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

– in the Scottish Parliament on 5th February 2014.

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Photo of John Scott John Scott Conservative

The next item of business is a debate on motion S4M-08914, in the name of John Swinney, on the Budget (Scotland) (No 3) Bill.

Photo of John Swinney John Swinney Scottish National Party

The Budget (Scotland) (No 3) Bill confirms the spending plans that were set out in the draft budget, with the objectives of increasing sustainable economic growth, improving public services and supporting families and businesses at a challenging time. Despite the Westminster-imposed 11 per cent reduction in our fiscal departmental expenditure limit over a five-year period, Scotland has now experienced six consecutive quarters of economic growth and we are ahead of the rest of the United Kingdom on all the key economic indicators. Consistent increases in employment levels show that Scottish Government policies to create employment and boost the economy are delivering the progress required in our economic recovery strategy.

Over the next two years, we will support the economy by securing more than £8 billion of investment in Scotland’s infrastructure, which will support more than 50,000 full-time equivalent jobs across the wider economy. We will also invest in our schools, our hospitals and affordable housing. More than £970 million of investment will have gone into affordable housing in the three years to March 2015, as well as a further £120 million to help first-time buyers and existing home owners buy a new-build home. We will also deliver greater connectivity through significant investment in our transport infrastructure and by providing superfast broadband to 95 per cent of premises in Scotland by the end of 2017-18, exceeding the Government’s targets.

We will continue to invest in the transition to a low-carbon economy and will increase our investment in active and sustainable travel to almost £60 million between 2014-15 and 2015-16. To reflect the policy priority put to me by the Scottish Green Party during the budget process, we will ensure greater community involvement in the design and delivery of healthy living and active travel measures as part of an integrated approach across Government.

We are investing heavily in our young people by funding a record number of modern apprenticeships and assisting in the development of key interventions to support young people into employment through the opportunities for all initiative. We await with interest the Wood commission’s report on developing Scotland’s young workforce, and I give Parliament the commitment that we will bring forward swift measures and appropriate resources to act on the final report in partnership with the Convention of Scottish Local Authorities and Scotland’s education and business communities.

A consistent theme in this Government’s approach to the economy is the support that we can offer to boost women’s participation in the labour market. In addition to our work in our employability and education strategies, we are providing more than £190 million to our partners in local government to increase early learning and childcare provision to 600 hours, saving families around £700 a year. In January, we announced a further £15 million in 2014-15 for a phased expansion of eligibility to the most vulnerable two-year-olds and £3.5 million for enhancing our childcare workforce’s skills to maintain the high quality of childcare, supporting around 2,000 jobs in Scotland.

Photo of Willie Rennie Willie Rennie Liberal Democrat

I welcome in particular the announcement that was made in January.

The cabinet secretary has mentioned the benefits of parents being able to get back to work, but does he recognise that a boost in early education for young people can have a big impact on the early years? Professor James Heckman has said that the best educational investment is made before the age of three. Does the cabinet secretary agree?

Photo of John Swinney John Swinney Scottish National Party

I certainly accept Mr Rennie’s point. Indeed, it clearly accords with the thinking that my colleague Aileen Campbell, the Minister for Children and Young People, has taken forward in the early years collaborative, which is an excellent example of how we are encouraging and motivating all relevant players to support the nurturing and development of our very youngest citizens. His point in that respect is well made.

Mr Rennie has persisted in pressing the arguments for the expansion of childcare, and I pay tribute to his constructive contribution to the budget process. Ministers have invited him to participate in discussions with partners about the delivery of our childcare commitments and we look forward to continuing our partnership working to deliver the Government’s commitments to Parliament on expanding early years education.

This budget also delivers measures to maintain Scotland’s position as the most competitive place for doing business. The UK’s most generous package of business rates relief, worth more than £590 million a year, is offered right here in Scotland. With our partners in local government and our enterprise and skills agencies, we are investing decisively in Scotland’s economic growth while ensuring that our people are qualified and able to take advantage of the opportunities that will follow.

As part of our drive to deliver sustainable economic growth, the Scottish Government is determined to do all that it can to tackle inequality in our country. At a time when the UK Government seems increasingly intent on dismantling the welfare state and has presided over an 8 per cent fall in real hourly earnings between 2009 and 2012, we have maintained our commitment to our public services and the social wage—our social contract with the people of Scotland. The budget reflects our commitment to a national health service that is publicly owned and local government that is properly funded, in contrast with the approach that the UK Government has taken.

To help Scottish households, we are continuing to work with our partners in local government to deliver a council tax freeze to save the average household £1,200 by the end of the current session. We are supporting our students through our commitment to free higher education, and we are maintaining free personal care, support for concessionary travel, free prescriptions and the Scottish living wage. From next January, we will fund free school meals for all schoolchildren in primaries 1 to 3, which will benefit around 170,000 children in total and be worth £330 a year for each child to families throughout the country.

Those measures will provide valuable support to people across Scotland. However, our people will face further challenges, and the Scottish Government is acting to limit the extent to which the UK Government’s welfare reforms undermine our approach to social partnership.

Within our limited devolved powers, and in partnership with local government, we have established a council tax reduction scheme that supports more than 500,000 people who would otherwise have seen their council tax benefit cut by the UK Government. We have provided funding for advice agencies to meet the ever-increasing pressures on them and created the Scottish welfare fund, which is backed by £33 million of funding to help those who are encountering difficulties.

We are determined to do all that we can to mitigate the effects of welfare reform, but the scale of the challenge is literally enormous. Welfare reform will remove an estimated £4.5 billion from the Scottish economy over the five years to 2015, and the chancellor has announced further welfare cuts over 2016-17 and 2017-18.

Photo of Gavin Brown Gavin Brown Conservative

The cabinet secretary has yet again quoted the figure of £4.5 billion. Out of that £4.5 billion, how much has the Scottish Government pledged to reverse were Scotland to become independent?

Photo of John Swinney John Swinney Scottish National Party

What I am accounting is the damage that has been done to the people of Scotland as a consequence of our continued participation in the United Kingdom. That is the reality that Mr Brown cannot avoid.

We must be clear that we will never be able to mitigate all the damaging effects of welfare reform and that any resources that we deploy for that purpose are at the expense of other services that we could support within our own areas of responsibility. Over the 2013-14 to 2015-16 period, this Government will spend more than £244 million on alleviating the impact of welfare reform. We could have spent those resources on devolved services had they not been required to safeguard vulnerable people in Scotland.

One of the key elements of welfare reform that has been much in focus during the scrutiny of the budget is the bedroom tax, which is an iniquitous and damaging policy. Following its support for the budget at stage 1, I have had constructive discussions with the Labour Party on mitigating the effects of the bedroom tax and have looked carefully at the issue to ensure that we have a robust way to offer further support.

I think that it is now accepted across the chamber that discretionary housing payments are the only measure that is available to provide money directly to tenants and prevent them from risking rent arrears and entering indebtedness, which has significant and wider implications. As members know, our ability to resource discretionary housing payments is limited by the cap that the Department for Work and Pensions has imposed. On the latest data that are available from the DWP, we are constrained to a legal maximum of £22.85 million, which is an increase from the original proposal of £20 million. I confirm that we are allocating that increased sum in the budget today. That takes the total support that can be provided directly by local authorities to individuals to £38 million. Although that is a significant level of support, it is some £12 million short of the estimated £50 million that is needed to fully mitigate the bedroom tax in Scotland.

The Deputy First Minister wrote to Lord Freud to ask the DWP to remove the cap on the additional funding that we can provide for discretionary housing payments. That is a simple thing for Westminster to do, at absolutely no cost to it, and it could be completed by 1 April.

Photo of Gavin Brown Gavin Brown Conservative

Was that the first time that the Scottish Government formally requested the lifting of the cap?

Photo of John Swinney John Swinney Scottish National Party

The impact of the cap has been discussed at various meetings with the DWP, but the first formal request for the lifting of the cap was made in the letter that we issued to the DWP on Friday. We await an answer from the DWP to that letter. If a positive reply is forthcoming, we will allocate an additional £12 million to assist in mitigating the bedroom tax through discretionary housing payments. However, we are prepared to pursue other approaches in the event that the DWP refuses our request. I give Parliament the assurance today that if the DWP says no, the Scottish Government will put in place a scheme to make the additional £12 million available to social landlords so that we need not see any evictions in Scotland this year as a result solely of the bedroom tax. [Applause.]

Obviously, any scheme will require to be consistent with the complex legal framework that regulates these matters. That is not easy, notwithstanding comments made by the Chief Secretary to the Treasury and his colleague the Parliamentary Under-Secretary of State for Scotland. The Scottish Government must ensure, as David Mundell acknowledged yesterday, that our actions are

“subject to the clearly set out constraints of the Scotland Act 1998”.

However, we are determined to put in place a lawful scheme to assist landlords and provide them with additional funding to fund any shortfall that results from the bedroom tax, so that tenants need not face eviction as a result solely of the bedroom tax. I will fund that through a reduction of £10 million in the budgetary requirements for the rail franchise, following the Office of Rail Regulation’s final determination of the funding required for Network Rail; £3 million of Barnett consequentials; and remaining budget exchange flexibilities.

I want to be clear that none of the funding that I have announced is a solution to the bedroom tax; this is about mitigation and picking up the pieces of Westminster’s iniquitous policy. The only real solution is to scrap the bedroom tax altogether, and this Government believes that the only way to do that is for this Parliament to have full powers over welfare in Scotland. I urge all parties in the Parliament to support the approach that I have outlined today; to support us in pressing the UK Government to lift the cap on discretionary housing payments in order to prevent people from getting into the awful spiral of debt; and to back us in putting in place resources to support the vulnerable. Parliament can take action to pick up the pieces of a policy dreamed up in Westminster that is causing real hardship to the people of Scotland.

I have listened to the views of Parliament and the country in finalising the budget and have worked constructively with all sides of the chamber over the past few weeks to secure its passage. The Scottish Parliament has repeatedly proved its ability to take the important decisions that are needed to improve people’s lives and to reflect our values. The Budget (Scotland) (No 3) Bill demonstrates the benefits to Scotland of decisions being taken in Scotland by those who care most about Scotland. It is a budget that does not simply mitigate the impacts of decisions that are not in our best interests; it also protects household incomes, supports growth and protects high-quality public services because those are the things that we value.

I believe that the Budget (Scotland) (No 3) Bill deserves support from across the chamber, and I commend it to Parliament and the people of Scotland.

I move,

That the Parliament agrees that the Budget (Scotland) (No.3) Bill be passed.

Photo of Iain Gray Iain Gray Labour

When we last debated the budget, the cabinet secretary, in an exchange with Patrick Harvie, said that

“a judgment has to be made as to whether the elements of the budget can be sufficiently considered by individual members and parties to be in the correct balance and therefore worthy of support, despite the fact that not all provisions within the budget may be to their liking.”—[Official Report, 22 January 2014; c 26905.]

It is certainly the case that there are many provisions in this budget that are not to our liking. For a start, it fails to properly fund the Government’s council tax freeze, meaning that, yet again, the freeze will be paid for through increased charges and reduced services for those who need them most and through the loss of thousands of local government jobs.

The budget does not reinstate the disproportionate cuts in the further education budget. The 3,500 college places that were announced yesterday, however welcome, hardly compensate for the 140,000 fewer college students in our colleges today.

The budget, wrongly in our view, prioritises the extension of free school meals to better-off—not well-off, but better-off—families over accelerating the provision of childcare to half of Scotland’s two-year-olds. Then there is the £1 billion-worth of anti-poverty programmes that have disappeared since 2007.

It is good, then, that the cabinet secretary is not tempted by the rather juvenile argument that to support a budget is to support its every measure and that to reject it is to reject everything in it. In that spirit, we have seen the budget this year as an opportunity to achieve something that both we and the SNP and, I think, others such as Green colleagues believe to be desirable, and that is simply an end to the impact of the bedroom tax on council and housing association tenants in Scotland. That would be the effect of the Parliament agreeing to the amendment in my name today.

It is worth reflecting on how far we have already come. In September, the draft budget contained no money to alleviate the bedroom tax. The cabinet secretary was adamant that it was a UK Government measure, which it is, and he would not let it off the hook. Of course, it was the 80,000 affected households that were left on the hook of the bedroom tax; in fairness, by October, the Scottish Government had relented and found £20 million in the budget, although that was still short of what is required.

