Draft Budget 2016-17

– in the Scottish Parliament on 16 December 2015.

Alert me about debates like this

Photo of Tricia Marwick Tricia Marwick None

The next item of business is a statement by John Swinney on the draft budget 2016-17. The Deputy First Minister will take questions at the end of his statement and there should therefore be no questions or interruptions.

Photo of John Swinney John Swinney Scottish National Party

The Scottish Government’s purpose is to deliver sustainable economic growth and to create the opportunity for all of our citizens to flourish. We believe that, with a relentless focus on tackling inequality and boosting productivity, we can create the foundations for a stronger and more inclusive economy.

However, that aim has to be delivered within a significantly constrained public spending environment. As a consequence of United Kingdom Government austerity, the Scottish budget will continue to fall in real terms, as it has done since 2010, until the end of this decade. The realities of the public finances are such that, if we want to improve our services, we must be prepared to continually reform the way in which we deliver them.

Therefore, this budget is driven by two themes: supporting inclusive growth, and protecting and reforming public services. We will deliver inclusive growth by focusing on investment in innovation, infrastructure, education and skills, and by maintaining a competitive business environment. We will protect and reform public services by delivering on the Christie commission approach of service integration at local level, with a shift to prevention and improving outcomes for individuals.

The tax and spending plans that I am announcing today will equip the country for the future and will lay the foundations for the reforms that will define the next Parliament—reforms that will reshape our health and social care services, deliver a step change in educational attainment, provide greater focus in the innovation system, deliver a fairer system of local taxation and use new powers over tax and welfare in a way that supports our central purpose.

The current financial landscape presents us with a challenge and a choice. Scotland can accept the Tory cuts, or we can rise to the challenge and choose a Scottish alternative to austerity. We choose to rise to the challenge. We choose the Scottish alternative. We choose to put reform and growth at the heart of this budget.

We will build on the Scottish Government’s record of delivering for the people of this country. Our economy has now grown in each and every quarter of the last three years. Over the latest period, employment has risen and unemployment has fallen. We have invested heavily in infrastructure, modernising services and boosting construction. We have invested in Scotland’s national health service and staff numbers are at record levels. We have worked to mitigate the most damaging effects of the UK Government’s welfare cuts. We have delivered curriculum for excellence and a record number of higher and advanced higher passes were achieved in 2015. We have delivered 600 hours of free high-quality early learning and childcare. Our country is safer, with crime at a 41-year low. Further, we are on track to reach our 2020 interim climate change targets. That is a record that we are confident about taking to the people of this country.

This year’s programme for government reaffirmed our commitment to build on those strong foundations. However, our aims are made more difficult to achieve by the UK Government’s continued austerity agenda. By 2020, our budget will be 12.5 per cent lower in real terms than when the Conservatives came to power. That is the equivalent of one pound in every eight that we spend being cut by Westminster by 2020. Even our capital budget will still be more than £0.5 billion a year lower in real terms in 2020-21 than it was in 2010-11.

Although we all recognise that the public finances need to be sustainable, the scale of the cuts is unnecessary even to meet the chancellor’s own fiscal mandate. We laid out clear, detailed plans that reduced the deficit and the debt while allowing public investment in the economy. The Conservatives rejected those plans. Their ideological obsession with austerity is born out of choice rather than necessity. We will not make that same choice. We will not make the poorest in society bear the burden.

That vision—and our commitment to fairness—underpins our approach to taxation. We recognise that, to support the public services that we all rely on, we must ensure that our tax policies are built on the principle that the tax burden should be proportionate to the ability to pay.

Today’s draft budget marks the first time that a Scottish Government will propose a Scottish rate of income tax. From April 2016, the UK Government will reduce the block grant by £4.9 billion with the partial devolution of income tax powers and, at the same time, switch off 10 pence in every £1 of income tax in Scotland. I am now required to set a rate in Scotland.

The current power allows for a single rate to be set in Scotland and applied equally to all three income tax bands: the basic, higher and additional rates. That means that any rate set above 10 pence would increase the tax paid by all Scottish taxpayers. By its nature, exercising that power would have a disproportionate effect on the amount of tax paid by the taxpayers on the lowest incomes. Likewise, although any rate below 10 pence would cut the tax bill paid by all taxpayers, those on the highest incomes would see the greatest benefit.

The simple fact is that the tax power does not enable me to target help to people on the lowest incomes. However, I have the power to ensure that that tax does not inflict an additional burden on people on low incomes. Therefore, I confirm that there will be no change in income tax rates next year. I propose that the Scottish rate of income tax be set at 10 pence in the pound. The rate that people pay this year will be the same rate that they will pay next year.

I hope that, from 2017-18, the Parliament will have more flexibility in setting income tax rates. However, that will depend on reaching agreement on a new fiscal framework and final passage of the Scotland Bill. I confirm that, subject to achieving those outcomes, the Government will set out its longer-term intentions with regard to income tax ahead of the dissolution of Parliament at the end of March.

The setting of the Scottish rate marks the latest tax power to be transferred to Scotland. Since April this year, Revenue Scotland has been responsible for the administration and collection of Scottish landfill tax and land and buildings transaction tax, and we are on track to meet our forecast revenues for the year. Scottish landfill tax returns covering the first six months of this financial year amounted to more than £74 million against a forecast of £117 million for the year as a whole. Land and buildings transaction tax revenues exceeded £218 million for the first seven months of this financial year, which also compares favourably with our forecast revenues of £381 million for 2015-16.

In setting the rates for 2016-17, we have listened to the views of the property industry and other key stakeholders. I plan to maintain the existing rates and thresholds for land and buildings transaction tax for residential, non-residential and lease transactions, thereby ensuring that the system remains progressive. That means that more than 10,000 additional purchases will be taken out of tax compared to the UK-wide stamp duty system that LBTT replaced last year. That will result in a reduced tax charge for more than 36,000 house purchases at or below £330,000. Overall, 93 per cent of house buyers pay no tax or less tax than under stamp duty.

