisfied with that? If the Liberal Democrats are satisfied with that, that is even more disappointing. Even if the Conservatives’ argument is that the poor must suffer most until they get the economy going again—I do not agree with that—at what stage do they think we should start sharing out the benefits more equally? At what stage should the statutory minimum wage be raised to a living wage?
However big or small the cake is, it needs to be divided up. Have the Conservatives nothing to say about creating a more equal society, or is it all just about getting a bigger cake and deil tak the hindmost?
I am sure that we all accept that politics is about priorities. The UK Government and the Scottish Government have their own decisions to make. The Chancellor of the Exchequer made his decisions in last week’s autumn statement, some of which will be welcomed and many of which will not. There was the decision to continue corporation tax cuts, which Labour and the Greens stand alone in opposing, and a lack of decisive action to help families in Scotland and across the UK with the cost of living crisis. However, the Scottish Government has its own big decisions to make, including how to spend its £35 billion budget and the £300 million of Barnett consequentials that it will receive.
I welcome this Scottish Conservative debate and the opportunity that it provides to discuss the issue. The Conservatives have proposed that the priority for the consequentials be business; they are perfectly entitled to do so. Similarly, Labour is entitled to put forward its priorities; families need to be helped with the cost of living, so we are calling for energy bills to be frozen, the living wage to be extended and more childcare for families now.
I want to focus on childcare, which has already been fully devolved to the Scottish Parliament and Government. Despite all the hype that we have heard, we have seen little action on this issue from the Scottish Government over the past six years. As Labour’s amendment makes clear, we want to extend childcare for two-year-olds now and we believe that, in order to help families, we should invest the Barnett consequentials in childcare.
I notice that Mr McDonald failed to agree with my call to do that.
It is time for the SNP Government to put its money where its mouth is and to decide whose side it is on. We talk all the time about the importance of the early years in children’s learning and development, the need to help people with the cost of living and the importance of childcare to the economy. I think that we are on the same page on this.
I am sorry, but I am not taking an intervention just now.
However, we should not just be talking about those things; we should be acting on them. The fact that the SNP childcare policies in the white paper come without a full price tag is not going to help anyone; indeed, the real possibility that people might not vote for the white paper means that it could also be irrelevant. Rhetoric needs to start meeting reality. After all, we have the powers and resources to change things for the better now. Investment in childcare now would build on Labour’s achievements in office in an area in which it has a record to be proud of.
I am sorry. I am not giving way just now.
We introduced universal early years education for three and four-year-olds and we had a childcare strategy within months of coming to office. We raised standards and we introduced child tax credits to supplement child benefit. The Scottish Government might have said a lot of things about childcare recently and made big promises in the white paper, but it is talking about the issue now only because Alex Salmond needs to convince a lot more parents to vote for independence.
People will for a number of reasons be rightly cynical about this new-found priority. Why should families believe SNP promises when it cannot cost them fully? Why should families believe SNP promises when it still has not implemented its promise of 600 hours of free childcare for three and four-year-olds, which was first made way back in 2007? Why should families believe the SNP when it cut nursery provision for vulnerable two-year-olds when it first came to power? John Swinney and Alex Salmond have said that their proposals would create thousands of jobs and save families thousands of pounds. My message is simple: do it—and do it now.
I respect Neil Bibby’s argument that childcare should be made a clear priority. Two weeks ago, however, Labour’s priority was colleges, last week it was housing and two hours ago it was local government funding. Have you deserted those three priorities and is childcare now the only priority? Where does Labour stand on the other three issues that it was demanding money for just two hours ago?
Your Judy Garland, “Somewhere Over the Rainbow” approach is not going to help any families now. In fact, during a cost-of-living crisis, you should be using the resources that you have to save families money. Providing half of Scotland’s two-year-olds with childcare would save 30,000 families more than £2,000 a year on childcare, but the SNP’s refusal to act now means that, instead of saving families money, it is costing them money.
If the SNP will not back Labour on extending childcare now, the white paper promises will not be worth the taxpayer-funded paper that they are written on. That will simply confirm the suspicion that, for the SNP, it is more about changing women’s votes than about changing their lives. It will confirm that you will say anything, but your only real priority is independence.
John Swinney often asks Opposition parties where we could get the money from. As I said earlier, it is there; it is in front of Mr Swinney. He will receive £300 million over the next two years from the autumn statement.
Labour wants extra childcare to help families with the cost of living now, and to help to give children the best start in life. Childcare was the big priority two weeks ago, but it has not even made it into the 233 words of Mr Swinney’s amendment.
It is time that we helped families with the cost of living, and it is time that the SNP Government put its money where its mouth is when it comes to childcare. It is time that the SNP decided whose side it is on and backed Labour’s call for more childcare now.
It was particularly peculiar to hear Gavin Brown laud the OBR’s growth projections—much of his motion is in that vein, as was his speech—because OBR projections have had to be revised time and again, as they have proven to be wrong. Mr Brown is on the Finance Committee with me, and those matters are constantly brought to its attention. I am surprised that he has not taken that on board.
Just last week, Professor David Bell, whom Gavin Brown is not shy of latching on to if he has said something with which he agrees and that suits him, provided the Finance Committee with written evidence that said that the OBR does not have a good record on projections. Gavin Brown was there, and he seems to ignore Professor David Bell’s views on the OBR’s track record.
If we are to rely on the OBR, we have to look at what it has said over the piece. The latest OBR forecast is that, by 2015, the UK economy will be 7.5 per cent larger than it was in 2010. In June 2010, it forecast that the UK economy would grow by 14.3 per cent over that period. In that month, it also forecast that, in 2013, public sector net debt would be 70.3 per cent of GDP. December’s forecast put the figure at 75.5 per cent. It previously forecast that, in 2014-15, public sector net borrowing would be £37 billion. December’s forecast is that it will be £96 billion, which is 159 per cent higher than the 2010 estimate.
I beg your pardon, Presiding Officer.