In December, the cabinet secretary argued that social security legislation meant that the sum could not be further increased. When I argued otherwise, I recall the Deputy First Minister heckling me from a sedentary position with the cry, “Where is the money coming from?” The fact is that I always had confidence—more than his Cabinet colleague, it would seem—that Mr Swinney could find the funds to complete the total £50 million package that is required to match the cost of the bedroom tax to Scottish tenants. This week, the same Deputy First Minister popped up in the Daily Record to say that the money was there after all, as Mr Swinney confirmed today, but that the DWP cap must be lifted.

We have always said that there are other legal and legitimate ways to use the money to help the victims of the bedroom tax, so last week we presented to the cabinet secretary a proposal for an additional tenant assistance scheme with two elements, one for local authorities and one for housing associations. The proof that it can work is that it already does, in Renfrewshire Council and East Lothian Housing Association. Both have been checked, either by Audit Scotland or by lawyers, and both, in essence, do the same thing—they write off small amounts of arrears rather than paying tenants, so they do not fall foul of benefits legislation.

Photo of John Swinney John Swinney Scottish National Party

Will Iain Gray reflect on which is the more desirable response to the difficulties that individuals face with the bedroom tax? Is it to increase discretionary housing payments to avoid people getting into debt, or to let people fall into debt and then write off their arrears?

Photo of Iain Gray Iain Gray Labour

It is clear that it is always better to avoid debt, but the important thing here is that, come what may, we do the thing that we want to do.

The cabinet secretary considered the scheme that was presented to him with understandable caution but with a commendably open mind, and our amendment reflects the discussions that we have had. With thanks to Renfrewshire Council and East Lothian Housing Association for their help, we are almost there. The full £50 million funding is in place, and if the DWP restriction remains, a workable alternative exists. Our amendment endorses that position.

Like Mr Swinney, I want the abolition of the policy rather than the mitigation of its effects. I want the tax to be abolished by a Labour Government next year. I understand that Mr Swinney and his colleagues want it to be abolished in 2016, in an independent Scotland. I think that my way is better, because it will lift the yoke from tenants in London, Manchester, Birmingham and Newcastle, as well as those in Scotland.

However, to be honest, those who are affected are not too worried about who abolishes the tax. We can decide today that no household in Scotland need pay the bedroom tax and that none should face eviction solely because of it, and we should make that decision.

To achieve that, we must—in the words of the prophet—act justly, love kindness and walk humbly, and we must support the amendment. We should act justly because most victims of the bedroom tax cannot choose to move to a smaller house, as no such houses are available to them. We would act justly because, with full funding, a choice will not need to be made about who to help and who not to help. We would act justly because the protection from eviction will extend to all tenants and not just tenants of councils that have no-evictions policies.

As for kindness, to support the amendment is to reject explicitly the cruelty of an all-too-common rhetoric that suggests that those who are affected by welfare reforms are feckless benefit scroungers who live in palatial accommodation. The truth is that most families who are affected by the bedroom tax are working, that 80 per cent have a family member with a disability and that the spare rooms are needed for carers, medical equipment or children who are spending time with an estranged parent.

I acknowledge that we and the Government will have to walk humbly. The Government will have to set aside the constitutional argument and accept that getting tenants off the hook is more important than leaving Whitehall on it, while we must acknowledge that, in this at least, the Government has not left Scotland on pause but acted and done the right thing. Even greater humility will be required if the Tories or Liberal Democrats are to support our amendment, given that it is needed only because of the wrong-headed policy of their Westminster colleagues, but I hope that they will consider it.

Yesterday was a good day for the Parliament. In passing the equal marriage bill, we rose to the singular historic moment and we were the Parliament that we were meant to be—we were shaping a more modern and inclusive Scotland. Today, we can rise above party differences again and do the right thing again—this time, in response not to the historic moment but to the daily, relentless and unfair difficulties and challenges of life that far too many of our fellow citizens face.

We can be the Parliament that we were set up to be again today, by exercising our power to protect our people. To paraphrase Donald Dewar, who is the nearest thing that this place has to a prophet—although I can hear him snorting with derision at the description—we can carry ourselves well again today.

When the budget was introduced, I called it a “don’t rock the boat, do nothing and get through the referendum” budget. If we agree to my amendment, we will have turned it into a “sink the bedroom tax boat to the bottom of the sea” budget. That is something that is worth doing.

I move amendment S4M-08914.1, to insert at end:

“but, in so doing, considers that funds be allocated in the total amount needed to fully mitigate the so-called bedroom tax in Scotland through discretionary housing payments and, if necessary, other schemes administered by local authorities and housing associations to ensure that no tenant need face eviction as a result of the bedroom tax.”

Photo of Gavin Brown Gavin Brown Conservative

When the draft budget was published in September, the media described it the next day as a “Tax blow for Scots business” and “A Budget of Bribes to Break Up the UK” and said, “Swinney’s ‘independence budget’ fails to impress”.

Photo of Elaine Smith Elaine Smith Labour

Mr Brown, will you turn your microphone round slightly? We are not hearing you properly; I am not sure whether that is because of the chat in the chamber.

Photo of Gavin Brown Gavin Brown Conservative

The budget should have been about jobs and the economy, but the economy barely got a mention in the cabinet secretary’s 14-minute speech.

The speech should have been about individual measures, which might not win votes in the short term but which will help the country in the medium and long term. It should have been about individual measures that might help to put growth on a more sustainable footing, because although the data are good at the moment, the underlying data show that we need business investment if we are to maintain the positive news.

The primary focus should have been the economy. Instead, the focus was the one in yesterday’s Scottish Government press release entitled, “Parliament urged to send budget message”, which had the subheading:

DWP must accept benefit call.”

Photo of Gavin Brown Gavin Brown Conservative

A member said, “Hear, hear.” The only time that the Scottish Government asked for the cap to be lifted, as the cabinet secretary said today—[Interruption.] I heard a member say, “Nonsense”, but the Scottish Government asked for that only at the tail end of last week—[Interruption.]

The Deputy Presiding Officer:

Order. Will members please desist from shouting across the chamber?

Photo of Gavin Brown Gavin Brown Conservative

Thank you, Presiding Officer.

The Scottish Government asked only at the end of last week, despite the fact that two days earlier the Minister for Housing and Welfare had held a meeting with Lord Freud to discuss welfare reform. Two days earlier, the issue that is so critical, according to the Scottish Government’s narrative today, was not even worth a mention; a letter had to be sent to put the Scottish Government’s point across, with only days to go.

The Scottish Government claimed for months that it was unable to act, clinging desperately to schedule 5 to the Scotland Act 1998 as if it were powerless to do more. Just a week ago, at stage 2 of the Budget (Scotland) (No 3) Bill, the cabinet secretary said in evidence to the Finance Committee:

“the sum of £20 million is a product of what I and the Government believe is the only legal route that we have to act in this area of policy.”—[Official Report, Finance Committee, 29 January 2014; c 3598.]

Seven days later, he says that an alternative scheme is “not easy”. A week ago he was talking about “the only legal route”; today an alternative is “not easy”.

Photo of John Swinney John Swinney Scottish National Party

The point that I was making to the Finance Committee was that the only legal route whereby we can get money into the hands of tenants without breaching the social security reservation is the discretionary housing payment route. That point has been absolutely consistent in everything that the Government has said. That cannot be disputed by Mr Brown.

Photo of Gavin Brown Gavin Brown Conservative

We heard today that Renfrewshire Council has decided to take measures. We heard during the week that East Lothian Council has decided to take measures. We heard yesterday, loud and clear, at the Scottish Affairs Committee in the House of Commons, that the Scottish Government has the power to do what it says that it wants to do. Whether it wants to deploy that power quickly or more slowly, as appears to be the case, is a matter for the Scottish Government.

Did the Scottish Government look into redesignation at all? Did it look at giving funds to housing associations and social landlords at all? Did it investigate any alternatives at all over the past 12 months? It appears that councils were able to engage with the United Kingdom Government and be innovative, but the Scottish Government was not able to do that.

Photo of Kevin Stewart Kevin Stewart Scottish National Party

Would it be better for Mr Brown not to lecture us on the subject but to do the decent thing and abolish the bedroom tax? [Applause.]

Photo of Gavin Brown Gavin Brown Conservative

That got a reaction. I feel a bit like Pete Wishart at Strathallan school. [Interruption.]

Photo of Gavin Brown Gavin Brown Conservative

Let me be clear. That was not a lecture but a series of important questions, which the Scottish Government needs to answer. There are questions that the Scottish Government could have asked at the beginning of the process but appears to be asking only now.

Photo of Iain Gray Iain Gray Labour

In part I agree with Mr Brown. For example, the Deputy First Minister could have written to the DWP much earlier to ask for the cap to be lifted. The point is that she has done that now and an alternative scheme is being agreed between Labour and the SNP. Given that we have reached that stage, should not Mr Brown simply support the amendment and let us progress?

The Deputy Presiding Officer:

We are short of time, but I will give Gavin Brown a little extra time, given all the interruptions.

Photo of Gavin Brown Gavin Brown Conservative

I am grateful for that, Presiding Officer.

Our party’s position has been clear and absolutely consistent all the way down the line. We believe that, where funds are available, the money should be invested in the economy. We think that we should put any consequentials that we have into getting growth going in Scotland and into employment measures that will be sustainable in the long term. We do not support Mr Gray’s amendment, but we point out that some of what has been coming from the Government, particularly over the past week, is merely hot air. It has changed its position fairly dramatically over the past seven days and I wonder whether that was about competence or whether it was an intentional ploy to get the maximum political mileage.

On the day that the budget document was released, the cabinet secretary said that

“there is no provision in the ... budget for dealing with the bedroom tax” because he had

“absolutely no intention of letting the Westminster Government off the hook in 2014-15.”—[Official Report, 11 September 2013; c 22282.]

This was about the Government trying to extract political mileage as opposed to doing what it said that it wanted to do and what, it turns out, it had the powers to do all along. That is why the Conservatives will not back this budget.

The Deputy Presiding Officer:

We are very tight for time this afternoon. I ask for speeches of a maximum of 6 minutes.

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

At stage 1, I supported a budget that I believed would protect and grow Scotland’s economy, maintain the social contract with Scotland’s people and offer support and assistance, where it can be offered, to those in our society who are most in need. My view has not changed. However, I believe that there are significant additions to the draft budget that will be welcomed across the chamber.

I was particularly pleased by the recent announcement that an additional £13 million will be levered into the college sector, creating 3,500 new full-time places.

The Deputy Presiding Officer:

I am sorry, Mr Gibson, but I must stop you for a moment. Members are saying that they cannot hear you. I have asked for the microphones to be checked, as the volume seems to be set quite low. Please make sure that your microphone is pointed in your direction.

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

Apologies, Presiding Officer. I am not in the mood for my usual bombastic method of delivery. I am trying to be somewhat more restrained, which is perhaps why some members cannot hear me as well as they usually can. I also have a very sore throat. I apologise to everyone in the chamber.

In my area, that investment will see Ayrshire College secure more than £1.1 million in funding, which will be used to support 300 additional college places and enhance employability activities. That will provide opportunities to work with employers, invest in delivering skills to Ayrshire college graduates and increase employment opportunities in key growth sectors of the Scottish economy, such as renewable energy, engineering, the creative industries and food and drink. It will also build on Scotland’s relatively strong employment figures and will, in particular, drive youth employment.

Although I was unable to touch on the issue in the previous debate, I was also pleased to note the allocation of £77 million of additional business rates relief in order to maintain parity with rates in England and Wales and expand the small business bonus scheme. Given that small and medium-sized enterprises account for 99 per cent of all Scottish businesses and over half of all private sector employment, it is clear that we must continue that vital business support during tough economic times. Indeed, the Federation of Small Businesses warmly welcomed the announcement, stating that the scheme had

“injected Scottish smaller enterprises with working capital at a time when they needed it most.” and that

“the Scottish Government has put these firms on a level playing field with their English and Welsh competitors.”

The Scottish Government is also investing in our young people, with an additional £125 million over three years to support young people towards and into work, including cash for recruitment incentives to help small companies to recruit young people by paying half the wage for the first six months of a new job. The £30 million opportunities for all funding supports our commitment that all 16 to 19-year-olds in Scotland who are not already in work, education or training will be offered a learning or training opportunity, and £5 million supports up to 2,500 young people into opportunities that are linked to major cultural and sporting events. There is also a record number of apprenticeships.