I am conscious of the issue of second homes. We need to ensure that the opportunities for first-time buyers to enter the market in Scotland are as strong as they possibly can be and we need to make certain that tax changes elsewhere in the United Kingdom do not make it harder for people to get on the property ladder. That is why I announce my intention to introduce a supplement to land and buildings transaction tax for people who purchase an additional home for £40,000 or more. Such properties will be subject to a supplement of 3 per cent of the total purchase price, payable in addition to the existing LBTT charge. We will shortly introduce legislation to seek the Parliament’s approval to introduce that supplement to ensure that it takes effect from 1 April 2016. In keeping with the Scottish approach to taxation, we will work closely with stakeholders in developing the specific policy and legislative proposals that will underpin that.

For the Scottish landfill tax, I plan to increase the lower rate of tax to £2.65 per tonne and the standard rate of tax to £84.40 per tonne with effect from 1 April 2016. Last year, I announced my intention to set the credit rate for the Scottish landfill communities fund 10 per cent higher than the UK equivalent for the first three years. However, the UK Government recently announced plans to drop its equivalent credit rate to 4.2 per cent. I believe that that is the wrong decision for our environment. Therefore, we will maintain the existing credit rate of 5.6 per cent, ensuring that landfill site operators contribute more to community and environmental projects than is the case elsewhere in the United Kingdom.

Early this week we received the report of the cross-party commission on local taxation. We welcome the fact that four of the five parties in the Parliament took part and reached agreement on a set of crucial principles: that local tax should be more progressive, broader and more empowering to local government. The Government will now consider the report carefully. In the new year, we will set out plans to reform the council tax in a way that will deliver sustainable council finances and greater fairness for local taxpayers.

I can also announce today that I intend to enter into a consultation with local government about the possible future assignation of a proportion of income tax receipts, thereby giving local authorities an incentive to boost economic growth in their areas.

Taken together, we expect to raise £671 million from the wholly devolved taxes in 2016-17. The forecasts have been assessed as reasonable by the independent Scottish Fiscal Commission, which will publish its own report setting out that assessment today. I am grateful to the commission for its work and for the scrutiny that it has applied over the past 12 months. As it should, the commission’s report challenges us to improve the robustness of our forecasting methodologies and the Government will do exactly that.

For the first time, we are publishing five-year forecasts for the devolved taxes. Those forecasts will aid transparency around the medium-term assessment of Scotland’s devolved public finances.

A strong and sustainable economy lies at the heart of a successful Scotland. Our economic strategy sets out our approach to deliver the dual and complementary objectives of tackling inequality and boosting competitiveness. Let me be clear: economic growth gives us the revenues needed to tackle inequality. We also believe that tackling economic inequality in turn boosts growth, removing a drag on the economy and boosting prosperity.

The draft budget provides the resources to deliver that by supporting innovation, investment, internationalisation and inclusive growth. We will work in partnership with employers, employees and trade unions, through the Scottish business pledge and the fair work convention, to deliver fair work and inclusive growth.

One of our most significant investments in the future of Scotland’s economy is the delivery of 600 hours of free high-quality early learning and childcare for all three and four-year-olds and vulnerable two-year-olds. We are going further. We are committed to the ambitious plan to almost double free nursery provision during the next parliamentary session to 1,140 hours.

In the programme for government, the First Minister set out the priority that we place on educational attainment. Just yesterday the Organisation for Economic Co-operation and Development report examining curriculum for excellence provided real encouragement that Scotland is on the right track in our schools. Just this morning, new figures were published showing record numbers of school leavers in positive destinations: work, education or training.

We have a good education system and we are committed to making it better. We must raise attainment for all and close the gap that has existed for decades between children in our most and least deprived areas. This budget makes provision for that commitment, with £33 million of investment in attainment programmes in 2016-17, which will support the four-year £100 million Scottish attainment challenge. We also intend to maintain teacher numbers this year. That reaffirms our commitment to improving the wider education system.

We will continue to invest in high-quality schools and community health facilities through our new hub programme of revenue-financed infrastructure investment.

In this difficult financial context I have protected college funding, delivering the budget stability that the further education system needs. We will deliver on our promise to expand the education maintenance allowance and modern apprenticeship programmes to help more young people fulfil their potential and enter positive, rewarding employment.

The Scottish Government has placed the principle of higher education based on the ability to learn, not the ability to pay, at the heart of what we believe. I confirm today that we will continue to fund our commitment to free tuition. We have backed up our commitment to keeping our universities world class by investing more than £4 billion in the higher education sector over the past four years. Now we will renew that commitment by investing a further £1 billion in 2016-17 to support the continued success of our world-class universities in delivering high-quality learning and research excellence.

However, we want to go further. We want a new relationship with higher education: a long-term partnership that is underpinned by on-going significant investment to support the delivery of key shared priorities. That is our ambition and we welcome the constructive approach that the universities have taken as we discuss with them how to make that a reality. Critical to that long-term approach is our investment in higher education research. The budget settlement will enable the core research budget for higher education to be protected as a key investment for the future of Scotland.

The Government has always prioritised investment in infrastructure to stimulate the economy. We are on track to build 30,000 affordable homes over the course of the current session of Parliament. We recognize the importance of extending our commitment on housing to create the quality accommodation that people require and to provide continued stimulus to the construction industry. We are committed to building 50,000 new affordable homes during the next session of Parliament, and I am delighted to announce that, as the first step towards that, we will increase the budget for affordable housing next year by £90 million, enabling us to invest around £690 million in housing supply.

On fuel poverty, we will continue to invest to help people have warm, affordable homes, building on our achievements to date through our home energy efficiency programme for Scotland. In total, we will make available more than £100 million to tackle fuel poverty and climate change and to help to improve the condition of Scotland’s homes. The development of energy efficiency as a national infrastructure priority will create transformational change in improving the energy efficiency and heating of homes, businesses and public buildings in Scotland, reducing fuel bills and greenhouse gas emissions.