We heard such good things about the OBR from Mr Rennie earlier. He can at least be forgiven because he is not a member of the Finance Committee, so he does not see the regular updates. I would have thought that it is well placed to put such matters on the record. If we are going to laud the OBR, we have to reflect that growth has failed to reach its previously predicted figures, and that debt and borrowing are higher than were previously predicted.
It was interesting to hear Mr Brown suggest that external factors were to blame. He talked about the euro crisis. Surely any person in the street could tell us that the austerity agenda must have contributed to the failure to match previous predictions. Let us not forget that that agenda has seen some £3.1 billion cut from the block grant and a 25 per cent reduction in Scottish capital budgets. That has put us in the position that the cabinet secretary and Mr Gray referred to. The GDPs of countries such as Canada, Japan, the USA and Germany are now above pre-recession levels, but in the second quarter of 2013, the UK’s GDP remained at 3.3 per cent below its pre-recession peak.
It was interesting to hear the exchange between the cabinet secretary and Mr Brown. When the Scottish Government called for borrowing to invest in the economy and the economic recovery, we heard Tory hysteria that that would somehow lead to a market crisis. Borrowing by the UK Government is now much higher than was predicted—and that is borrowing to fill a hole that has been left by the failure to grow the economy as predicted. If that money had been borrowed earlier, we might have seen rather better economic growth than we have seen over the past few years.
The talk of economic growth will ring hollow for too many. I think that Iain Gray made the point very fairly that families are feeling squeezed right now. Kevin Stewart rightly put on the record that another 50,000 children are likely to be pushed into poverty as a consequence of the UK Government’s welfare reform agenda. Just this week I was contacted by a constituent who is an engineering graduate who has £16 per week to live on through the welfare system. We must reflect on the fact that, for such people at the sharp end of the economic experience, talk of economic growth certainly does not reflect their personal experience.
I turn briefly to the Labour amendment. I said that I agree with what Iain Gray said earlier, but I disagree with his amendment. I do not disagree with its sentiment, because I think that we all want to see better childcare provision in Scotland. However, I think that my colleague Mark McDonald’s point was a fair one, because we must reflect on the fact that the Barnett consequentials that Mr Gray wants to pay for childcare extension are for only a two-year period. How can we possibly extend childcare for only a two-year period with no guarantee thereafter?
I heard the catcalls earlier that our plan is independence. Indeed, it is. I hope that we will have independence and I believe that we will, but I do not know that we will. Only when we have the powers of independence will we really be able to see the Scottish Government’s ambitious vision being taken forward, which will cost some £700 million per annum. If any member can identify £700 million for the agenda that the Scottish Government has identified in the current context, they are somewhat of a magician. That is just another reason why we need independence.
Thanks to the approach that has been taken by the United Kingdom Government over the past few years, we have seen several positive signs that our economy is improving: improved growth forecasts; reduction in the national deficit; and faster-than-predicted increases in job creation. That finally banishes the argument that we should have diverged from our path of implementing sensible economic measures and controlling our spending.
The SNP’s fabled plan MacB seems to have disappeared, as the SNP has finally come to terms with the reality that the UK Government is doing what is best for our economy. The measures announced by the chancellor in last week’s autumn statement continue that good work, while also helping people and businesses across Scotland. The fuel duty freeze will provide real help to motorists who have had to pay more and more in recent years just to keep up with the cost of running a vehicle; a reduction in green levies will help more than 2.5 million Scottish households with the cost of their electricity bills; and, with the abolition of national insurance contributions for under-21s, the UK Government will help to support the 138,000 jobs for young people that we currently have in Scotland and grow that number.
However, there is one issue that I want to concentrate on that is of particular concern in my constituency in the Borders. In the autumn statement, the UK Government announced significant measures towards helping with business rates, because not only will retailers and food and drink premises south of the border get a special discount of £1,000 from their business rates, but all businesses will be protected with capped business rate increases. Those are important measures that will undoubtedly help businesses in the rest of the United Kingdom and provide a welcome boost to struggling high streets. It is therefore unfortunate that the Scottish Government has not fully replicated those measures for the benefit of Scottish businesses.
The measures are the sort of help that Hawick High Street in my constituency badly needs. In a trend that has become all too familiar throughout Scotland, Hawick has seen many shops close in its town centre over the past few years. The number of empty premises is on the rise and they are scarring what I believe is one of the most beautiful town centres in Scotland. However, as much of the High Street is designated—wrongly, in my opinion—as a prime retail area, none of the premises is entitled to benefit from the bonus scheme or discounts that are currently on offer. I have been contacted by many local businesses asking for help with their rates, and in turn I have been in contact with the cabinet secretary to raise those concerns, but so far the Scottish Government has been unwilling to take action. Something can and must be done to help those businesses. The situation has become so bad that the community council has organised a special meeting to discuss the situation.
I am sure that everyone in the chamber appreciates how important town centres are. Not only are they the living face of our communities, but they are vital to our towns’ economies and their social wellbeing. They influence how people experience and relate to their local area, and they remain the place in our communities where people meet and interact. We do not need any surveys or statistics to know why our high streets are so popular with our constituents. Local residents recognise the important role that town centres play, especially in our more historic market towns.
The next few weeks will be a nervous time for those retailers. The Christmas rush represents the busiest time of year for many small businesses and they know that, if they do not achieve good sales this month, the rest of the year will be a struggle. With online retailers taking more and more business away from our high streets, the nature of our town centres is starting to change. The Scottish Government needs to acknowledge that change, and the onus is on us to do something to help. However, high streets such as the one in Hawick have received little help from the Scottish Government.
It is now up to the Scottish Government to recognise the problems that Hawick and other town centres face and to start using the powers that are already at its disposal to provide real help to our retailers and our high streets. The businesses in my constituency cannot afford to wait any longer for action to be taken. I urge the Scottish Government to sit up and take notice of the growing concerns before it is too late.