Supporting public services in challenging financial times is vital, and this budget will protect the national health service budget; maintain the council tax reduction scheme; maintain a Scottish living wage for public sector workers for whom the Scottish Government is responsible; continue support for the three change funds, driving a shift to more preventative approaches; and provide £120 million in funding in 2015-16 to assist health and social care integration. The Scottish Government is also on track to deliver 30,000 affordable homes by 2016, of which 20,000 will be for social rent. Over the four years to 2015-16, the Scottish Government will have driven investment in affordable housing to more than £1.35 billion.

The SNP supports free prescriptions, free tuition, concessionary travel and free personal care and the council tax freeze across Scotland continues to put money into people’s pockets.

As far as infrastructure is concerned, £8 billion of investment will take place in Scotland over the next two years.

Last month, a degree of consensus broke out between the two largest parties in the Parliament. Although the debate was, at times, heated and plenty of differences remain, it was refreshing to see the Labour Party and the Scottish Government working together to reach what seems to be a point of agreement on at least one aspect of the welfare reforms that are being imposed on Scotland by the Tory-Liberal coalition at Westminster.

The bedroom tax represents all that is wrong with the welfare reforms that have been haphazardly enforced by the coalition. Those reforms have been idealistically driven, with little or no thought being given to the people affected. Westminster’s solution—that people should somehow just find smaller accommodation—is entirely compassionless, capricious and impractical.

There can be no doubt that the bedroom tax is one of the most unpopular, iniquitous and idiotic policy decisions that has been taken by a UK Government since the poll tax. As it stands, some 76,000 Scots, including more than 12,000 children, are suffering as a result of the bedroom tax, and 80 per cent of the households that are affected contain at least one disabled adult.

It is also clear that Scotland is being disproportionately hit by the policy. Recent freedom of information requests by the Trades Union Congress’s false economy campaign show that Scottish councils have among the highest proportion of tenants—

Photo of Neil Findlay Neil Findlay Labour

While the member is on the bedroom tax, will he take the opportunity to commend the innovative use of the member’s bill process by Jackie Baillie, which forced the issue up the agenda?

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

Most important, I would like to commend the Scottish Government for working with other parties to find a proper solution.

Labour support for the budget will send a strong, united message to Westminster that the Scottish Parliament and the people of Scotland do not accept the bedroom tax.

As the Daily Record editorial pointed out yesterday, the UK Minister for Welfare Reform

“could have lifted the discretionary housing payments cap with the stroke of a pen.

That would have been the easiest solution and brought immediate relief to the thousands of Scots plunged into poverty.”

This Parliament has had to pick up the pieces and find money from its devolved budget to cover the costs of a reserved matter. That again demonstrates how out of touch Westminster is and surely adds weight to the argument that such matters are best placed and would be better managed in the hands of a Scottish Parliament that works with the interests of the Scottish people at heart.

The budget gives us the opportunity to vote to stimulate growth in our economy, to create and protect jobs, to deliver free school meals for pupils in primaries 1 to 3 and expand childcare, to offer opportunities to our young people and to help those who need it most. In areas in which we have control over the economy, we can do things better and more effectively for Scotland. Westminster’s failed austerity agenda is holding Scotland back, but with independence we can bring about lasting growth and make Scotland fairer.

I ask members to support the budget.

The Deputy Presiding Officer:

I reiterate that speeches should be of a maximum of six minutes.

Photo of Jackie Baillie Jackie Baillie Labour

I welcome the opportunity to speak in the debate. Unsurprisingly, I will focus my remarks solely on the bedroom tax.

I say at the outset how much I welcome the position that the Scottish Government has now taken on the bedroom tax. In particular, I single out for praise John Swinney, whose approach to the negotiations has been positive. I very much welcome our discussions. I look forward to continuing to work with him in the future and would welcome confirmation from him that I will be involved in the discussions on shaping the mechanism that will be used, as we previously discussed.

Let us be clear: by voting for the budget today, we will, in effect, bring an end to the bedroom tax in Scotland. I can find very few people who believe that the bedroom tax is anything other than a vile and iniquitous piece of legislation. It affects almost 80,000 people in Scotland, at least 80 per cent of whom are disabled, and the majority of whom are on low fixed incomes. [Interruption.]

The Deputy Presiding Officer:

Order. If members do not wish to listen to the debate, they are free to leave the chamber, but I ask members who are in the chamber to please cease their conversations and listen to the debate.

Photo of Jackie Baillie Jackie Baillie Labour

Thank you, Presiding Officer.

I think that we all agree that the policy itself is completely wrong-headed. You do not use a blunt policy instrument such as the bedroom tax, which charges people simply for having a spare room, to fix a problem in housing supply. Indeed, it is estimated that some 60,000 people would need to move house to avoid the bedroom tax but that only around 20,000 one-bedroom properties were available for let last year. The fact that the policy just does not add up demonstrates that it has more to do with Tory ideology than any evidence base.

Labour has been very clear throughout the debate: we oppose the bedroom tax. We voted against it and we will abolish it if we are elected in 2015. I acknowledge that the SNP is also committed to the tax’s abolition in the event of independence, but in both those cases we are asking people to wait, to cope with having to pay extra for their housing while they are on fixed and low incomes, and to deal with the stress that that causes.

John Swinney said in a previous debate that he did not want to let Westminster off the hook, but I am sure that he would also agree that some of our poorest people should not be left on the hook to prove a political point.

This is so much more important than a debate about the constitution. This is about the Parliament using powers to protect people. It is exactly at times like these that the Parliament should fulfil that purpose. The 80,000 tenants in Scotland hit by the bedroom tax cannot afford to wait until the votes are counted in the referendum or, for that matter, the general election. We can and should act now.

In January this year, I gained sufficient support to introduce a bill to protect people from evictions as a result of the bedroom tax. With one brave exception, Scottish National Party members did not rush to sign it, but it certainly served its purpose by concentrating the minds of ministers. My only disappointment is that it has taken so long to do so. For more than a year, Labour has been calling for the Scottish Government to fully mitigate the bedroom tax. We stood shoulder to shoulder with campaigners throughout Scotland. We have marched together across cities in Scotland and our activists have taken to the streets with petitions, taking the campaign to local neighbourhoods.

In March 2013, Govan Law Centre lodged a petition in this Parliament calling for no evictions as a result of bedroom tax arrears. It would be fair to say that the petition was not met with universal acclaim from the SNP; indeed SNP back benchers were lined up to condemn it.

In October 2013, the no2bedroomtax campaign lodged a petition calling for £50 million to mitigate the bedroom tax in Scotland. Again, that was not met by universal acclaim from the SNP and, again, SNP back benchers were lined up to condemn it.

It is not a matter of cost: £50 million is a tiny drop in the ocean of the Scottish Government’s budget. Under pressure from Labour and civic Scotland, John Swinney added a very welcome £20 million to discretionary housing payments, claiming that that was all he had the power to do. However, we now know that that is not the case. We provided clear evidence of two successful schemes that are operating in Scotland. First, we had Renfrewshire Council’s tenant assistance fund, which was helpfully considered positively by Audit Scotland. A similar fund operates in East Lothian Housing Association. Both are perfectly legal. Existing housing legislation can be used to deliver.

There are other routes, too, that the Scottish Government can take that are within its powers. That was confirmed by Danny Alexander and David Mundell, both UK Government ministers.

The money pledged by the finance minister today to end the bedroom tax in Scotland is absolutely and unreservedly welcome. It removes the need for any social landlord to take eviction proceedings against tenants due to bedroom tax arrears. Despite the 11th-hour letter to Lord Freud asking for the cap to be lifted, John Swinney has recognised that there is action that he can take. I very much welcome that.

I will borrow a phrase from the First Minister—not someone I often quote. He is fond of saying, “Let me say, as gently as I can”; usually, he is talking to Jackie Baillie. On this occasion, let me say as gently as I can to Nicola Sturgeon that the letter could have been written at any point in the past year, but it was not. Margaret Burgess could have raised it with Lord Freud when she met him the other week, but she did not. It was a straw man—a fig leaf—designed to give some cover to a spectacular U-turn by the SNP. The people of Scotland expect us to work together in their interests and not to engage in political posturing with the UK Government.

I welcome that U-turn by the SNP. It is a strength of a Government, not a weakness, to listen and then to act, and to admit when it is wrong. Today, we can vote in effect to end the bedroom tax in Scotland. It is absolutely the right thing to do.

The Deputy Presiding Officer:

I advise the chamber once more that speeches should be a maximum of six minutes. The previous two members went over their time. If members go over their time, they will either have to be stopped or other members will have to drop out of the debate.

Photo of Christina McKelvie Christina McKelvie Scottish National Party

I hold strongly to what seems to have become a rather unpopular concept, which is that every individual, of any age, ethnic or religious background, sexuality or gender, is entitled to be treated fairly and equally. Rabbie Burns espoused that idea profoundly, writing,

That Man to Man, the warld o’er,

Shall brothers”— and sisters, if I may add in my own wee bit—

“be for a’ that.”

Although the issues have become unfashionable in Westminster, fairness and equality remain deeply embedded in the Scottish psyche. The failed austerity agenda is holding Scotland back.

This budget is proof that decisions about Scotland are best taken by the people who live here. Our commitment to delivering free school meals for all children in primaries 1 to 3, and our transformational childcare policy, show where this Scottish Government’s priorities are. Our priorities are not those of the Westminster Tories.

What has gone wrong? Why is it that the children of Scotland whom we were pulling out of poverty are again being condemned to it? Why is this Scottish Government, committed as it is to providing universal benefits and a decent living wage, being forced to follow an alien inequality agenda? The Scottish Parliament’s Welfare Reform Committee recently received an independent study that was undertaken by the centre for regional economic and social research at Sheffield Hallam University. Its findings warned that welfare reforms alone will take more than £1.6 billion a year out of the Scottish economy. That equates to around £480 a year for every adult of working age in Scotland. In Glasgow, the amount rises to £650 a year. Down south, in Tory constituencies such as Hampshire and Berkshire, the impact falls to about £200 a year. That might be good for David Cameron’s voters but it does not follow my idea of fairness and it certainly does not follow this Government’s idea of equality. The gap between rich and poor is increasing on a UK-wide basis. Only with independence can we really set about changing that in Scotland.

As is inevitably the case under the coalition Government’s misnamed welfare reforms, it is the most vulnerable who suffer. That means, especially, the women and children, older people and those with disabilities of any kind. People are considered to be living in poverty if they live in households with less than 60 per cent of the median household income. That is the key measure that is used by the UK and Scottish Governments, and by the European Union. Using that measure, and after housing costs are taken into account, the Child Poverty Action Group in Scotland found in 2012 that 910,000 people here still live in poverty. That is 18 per cent of our population. It means that 220,000 Scottish children—21 per cent of all our children—live in poverty.

Real progress was being made in reducing those figures until the UK coalition Government’s tax and benefit policies started coming into the picture. CPAG now warns that

“there will be massive rises in child poverty in the coming years. In Scotland alone, forecast trends would suggest between 50,000 and 100,000 more children being pushed into poverty by 2020.”

In countries such as Denmark and Norway, fewer than 10 per cent of children live in poverty. Although that figure is alarming, it is much less so than the current UK figures.

The Scottish Government is determined to change the situation but, without the powers to make our own welfare policies, we can only try to mitigate the disasters of the bedroom tax and cuts in child benefit. The virtual elimination of the disability living allowance and the introduction of the so-called personal independence allowance will make the poverty picture far grimmer over the next months—far grimmer for a friend of mine who suffers from motor neurone disease and has been told by Atos that he is fit for work.

Of course, poverty impacts on health and mental wellbeing. It pushes people out of the workforce and stops them from becoming economically active. That has a negative impact on the more general condition of the Scottish economy. People with no money cannot spend it, which means that they cannot contribute to the growth of the nation. Contrary to the George Osborne school of economic theory, Government commitments and policy actions that boost pensions, benefits, tax credits and wages, and the removal of some of the barriers to work, have had a positive impact in Scotland. Cutting back on benefits will not contribute to a healthier economic environment. Mr Osborne’s approach is, indeed, a false economy.

This Government’s commitment to a living wage; to free school meals up to primary 3; to the energy assistance package; to improved access to debt solutions; and to investment in new council housing are all important moves forward. However, we cannot move as far forward as we would like without independence. Progress on child poverty is stalling, not because of the Scottish Government’s policies, but because of the welfare policies that have been inflicted on us by Westminster. We stand not only to lose the gains that have been made so far but to see a reversal in the progress that has been made. That is a travesty.

Westminster political campaigners have revived moral scapegoating, painting sizeable elements of Scottish society as broken. The language of worklessness has become commonplace, bundling together a range of reasons why people are not in paid work, including disability, ill health and caring responsibilities. That oversimplification has led to increasingly punitive welfare policies and an increase in the risk of people falling into poverty.