Our investment in digital connectivity is central to our ambition of harnessing the opportunities for growth and improving public services across all aspects of Scottish life. We will invest £130 million in Scotland’s digital infrastructure next year to help to meet our 2017 target that 95 per cent of premises in Scotland will have access to next-generation broadband, alongside our investment through the emergency services project, which will enhance mobile coverage into the bargain.

We will invest almost £1 billion in transport projects. On rail, that will include the completion of the electrification of the Edinburgh to Glasgow rail line. On our roads, we are making progress on dualling the A9, including the construction of the first section between Kincraig and Dalraddy.

I can announce today that new projects are now also able to proceed. I am authorising the commencement of works in 2016-17 on the Dalry bypass in Ayrshire. In light of the excellent progress on the Aberdeen western peripheral route, I confirm that work will begin in 2016-17 on the improvements to the Haudagain roundabout in the city of Aberdeen. In addition, the Forth replacement crossing is on track to be completed by the end of 2016.

Alongside those major new projects, we will invest in the maintenance and operation of Scotland’s trunk roads and motorways. Significant investment will also be made to support ferry services, with two new 100m vessels earmarked for the Skye and Western Isles connection and the Ardrossan to Arran route. We will continue to support Highlands and islands air travel through the air discount scheme, which offers a 50 per cent discount on core air fares.

We are committed to a significant programme of investment in Scotland’s water and sewerage infrastructure for 2015 to 2021, which is worth £3.5 billion and includes £250 million to upgrade Glasgow’s waste-water infrastructure to improve the environment of the River Clyde and to tackle flooding.

On flooding specifically, there have been a number of incidents this year that have caused enormous distress to members of the public. I can announce that in this financial year we will provide £4 million to the local authority areas that have been most affected by the recent flooding in Hawick, Newcastleton, Dumfries, Alyth and other localities to help with recovery and to help households and businesses to access the support that they require.

Scotland’s businesses are the key to creating jobs and boosting prosperity. The draft budget therefore maintains the small business bonus scheme. Nearly 100,000 firms across Scotland will benefit from reduced or zero business rates. The draft budget again matches the English poundage rate.

In looking forward, I am mindful of the views and representations of many in the business community about the future of business rates in Scotland. I share with Scottish business a recognition that our system of business rates must minimise barriers to investment, be responsive to economic conditions and support long-term economic growth and investment. I can therefore announce that we will launch a review of the non-domestic rates system in Scotland.

Over the past two years, inflation levels, coupled with below-inflation increases in poundage, have generated lower non-domestic rates income than anticipated. Income projections have not kept pace with the benefits to business from the small business bonus scheme. That is why I am today proposing to increase the large business supplement on non-domestic rates and make changes to some other reliefs. Taken together, that will raise around £130 million to fund investment in the economy.

The draft budget also recognises the importance of the third sector and the key role that it plays in supporting communities and social enterprise. I have protected the core budget for the third sector.

Our economy is now in a sustained period of growth and employment is above pre-recession levels. The future health of our economy, however, lies in improving our productivity through greater innovation. We are committing funding of around £345 million to support research and innovation through our enterprise agencies and the Scottish Further and Higher Education Funding Council. The Scottish funding council has committed £124 million of funding over six years to its network of innovation centres, but we believe that our approach to innovation needs greater focus to achieve greater economic impact. The Scottish Government therefore intends to work with our partners, including the enterprise agencies, the Scottish funding council and the universities, to align our approach to innovation, to pool funding and to simplify the innovation landscape. That ambitious reform—the next on our agenda of reform—will help us to create an innovation environment that drives the development of new products, processes and services through improved collaboration.

Those measures capture the agenda of the Government in working to create inclusive growth, which is one of the two key elements of the budget today. The other element is the reform of our public services.

Our public services play a vital role in shaping both our economy and our society by making a major contribution to the wellbeing of our communities, promoting prosperity and enabling people to participate more fully in society.

Having removed the ring fencing of local authority budgets in our first term of office, we have encouraged a greater degree of joint working at local level between public bodies, with a strong focus on meeting the needs of individual citizens. The Christie commission in 2011 reinforced that approach, with its emphasis on integration of public services and a decisive shift towards preventative spending. Since then, we have reformed the delivery of college education and the police and fire services with greater efficiency as a result.

The budget underscores our commitment to continue on that journey of reform. We will take steps to extend digital applications in public services, increase the use of shared services, secure further value from procurement, make more effective use of our public assets and reduce overlap between public services.

Our police service plays a critical role in protecting our communities. In the past few years, our police service has undergone difficult but necessary reform. It is now time to build on that. I am pleased to confirm today that we will provide real-terms protection to the front-line policing resource budget next year and, if we are re-elected in May, for every year of the next Parliament, which is a boost of £100 million over that period.

When the Parliament passed the legislation for a single police force, it agreed that this current financial year would effectively mark the end of the time-limited police reform budget. However, given the challenges facing our police, particularly those arising from the current security situation, I am announcing further support today. Instead of removing the reform budget as Parliament intended, in order to consolidate the reforms and to support the work of the police, I am committing a further £55 million next year to the important task of community safety.

In all of those reforms, our objective is to provide coherent public services underpinned by an approach that is based on partnership. From our earliest reform of removing ring fencing, the Government has invested significant importance in our partnership with local government.

In the period 2012 to 2016, local government funding settlements have been maintained on a like-for-like basis, with extra resources allocated to deal with additional responsibilities. Compare that with local government in England, which faced a real-terms cut in funding of 27.4 per cent over 2011-15 and further reductions this financial year, and faces further reductions in the next financial year.