Some of the people who I represent would look on this debate and the glorification of the Osborne approach by Gavin Brown with a mixture of incredulity and bemusement, because for many of them the reality that he talks about is not the reality that they experience. During the Donside by-election, I noted with interest that, when the Conservatives campaigned, they stayed well away from the communities of Middlefield, Woodside, Printfield and Fersands—areas that are absolutely at the sharp end of Conservative welfare reforms—lest they actually had to see the impact of their policies on everyday people’s lives.
I am interested that, during his speech, Gavin Brown talked about how good the chancellor’s budget will be for the retail sector and he then tried to suggest that all the pressures that the sector is facing are the fault of that nasty Mr Swinney and his policies in the Scottish Parliament, yet when I raised with him very real point about the 20 per cent VAT hike, on which there was no consultation with business, he skated over the prospect of that having any role in the real pressures that businesses are facing.
Businesses that I represent and talk to are certainly feeling the sharp end of that—particularly the smaller businesses, for whom the margins are tight. I will come back to small businesses later.
Not at this time. I thought that that have might been obvious from the fact that I did not let the member in.
Mr Rennie spoke about the record number of people in work. That was interesting in that, while he was doing that, I remembered the Joseph Rowntree Foundation’s findings of just a few days ago. It stated that we now have more households who are in work and in poverty than households who are not in work and in poverty. This is the first time that that position has been recorded.
That says to me that, while Mr Rennie lauds the fact that more people are in work, it is not simply the fact of being in work that gives people the opportunity to escape poverty. The UK Government is spectacularly failing to tackle in-work poverty, particularly the reliance of people who are in in-work poverty on benefits, by driving forward the better wage and employment standards that would allow people to escape in-work poverty. That would have the consequential impact of reducing the burden of the welfare budget that Mr Rennie and his colleagues are so keen to reduce. That would be a win-win. Perhaps Mr Rennie will tell us whether that would be a good thing.
Willie Rennie is very adept at praising his party’s role in the UK Government. He will know that independent analysis stated quite clearly that those tax changes were nullified by changes to the benefits system and other economic policies that are having a negative impact on those who are at the lowest end of the income scale.
On the impact of the Liberal Democrats in Government, most of us have had a wee chuckle at Danny Alexander—the man who shares responsibility for the increase in the number of food banks—being pictured grinning at the opening of a food bank as if that is somehow a welcome measure. Indeed, Aberdeen has seen the launch of the Food Banks Partnership Aberdeen, which includes a range of organisations from my constituency such as the Middlefield community project, the Fersands and Fountain community work project, and the Printfield community project. Even in a wealthy city such as Aberdeen, more and more people have to rely on food banks. That is a direct consequence of the policies that are being pursued by Mr Rennie’s colleagues in coalition with the Conservatives.
I want to talk about the small business bonus scheme. For all that Gavin Brown lauds the impact of his UK Government’s policies on the retail and business sectors, small businesses in my constituency praise the small business bonus scheme. During the Donside by-election, the cabinet secretary and I visited Audstar florist in Dyce. We met Audrey Ross, the owner of the business, and she said that thanks to the savings that she has accrued through the small business bonus, she has been able to invest in her business by buying a new vehicle, and to ensure that, during the tough times, her business was partially insulated from some of those impacts thanks to the measures that the Scottish Government has put in place.
I can indeed, Presiding Officer.
There is a lot of talk among the Conservatives about relying on the OBR as some sort of independent, forward-thinking guru. If we look at the OBR’s record over the past few years—its predictions and the need for them to be revised—it is safe to say that the OBR is as good at predicting economic growth as Michael Fish was at predicting hurricanes.
Last week’s autumn statement was supposed to be one of the big events in the parliamentary calendar and the economic cycle. In the end, it was a bit of a damp squib, overshadowed as it was by a matter of real political moment—the death of Nelson Mandela.
In some ways, I am surprised that the Conservative Party brought the subject before the Scottish Parliament today because what I did see of the autumn statement was rather unedifying. The Chancellor tried to present his decisions on fiscal policy against a background of a return to economic growth, but it came across as an almost entirely political calculation. The reaction of the braying ranks behind him, for example, was to greet the news not with delight for the businesses that would be spared or the jobs that would be secured, but as a group of politicians who believed that their goose was cooked until someone turned off the oven at the last minute.
If that was not unappetising enough, what really stuck in my throat was George Osborne claiming credit for this much-vaunted recovery. Many of us might indeed be thanking our lucky stars that we have returned to economic growth, but I suspect that very few will be thanking George Osborne. It is a sad fact that for 40 of the past 41 months, since the Conservatives came to power, we have become worse off as prices have risen faster than wages. In fact, for those of us who are intrigued to know what happened in the one month when we did not get squeezed, there was an interesting exchange at Treasury questions yesterday.
In a moment. My Labour colleague Clive Efford MP highlighted the fact that the number of people who are earning more than £1 million per year jumped from 13,000 in January to 18,000 following the budget. As he pointed out, that means that their combined income rose from £27 billion to more than £47 billion. He then asked,
“Is that the reason why April was the only month in which earnings rose above inflation?”—[Official Report, House of Commons, 10 December 2013; Vol 572, c 112.]
I note that the question was not denied by the Treasury minister. Perhaps Mr Johnstone can answer it.
Now that the member has told us what has happened in the past 40 months, might he abandon the year zero approach and remember what happened in the 24 months previous to that?
A forward-looking comment from Mr Johnstone, there, trying to blame Labour for three years of no growth at all and flatlining from the Tory policies. The Tories justify their austerity economics with a promise that they will balance the books by 2015. Now they are not even forecasting a return to surplus until 2019.
The Chancellor proudly boasted that the autumn statement is “fiscally neutral” but it is certainly not socially, economically or politically neutral. How can the Tories be proud of cutting taxes for the highest earners while freezing wages for working people? How can they justify abolishing support for families and removing vital welfare benefits for the most vulnerable while the biggest multinationals pay less and less tax, if they pay tax at all?
Professor Brian Ashcroft has written an excellent article in which he points out that it is simply not true to state as fact that austerity has been good for economic recovery. In fact, many economists believe that austerity has simply stalled or delayed our economic recovery behind that of similar industrialised countries—a point made by the distinguished convener of the Finance Committee and our distinguished cabinet secretary, too.