We are not, and will not be, the broken society of the Tory mindset. We will preserve and protect our fundamental values of care, compassion, equality and fairness and we will do it in an independent Scotland—a Scotland of the commonweal, where all of us are first.

Photo of James Kelly James Kelly Labour

I welcome the opportunity to take part in the budget debate. Understandably, much of the discussion in the initial exchanges centred on the bedroom tax. If being in politics and in Parliament is about making a difference, the agreement that has been reached between the Scottish Government and the Labour Party on that issue is crucial.

There is no doubt that, as members have said, the bedroom tax—a measure that unfairly affects nearly 80,000 people in Scotland—is something on which we should come together and act. I welcome the fact that the Government has engaged positively on the issue. We have moved significantly since the draft budget was published in September, when there was no money to mitigate the effects of the bedroom tax. The Government has listened to the strong voices of not only Iain Gray and Jackie Baillie but organisations such as Shelter Scotland. That is important, because such organisations speak from the ground and from communities. It is important that the Parliament takes such views on board.

It is also important to recognise that, despite the agreement on the bedroom tax, the passing of the budget will not wipe out some of the issues in our constituencies. There are schools in my constituency that cannot afford to print out the homework for the pupils. I recently visited a sheltered housing complex that was no longer able to continue with its overnight sleeper, which caused a lot of anxiety to pensioners in the complex. I am frequently visited by constituents who stay in overcrowded accommodation and struggle to get alternative housing because of the growing waiting lists. It is important not to lose track of the issues on the ground.

There is no doubt that, with the £30 billion that it has at its disposal in the Scottish budget, the Government can make an impact on the economy. One way in which it can do that is to invest in capital projects. However, it is important that those projects are properly managed and that the investment makes a difference in the economy.

Recently, an announcement was made on the M8-M73-M74 interchange project. Although it is welcome that some progress is being made in that project, the progress on improving transport in that area and making a contribution to the economy in the west of Scotland has been far too slow.

Another example is the Edinburgh to Glasgow improvement programme—EGIP—on which the Minister for Transport and Veterans made an announcement only this week. The reality is that the ground has continued to shift on that project. There were cuts of £350 million last year and now the cost has increased by £93 million. The lack of clarity on phase 2 of the project and the criticism that Audit Scotland made of the management of the project are matters of concern.

Photo of John Mason John Mason Scottish National Party

Does James Kelly agree that the innovative solution of extending the platforms at Queen Street station so that we do not need so many trains or such fancy signalling should be better for the environment and is a win all round?

Photo of James Kelly James Kelly Labour

The Government is yet to flush out all the detail of what is happening at Queen Street and what is happening with regard to the rest of the programme. We all want to see work being done on the projects, but it is important that we see the detail of that work because of how the projects have been managed—Audit Scotland criticised the lack of transparency around the five key infrastructure projects. If the projects are not managed properly and if people do not ensure that the key details are followed through, we will not see the economic benefits. We are talking about billions of pounds of public money; we have to make the best use of that investment.

It is important that the SNP Government treats Parliament properly and with respect. Back in October, the Government announced its intention to take Prestwick airport into public ownership—an intention that Labour supported. That was followed by the purchase of the airport in November. However, it took until yesterday for Parliament to get an update on the business case and the budget implications: £3 million of working capital had to be injected; £2 million was needed to refurbish the airport; and £1 million was needed to carry through due diligence. That is £6 million in total. However, I did not hear anything from John Swinney on the budgetary implications of that. We should not have to wait four months to hear about what is happening with such an important project, which has implications for the Scottish budget and for the Scottish economy.

It is important that the budget is passed today, but it is also important that the Government takes a hands-on approach to the issues that are affecting many of our constituents.

Photo of George Adam George Adam Scottish National Party

The budget is proof, if any were needed, that decisions about Scotland are best taken by the people who care most about Scotland—the people who live here and their representatives. Westminster’s failed austerity agenda is holding Scotland back. The Parliament needs further powers to bring about the lasting growth and to create the future that we all want in Scotland. To take that next step—that next leap—the Parliament needs to gain further powers.

As the cabinet secretary has already stated, the budget will support economic recovery, creating jobs and opportunities for the people of Scotland. There has been a lot of talk about the bedroom tax, but I want to talk about education.

Photo of Hugh Henry Hugh Henry Labour

Notwithstanding our differences on the constitutional future, will you join me to praise the work of Renfrewshire Council and its innovative approach to helping tenants through its hardship fund?

Photo of George Adam George Adam Scottish National Party

What I will do, Mr Henry, is praise the work of the Parliament and praise the parties for working together to represent the people of Scotland and find a solution to the bedroom tax at this stage.

I return to the issues that I was going to discuss. There is the important fact that the Government will deliver free school meals to all primary 1 to primary 3 children and expand childcare. The Government will spend £55 million over two years to expand the provision of free school meals. It will spend £59 million over two years to provide additional childcare places, taking the total additional funding for childcare to about £250 million over two years.

From August 2014, all two-year-olds in workless households will be entitled to 600 hours of free nursery education. That will benefit 8,400 children—15 per cent of all two-year-olds. From August 2015, that entitlement will be extended to two-year-olds from the hardest pressed families who are in receipt of a range of benefits. That will benefit 15,400 children—27 per cent of all two-year-olds. That is about making a difference in people’s lives and the budget shows that the Scottish Government is achieving that.

From January 2015, all children in P1 to P3 will be entitled to free school meals, which will save families at least £330 per child per year. The childcare commitment means that from August 2015, Scotland will be delivering more than 80 million hours of free childcare for two, three and four-year-olds every single year. That is 6.5 per cent more hours than if we had implemented the English system.

However, to get to the next level—to make that leap to move Scotland forward—we can transform childcare only with independence. An SNP Government in an independent Scotland will introduce a universal system of high-quality learning and childcare for children from the age of one. The “Scotland’s Future” document sets out on page 194 how we will transform childcare.

By the end of our budget, we will be providing 600 hours of childcare for approximately half of Scotland’s two-year-olds. Those whose parents receive working tax credits or child tax credits will benefit. By the end of the first session of Parliament, we will ensure that all three and four-year-olds and vulnerable two-year-olds will be entitled to 1,140 hours of childcare, which is the same number of hours that children currently spend at primary school. By the end of the second session of Parliament, we will ensure that all children from the age of one to school age will be entitled to the same number of hours of childcare per year

I mentioned earlier that the budget will support economic recovery and create jobs and opportunities for the people of Scotland. The Scottish Government is already investing in our young people—indeed, Scotland is the only country in the EU to have a dedicated Minister for Youth Employment. Since December 2011, Angela Constance has been in charge of that portfolio and the youth unemployment rate has fallen from approximately 25.4 per cent—approximately 113,000 young people—to 19.6 per cent, or 79,000 young people, which can be compared with a rate of 20.4 per cent in the UK overall.

The Scottish Government has invested an additional £125 million from 2012 to 2014-15 to support young people towards and into work. There is £88 million, including £25 million in cash, for recruitment incentives to help small companies to recruit young people by paying half their wage for the first six months of a new job. There is £30 million of funding for the opportunities for all programme to support our commitment that all 16 to 19-year-olds in Scotland who are not already in work, education or training will be offered a learning or training opportunity. There is also £5 million to support up to 2,500 young people into opportunities that are linked to major cultural and sporting events.

I welcome all those commitments from the Scottish Government and the cabinet secretary, but we must look at other ways to ensure that Scotland can take the next step to make a difference. I do not doubt for a minute that every one of us in the chamber has the best interests of our constituents and the people of Scotland at heart, but we must look at how we deal with the challenges ahead. I believe that independence offers us a future for our children and young people; in my view, that is the most important element, given my motivation as a parent and as an elected representative for the people in my constituency.

I welcome the budget, which focuses on and helps towards Scotland’s future, but I look forward to future budgets when we will sit in the Parliament of an independent country and talk about Scotland’s future.

The Deputy Presiding Officer:

Before we move on, I remind members that they should speak through the chair and that they should not turn their backs on the Presiding Officer.

Photo of Willie Rennie Willie Rennie Liberal Democrat

Today is a good day for young children, as the budget gives us a chance to change their fortunes and enable them to reach their potential. There will be a partnership between parents and the Parliament, and I thank John Swinney for the work that he has done with me to achieve a really good outcome.

We underestimate the ability and potential of young children, and we should remember what the nursery education provision will do. There are three primary reasons why we want to increase nursery education for two-year-olds. First, it supplements the excellent work that is undertaken by parents. We should not underestimate the role of parents or undervalue their contribution to their child’s upbringing.

Secondly, it is a route out of poverty. I believe, as a liberal, that education is the route out of poverty, and the way to tackle the inequality that we see every day in our communities but are desperate to change. It gives children the crucial extra support that they need.

James Heckman, whom I have mentioned to John Swinney previously, said that the best investment that we can make in education is before the age of three. The former chief medical officer has talked about brain development and how the relationships between a child and their family and community are crucial at the earliest stages. It is clear that making that investment is essential.

Finally, the increased provision gives parents the opportunity to get back to work. It is only a small number of hours every week, but the extra step back into the workplace will boost their income and employment. Ultimately, work is good, and we should encourage it.

So, there are three excellent reasons why we should support the increased provision of nursery education. I am slightly disappointed that it has taken so long to get there, and I hope that fewer barriers are put up next time round. First, we were told that the policy would not work in England; then we were told that we had family nurse partnerships, which were the equivalent, so we did not need to increase provision; then we were told that we could do it only through independence; and then there was no money. We have managed to knock down each barrier. I thank John Swinney for overcoming each of them and for making the decision.

That would not have happened without the persistence of members such as Malcolm Chisholm and Bob Doris, who is obviously too embarrassed to be here today to have more praise heaped on him by me. Some members have been persistent on the policy since before it was the popular thing to do. I commend the work that they have undertaken.

Before Christmas, I wrote to John Swinney with five reasonable recommendations and costed proposals on the budget. I have written similar letters in every budget process since I became a member of the Parliament. The first of our proposals was on nursery education, and I am delighted that we have made progress on that. The second was on free school meals, a policy that was announced by Nick Clegg in Glasgow last autumn and which is now being delivered throughout the United Kingdom. On social housing, we suggested an innovative way of using the financial transactions money, and I hope to have further discussions with John Swinney as we progress on that. Colleges have been hit significantly by reductions in spending, so the extra £3.5 million for nursery staff support and development is welcome. We have also had good and constructive discussions with John Swinney on Shetland’s housing debt and the unique circumstances in which Shetland finds itself on that.

On all five areas, significant progress has been made and there has been constructive engagement with John Swinney, which leads the Lib Dem group to believe that we can support the budget at decision time tonight. The budget is not the one that we would deliver if we miraculously changed from a group of five members to a majority group in the Parliament, but it is good enough for us to support. As John Swinney knows, we would make radical changes to Scottish Water to release funds to invest in regional development banks, broadband, energy conservation, science and infrastructure. We think that that would be a big investment in the economy and would create 100,000 jobs. Nevertheless, we recognise the position that we are in.

We recognise the engagement by John Swinney and the improvements that have been made on all five areas that we raised. I am pleased that John Swinney has invited me to be part of the implementation of the nursery education roll-out for two-year-olds. I will work constructively with Aileen Campbell and her officials to ensure that we implement the policy effectively.

The budget is good enough because John Swinney engaged in the process. It is worth noting, as John Swinney did, the progress on the economy. Growth is up, unemployment is down and employment is up, with 130,000 extra jobs in Scotland and 1.4 million more across the UK. Many members who said that the UK coalition’s plan would not work are now keen to say that it was their plan all along. Much more needs to be done, however, and we cannot be complacent. We need to continue to make progress on recruiting more people into companies in Scotland. However, today’s budget is a step in the right direction on nursery education, school meals, social housing, college funding and Shetland’s housing debt.

Photo of Jamie Hepburn Jamie Hepburn Scottish National Party

Just last week, the Welfare Reform Committee, of which I am the deputy convener, published its interim report on the bedroom tax. The committee found that the bedroom tax is

“iniquitous and inhumane and may well breach tenants’ human rights” and is

“having a real and harmful impact on people’s lives, and often the most vulnerable in society—those with disabilities, children in separated families etc.”

The report continued:

“Many people are ‘trapped’ into paying the ‘bedroom tax’ in that there are not enough one bedroom properties available to down-size to.”