Local government has been a founding partner with the Government in the reform of health and social care services. Today, the Government is radically reforming the way that social care is paid for. The Government intends to allocate £250 million of new funding support from the health service into social care in 2016-17. That fundamental realignment of resources will build the capacity of community-based services and enact the most significant reform in health and care since the creation of the national health service in Scotland in 1948. It will mean that fewer people need to go to hospital, but it will also ensure that where hospital is necessary, people will return home more quickly. It addresses the underlying reality of social care and health integration. The old boundary between NHS and local government spending—the boundary that has stymied so many attempts to improve care over decades—ceases to exist. [Applause.]

Although this budget delivers a strong but challenging financial settlement for local government, we must recognise that the substantial investment and reform in social care will support the delivery of that essential service. We will now engage in consultation with local government on the terms and implementation of the local government finance settlement in advance of stage 3 consideration in February. The key to those discussions is the focus on reform. Local government is an essential partner in ensuring that the reform agenda leads to the creation of sustainable public services. It is our partner and we will agree with it how best to deliver the realignment of resources.

That brings me to the overall health budget. This Government is absolutely committed to a well-funded national health service. I announce today that I am allocating more than £500 million to NHS budgets, which will result in total planned spending of nearly £13 billion next year—an increase of 6.5 per cent on comparable figures for 2015-16.

Let me make this clear. The nature and scale of the challenges that our NHS faces—in particular the challenge of an ageing population—mean that additional money alone will not equip it properly for the future. To be blunt, if all we do is fund our NHS to deliver more of the same, it will not cope with the pressures that it faces. To really protect our NHS, we need to do more than just give it extra money. We need to use that money to deliver fundamental reform and change the way that our NHS delivers care. That is why the reforms that the additional investment will support are just as important as the scale of it—perhaps more so.

In addition to the fundamental realignment of social care, the new investment will support two further reforms that will reshape our NHS and equip it for the future. First, we intend to transform primary care with an extra £45 million next year to fund improvements and develop new models of care, with multidisciplinary teams working together to meet the needs of their communities. Secondly, we will build additional elective capacity to meet the growing needs of an older population. We will invest £200 million over the next five years in six new treatment centres, which will equip the NHS to carry out increased numbers of hip and knee replacements and cataract operations in a way that does not add pressure to our emergency hospitals.

Investment for reform is how we protect our NHS for the long term and this is a budget that shows, yet again, that our precious NHS is safe in the hands of this Government now and in the future. [Applause.] We are committed to real-terms increases in the NHS budget not just in 2016-17 but for the duration of the next parliamentary session, should we be re-elected in May.

As the UK spending review was delivered much later than normal, forcing the Scottish Parliament to implement a truncated process for review and scrutiny, it is not practical to undertake a full multiyear spending review in the time available. Furthermore, Scottish ministers continue to discuss, as part of the Scotland Bill, the fiscal framework that will underpin future Scottish block grants from the UK. Any agreement will have a material impact on the powers and resources that are available to Scotland.

It is, however, possible to set out our vision and key priorities for future years. We will continue to reject austerity, we will continue to prioritise investment in the public services that people value the most, and we will undertake ambitious reforms to ensure that those services remain sustainable and deliver improved outcomes.

We will invest in our schools, to ensure that every child in Scotland has the opportunity to fulfil their potential. We will support the Scottish attainment challenge and implement the recommendations of the Commission for Developing Scotland’s Young Workforce.

We will create a stronger, more inclusive economy, by investing in innovation, internationalisation and our infrastructure. We will support job creation, encourage employers to move to the living wage and improve the productivity of Scotland’s workforce.

We will tackle inequalities and make Scotland a fairer, more equal country. That will include using our new welfare powers to create a more coherent and responsive package of intervention.

What we will not do is follow in the UK Government’s footsteps and implement austerity and target the poorest and most vulnerable people in our society.

That brings me to the final theme of this budget statement. The UK Government’s welfare reform agenda is presenting real difficulties for hard-pressed families in Scotland and is impacting on some of the most vulnerable people in our communities.

In contrast, the Scottish Government will continue to do whatever it can to protect family incomes. I confirm today that we maintain our commitment to support people in Scotland who are affected by the UK Government’s welfare cuts, through measures that include the allocation of £38 million to the Scottish welfare fund, up to £343 million for the council tax reduction scheme and £35 million to ensure that nobody pays the bedroom tax.

We will continue to help family budgets, through initiatives such as free prescriptions, regular eye checks and free concessionary travel for older, disabled and young people, and we will ensure that free school meals continue for children in primary 1 to P3.

Our public sector pay policy for 2016-17 targets support for people on low incomes, requiring all employers to pay the Scottish living wage, raising to £22,000 the low-pay threshold beneath which employees receive a minimum pay increase of more than 1 per cent, and maintaining the Government’s no compulsory redundancy policy.

Free personal and nursing care, which is a key achievement of the Scottish Parliament, will also be maintained, as a vital part of the reformed community-based health and social care service.

I turn to the council tax. The Commission on Local Tax Reform said in its report this week that the current council tax system is unfair. The commission is right. It also said that many people pay too much. Again, it is right.

This Government is committed to protecting household budgets. In this budget I have already frozen income tax rates. In 2011, we promised to freeze the council tax in every budget of this parliamentary session. I confirm today that we will keep that promise and freeze the council tax next year. That means that council tax will have been frozen for nine consecutive years, saving the average household £1,500 in total on a band D bill.

That means that there is a dual tax freeze, on income tax and on the council tax, which will help families week in and week out, the length and breadth of Scotland.

In this draft budget, the Scottish Government is acting to promote our economy, deliver opportunities for all and protect and reform our public services for the future. In challenging times, it is a budget for growth and reform. It is a budget for Scotland and I commend it to Parliament. [Applause.]

Photo of Tricia Marwick Tricia Marwick None

Order. The Deputy First Minister will now take questions on the issues raised in his statement. I intend to allow around 60 minutes for questions, after which we will move on to the next item of business.

Photo of Jackie Baillie Jackie Baillie Labour

I thank the finance secretary for advance sight of his statement—well, at least part of it. So much is hidden, and I am not just talking about the redacted statement. I express my disappointment that—certainly in my memory—this is the first time in the history of this Parliament that budget announcements have been redacted in such a way. That is genuinely disappointing.