Returning to the much heralded recovery, perhaps even more worrying were the observations of the Office for Budget Responsibility on the autumn statement. As my colleague Michael McMahon said, in the opening paragraph of its report it states in an incredibly damning sentence:
“We judge the positive growth surprise to have been cyclical, reducing the amount of spare capacity in the economy, rather than indicating stronger underlying growth potential.”
This Government is quite simply using all the wrong measures to judge its own success. It pursues and fails to reach its own borrowing targets—by some £200 billion—and seeks the approval of credit rating agencies that we should not be asking to tell us the time of day and, yet again, fails to achieve that jaundiced approval. What really matters to people is their sense of wellbeing in economic terms: whether they have a job, what kind of job that is, whether they can pay their fuel bills and what the cost of living is. The scary thing is that after three years of a flatlining economy, working people here in Scotland are more than £1,400 a year worse off.
What should we be doing? I start by praising the Scottish Government, because it is at least indicating that it wants to move to measures of wellbeing through the national performance framework.
I have a lot of sympathy, too, for the language of Keynesian economic growth that Mr Swinney uses, although I am worried that the cuts to the housing budget, for example, run entirely contrary to what the cabinet secretary says he wants to achieve.
Where I perhaps part company with the SNP Administration is on its cuts to colleges. Surely if there is one thing that this Government should be doing it is educating people to the best of their ability and giving them the skills and training to improve not just their employability but our country’s productivity.
However, I think that Labour and the SNP have quite a similar agenda—or we certainly talk the same progressive language. The First Minister has spoken about a transformational change in childcare. Well, let us do it now.
I do not associate with the paranoid tendency in the SNP. Linda Fabiani accused us of having a go at the SNP. I ask her to read the motion. In fact, I specifically ask the cabinet secretary to reply to our motion and tell us what his views are on childcare and whether we should spend the autumn consequentials on childcare. It is a specific question and we heard nothing on it in the cabinet secretary’s opening statement. I ask him to address it in his closing remarks because we in the Labour Party will give our whole-hearted support to investing that sum in childcare. Let us shed our reputation as having one of the most expensive childcare systems and have one of the best.
Forecasts are one thing; reality is something very different. As we have heard, a UK Government target in 2010 to grow the economy has been dramatically missed. As a result, UK Government borrowing will be £197 billion higher by 2016 than predicted. That is the reality, yet increasing UK debt is being used as an excuse to make drastic and swingeing cuts to the welfare payments of some of the most vulnerable people in Scottish society. That attack on our most vulnerable could result in £4.5 billion being taken from welfare by 2014-15.
The reality of that is that working tax credit reforms, for example, will take £3,870 from working families every year. In terms of the childcare element of that, there will be £1,560 less.
If we look at the working tax credit reforms by the UK coalition in the round, we see that 372,000 families will be worse off to the tune of, on average, £810 a year. The bedroom tax—a topical subject—will mean that more than 70,000 affected households will be nearly £600 worse off every year and will no longer be able to pay their rent in full. I will give the chamber one final example: the reform of incapacity benefit into employment support allowance affects 144,000 people to the tune of—on average, by 2016—£3,480 a year.
That is wrong for a number of ethical and moral reasons, but it is also wrong for economic reasons. Those people in my constituency, across Glasgow and across Scotland spend money in the real economy. They do not hoard money or invest money; they spend it in their local cafe or on getting a bus into the town centre to see if they can get some bargain clothes for their children. The cuts are wrong on many levels, but they also directly take money out of the economy. They are wrong ethically and they are wrong in business terms.
The best way in which to cut the welfare budget is to get people into meaningful work, and the way to do that is with increased capital investment. Between 2010 and 2016, there was a 26 per cent cut to Scotland’s capital budget. That is £927 million, which is a huge number at first glance. However, if we put it beside the £197 billion additional UK debt due to the Conservative-led coalition’s mishandling of the economy, it quickly pales into insignificance.
I am sorry, but I have only five minutes.
However, every £100 million that is invested in capital projects can generate £160 million of economic activity and support 1,400 people into work in a year. Those capital cuts have cost the Scottish economy £1.5 billion and have prevented 13,000 Scots from having jobs created for them—Scots who could be off benefits and in meaningful employment, paying taxes and doing better in their lives.
There has been a mishandling of the economy and completely wrong priorities have been backed by the UK coalition, so I cannot possibly support the motion that is before us today. I am not willing to cheerlead for austerity and pain in my communities. The UK parties should be ashamed of themselves. The Conservatives and the Liberal Democrats are a disgrace, flag waving about the pain that is being caused to the people I represent.
We have already heard about more money for housing, colleges and local government. I would love there to be more money for childcare. I would also love there to be more money for free school meals and kinship care, which are two of my other priorities. I draw Labour’s attention to the fact that the free school meals pilot in primary 1 to primary 3 that the Scottish Government proposed had to be shelved because of UK cuts to our budget. The only way in which we can get sustainable, transformational childcare in this country is by the huge investment of £700 million every year—not as a one-off payment—that will transform the lives of the people I represent and will give our children the best start in life.
I am gently reassured by the fact that Bob Doris is unable to support the motion that is before us this afternoon.
The Chancellor of the Exchequer’s autumn statement provided good news for Scotland. Not only were we told that the economy is growing again, and growing at an encouraging rate, despite all of the doom and gloom warnings that we have heard from Labour and SNP politicians—and, believe me, there was a lot of doom and gloom in the chamber this afternoon—but there were specific measures to help aid the economic recovery.
Michael McMahon said that “self-praise is no praise”, and he is right, so let me tell him some of the organisations that have praised the chancellor’s autumn statement. They include the British Independent Retailers Association, the British Retail Consortium, the Confederation of British Industry, the Federation of Small Businesses, the Institute of Directors and the Scottish Chambers of Commerce—the list goes on. They have all combined to praise the chancellor’s statement.