The committee feels that the solution is for the UK Government to immediately abolish the tax but that, if it does not do so, the Scottish Parliament

“should be given the powers and resources to abolish it.”

All members of the committee, except Alex Johnstone, supported that view.

I believe in that position: it would allow us to get rid of the iniquitous bedroom tax. Short of that, it is incumbent on all of us to do what we can to help those who are on the sharp end of the bedroom tax. Of course, the Scottish Government topped up discretionary housing payments to the full amount last year and it is committed to doing so in the coming year. The Finance Committee and the Welfare Reform Committee in their budget scrutiny welcomed that funding, which was also welcomed by others outside of this place.

Photo of Linda Fabiani Linda Fabiani Scottish National Party

I should perhaps state my position as a fellow of the Chartered Institute of Housing and a former housing association director. Jamie Hepburn has been talking about the discussions that we have been having. If the DWP does not agree to respect any decision that this Parliament makes on discretionary housing payments and we move to debt write-off, I have a concern about the legalities of that in terms of the constitutions, rules and governance of housing associations. I refer not to the larger associations that Jackie Baillie spoke about, but to small, community-based ones—

The Deputy Presiding Officer:

Can you hurry along, please?

Photo of Linda Fabiani Linda Fabiani Scottish National Party

Yes.

Such housing associations are often run by voluntary committee members. Does Jamie Hepburn agree that we need clarification on the legalities from both Jenny Marra and the cabinet secretary when they sum up?

Photo of Jamie Hepburn Jamie Hepburn Scottish National Party

I agree that that is an area of concern, which runs into the issue of the limitations of the Scottish Government and this Parliament to act more generally. There are issues for housing associations as well.

I welcome the £15 million, on top of the money that was announced previously, that has been identified as a mechanism to mitigate the bedroom tax. It is right to direct that to discretionary housing payments, because how we direct resources to mitigate the bedroom tax comes up against the limitations of the powers of this Parliament: the reservations of the Scotland Act 1998 in relation to social security payments. DHPs are the clear, obvious way to direct resources for this effort.

Discretionary housing payments are a way to get money into the pockets of those who need it. It is preferable to do that, rather than write off debt, because that would prevent people from getting into debt in the first place. We have seen great demand for DHPs in many parts of Scotland. In North Lanarkshire, where my constituency is located—as, indeed, is yours, Presiding Officer—there was an increase of 881.52 per cent in DHPs awarded in April to November last year compared to the equivalent period in the previous year. That is a staggering increase.

It is right that we direct additional resources to discretionary housing payments, but that runs up against another limitation that we have: local authorities can top up discretionary housing benefits only to no more than 2.5 times the DWP allocation that they have received. That cap comes from a statutory instrument made under section 70 of the Child Support, Pensions and Social Security Act 2000. We need the DWP to agree to lift that cap.

I believe that the DWP should have committed more to DHPs in the first place. We know that despite the fact that Scotland has 20,000 more households that are affected by the bedroom tax than London has, the DHP allocation for Scotland for this coming year is £35 million less than the allocation for London.

The Scottish Government has identified additional funding. UK ministers have said—Gavin Brown referred to this obliquely—that the Scottish Government can spend its resources as it sees fit. An increase in DHP funding is what the Scottish Government has identified as the best way to spend its resources, and it will not cost the UK Government an additional brass farthing. Any opposition to that could only be born of spite.

When we vote on the budget this evening, this Parliament should send a clear and unambiguous message to Iain Duncan Smith—who continues to be too afraid to appear in public session at our Parliament’s Welfare Reform Committee—that we support the method that the Scottish Government identified to further mitigate his bedroom tax.

Scotland suffers in the welfare reform process in ways other than the bedroom tax, as the cabinet secretary said. Some £4.5 billion is being removed over five years, and after welfare reform is fully in place £2 billion will be removed per annum. That is why I welcome the range of measures that the Scottish Government has taken. Some £244 million has been committed over a three-year period and there is now an additional £15 million. That is a fantastic commitment by a devolved Administration to do what it can to mitigate the effects of an iniquitous welfare reform process.

That is why I supported previous Scottish Government budgets and why I will support this Scottish Government budget. I look forward to the day when we see Scottish Government budgets that do not just mitigate the welfare reform process but put in place a decent and fair social security system for people here in Scotland.

Photo of Murdo Fraser Murdo Fraser Conservative

Throughout the budget process, the Scottish Conservatives have made it clear that our priority is the Scottish economy, and we have said from the outset that we would test the Scottish Government’s budget on whether it prioritised economic recovery. To my regret, it does not.

As Willie Rennie said, there is good news about economic recovery; growth is up and unemployment is down. Just two weeks ago, the International Monetary Fund raised the forecast for UK growth in 2014 from 1.9 to 2.4 per cent, and other estimates suggest that in the coming years the UK economy will be the fastest growing in the developed world.

However, the recovery is still fragile, and the Government needs to put in all the support it can. In recent years, Scottish businesses have benefited from a competitive advantage, partly because of the small business bonus, which the Scottish Conservatives supported. However, other steps that the SNP has taken have not been so helpful. For example, the retail levy was bad news for business; it deterred investment and might well have cost jobs. The good news is that Mr Swinney has indicated that he will scrap it, although it is a pity that he could not act sooner. He has also missed the opportunity to introduce the retail bonus that is coming in south of the border. He could have chosen such measures in order to prioritise economic recovery.

Instead, the SNP has chosen not to boost the economy, but to put the money into welfare. It is putting more money into local councils’ discretionary housing budgets, despite the fact that councils across Scotland are already unable to spend the very large sums that they have been given.

I will take my own—and Mr Swinney’s—local authority, Perth and Kinross Council, as an example. I understand that as of January only 14 per cent of its total £1.3 million DHP budget for the current financial year had been spent and that it is likely that a very substantial sum will have to be returned to the Scottish Government at the end of the financial year. That pattern is being repeated across Scotland. There is no evidence that there is a huge level of demand for discretionary housing payments resulting from the spare-room subsidy.

Photo of Iain Gray Iain Gray Labour

What action has Mr Fraser taken with Perth and Kinross Council to ensure that it is doing everything in its power to ensure that everyone who needs and is entitled to DHP support receives it?

Photo of Murdo Fraser Murdo Fraser Conservative

The question for Mr Gray—in his new alliance with the SNP—is this: why is pouring money into an already undersubscribed budget a priority? Indeed, why is the issue a priority at all? Why have the SNP and the Labour Party deemed that putting more money into supporting people who are underoccupying properties is their top priority in this budget? What about the people who are—as James Kelly fairly asked—living in overcrowded accommodation? Why are they not getting the same priority? My fear is that the budget is more about political opportunism and beating the UK coalition Government with a big stick than it is about any serious attempt to take practical steps to produce a budget that is in Scotland's best interests.

Photo of Murdo Fraser Murdo Fraser Conservative

No. I need to make progress.

Members from around the chamber will object to being accused of opportunism, but I think that it is worth considering just for a moment the stance that both parties have taken in the past on the question of an underoccupancy charge. When it was in power at Westminster, the Labour Party introduced as part of the Welfare Reform Act 2007 the local housing allowance, which was an underoccupancy charge for people who were living in private rented accommodation.

Photo of Murdo Fraser Murdo Fraser Conservative

I need to make progress. I will give way later, if I have time.

The measure was steered through the House of Commons by Jackie Baillie’s friend, the then Minister for Employment and Welfare Reform, Mr Jim Murphy. I read Hansard with great interest to see how many times Labour members described the current underoccupancy charge as “iniquitous” or “draconian” but, bizarrely, not once did either of those words appear. In fact, the legislation was unanimously supported by the Labour Party, which today seems to be remarkably incensed at the current coalition Government introducing more or less exactly the same measure for people in social rented housing. This is more about political point-scoring than it is about taking any stance of great principle.

It is not just Labour that is guilty here.

Photo of Murdo Fraser Murdo Fraser Conservative

I am just about to turn to the SNP, so Mr Macintosh might enjoy this.

Where was the opposition from the SNP members at Westminster? Where were the speeches against the underoccupancy charge? Where was the outrage? Where were the denunciations? There was none. Not a single SNP member in the House of Commons raised so much as a murmur in opposition, and when it came to the vote, not a single SNP member could even be bothered to turn up, never mind to vote against the measure. Who were the guilty men? Let me name them. They were Mike Weir, Stewart Hosie, Angus MacNeil, Angus Robertson, Pete Wishart and—yes—Alex Salmond. So the man who is the leader of the SNP and First Minister and who regularly denounces the underoccupancy charge as an outrageous measure did and said nothing when a similar proposal was introduced for the private rented sector.

Photo of John Scott John Scott Conservative

The member is in his last minute. I am sorry.

Photo of Murdo Fraser Murdo Fraser Conservative

Mr Ewing can take time to apologise later. I am sure that the Presiding Officer will make that available to him.

When SNP members denounce the iniquity of the underoccupancy charge—we have heard plenty of that this afternoon, and we will hear more of it—they should be embarrassed by the behaviour of their SNP colleagues at Westminster, including their own First Minister. Any reasonable person would conclude that the SNP’s stance is no more than posturing, pure opportunism and rank hypocrisy. It is about scoring political points rather than taking any stance that is based on principle.

In conclusion, the budget sets the wrong priorities for Scotland. It fails to put the economy first. It is all about politics, and it exposes the double standards that are at the hearts of both the Labour Party and the SNP Government. For all those reasons, members should reject it.

The Deputy Presiding Officer:

Jim Eadie has up to six minutes. We are very tight for time.

Photo of Jim Eadie Jim Eadie Scottish National Party

I welcome the opportunity to speak in the debate and welcome the range of measures that the cabinet secretary has set out.

The budget has, at its heart, the ambition to provide the investment that Scotland requires to power economic recovery, to create and sustain employment, and to support the transition to a low-carbon economy. It puts in place the measures and funds that are required to protect the most vulnerable people in Scotland from the impact of the UK Government’s austerity programme and from the dismantling of the welfare state on which the UK Government is embarked.

I agree with Iain Gray, who said that he “always had confidence” in the cabinet secretary. I, too, have confidence in the cabinet secretary, who is to be commended on delivering a balanced budget in the face of the 11 per cent reduction in the fiscal DEL over a five-year period. The reduction in capital investment has been even greater.

It is unfortunate that the Chancellor of the Exchequer is determined to pursue at any cost his failed austerity agenda. Murdo Fraser said that the recovery is “fragile”. That is an understatement; it is now forecast that, over the period to 2015, the UK economy will be 5.9 per cent smaller, with borrowing £197 billion higher, than it was when the chancellor first set out his spending plans in 2010. Those policies are not made in Scotland, nor are they benefiting the people of Scotland.

Jackie Baillie made a characteristically robust and uncompromising contribution on the bedroom tax. Let me say in the new spirit of consensus that I completely agree with her on the bedroom tax. She said that the iniquity of that tax is impacting on 80,000 people across Scotland, eight in 10 of whom receive disability benefits and many of whom are on fixed incomes. They are having to pay the price of Westminster’s austerity programme.

We have to reflect on the fact that the bedroom tax is a policy that was made in London to address a problem that does not exist outwith London. Despite Scotland’s having 20,000 more households being affected by the bedroom tax than London has, the Department for Work and Pensions allocation for Scotland in 2014-15 is £35 million less than the allocation for London. That tells us that the solution actually addresses the problem of overheating in the rental market in London and the south-east of England.

I welcome the agreement between the Scottish Government and the Labour Party, and hope that we can apply pressure that will be successful in lifting the limit on discretionary housing payments in order that we can address what the Welfare Reform Committee described as the “iniquitous and inhumane” bedroom tax. However, whatever the outcome of the Deputy First Minister’s appeal to Lord Freud, the fact remains that we can only mitigate the impact of the bedroom tax; we cannot abolish it without the powers to do so.

The Scottish Government has long argued that Westminster cuts are a roadblock to economic recovery, but only last month, Chancellor George Osborne pledged £12 billion of further cuts to welfare spending after the next general election. That is the real threat that the people of Scotland face, which we must address in the coming referendum. We have to contrast that threat with the opportunity that independence will provide, which was brought into sharp focus by the analysis published this week by the Financial Times that said that

“the Scottish economy would rank among the top 50 in the world by size of GDP, and would be relatively wealthy, richer than the rest of the UK and in the top 20 countries globally in terms of GDP per head”.

Independence will provide that opportunity and allow us to go beyond the limits of the devolved settlement and the budget constraints within which Mr Swinney must operate.