This is a historic budget. It is probably the most significant budget since the Scottish Parliament opened in 1999. Major new tax and welfare powers are coming to Scotland, and the finance secretary could have used today to outline detailed plans to end austerity and close the gap between the richest and the rest in Scotland.

The finance secretary claims to have delivered on that in his statement, but he is not rejecting austerity—he is simply managing it. Scottish Labour is calling for a genuine anti-austerity budget and a long-term plan for Scotland. [Interruption.]

Photo of Tricia Marwick Tricia Marwick None

Order. Let us hear Ms Baillie.

Photo of Jackie Baillie Jackie Baillie Labour

Instead, what we have from the SNP is a budget for an election only. It is short term, with all the cuts hidden away, but we know that the cuts are still to come. The finance minister should today have laid out plans across his whole budget for at least three years. We should have seen a Scottish spending review. He has selected the good news to tell us but hidden away the bad. Austerity hidden is not austerity avoided, and people deserve to know the truth.

The SNP’s credibility on the economy is being questioned by experts. Growth is down. We are lagging behind the rest of the United Kingdom. Oil prices are at their lowest level for decades, and the employment statistics published this morning are down and still below pre-recession levels. After nine years, the finance secretary has only just discovered that he can do something about productivity, and I say to him as gently as I can that a freeze is not progressive. A freeze actually does not help the poorest people against austerity. [Interruption.]

Photo of Jackie Baillie Jackie Baillie Labour

The Scottish Government has given us recycled announcements. It has told us which budgets it is increasing but not which budgets are being cut. The finance secretary says that he is protecting schools, but the headline education budget is cut. He says that he is increasing health and in particular social care, but at the same time he is slashing the budgets of councils that deliver for local people.

The experts at IPPR Scotland have said that the cuts are most significant in 2017-18 and 2018-19. Those are the hidden cuts or hidden tax rises that the SNP is not telling us about before May. Here we are, with the most significant budget in Scotland’s history being delivered by a party that promised to stand up for Scotland against Tory austerity. [Interruption.]

Photo of Jackie Baillie Jackie Baillie Labour

Does it deliver fairer taxes? No. Does it deliver a longer term plan for Scotland? No. Does it deliver an anti-austerity alternative? The answer is no.

The SNP has been in power for nine years and it has a majority in this Parliament and more powers than ever before, but is it not the case that, in substantial areas of the budget, John Swinney is simply copying George Osborne? That is not anti-austerity. [Interruption.]

Photo of Jackie Baillie Jackie Baillie Labour

Surely Scotland deserves better than that.

Photo of John Swinney John Swinney Scottish National Party

The first point that Jackie Baillie raised highlights the atrocious lack of communication within the Labour Party, because this is not the first time that a financial statement has been redacted. It was redacted last year by agreement among the business managers of Parliament so that I was able to announce straight to the Parliament the tax rates that were being put forward.

I cannot actually remember who Labour’s finance spokesperson was last year—I have gone through so many over the years—but if Jackie Baillie had talked to whoever it was last year, she would have found out that the information was redacted last year. That is just a basic illustration of how lacking in detail Jackie Baillie is on the handling of these issues.

In the several minutes of her contribution to Parliament, there was not a single alternative proposition from Jackie Baillie. Of course, that is a character trait of Jackie Baillie. All that she and the Labour Party deliver is abuse and hectoring of other people. They do not produce an alternative to show what they would do differently.

The budget process is Jackie Baillie’s opportunity to redeem herself. Now that I have published hundreds of pages of financial information on the choices that we have made, she can look through that and decide what she would do differently, what taxes she would put up, what budgets she would change and what other alterations she would make to my financial plans.

I have submitted a budget that protects the incomes of the lowest-income households. That is the most effective way that we can use the powers available to us today to secure the best interests of the people who we are elected to serve in this Parliament.

Photo of Murdo Fraser Murdo Fraser Conservative

I thank the finance secretary for an advance copy of his statement. This is a historic budget for the Scottish Government. For the first time since devolution, the Scottish Government’s finance secretary is not simply concerned with the distribution of the resources available to him; for the first time, he has a substantial power to vary the total resource in his budget by amending the rate of income tax.

The finance secretary has chosen to set the Scottish rate of income tax at the same rate payable elsewhere in the United Kingdom. We applaud that decision. We do not believe that hard-pressed families in Scotland should pay higher taxes than those elsewhere in the United Kingdom. [Interruption.]

Photo of Tricia Marwick Tricia Marwick None

Order. Let us hear Mr Fraser.

Photo of Murdo Fraser Murdo Fraser Conservative

It cannot be forgotten that the finance secretary had a choice in the matter, and he chose not to increase the resource available to him by levying additional taxes.

For all that we have heard about austerity and swingeing cuts, we must remember that the Scottish Government’s total budget for the coming year is, in cash terms, nearly £400 million higher than in the current year. In real terms, there is a small decrease, but that decrease is substantially less than the finance secretary’s most recent underspend. In that context, any talk of swingeing cuts simply looks ridiculous.

If it is still the position of SNP members that the Scottish budget is too low, then the solution is in their own hands. The finance secretary could have chosen to raise the rate of income tax, and he decided not to do so. For years he has portrayed himself as a prisoner of Westminster austerity, but now that he has been given the key to door of his cell, he has chosen not to use it. I trust that we will hear no more from SNP members about austerity and Westminster cuts, when they have made the choice not to increase the size of the budget available. They had their chance, and they flunked it.

The Scottish Conservatives will carefully scrutinise the detail of the budget that has been presented and will, as ever, suggest constructive changes when we have done so. For the moment, we welcome the extra cash for housing, and the promised review of non-domestic rates—a straight lift from the Conservative general election manifesto. Where the Conservatives lead it seems that the SNP follow. However, it is disappointing that there is no restoration of the SNP’s swingeing cuts to college budgets.