I will concentrate on the help that the UK Government is giving to business and why I believe that the Scottish Government should at least match it. As Gavin Brown pointed out, the freeze on fuel duty will be good news for businesses right across the country, and particularly in rural areas. We have seen the scrapping of employer national insurance contributions for 1.5 million under-21-year-olds across the UK, which will save businesses in Scotland £45 million and support the jobs of 138,000 young people here. In addition, the Barnett consequentials have provided the Scottish Government with an additional sum of more than £300 million over the next two years. Already, debate has opened up on how we should spend that largesse.
Perhaps most interesting has been the chancellor’s approach of introducing a 2 per cent cap on the business rate increase, with a special discount for retail premises that sell food and drink and that have a rateable value of £50,000 or below. That will make a real difference to the attempts to breathe life back into our high streets.
The Scottish Government and Mr Swinney are fond of telling us that Scotland has the most competitive business tax regime in the UK. Certainly, businesses here benefit from the small business bonus scheme, and I am proud of the role that the Scottish Conservatives played in ensuring that it was introduced earlier than the SNP originally intended. I have no doubt that the scheme has helped many small businesses on our high streets to survive the recent economic downturn. I also welcome Mr Swinney’s admission this afternoon that, had it not been for George Osborne’s cap of the business rates increase at 2 per cent, he would have been happy to impose an inflationary increase of 3.2 per cent.
Mr Swinney should join me in welcoming the step that Mr Osborne has taken. In fact, we should reflect on what a miracle worker Mr Osborne is because, under the devolution settlement, he has no power over the Scottish business rate, but he still ensures that Scottish businesses directly benefit from his announcement, as Mr Swinney follows his lead. Let us hope that that trend continues.
The danger is that the competitive advantage that Scotland had is being eroded. We have had the increase in rates on businesses with empty properties and the retail levy, which is an additional rates charge that is not payable by businesses in England and that costs £95 million. The MSPs from all parties who met representatives of Sainsbury’s last week will have heard them say clearly that, as a direct result of that SNP policy, their business no longer believes that Scotland is as profitable a part of the UK to set up new stores as England and Wales. Residents in places such as Pitlochry and Perth who are looking forward to a Sainsbury’s store and wondering why it is not coming need to know that it is the decisions of the SNP Government that are delaying Sainsbury’s from taking forward projects. We have also heard concerns from the business community about the fact that Mr Swinney’s budget plans for the next two years include a £450 million increase in revenue from business rates.
Therefore, if there is a competitive advantage, it is being eroded and that is already having a negative impact on the Scottish economy. The SNP’s white paper says that the SNP will take forward a reduction in corporation tax if it has power to do so. However, only a minority of businesses pay corporation tax, whereas virtually every business pays business rates.
A cut in business rates today in Scotland is therefore more beneficial to the economy than a cut in corporation tax would be, because more businesses would benefit. It is within the power of the Scottish Government to deliver that today, rather than wait for jam tomorrow in the unlikely event of independence. The Scottish Government should take action today to help Scottish businesses. We do not want to lose our competitive advantage in the UK, which is why I support Gavin Brown’s motion.
I agree with Gavin Brown’s opening remark that there is a long way to go. One of the difficulties in setting out on a journey is the need for a road on which to travel. If capital spending is cut, that road is not built. That is what the Conservatives have inflicted on us.
I congratulate the Conservatives on exploiting a Scottish invention to a degree that was previously unthought of. Scotland invented the overdraft, and boy are the Tories exploiting it. We have moved from the overdraft to the credit card as the UK’s credit rating has been cut from AAA to AA+. Of course, when credit ratings are cut, interest rates increase, so the outlook is not necessarily good.
The point of a debate such as this is not about the numbers. We can trade them all day long and choose our own numbers, but do people outside here understand what they mean? What does £197 billion of new borrowing physically look like? It works out at something over £5,000 per household in the UK. That sounds like quite a lot of money.
What does £5,000 look like? If we made a pile of 5,000 pound coins, it would reach the ceiling; alternatively, it would go all the way horizontally from me to my colleague Alex Fergusson. That is a big lot of money. People would know what it meant if they saw it sitting somewhere, waiting to be spent. That is only the increase in debt and not the amount of debt.
What does the £5,000 compare with? The increase in debt for every household is more than we pay a pensioner in state pension every year.
One of the jobs that we as politicians must do is turn such abstract arguments into something that Joe Public can relate to—something physical—because £197 billion is just an awfully big number. It happens to have 12 digits or, in binary, 38 digits.
People who deal with big numbers get desensitised to them. Thirty years ago, I was in the Bank of Scotland’s London dealing room, where we settled up with the Bank of England in about 30 minutes at the end of the day by trading excess money to other banks that were short or vice versa. That was done with paper and pencil, and I was there to see whether we could automate the process.
At the end of the day, when the numbers were added up for the various corrections that had been made and the trades that had been done with other banks, it was found that the numbers were £56 million adrift. The interesting thing is that the people there said, “It disnae matter,” and they went to the pub. People who deal with big numbers get desensitised to them. The figure of £197 billion, which is not the debt but the increase in debt, is so vast that none of us here has any conception of what it means.
Sam Goldwyn said that predictions are a risky business, especially when they are about the future. The OBR has given new meaning to that comment with its flaky predictions of growth, which have been halved, and of borrowing, which has more than doubled. When we rely on figures from a source such as the OBR, we rely on a chimera and on something that is provably of little worth.
With the terms of the debate, the Conservatives have given us insight into precisely how we cannot rely on the numbers that we get from such independent people. The OBR does not have a track record that we can rely on. We must be careful to illustrate to people what the numbers look like in bread and butter terms. I hope that my example has given my dear colleagues something on which to engage with their constituents.
Unsurprisingly, I will not support the Conservative motion. I cannot support the lack of reality that underlies the sentiment that would see working people and the vulnerable in our society worse off. The truth is that, since David Cameron came to office, working people are on average £1,600 worse off.