I commend the cabinet secretary for the measures that he has brought forward and the £8 billion infrastructure investment over the next two years—some of which will go towards refurbishment of James Gillespie’s high school in my constituency. The other measures for which I commend the cabinet secretary include the provision of an additional £20 million for cycling infrastructure projects across the country, which has been welcomed by cycling organisations including Spokes, Cycling Scotland and Sustrans Scotland. The funding will enhance the community links programme that is run by Sustrans and it will allow us to factor in even greater additional funding through local authorities. Some of the new funding has already been allocated to improvements in my constituency, including the refurbishment and resurfacing of North Meadow Walk cycle path, which will be to the benefit of many people in my constituency.

The budget provides investment to support economic growth, to protect our most vulnerable people and to deliver the high-quality public services that people in Scotland have a right to expect. I commend the Scottish Government for it.

The Deputy Presiding Officer:

Thank you for your brevity.

Photo of Malcolm Chisholm Malcolm Chisholm Labour

I am very pleased to agree with the cabinet secretary whenever I can, so I am sure that all Labour and SNP members—and, I hope, some others—agreed with him when he said that the bedroom tax was an “iniquitous and damaging policy”.

Unfortunately, of course, Murdo Fraser and his colleagues do not agree with that view. Murdo Fraser spuriously compared the bedroom tax to the local housing allowance. The fact is that the bedroom tax penalises people who are already disadvantaged and are sitting in tenancies from which they cannot move. The reality is that the local housing allowance affected no sitting tenant.

Labour and the SNP may, of course, disagree about how to end the bedroom tax in law, but we have always agreed that it needs to end and we now agree, at the end of the budget process, that we must do whatever it takes to hasten its demise in Scotland. I think that most people in Scotland will be pleased to see us working together in this way; they would probably like to see it happen more often. Notwithstanding our differences over the next few months, I hope that it may be seen to happen in some other areas.

It is true that there was nothing in the budget originally about the current approach to the bedroom tax. It is certainly the case that it would not have happened without the pressure of campaigners and the demands from Labour. It is also true that no approach was made to the UK Government until Friday. We could certainly make many comments about that. One that I will make is that I intervened on the cabinet secretary on 19 December in the chamber and raised specifically the suggestion of a letter to the UK Government, but no action was taken until Friday. Clearly, much more could be said about that, but let us not dwell too much on it today.

What we really ought to concentrate on today and over the next few weeks is ensuring that everyone who needs and is entitled to help to deal with the bedroom tax receives that help. That is what John Swinney, Jackie Baillie and others need to set their minds to over the next few weeks, because everyone who is suffering from the bedroom tax needs to receive the help that has been promised today.

As Iain Gray said at the end of his speech, this has therefore become a “sink the bedroom tax” budget, having started life as a “don’t rock the boat” budget. The fact that it was a “don’t rock the boat” budget is evidenced by the lack of discussion today about other elements of the budget, even from the Conservatives; the bedroom tax took up the majority of, for example, Murdo Fraser’s speech today.

The debate has concentrated a great deal on the bedroom tax and childcare; it is no accident that those are the two big demands that Labour decided we would put forward for the budget this year. There was also the free school meals argument, but since the SNP has not repeated the inaccurate comments about Labour that it used in previous debates, I will not reopen that subject today, except to repeat briefly the point that I made to John Swinney in the Finance Committee last week, which was that quite a few schools have problems accommodating the increased numbers from the free school meals policy—I can think of at least one such school in my constituency. However, I note that Mr Swinney undertook to work with COSLA to try to address that problem.

Let us concentrate on practical implementation of the policies that have been agreed in the budget, whether on free school meals, the bedroom tax or childcare, which I must come to in the last couple of minutes of my speech.

I pay tribute—although he is not here at the moment—to Willie Rennie for his persistence on the issue, but I am sure that he would, if he were here, acknowledge that Labour’s big ask on childcare in the early stages of the budget process was crucial to the announcement in January about childcare for two-year-olds. As with many other policies, we cannot absolutely prove that, but we all know that that is how politics works. When opposition parties campaign effectively on an issue, governments often have to give way. I therefore welcome what was announced at that time about childcare for two-year-olds, and I welcome the previous announcement on 600 hours of provision in the Children and Young People (Scotland) Bill. The effect of that on women’s participation was overstated a little by John Swinney today, but that is just one part of it. The child development that Willie Rennie emphasised is clearly important as well.

As with the bedroom tax, the Scottish Government has not been able to resist making childcare, too, a referendum issue. I think that we will continue to debate that over the next few months. All that I will say about it today is that, if there were to be a yes vote, the chances of finding more money for childcare in the early years of independence would be no better than the chances now, so let us get on with it. That is what Labour has been saying. We need money up front, even if we are going to have increased revenues from increased employment thereafter. On that other point—which in a sense is the fundamental referendum point on childcare in the white paper, as I said in a previous debate—the benefits of increased employment in Scotland can just as well come to Scotland through devolution of income tax and fiscal devolution more generally.

The arguments will go on, but today I will concentrate on two things. First, let us implement the policies on which we have agreed on the bedroom tax and childcare and, finally, let me congratulate my front-bench colleagues, who have had a superb budget. They have won all the demands that they made on the bedroom tax and some of the demands that they made on childcare for two-year-olds.

Photo of John Mason John Mason Scottish National Party

There are a number of measures in the budget that we can all be positive about, including some topical ones. They include free school meals for primaries 1 to 3, the extension of childcare, and the most recent move to cover the bedroom tax. I accept that the bedroom tax is at the top of the political agenda and is probably the highest-profile item; it is certainly being debated widely today. If we can resolve that situation, a lot of people will be happy.

However, we should not lose sight of other aspects of welfare reform that are hitting my constituents and, I assume, those of other members. They include some strange decisions on fitness for work, which my colleague Christina McKelvie mentioned, when persons who are clearly not fit for work are told that they are. Another thing that my constituents face is the imposition, for doubtful reasons, of sanctions whereby people are suddenly left with no income at all.

It is clear that neither the Scottish Government nor the Scottish Parliament is able to mitigate those or other aspects of welfare reform, because other services would have to suffer seriously in compensation. To have control over the full welfare budget and the related rules and regulations surely has to be a top priority for Parliament as we move forward. I would be interested to hear from the other parties whether they can guarantee that, if Scotland were to vote no in September, they would be able to transfer welfare powers to this Parliament, under devolution.

It strikes me that this is—I presume—the last budget in which we will deal almost exclusively with expenditure. Next year, we will be thinking about taxation—the landfill tax and the land and buildings transaction tax—and the year after that we will consider at the very least a share of income tax. It is worth remembering that we can all agree that a responsible grown-up Parliament should have responsibility for taxation and expenditure. We will have ample opportunity to discuss raising taxes in the future. The Finance Committee is looking at the Revenue Scotland and Tax Powers Bill, which I find fascinating.

Professor James Mirrlees was at the Finance Committee’s meeting this morning. He takes a very high-level view of tax systems. In the lengthy Mirrlees review, he refers to a number of features of a good tax system and compares them with the current UK tax system. In one table that I found particularly interesting, under the heading “Taxes on earnings”, he said that a good tax system has

“A progressive income tax with a transparent and coherent rate structure”,

whereas the current UK system has

“An opaque jumble of different effective rates as a result of tapered allowances and a separate National Insurance system”.

We do not look much at the taxes that we raise, so I am putting down a marker to the effect that I hope that, when we come to next year’s budget and our first discussions of tax as part of a budget, the Scottish Parliament will do better than the UK has, so far.

One tax over which we have some influence is council tax, so I will mention it; I particularly welcome the council tax freeze. Council tax is a bad tax to start with because it does not take into account ability to pay; for example, pensioners who stay in the same house after they retire see the cost carrying on as before, despite their income being reduced. If councils increase council tax, people who are struggling get hit even harder.

Some people have said that they are relaxed about increasing the council tax. I wonder who they are. Some of them are people who earn a lot, which might include some of us. Council tax is easy for them and for people on low incomes who perhaps pay no council tax. Some of them would like the freeze to stop and more services to be provided, but what about the people who are just coping and no more? I reckon that a number of them are in constituencies such as mine. They are ordinary decent hard-working people who have not had a pay increase for a while, and whose hours might have been cut. They face the fact that most costs are rising with inflation and, in the case of energy costs, that they are rising much faster than inflation. It can make a real difference to those people that their council tax has been frozen, so I very much welcome the freeze continuing.

At the risk of repeating last week’s debate on the Commonwealth games, I will say how much I value the capital expenditure in the budget in the past, the present and the future. What a difference that spending has made to the east end of Glasgow. In preparation for the sports at the games, we have the Emirates arena, the Tollcross pool upgrade and the hockey centre. They have all provided construction jobs, on-going jobs for local people and facilities for local people.

I keep returning to housing. Linked to the Commonwealth games is the tremendous boost that will come through the games village, which is providing jobs, improving the area—as many people know, it has struggled—and providing high-quality homes for local people.

I also very much welcome transport investment, which is providing jobs in construction and making it easier for people to travel to jobs. We saw that with the M74 completion, and we now have the commitment of some £415 million—I believe that that is less than the original budget—for the M8, M73 and M74 motorway improvements. That is very welcome for jobs.

I very much welcome the budget. Of course, if we were not subsidising Westminster to the extent that we are, we would have more resources here with which to do more. However, that is—sadly—not currently the case. I congratulate the cabinet secretary on the balance that he has achieved with tight resources.

Photo of Kenneth Macintosh Kenneth Macintosh Labour

I read an attention-grabbing, if rather depressing, set of statistics this week. Over the past three decades, real incomes have risen for accountants by 60 per cent, for lawyers by 114 per cent and for doctors by 153 per cent. In comparison, over the same period, incomes have fallen for bakers by 1 per cent and for unskilled factory workers by 3 per cent.

The figures reveal that growing inequality is a long-standing problem—here in Scotland, in the United States, where the issue was the focus of President Obama’s state of the union address, and across most developed economies. There is an accompanying trend, in that less and less of our overall economic output goes on wages and labour costs and more and more is paid out in profits.

The growing gap that is being created was partially hidden when earnings were going up but, over the past four years, inflation has outstripped pay and most households have felt the cost-of-living squeeze. It has been particularly hard on people at the bottom, for whom rent, fuel and food account for a larger share of spending. Price increases have hit those people hard, and the effect has been compounded by the UK Government policy of hikes in taxes on spending and cuts to benefits.

Against that background, I have welcomed not one, not two, but three Scottish Government announcements over the past few weeks of budget negotiations. The first was on the allocation of additional funding for childcare, which Malcolm Chisholm talked about. It is six years since Wendy Alexander and the Labour Party outlined our plans to give every child a positive start, beginning with an extension of support to vulnerable two-year-olds. The Liberal Democrats have long shared that ambition and I warmly welcome the Scottish Government’s moves in that direction.

I did not agree with everything that Willie Rennie said in his speech last night, but I endorse his quoting the Nobel prize winner James Heckman, who said that investment in a child’s education before the age of three is the investment that gets the biggest return. I think that most Scots will be as pleased as I am that we can share our progressive vision. Whatever the outcome of the referendum, we can work together, through a devolved Scottish Parliament, to deliver the transformational childcare that we want in Scotland.

The second announcement that I welcome is the cabinet secretary’s confirmation today that he will meet our demand to find the full £50 million that will in effect stop the bedroom tax in Scotland. That has taken a little longer than we would have liked it to take, but the consensus that clearly exists among Labour and SNP MSPs—that shared anger and frustration at what is an unfair penalty on our poorest households—has found its political expression.

I thank everyone who gave voice to their frustration and despair at the effect of that punitive measure. I thank the individuals who gave their testimony to the Parliament’s Welfare Reform Committee and the people who led the campaign, including Alan Wyllie, whose powerful evidence was, I think, a factor in persuading the minister to change his mind. I thank Mike Dailly and his colleagues from the Govan Law Centre and, of course, I thank Jackie Baillie for highlighting what can and should be done.

As the Welfare Reform Committee highlighted in its report, 80 per cent of the households that are affected by the bedroom tax include a disabled adult. In other words, the cut specifically targets the most vulnerable people in our society. I know that most members would rather that we simply got rid of the measure altogether by getting rid of the Tory Government, and I know that SNP colleagues would like to do that through independence. However, today’s announcement provides yet another example of why devolution works and how it protects Scotland from the worst excesses of a Tory Administration. We can say no to the bedroom tax, just as devolution allows us to say no to market forces in the NHS.