I am disappointed that the finance secretary has not introduced greater changes to land and buildings transactions tax, given that the existing scheme is having a detrimental impact on the market, particularly for larger houses in many parts of Scotland, and we are looking at a significant shortfall in the sums previously predicted to be raised from residential property. I ask that the cabinet secretary looks again at that, although I welcome his following George Osborne’s lead in increasing by 3 per cent the supplement for second homes. That shows, once again, that where the Conservatives lead the SNP follow.

Photo of John Swinney John Swinney Scottish National Party

I know that it is early days in the scrutiny of the budget, but there was a fundamental problem and flaw in Mr Fraser deploying the argument that I have not taken any steps to increase the amount of money available to me—I have.

I have taken the step to increase our expected take through the levy on business rates by £130 million. That was not sneaked in on page 150 of the document—I expressed those words directly to Parliament. All that preamble of total inflated nonsense from Mr Fraser is punctured by that one little fact that I have used the opportunity to increase the money available to me. Therefore, we can ignore the first part of Mr Fraser’s rant.

We will not ignore the last part of Mr Fraser’s rant; rather, we will dismantle it. Mr Fraser might have wanted me to use the Scottish rate of income tax to increase the level of tax that is levied on individuals.

Photo of John Swinney John Swinney Scottish National Party

Mr Fraser argued that I should have taken that step, and I can see why that would have suited him, but if I had done that, it would have led to an increase of 2.6 per cent in the income tax of high earners, but it would have increased the tax take from low-income households by 5 per cent. In other words, Mr Fraser was protecting the rich and punishing the poor, just as the Tories always do.

As for land and buildings transaction tax, when I stood here last year I was lectured ad infinitum by Gavin Brown about the fact that we had not raised the taxes that we said that we would raise. I have just put on record the performance in the first six and seven months of this financial year, which demonstrates that the tax take is on course to be delivered.

As for the suggestion that we have distorted the market, I will share with Parliament a quote by Christine Campbell, who is the managing director in Scotland of Your Move. She said that LBTT has given

“middle and ... lower tiers of the market ... a new lease of life ... This rapid ... growth in Scotland is grounded in the new LBTT rates, which are stimulating demand at the bottom and middle rungs of the property ladder.”

That is what I was determined to do. Here we again see the fault line between us and the Tories. I am pleased that the bottom and the middle of the market are doing so well; the Tories are only concerned about the top.

I look forward to the detailed scrutiny of the budget, because this Government has put forward a budget that is on the side of fairness in our society and improving opportunities in the economy, and we will defend that to Parliament and the people of Scotland.

Photo of Mark McDonald Mark McDonald Scottish National Party

As the MSP for the Haudagain roundabout, I welcome the Deputy First Minister’s announcement that works will begin in 2016-17.

The Deputy First Minister mentioned the requirement to protect public services through reform. How will the Government continue to build on the Christie commission agenda that has been pursued via reforms to police, fire, health and social care services, which were introduced by the Scottish Government and supported by the Labour Party?

Photo of John Swinney John Swinney Scottish National Party

I am pleased that we have managed to signal the start of the work at the Haudagain roundabout. I can never hear mention of the Haudagain roundabout without hearing the voice of our dear late colleague Brian Adam, who championed that cause.

As regards Mr McDonald’s substantive question on public service reform, the Christie commission provided Parliament with an excellent agenda, which was structured around the integration of services at local level, the breaking down of boundaries in public services and ensuring that we had a focus on the needs of individuals. That approach is at the heart of the reform agenda that we have progressed on police and fire services and health and social care, and I will be delighted to see what progress can be made in taking forward such fundamental reform to benefit individuals in Scotland.

Photo of Willie Rennie Willie Rennie Liberal Democrat

I thank the Deputy First Minister for advance sight of his statement. I am sure that there are many things in the budget that Liberal Democrats can support. As always, we will make a very positive and constructive case for investment in key areas such as mental health, childcare, and infrastructure for the north-east and the Highlands and Islands. We will continue to be constructive.

However, it is quite clear that, since the last time the Deputy First Minister delivered his budget, employment in Scotland has gone down—fewer people are now in work. That clearly shows that we cannot trust the SNP on the economy. I do not think that we can rely on the SNP on mental health, either, because it has cut the share of the NHS budget that is spent on mental health. On childcare, the SNP’s record is pretty woeful—it cannot even deliver on the commitments on childcare that it made in previous budgets—and the police reforms have not saved the money that they were intended to save, so John Swinney is having to patch up the police budget to cover up the mistakes of the past.

I listened very carefully to what the Deputy First Minister said about increasing taxes. He made it quite clear that business rates have not raised the income that he expected would be raised; as a result, all that he is doing is plugging the hole that was already there. The Deputy First Minister has spent his entire political life campaigning for more tax powers, but what does he do when he gets them? Nothing—he makes no change. He leaves the rate exactly the same as in England. How can he tell the chamber that he is rejecting austerity when he is not raising a single penny more, even though he has the tax powers to do something about it?

Photo of John Swinney John Swinney Scottish National Party

Let me work my way through the different issues that Willie Rennie has raised. First of all, on mental health, there is an additional £50 million in the budget for mental health, bringing the total to £150 million. I hope that Mr Rennie will welcome that.

On the point about employment, perhaps Mr Rennie was not looking at this morning’s data, but employment in Scotland is at 74.3 per cent, or 10,000 higher than a year ago. That is higher than the employment rate in the rest of the United Kingdom, and I would have thought that Mr Rennie would welcome that.

Moreover, I point out that, despite all that Mr Rennie has said about the police and his demands that we take action, we have protected the police budget with a real-terms increase, and I have put in resources to ensure that the police can deal with some of the challenges that are facing them. Is Mr Rennie so grudging that he cannot applaud the decisions that the Government has taken? We could have spent the money on something else, and Mr Rennie would have been here, demanding more money for the police. His approach, I think, lacks a bit of credibility.