The autumn statement does nothing to tackle the cost of living crisis. We have a flatlining economy in which prices have risen faster than wages for the past 40 out of 41 months during Cameron’s term. Osborne celebrated our recovery and growth, but the fact is that growth is meagre—far lower than in Germany, America and many other countries, as we have heard. This is the slowest recovery for 100 years.
The autumn statement was a chance for the coalition Government to provide real benefits. For example, it could have announced an energy price freeze and saved every Scottish household £120 as well as making long-term changes to the energy market, but it did not. It could have announced that it would scrap the damaging welfare reforms, but it did not. It could have announced real measures for growth, but it did not.
What about the coalition Government’s promise to balance the books by 2015? In 2015, borrowing will be £79 billion, so I am not sure what books the Government is trying to balance—certainly not the budget. By 2016, borrowing will be £197 billion higher than was expected when forecasts were made in June 2010, as we have heard numerous times this afternoon.
In 2010, we were promised increased living standards, growth, and cuts to the deficit, yet the coalition Government has failed every test it has set for itself. There is still no recovery—in fact, there are more people living in poverty now than there were at the start of the Con-Dem Government.
The coalition Government is out of touch. Not only is it not working for ordinary working people, it is not working for anyone—unless, of course, they are one of the fortunate few earning more than £150,000, who received a huge tax cut. It is becoming increasing clear that, to benefit from the coalition, people need to be one of the elite few.
In Scotland, we feel the pain of the coalition Government’s programme of austerity but, through the Barnett consequentials, we are set to get an additional £308 million over the next two years. That money could be used—as Labour’s amendment to the motion states—to extend early learning and childcare to 50 per cent of two-year-olds. That would mean that the Scottish Government could start to implement transformational childcare changes now. There is no need to wait—it is time to get Scotland off pause and start tackling child poverty. The Scottish Government has the power, but does it have the will to do it?
Nicola Sturgeon MSP stated during the launch of the white paper that the reason for not delivering a transformational childcare strategy is that the money raised would go into the coffers of the UK Treasury. Does that mean that if Scotland votes no, this Government will never deliver that strategy, despite the fact that it is well within its power? If the cabinet secretary will not agree today to start implementing those changes, will he at least assure us that, in the event of a no vote, this Government will start delivering for Scotland? Or is childcare just another political carrot to try to attract a yes vote?
I am sorry, Mr Mason, but I am out of time.
We stand ready to work with the Scottish Government on improved childcare now, because we can implement measures now to help many struggling families across Scotland.
The autumn statement is more of the same from the UK Government: tax cuts for the elite few and misery for the masses, with no hope of the economic growth, the increased living standards or the cuts to the deficit that we were promised.
The economy is flatlining and Osborne has privatised the defibrillator. However, I do not agree with the Scottish Government that the only solution is to vote yes. The solution is to get rid of the out-of-touch UK Government and vote in a Labour Government that will work for working people and the disadvantaged in our society because establishing new borders in an increasingly connected world will not help to tackle inequality or improve living standards across Scotland.
With the extra money from the Barnett consequentials, I call on the Scottish Government to start work on the promised transformational childcare strategy now. Thanks to devolution, we have the opportunity to make a real difference to families across Scotland now and that is what we should be doing.
In this afternoon’s debate there has been some sympathy for the Tories who are arguing their case today. Michael McMahon made that explicit when he spoke about how hard it must be to be a Tory and have to defend the indefensible in the form of George Osborne’s autumn statement. I would like to say that the Tories have made a fair attempt at it, but it is fairer to say that they have really struggled to do so.
They have, of course, had some support—[Interruption.] I can hear Alex Johnstone—I will come to his contribution in a minute.
The Tories have had some support from Willie Rennie, which we would expect as his party is in coalition with Mr Osborne’s party. Mr Rennie has intervened on members on a number of occasions today to pose the question, “Will you admit that there is growth and there will be more, and that that is a good thing?” A number of us—Mr Swinney and I, for example—acknowledged that it was good to see some growth, but the point is that there is rather less than was predicted or planned for.
I ask members to stop and think about it: if a Government’s economic policy is that there will be growth, that is quite limited in vision. It is a bit like saying that the coalition Government’s housing policy is that there will be houses, or that its school policy is that there will be schools, although it does not appear to take that approach to the NHS, which I am not entirely sure is going to survive in any form that we know it.
If that is the scope of the vision that we are supposed to celebrate today—that there is some growth—it is pretty minimal. With regard to the quality of that growth, it is worth looking at the OBR’s analysis.
I recognise that Iain Gray is trying to be positive in acknowledging that there is some growth, and that is a good thing. However, he must surely also recognise that the advice that he and others gave three years ago that we should abandon this strategy was just wrong.
I do not accept that, and the OBR points out just how the growth that Mr Rennie celebrates has been achieved. It states in its analysis that the growth is driven by increases in house prices and consumer spending from savings, and that that is not sustainable. The alternatives for which we—and my colleagues in Westminster—have argued were aimed at creating sustainable growth in the economy.
The Conservative members opposite me have sometimes struggled with justifying some of their positions. I was particularly struck by a couple of exchanges on the welfare budget—to which significant reductions were proposed in the autumn statement—which strike at the core of the fallacy of success.
Gavin Brown said that the welfare budget is going up but is not rising as much as it would have without the austerity programme. That is not the case. The budget for employment support allowance alone has gone up by almost £3 billion, which is more than Mr Osborne predicted, and housing benefit has increased by £2.7 billion more than was predicted. That is because of the austerity programme, the fact that so many people have been thrown out of work and the squeeze on wages, which has led to people qualifying for and claiming more housing benefit.
The Tories’ desperation in attempting to justify their position reached its nadir when Alex Johnstone called out from a sedentary position while John Swinney was talking about borrowing, “We are borrowing less.” The fact of the matter is that George Osborne has borrowed more in the past three years than the Labour Governments did during 13 years of government. He is not borrowing less—he is borrowing £200 billion more than he planned to.