The final announcement that I welcome is the additional £13 million for Scotland’s colleges. There is no point in pretending that my welcome does not come with a caveat—indeed, several caveats. It is tricky to work out the figures exactly, but it is fairly clear that the funding will not make up for the cuts that have been imposed over the past few Scottish budgets. I asked the Scottish Parliament information centre about that earlier and learned that the £13 million is made up of £6 million in European social fund money and £7 million in matched funding from the Scottish Further and Higher Education Funding Council—which might be existing funds. However, the money is welcome. The Auditor General for Scotland said recently that colleges across Scotland faced an overall 11 per cent real-terms reduction in revenue grant funding from the Scottish Government between 2011-12 and 2014-15, so the money still leaves colleges short.

What has that meant in real terms to real people? It has meant that more than 140,000 Scots who might have had the chance to go to college this year have been denied that chance. That is an incredible and shameful figure. In 2007, when the SNP came to power, 380,000 people went to college; the number has declined to fewer than 240,000. Therefore, although I welcome the £13 million, I want to hear that the announcement marks a change of direction and that the Government will finally put education first. Benefits are important in the short term, but what really matters in the long term is education.

I began by talking about what has happened to incomes in real terms over the decade—the inequality gap that has opened up between professional, highly skilled and educated workers, and workers who have no or minimal skills. We counter inequality and close that gap by investing in training, skills and education. Only by improving our productivity and building the knowledge economy, so that we give people the skills and confidence that they need if they are to flourish, will we truly prosper in this country.

Photo of Jean Urquhart Jean Urquhart Independent

As always, I pay tribute not only to the hard work of the cabinet secretary in putting together the budget but to the efforts of the Finance Committee clerking team in helping those of us who are on the committee to scrutinise the budget and shed some light on the issues at hand. I am pleased to have the opportunity to go over some of those issues in this stage 3 debate.

The Scottish Government is to be congratulated on producing a positive and ambitious budget despite the tough economic environment and Westminster’s disastrous austerity agenda. Once again, vital components of Scotland’s social wage—free prescriptions, free personal care and public transport for the elderly, and free university education—have been protected. When household budgets are being squeezed by rising food prices and energy costs, those measures are not only welcome but necessary.

As a member of the Finance Committee, I am particularly pleased that the Scottish Government has strengthened its commitment to prevention, spending to stop social and health problems before they start instead of relying on expensive cures once it is too late. That philosophy is increasingly being followed in Government strategy, and the budget includes £30 million over two years to support the voluntary sector’s vital work in that area.

However, far too many charities are still being given funding settlements for just one year at a time, which makes it hard for them to plan and invest in future services. For example, the Badenoch & Strathspey Community Transport Company, which is extraordinarily good, faces an uncertain future despite providing an essential service that is well used by hundreds of people every week. We need to move to an expectation that funding for community projects will be for several years at a time, which will create the security that these brilliant voluntary sector services need and deserve.

On a more general note, I was pleased to see so many parties voting for the principles of the budget at stage 1. That is a testament to the cabinet secretary’s ability and his determination to get the best deal that he can for Scots from all walks of life. It also demonstrates that, despite differences of opinion on Scotland’s constitutional future, a solid majority in this Parliament believe that there is such a thing as society, that we cannot slash and burn our way to a better economy and that a healthy economy is based not on how those at the very top weather the storm but on how those at the bottom are protected from the harsh winds of an economic storm that continues to wreak havoc on communities up and down Scotland.

I am still angry that the bedroom tax was imposed on Scotland in the first place. I am angry that other welfare cuts, which are driven by ideology and lack compassion, are causing tens of thousands of Scots to turn to food banks. I am angry that a party that has been consistently and overwhelmingly rejected by the Scottish people for years continues to hold the purse strings. No matter what sterling work the cabinet secretary is able to do within the confines of our financial settlement and no matter how much we may agree with the second-largest party in this Parliament, the fact remains that, until Scotland has the full economic powers of any other nation, there is only so much that can be done to counteract the me-first attitude of Westminster’s right-wing orthodoxy.

At the end of her speech, Jackie Baillie declared with great aplomb—I hope that I am quoting her correctly—

“Today we can vote in effect to end the bedroom tax”.

Well, we cannot. We cannot simply vote to end the bedroom tax—that is the point of wanting Scotland to have independence.

Photo of Jackie Baillie Jackie Baillie Labour

Does the member accept that, because of the Scottish Government’s actions in putting the £50 million on the table, we have effectively ended the bedroom tax in Scotland?

Photo of Jean Urquhart Jean Urquhart Independent

No, I do not accept that at all. We have mitigated some of the worst outcomes of the bedroom tax, but we have not ended it. In fact, Scotland is going to pay dearly, to the tune of possibly £50 million from other services, to mitigate the bedroom tax. Let nobody be under any illusion that we have ended the bedroom tax.

The Conservative members who have spoken so far have pointed out that the cabinet secretary has not mentioned business or the economy, and they have said that this is not a budget for business. However, it seems to me from all the reports—those in what I might choose to call the English papers as well as those in the Scottish papers—that the big issue today is not the business community. The biggest issue—the one that is hitting everyone’s mailbox—is the bedroom tax and its effects on housing associations and local authorities.

I highly recommend the budget. I can only repeat what many other members have said: the only way to mitigate the bedroom tax is to abolish it, and the only way to guarantee that it will be abolished is to vote yes on 18 September. The budget lays the groundwork for a fairer and more prosperous Scotland. I support the Budget (Scotland) (No 3) Bill and the Government in its efforts to ensure that all future budgets can freely set Scotland’s priorities.

The Deputy Presiding Officer:

I call Chic Brodie. You have up to five minutes.

Photo of Chic Brodie Chic Brodie Scottish National Party

The austerity cut has been matched by a time cut.

I am delighted to support the Budget (Scotland) (No 3) Bill. I will not rehearse all the arguments on welfare cuts et cetera.

In any budget, consideration has to be given not just to the current expenditure level—which, at present, is reduced—but to future revenue streams and economic recovery. The recovery that is taking place in Scotland is not a mirage that is happening in spite of austerity but a reality that has been pursued by finding a way to plan and invest for the future. Finding that balance is not easy, but the optimisation of future opportunities, jobs and revenue has, I believe, been addressed as best it can in the straitened circumstances in which the budget has been delivered.

Like its recent predecessors, the budget has a focus on innovation, initiative, productivity and investment—investment not just in capital but in our young people, which is critical. The incremental £125 million that has been provided since 2012-13, and which is promised through 2014-15, to support young people into work is already working—youth unemployment has fallen by 34,000 since December 2011.

Investment in people—and young people, in particular—is critical for our future, but in the present economic circumstances so, too, are growing and improving our national asset base. The budget increase of £8 billion in capital spend over the next two periods is designed to reflect the infrastructural benefit at a national level of capital investment in national assets, whether that takes the form of asset improvement or efficiency projects that will feed through from that.

Investment in employment and training our young, in developing efficiency and productivity, and in improving revenue-supporting infrastructure has been made in this budget in the face of the most adverse of circumstances. I am not one of those people who believe that the current recovery will continue for ever.

Above all, it is necessary that we invest in the creation of wealth and in business and revenue opportunities. I give the example of tourism, which is an export activity. All this year’s major events—the homecoming, the Commonwealth games and the Ryder cup—will generate income and jobs, and investment in them will not be just for this year but will be capitalised on in future years. I say, for the benefit of the leader of the Opposition, that high-level marketing and selling abroad is an investment for the future.

Photo of Chic Brodie Chic Brodie Scottish National Party

I am sorry, but I cannot—I have only five minutes.

Other measures in the budget include business rates relief and the retention of the small business bonus scheme, which the cabinet secretary mentioned; the SME growth programme, which is being provided with £38 million of financial support and £53 million of financial transaction loan facilities; and the Scottish Investment Bank support for export and high-growth companies with loans from £250,000 to £2 million.

In addition, there is the continued support for the enterprise agencies, which last year had 118 offers of regional selective assistance accepted, with planned capital expenditure of £216 million safeguarding nearly 500 jobs and supporting and boosting the third sector and social enterprises.

All that is designed to support an investment-led recovery while balancing the needs of an austerity-mitigating expenditure programme.

I am not known for being sycophantic, but this cabinet secretary has produced a big square from a very small circle—again. As with the bedroom tax, this budget has shown that, funnily enough, if all of us—this certainly applies to Labour and the Lib Dems—work together with the Scottish Government in the interests of Scotland, things can be so much better.

The Deputy Presiding Officer:

Thank you for your brevity. Before we move to the closing speeches, I apologise to the member who we could not call to speak in the debate.

Photo of Gavin Brown Gavin Brown Conservative

I begin by picking up on an issue that has been mentioned several times in the debate, first by the cabinet secretary and then by others, including Jamie Hepburn. It is a statistic that has been used a number of times by the Scottish Government over the past couple of years. It is the Government’s contention that the cost of benefit changes is £4.5 billion. The Scottish Government suggests that life would be very different if we were to be independent.

I asked the cabinet secretary, during his opening speech, how much of that £4.5 billion-worth of changes would be reversed were Scotland to be independent. I asked that because, although the Government says in the white paper that there are two or three measures that it would reverse, it is silent on all the other measures. Apart from that, it says that it would broadly adopt the welfare system from the rest of the UK.

The largest single measure within that £4.5 billion, which is about a third of it in total, is the change from the retail prices index to the consumer prices index. Is there any commitment from the Scottish Government to reverse that if we are to be independent? If not, it needs to take off a third of that £4.5 billion when it criticises the benefit changes.

The second largest measure is the changes to child benefit. Is there any commitment to reverse that decision? I do not think that there is, because I heard Christine Grahame ask the First Minister about that a couple of months ago and no commitment was given. If that is the Scottish Government’s position, it cannot complain about that sum of money either.

If we drill it down, I would be surprised if there was a commitment from the Scottish Government to reverse any more than £200 million out of the £4.5 billion were we to be independent. I look forward to hearing which additional measures it would change; otherwise, it is not legitimate for the Government to use that figure in future. It knows fine well that it would not change most of it if it had the power to do so.

We have said from the outset that this should have been a budget about the economy. I disagree with Jean Urquhart when she said that she did not think that it was the biggest issue. Poll after poll shows that at the very top of people’s agenda is jobs, growth and the economy. That is where our focus ought to be.

We hear from the Government that, if it had the powers, it would set a business tax strategy to stimulate investment. If it is to be taken at its word on that, why does it not do that with the tax powers that it currently has? I have said before in the chamber that I thought that, in its first session of government, it had a pretty good innings when it came to tax, particularly in relation to the small business bonus. However, since becoming a majority Government, the position has been very different.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

Does Gavin Brown accept that we have extended the small business bonus over the years and that more than 90,000 small businesses now receive the benefit of it and pay low or no business rates, to a maximum relief of £4,620 per annum? How much lower is that relief in England?

Photo of Gavin Brown Gavin Brown Conservative

The minister always shouts very loudly when he does not have a particularly strong point to make. As he well knows, the increase to the small business bonus in financial terms, in terms of this budget, is about £4.5 million.

Photo of Gavin Brown Gavin Brown Conservative

If the First Minister will allow me to continue, I will tell him. The increase in Barnett consequentials that the Government gets is far more than £4.5 million; about £80 million to £90 million of the Barnett consequentials that it gets came from business rates.

What has happened in the SNP’s second term, in which it has been a majority Government, is that it has brought in the retail levy and empty property rates. We have diminished enormously a big advantage that we used to have over the rest of the UK. There has been a refusal to publish the land and building transaction tax rates. We have a business incentivisation scheme that has not got off the ground at all, with COSLA being blamed for that instead of the Scottish Government. And, of course, there is the retail rebate, which will be brought in south of the border and for which we get Barnett consequentials of £29 million next year and £39 million the year after. However, Scotland has refused to look at it, even though it would have boosted the retail sector at a time when that was needed and a time when we had a retail levy that put the sector in a tougher position here than in the rest of the UK.

The focus of the Scottish Government in this budget is not on the economy. There are many measures that it could have taken on tax. It could have brought back the town centre regeneration fund, a popular fund that had support across the chamber when it was introduced and which has been cited by many SNP back benchers over the past 12 months or so. Why are we not doing anything about that?

The focus of most of the debate has been on welfare reform. I think that we have exposed some of the questions that need to be answered by the Scottish Government about that. What exactly has the Scottish Government been doing over the past 12 months? It certainly has not been thinking about how it can deal with issues using some of the powers that it already has.

Because there is not a focus on the economy, we will not be supporting the budget today.