Finally, I took care and a substantial amount of time in my statement to explain the rationale behind the decision on tax. The SRIT powers are so constrained that we cannot increase tax on people earning high levels of income without increasing it for people on low incomes. I have sat in this Parliament for years, being lectured by the Liberal Democrats on the importance of protecting people on low incomes. I have just done that, and I had thought that in doing so I might have got a bit of encouragement from Mr Rennie.

I have said to Parliament that, subject to our getting a satisfactory agreement on the fiscal framework that will give us greater clarity on the size of the budget in the years to come—after all, a material point that we all have to wrestle with is that the fiscal framework could vary the amount of money that we have available at our hand and under our control in this Parliament—I will come back to Parliament before the end of the parliamentary session and set out our longer-term intentions on the exercise of the tax powers. We will do all those things, and I hope that, if Mr Rennie is feeling more charitable when the day comes, he will give them a better welcome.

Photo of Tricia Marwick Tricia Marwick None

As members will imagine, a large number of members wish to ask questions. I therefore ask for brief questions and brief answers so that we can get through them.

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

I warmly welcome the cabinet secretary’s very positive statement, particularly the excellent news for my constituents of a new Ardrossan to Brodick ferry and of work on the Dalry bypass and Den realignment, construction of which was held up by a public local inquiry, beginning on-site in the next financial year. I understand that the road orders were laid on 2 December and come into force today, but numerous constituents have asked when the work on the bypass will begin on-site. Can the cabinet secretary please advise the chamber on that?

Photo of John Swinney John Swinney Scottish National Party

I cannot give Mr Gibson a definitive date for the commencement of that work, but it will be during the 2016-17 financial year. As he has said, all the authorisation processes have been completed; we will be able to start construction during 2016-17, and the resources are in the budget to enable that to happen.

Photo of Iain Gray Iain Gray Labour

The Deputy First Minister talked about investment in education, but we know that since 2011 this Government has cut education spending even as it was increased elsewhere in the UK. In this budget, colleges and universities again face real-terms cuts, and local authorities responsible for schools face significant reductions in budgets. Has the Deputy First Minister not failed yet again to protect education?

Photo of John Swinney John Swinney Scottish National Party

I thought that Iain Gray would have welcomed the fact that the Government has put in place protection for the colleges budget, that we have protected the higher education budget, and that we have put extra resources into the attainment activities and ensuring that we work relentlessly to close the gap in attainment between children from more deprived areas and those from less deprived areas.

I simply put the challenge back to Iain Gray that I put to Jackie Baillie. Iain Gray has some experience of the question, of course—he knows the way it works. Choices have to be made, and I have set out a balanced package that enables us to invest in key areas of activity, including educational services in Scotland. If Iain Gray wants to recommend and argue for an alternative to be taken, the opportunity is open to him to do exactly that.

Photo of Clare Adamson Clare Adamson Scottish National Party

I warmly welcome the increase in the budget for affordable homes by £90 million to £690 million. How many of the 50,000 new affordable homes that have been promised in the next session will be for social rent?

Photo of John Swinney John Swinney Scottish National Party

The estimates are still estimates, but we expect the figure to be around 35,000 houses for social rent. That will be a 75 per cent increase on our previous target in the previous programme.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

The Deputy First Minister has rightly made the protection of health spending in Scotland a key priority of his Government, but can he please put that into context for members, given the scale of real-terms reductions to the Scottish budget that the UK Government has imposed? What has been the real-terms increase in health spending under the SNP Government?

Photo of John Swinney John Swinney Scottish National Party

The budget for the health service has increased in real terms throughout the SNP Government’s period in office since 2011. We have committed ourselves in this settlement to do exactly that, and we have committed ourselves to continue that performance if we are re-elected in May. It is important that the health service is able to rely on a strong financial settlement, but equally—I laboured this point in my statement—that it is able to undertake a programme of reform to ensure that it has the capacity and the service design to meet the needs of a changing population and the changing requirements of the people of our country.

Photo of Gavin Brown Gavin Brown Conservative

A few moments ago, the cabinet secretary said that he is protecting the higher education budget, but according to page 55 of the draft budget, it is falling by £35 million in cash terms for resource. Can he explain what he means by protecting the higher education budget? He also said that he is protecting policing with a boost of over £100 million, but the Scottish Police Authority budget appears to have a real-terms cut of £12 million. Can he explain how there is a boost of £100 million?

Photo of John Swinney John Swinney Scottish National Party

There are two points. First, I said in my statement that we had protected the higher education research budget, which is exactly what he have done. [Interruption.]

Photo of John Swinney John Swinney Scottish National Party

We will check the record. If I did not use those precise words and have given an incorrect answer, I apologise. In my statement, I said that we had protected the higher education research budget. I will check the record and see whether it is correct, but that is exactly the point that I was making.

Secondly, our commitment was to protect the policing resource budget in real terms. If Mr Brown looks at the document, he will see that the Scottish Police Authority’s resource budget has increased in real terms by 1.7 per cent. In addition to that, the Government has put £55 million into policing this year that the police service could not reasonably have expected, because the financial memorandum that I am sure Mr Brown must have scrutinised in the Finance Committee and voted on in the Parliament envisaged the removal of that reform budget by the next financial year. We have given a very strong financial settlement to the police service by increasing the resource budget in real terms and ensuring the extra injection of £55 million, which the police service could not have expected to receive.

Photo of Kenneth Macintosh Kenneth Macintosh Labour

A few moments ago, the cabinet secretary was rather boastful about the clarity of his statement on business rates, but I noticed that he studiously avoided giving a figure for the local government settlement. Instead, he has relied on euphemistic terms such as “strong” and “challenging”. The reason for that is clear: those who rely on the public services that are delivered by our local authority colleagues are clearly the biggest losers. The cabinet secretary knows that those services are relied on by some of

“the poorest and most vulnerable people in our society”,

to use his own words. We are talking about day centres for people with learning difficulties, care homes for the elderly, library services and learning support for our children.