The OBR has featured heavily in the debate today. Mr Swinney was almost waxing lyrical about the OBR at one stage, which surprised me a bit, because the OBR papers that accompanied the autumn statement included a downward revision of its own estimates of oil revenues. That poses some problems for Mr Swinney’s economic forecasts for independence, as oil revenue would be £1.7 billion less than was suggested by the OBR’s previous forecast, which in itself was significantly lower than Mr Swinney’s own forecasts.
I was even more surprised when Kenny Gibson went further and quoted the IFS. Some weeks ago, when the IFS published its report on Scotland, I did the rounds of the television studios with some of Mr Gibson’s colleagues, who came close to painting the IFS as some kind of satanic cult. If SNP members want to quote the IFS, they must accept that it says not only that there is a bleak picture for the UK but that the picture for Scotland is bleaker still and an independent Scotland would require tax rises or significant cuts simply to stand still.
The most striking thing about the debate was that almost no SNP member mentioned the SNP’s key policy on childcare, even in the passing. There could be no greater demonstration of the truth.
The truth is that a desirable policy is being held hostage to a yes vote. That is no way for a responsible Government to act on the future of the young children of our country. The Government has the opportunity to extend childcare now and it has the resources to do so. It should take that decision.
This has been an interesting debate. If I were to offer Mr McMahon some feedback on his speech, I might suggest that he spelled things out rather bluntly at the start, when he talked about the Conservatives’ “delusional” motion. That was rather strong stuff for faint-hearted members.
However, Mr McMahon provided a pretty fair assessment of a theme that has run through the debate, which is that the Conservative and Liberal Government has stuck to the plan—Mr Rennie has stuck manfully to that line all afternoon. If, however, the Conservative-Liberal Government had stuck to the plan, it would not have borrowed £197 billion more than it had planned in 2010 to borrow. If the plan was so successful, we would—apparently—have had 5.9 per cent more growth by 2015 and would not have had to borrow £197 billion. I am with Mr McMahon on the importance of having a realistic debate about levels of growth.
It is fair to say that members have welcomed the return of growth to the economy—I am with Mr Gray on that. I set that out in the budget statement in September, when Mr Brown was somewhat less charitable about Scotland’s growth achievements. I am quite happy to acknowledge that growth is returning to the economy. That is what we have been pressing for; we would just have liked it to happen a bit earlier.
Business rates have been a major issue in the debate. I might have misheard Mr Lamont, and if I did so I will amend the record today, but I think that he said that no business in Hawick High Street benefits from the small business bonus scheme. I see that Mr Lamont is shaking his head, so maybe I did mishear him, because there are in Hawick 863 commercial properties that have rateable values of under £18,000, some of which will be among the 3,580 properties in the Borders that have saved £23 million in business rates since the Government introduced the scheme.
I clarify that the area of the High Street that is designated “prime retail”—it is a large part of the High Street—does not benefit from any discount or incentive scheme. That is the part of the High Street where I identified a real problem, and it is the area where most of the empty units are.
We are entering very specific territory. I have engaged on the matter in the past, so I share with Parliament that Mr Ewing wrote last month to everyone on the valuation roll who does not currently benefit from the small business bonus scheme to advise them of the opportunities. That will, of course, include any such businesses in Hawick.
Mr Lamont also said that the Government has not supported Hawick. I point out to him that in 2009-10 Hawick received £353,000 from the town centre regeneration fund. I have seen some of the fruits of that money in my visits to the town. If my memory serves me right, I think that I will be going to Hawick on Monday—I am pretty sure that that is correct. If Mr Lamont wants a chat over a cup of coffee in the heart of Hawick project, I am quite willing to allow him to stand his hand. Oh! He is standing up. Here we go.
I have now had the opportunity to check my diary and I see that I am going to be in Hawick on Monday morning, so I make that commitment. I cannot possibly bring myself to grace the door of Mr Lamont’s office, however, so the heart of Hawick seems to be a sensible compromise.
On business rates, the Conservatives have advanced the argument that we should replicate all that has been put forward by the chancellor in his budget statement. I would turn that argument round and pose the question: should I have replicated all that the business rates regime in England has delivered over the past few years? If I had done that, small businesses in Scotland would not have benefited from the saving of £15,000 on average that they have made as a consequence of our measures. I put it to the Conservatives that the Scottish Government has been in a leading position in delivering business rates support much more consistently over the period than has the Government south of the border, which is what has given the Scottish economy its competitive advantage.
Let me put the public health supplement in perspective. A total of 240 premises out of 220,000 commercial premises in Scotland—0.1 per cent of all commercial premises in Scotland—are paying the public health supplement, which will come to an end in 2015. We should bear that in mind when we consider the question of competitive advantage.
I have met Sainsbury’s, but it has not made that point to me. Asda has announced the building of four new stores and a depot in Scotland. If organisations want to make representations to me about such things, I am perfectly happy to meet them.
In yet another of Ken Macintosh’s thoughtful speeches to Parliament, he asked me to address specifically the Labour amendment on childcare; I am happy to do so. There are consequentials from the autumn statement last Thursday that I have not yet allocated. The Government is giving consideration to all those issues and we will advise Parliament of our intentions in due course, just as I have advised Parliament today of our intentions on business rates. We will update Parliament after the Cabinet has come to its conclusions.
In closing, I make the point that we cannot spend the money twice—we can spend it only once. My colleague Bob Doris intervened rather effectively on Neil Bibby in marshalling the fact that a couple of weeks ago Labour’s priority was colleges, a week ago it was housing, at 2.40 this afternoon it was local government and in this debate it is childcare. We have argued for the importance of childcare provision, which is why we have expanded it from the 412 hours that we inherited from the Labour Party to 475 hours, and intend to expand it to the 600 hours that are provided for in the budget that I have put to Parliament.
I am afraid that I must bring my remarks to a close.
We will reflect on how those consequentials can be used to realise the Government’s policy priorities. However, I say to everyone in the chamber that the resources can be spent only once; they cannot be spent on more than one occasion in order to meet multiple policy priorities.