Photo of Jenny Marra Jenny Marra Labour

In 1999, we voted for a Scottish Parliament because we recognised that there would be times when we would want to do things differently in Scotland. Never has that been more significant than right now, in relation to the issue of the bedroom tax.

If passed today, Labour’s amendment will mitigate the effects of the bedroom tax in Scotland. The amendment follows a series of negotiations, which have brought us to the point at which the full sum required to mitigate the bedroom tax is in the cabinet secretary’s budget.

In the draft budget, there was nothing for the bedroom tax. At stage 1, there was £20 million. Now, the full amount—which the Government initially said it would be impossible to provide, because it would let Westminster off the hook—is in the budget. We are glad about that. We did it by working together across parties to negotiate a common ground.

Mr Swinney was clear that work remains to be done on an alternative scheme in the event of the Department for Work and Pensions refusing to lift the cap. Discussions between us on this issue have, so far, been constructive, and have included a willingness on the Government’s part to continue to push forward development of that scheme together.

Earlier this afternoon, Jackie Baillie asked the cabinet secretary to confirm his willingness to continue to meet us, but he did not do so at that point. Perhaps he will intervene now to confirm that he is willing to continue to meet us and work together on the issue.

Photo of Jenny Marra Jenny Marra Labour

Thank you, cabinet secretary, for saying that you will address that later.

The Deputy Presiding Officer:

Please address your comments through the chair.

Photo of Jenny Marra Jenny Marra Labour

Sorry, Presiding Officer.

Linda Fabiani questioned the legality of housing associations taking measures to mitigate the bedroom tax. East Lothian Housing Association has already done that, and the move has been approved by lawyers. Renfrewshire Council has done something similar, and that move has been approved and audited by Audit Scotland.

Photo of Linda Fabiani Linda Fabiani Scottish National Party

I think that the member misunderstands my point. I understand what she is saying and I know how those moves are working. I am concerned about small, community-based organisations that operate under specific rules and whose voluntary committee members might be legally liable. I wonder whether the ability to write off arrears that are solely attributable to the bedroom tax might perhaps mean that arrears that were due to other punishing welfare reform measures also had to be written off. I am concerned that people could end up in trouble, and I want to ensure that the possibilities are properly investigated.

Photo of Jenny Marra Jenny Marra Labour

It is my understanding that East Lothian Housing Association has voluntary members, but I am sure that the cabinet secretary and Labour members who have been working very hard on the issue know the ways of managing to mitigate the bedroom tax in full. Our amendment makes that clear.

I turn to Murdo Fraser’s comments in the debate. He said that his council—Perth and Kinross Council—spent only 14 per cent of its discretionary housing payments. There must be some recognition that some councils have been better than others at letting tenants know what support is available. Perhaps Murdo Fraser would like to take that up with the councils in his region.

Murdo Fraser also made some comments about the local housing allowance. Malcolm Chisholm addressed the difference, but I will clarify the matter for Murdo Fraser. Let us be clear that we are having the debate because the Conservative Government imposed the bedroom tax throughout the United Kingdom. When civil servants in Westminster presented the proposal to Alistair Darling when he was chancellor, he handed it back to them and said that no Labour Government would do it. When they handed the same proposal to George Osborne, he grabbed it with both hands and imposed the bedroom tax on Scotland and the rest of the United Kingdom.

Photo of Murdo Fraser Murdo Fraser Conservative

Can Jenny Marra answer me this simple question: does the local housing allowance, which was introduced by the Labour Party, incorporate an underoccupancy charge—yes or no?

Photo of Jenny Marra Jenny Marra Labour

Malcolm Chisholm’s comments to Murdo Fraser were very clear on the point. That tax did not affect sitting tenants, which is the key difference. Murdo Fraser can try all he likes to deflect from his Conservative Government’s policy of the bedroom tax, but we know that the Conservative Party is responsible for that iniquitous tax in Scotland and throughout the United Kingdom.

The Parliament must now not fail those whose hopes have been built up in the negotiation by falling back on any arguments about the constitution or anything else. The interest of Scots has been captured by the consensus, and our reasoned amendment gives us the chance to show that we are capable of putting aside our differences for one day in the name of permanently mitigating the effects of that iniquitous policy in Scotland.

Simply to oppose the bedroom tax is to maintain it. We must walk a different road. We must find a different way. That is what the Parliament was created to do. When Donald Dewar opened the Scottish Parliament in 1999, he said:

“We will make mistakes. But we will never lose sight of what brought us here: the striving to do right by the people of Scotland; to respect their priorities; to better their lot; and to contribute to the commonweal.”

When we vote today, let us not simply vote to reject the Tory bedroom tax—a mistake in every sense. Let us vote to do what really matters: to make life a little bit easier for Scots who are suffering now.

With the political will, dedication, time and effort of the Scottish Government, we can make the effects of the bedroom tax history. The cabinet secretary has come this far; we know that he can cross the finishing line and deliver. He can ease the anxiety of those whose fears are growing, stop the worry for those who cannot afford to pay the tax, and remove the stigma for those who simply want to stay in their homes—the homes in which they have lived for years—and the communities that they love. He, and we, can better their lot. He can build upon the commonweal.

Let us not rest on the mistakes of others but confound them by the strength of the values upon which our Parliament is built.

Photo of John Swinney John Swinney Scottish National Party

There have been two major themes to the debate, and I will address them both. The first is a discussion about whether the budget is sufficiently focused on delivering the economic recovery that is required in Scotland. The second concerns the bedroom tax. I will take the two in order.

The Conservatives have been consistent throughout the budget process in criticising the budget as being insufficient in dealing with the economy. I have listened with great care to all the contributions from Mr Brown and Mr Fraser during both plenary stages of the budget process; I have listened to their suggestions about how the budget could be strengthened to make it better—to pass the Tory test, if we can put it that way. In the course of the two debates they have suggested that I should not have applied the retail levy; that I should have given a £2,000 bonus to certain pubs and shops over a two-year period; and that I should have had a town centre regeneration fund. That is it. That is all that the Conservative Party has come up with as alternative suggestions to the measures that I am setting out on the economy. I will give way to Mr Brown if he wants to make up another list at the last minute.

Photo of Gavin Brown Gavin Brown Conservative

If the cabinet secretary checks the Official Report, he will see that we also made suggestions about empty property tax, the publication of LBTT rates and, indeed, a big extension to the business rates incentivisation scheme. He has only mentioned half our suggestions.

Photo of John Swinney John Swinney Scottish National Party

My point about business rates and the business tax regime is that I want the regime in Scotland to be advantageous—to be superior to the regime in the rest of the United Kingdom. Mr Brown has argued that I should be mimicking what goes on in the rest of the UK.

Photo of John Swinney John Swinney Scottish National Party

Mr Johnstone, the heavyweight from the back benches, says that I should be mimicking the Conservatives—that I should be following them. As I have rehearsed with Mr Brown already, that means that I should be leaving Parliament to go back up to my office and require businesses in Scotland to repay money that we have made available to them by having a more advantageous business rates regime in Scotland.

As for the business rates incentivisation scheme, I have a letter in front of me that was sent to me on 17 June 2013 by the spokesperson for resources and capacity at COSLA, Councillor Kevin Keenan. In the letter, Mr Keenan asks me not to take action on the business rates incentivisation scheme until a proper evaluation of the full audited figures for 2012-13 are available. That evaluation will not be available until spring 2014, so perhaps Mr Brown—

Photo of Gavin Brown Gavin Brown Conservative

The cabinet secretary is indeed being very generous.

That is a policy that the cabinet secretary published in 2011. Is he seriously blaming COSLA for the fact that nothing has happened since then?

Photo of John Swinney John Swinney Scottish National Party

I am saying that I have made a proposal to COSLA and I cannot reach agreement with COSLA because it wants to delay until the audited figures are available. I am not blaming anybody; I am simply explaining that I have not managed to reach agreement with COSLA on the publication of the numbers. That is the problem that is at the heart of the situation.

Mr Brown told us at stage 1 that he was not going to vote for the budget. He has told us at stage 3 that he is not going to vote for the budget. I will just read to Mr Brown something from the Official Report of 4 February 2009—in the good old days when Mr Crawford and I worked together to keep the Conservatives on the straight and narrow when it came to budget issues.

Mr Derek Brownlee—ah yes, Mr Derek Brownlee. We all miss him; that was when we had quality in the Conservative Party. Mr Brownlee said:

“As we pointed out last week” to the Labour Party and others

“voting down the budget has serious consequences for public services, council tax levels and small businesses.”—[Official Report, 4 February 2009; c 14658.]

Was Mr Brownlee not correct? The Conservatives are now going to vote against the budget, jeopardising public services, council tax levels and small businesses. What an absurdity the Conservative Party has become.

Photo of John Swinney John Swinney Scottish National Party

I have to do justice to the other issue that arose in the debate. I think that we have done enough justice to the Conservative Party and its folly.

On the bedroom tax issue, a lot of points were raised about what actions the Government has taken to secure the increase in the cap on discretionary housing payments. It is important that I put this material on the record properly.

First, I remind members that the bedroom tax was introduced in April 2013. Therefore, when David Mundell says that we should have taken action in the previous three years to deal with the consequences of the tax, it takes a little bit of imagination to think of how we could have done so. The tax has been operating only for the best part of 10 months.

Secondly, on 6 March 2013 my colleague Margaret Burgess, the Minister for Housing and Welfare, met Lord Freud. I accept that she did not, at that meeting, ask for an increase in the cap. What she asked for was the abolition of the bedroom tax.

At a meeting on 18 June 2013, the Deputy First Minister met Lord Freud and asked for an increase in discretionary housing payments. Thankfully, as a result of that meeting, there was an increase in those payments, and they were also increased for rural local authorities.

Subsequently, we have been monitoring discretionary housing payments, and it has become apparent—as has been made clear to Parliament—that some local authorities are very close to allocating, or have already allocated, all the discretionary housing payments that are available to them.

One reason that the cap must be increased is to enable better distribution of discretionary housing payments to meet the need in the parts of the country where such a case load arises. That is why we have now asked the DWP to lift the cap—to enable us to put in more resources to deal with the issue.

One reason that we have not previously asked for the cap to be lifted is that my colleagues have—quite rightly—been trying to get the DWP to put more money into the system. Why? Because we should not have to be taking money out of devolved public expenditure and putting it into mopping up the mess that has been left by the UK Government’s welfare reforms.

In short, my colleagues have focused first on securing abolition of the bedroom tax, secondly on increasing funding from the DWP to pick up the pieces of its mess rather than using our money to do so, and thirdly on arguing for an increase in the cap. I hope that the cap is increased as a consequence of the representations that we have made.

We have taken that action, and I have signalled that, if we are unsuccessful in securing an increase in the cap, the Government will work to put in place an alternative scheme to deal with writing off debt that individuals have acquired. I am glad that, when I intervened on Iain Gray, he confirmed my view that it is better—if at all possible—to avoid people getting into debt in the first place. The cap must be increased so that we can avoid that situation.

I commend Renfrewshire and East Lothian councils for coming up with debt write-off schemes as part of their relationships with their social tenants. We in Government do not have such a relationship; we do not fund those individuals and have no direct relationship with them. An individual’s debt is held by the authority or the housing association.

I commend the councils’ actions, but I make it crystal clear to Parliament that the Government’s view is that we must prioritise raising the cap to increase discretionary housing payments to enable us to avoid people falling into debt, which is a disaster for individuals in those social circumstances.

During the debate, many members have said that I was wrong to say in my September budget statement that I did not want to make provision to deal with the tax at that time because it would let Westminster “off the hook.” I make no apology for that statement to Parliament, because I do not believe that it is right and proper for the Scottish Government to have to use devolved public expenditure to clear up the mess that has been created by decisions that are taken elsewhere. I find that to be thoroughly unacceptable in Scotland.

I am not the only one who finds that unacceptable. Yesterday, in the Welsh Assembly, the leader of Plaid Cymru asked the Welsh First Minister—who, by the way, is a Labour First Minister—whether the Welsh Government will join the Scottish Government in calling for a lift in the cap on discretionary housing payments. The Labour Welsh First Minister said:

“There is ... the issue of why a devolved Government should be paying for what is the responsibility of a non-devolved Government. There is a sense of hazard there”.—[Record of Proceedings, National Assembly for Wales, 4 February 2014.]

On this one limited occasion, Carwyn Jones says it all for me. It is absolutely ridiculous that a devolved Parliament should pick up the pieces for Westminster. We should have the power to make our own decisions and to create a fair welfare system for the people of our country.