I am rather amused to hear that the cabinet secretary seems finally to have realised that we can spend the money only once. That comes from a Government that claims that we will, when we are a separate Scotland, be able to decrease tax, increase spending, decrease borrowing and have not one but two oil funds—one for the short term and one for the long term. That is spending the money five times.
The debate on the autumn statement is usually one that the Scottish Government is particularly keen to have. In 2008, it had a statement and a debate on the pre-budget report, as it was then called; in 2009, it had a debate on the pre-budget report; in 2010 we had the spending review; in 2011, it wanted a debate and in 2012 it wanted a statement. However, in 2013—this is interesting and noteworthy—the Government, for the first time, did not want to have a debate or a ministerial statement on Government time on the consequences and consequentials of the autumn budget statement. Perhaps that is because most, if not all, the news in that statement pointed to a positive economic position. It contained policies that could help to drive forward our economy and it included consequentials for Scotland that the Scottish Government does not want to talk about terribly much.
Let us look at what the Scottish Government asked for. In keeping with usual practice, the cabinet secretary wrote a letter to the Chancellor of the Exchequer setting out his key priorities. The Scottish Government’s priorities were additional capital investment, improved access to finance and no additional cuts to spending. I will take those in reverse order. He got no additional cuts to spending; in fact, as we know, the UK Government went further and gave him additional money to spend over the next two years—an additional £1 million for the current financial year, which I accept is not terribly much, an extra £120 million for 2014-15 and an extra £187.5 million for 2015-16. So, his primary objective was delivered.
The cabinet secretary wanted additional capital investment. That is what he got, with an additional £98 million to add to the March budget and the previous year’s autumn statement. We have made the point that, when the chancellor gave that money a year ago, it turned out that a significant number of the Scottish Government’s so-called shovel-ready projects were not particularly shovel ready—some did not even have planning permission. However, for a considerable time, it was claimed that they were shovel ready.
The Scottish Government’s third priority that it asked for in its letter to the chancellor was improved access to finance. That is exactly why funding for lending is being turned towards the business sector and away from the housing sector, with incentives in that particular scheme being skewed heavily towards small and medium-sized enterprises. All major banks will have to appoint a senior champion to promote the independent appeals process. Furthermore, additional sums are going into the British business bank—£250 million—to add to the existing £1 billion. The Scottish Government demanded its three priorities; they got those three priorities through consequentials and a number of positive policies to help to grow the economy.
Let us return to the theme of business rates, with which the cabinet secretary ended his speech with his talk about the regime south of the border. Firstly, let us look at the business rates cap. Although we welcome that it is 2 per cent instead of 3.2 per cent, the reality—to be fair to the cabinet secretary, he admitted this—is that, had it not been for the chancellor’s intervention or the announcement in last week’s autumn statement, the business rates increase in Scotland would have been 3.2 per cent and not 2 per cent. That is crystal clear. The logical conclusion that was drawn by Murdo Fraser is that it looks as though if people want business rates to be cut in Scotland they should go to the Chancellor of the Exchequer instead of the Cabinet Secretary for Finance, Employment and Sustainable Growth in Scotland.
That comes from the Government that refused to have transitional relief in Scotland when it was in place in England. Murdo Fraser’s point—he made it extremely well—is that the competitive advantage to which the cabinet secretary and the Government continually refer is being eroded.
Earlier, I praised the Government for what it did on business rates in its first term of office through the small business bonus scheme. I was happy to do so at the time and I am happy to do so again, but since being re-elected as a majority Government, the SNP has continually eroded that competitive advantage. As has been mentioned, it brought in the retail levy without any form of consultation.
I will not, at this time.
The Government also brought in an empty property relief cut without consulting on the proposal, which has also eroded Scotland’s competitive advantage. Business is paying an increasing share.
I will give way in a moment.
Another advantageous policy south of the border is that retail premises that have a valuation of up to £50,000 will get a discount of £1,000, but that appears not to be being replicated in Scotland—although the cabinet secretary may, of course, change his position. That policy will have a £39 million benefit in Barnett consequentials in 2014-15, but from what we have heard about the local government settlement, we know that about £3.8 million of that will be applied to extension of the small business bonus scheme. In my view, we are eroding our competitive advantage step by step. That is why we are pressing the cabinet secretary to take action.
I said that I would give way to the cabinet secretary and I am happy to do so.
If we follow the logic of Mr Brown’s argument, the Scottish Government would have to unwind the level of support that we are providing through business rates relief, because it appears that we have to follow every decision that is made south of the border.
Secondly, on empty property relief, Scotland still has a more competitive regime than that which exists south of the border.
Our critique is that the Government seems to be doing everything in its power to erode and to roll back that advantage. Although it says that it would do other things if it had the powers to do them, it is failing to use the powers that it has. That is true in relation to air passenger duty, which the Government says it would cut, although it is doing nothing with the powers that it has on the air route development fund. It says that there ought to be a VAT cut for the hospitality industry, but it is doing nothing for the industry here through business rates. It says that it would like to cut VAT for construction firms if it had the power to do so, but it is doing nothing for that industry with the powers that it has on business rates.
I want to pick up on a few other themes. The Government and—I have to say—the Labour Party have completely ignored the fact that there was a meltdown of the euro two years ago. When the UK Government made predictions in 2010, of course it did not predict that the entire continent was going to go into meltdown and that some members of that currency were at serious risk of departing from it. No one predicted that. Of course, that had a knock-on effect on growth and borrowing between then and now. Anyone who tries to ignore the effects of that is not facing up to reality. That would have been the difficult position that we faced, regardless of whether we were independent and regardless of whether we had a Labour, a Conservative or, indeed, a coalition Government. We cannot ignore that.
We have heard a lot of positive comments from business about the autumn statement and very little criticism of it. I will close with a statement that rather sums up the results of the autumn statement. The director general of the CBI, John Cridland, said:
“We have always advocated the dual approach of tackling the deficit and driving growth—the OBR forecasts confirm it is working. Let’s stick with what works.”