A cursory glance at the figures suggests that there is a 6.1 per cent real-terms cut for local authorities. Does the cabinet secretary agree that that is the figure? If so, why is he insisting on imposing grossly disproportionate cuts on our poorest communities?

Photo of John Swinney John Swinney Scottish National Party

For him to understand the figures, I will go through some of the detail with Mr Macintosh. Local government resource support from the Government will reduce by £350 million. The capital budget will be reduced by £150 million, but that is a temporary factor. Local government has a current guarantee that it will have access to 26 per cent of the capital resources that are available to the Scottish Government in capital departmental expenditure limit allocations from the UK Government. I have told local government that I will not only assure that to 2018-19, which is what we previously agreed, but will extend it for another year to 2019-20. Although the budget is lower this year, it will be replaced in later years as part of the capital programme. The 2015-16 capital budget for local government is inflated because of exactly the same reprofiling of budgets that took place, so the 2015-16 budget is much higher than the trend budget would be. Some of that accounts for the difference in the figures that we have in front of us.

The key point, in answering Mr Macintosh’s question, is around reform of public services. With the financial arrangements that we have available to us, we have to be able to secure greater impact from the resources that are available to us. That is why we are reforming health and social care to improve outcomes for individuals, to give people access to integrated services and to ensure that the resources that are available can have a greater impact and deliver a much greater range of services. That is why the Government has put in £250 million of new resources through the health service to create stronger health and social care budgets, which we will discuss with local authorities, and which is in addition to the local government settlement as set out in the budget document.

Of course, finally, I say that the opportunity is available to Mr Macintosh to say how things should be different. Again, Mr Macintosh has been one of my Labour counterparts, so he knows the form here; he can come forward with alternatives to the choices that we have made. However, at the heart of our approach to local government is our working in partnership with local government to deliver reform and integrated health and social care services.

Photo of John Mason John Mason Scottish National Party

The Finance Committee has heard a number of witnesses on the Scottish rate of income tax. I am sure that the cabinet secretary is happy to know that the Scottish Trades Union Congress agrees with him that the 10p rate should stay the same. However, we have heard other witnesses say that the SRIT would be a bit progressive if we were to increase that. How does the cabinet secretary respond to that?

Photo of John Swinney John Swinney Scottish National Party

The analysis that I have available to me—which I shared with Parliament just a moment or two ago in my answer to Murdo Fraser—is that an increase in the Scottish rate of income tax would be a greater burden on, and relate to a greater proportion of the tax payment of, individuals on low incomes than those on higher incomes. To me, that rather makes the case that the current Scottish rate of income tax power is a blunt instrument for us to deploy and that what we should do is provide clarity as I have done today and then consider, once we see the financial arrangements for the wider tax powers that will come as a consequence of the Scotland Bill and the fiscal framework, how we can most effectively exercise those to ensure that the Government’s principal position of supporting progressive taxation can be deployed as effectively as possible.

Photo of Christina McKelvie Christina McKelvie Scottish National Party

We recently had a debate in the chamber on the 16 days of activism campaign that marked international day for the elimination of violence against women. We have seen record funding from the Scottish Government for tackling violence against women and girls, and a clear commitment from the Government that it will do as much as it can on that. Can the Deputy First Minister give us some insight into what funding will be available to continue that very valuable work?

Photo of John Swinney John Swinney Scottish National Party

The Government has maintained spend on the equalities budget at £20.3 million—the same as in 2015-16. That budget will support front-line provision, particularly in relation to violence against women and girls.

In the current year, the justice portfolio will make funding available, in addition to core baselines, towards the First Minister’s commitment to provide £20 million over the period 2015-2018 to tackle violence against women. It is a central priority of the Government’s equalities agenda.

Photo of Paul Martin Paul Martin Labour

The cabinet secretary advises us that he wants to create a fair and equal society in Scotland. I ask him to start in Glasgow, where more than 197,000 people live in poverty. Despite that, it is estimated that Glasgow City Council will see a funding cut of more than £120 million—short-changed once again. Does the cabinet secretary agree that we should get a fair, proportionate and protected budget in Glasgow in order really to tackle poverty and create in Glasgow the fair and equal society to which we aspire?

Photo of John Swinney John Swinney Scottish National Party

I have taken the decision to set the funding floor for the local government settlement such that it will protect Glasgow City Council from reductions in its budget that would have occurred had I not intervened to secure that support for the city of Glasgow. The First Minister and I have been determined to ensure that the work that can be undertaken in Glasgow to tackle the persistent inequalities that have existed is taken forward by the city council and other public authorities. That will be made a great deal more practicable and possible by the intervention that I have made on the establishment of the funding floor for local government.

Photo of Roderick Campbell Roderick Campbell Scottish National Party

I welcome the additional £50 million for mental health spending over the next five years. Will the cabinet secretary tell Parliament a bit more about what that is targeted to achieve?

Photo of John Swinney John Swinney Scottish National Party

The primary focus of that activity will be on supporting a variety of different interventions, on child and adolescent mental health services and on improvements in primary care, with a particular focus on removing or reducing the waiting times that individuals experience. We all recognise that that has been a particular challenge and a difficulty for many individuals in different parts of the country.

Photo of Patrick Harvie Patrick Harvie Green

The Deputy First Minister flags up a review of non-domestic rates as well as the idea of assigning a share of income tax to local government just days after the Commission on Local Tax Reform has reported. That seems to be not in keeping with the cross-party approach to local government finance.

I note that the small increase in the energy efficiency budget is better than a small decrease would have been, but the cabinet secretary described it as a “transformational” approach. Does he not acknowledge that, in the wake of the Paris agreement, some of us were expecting something rather more dramatic than that?

Photo of John Swinney John Swinney Scottish National Party

Throughout the budget, there is consistent and strong support for a range of measures to deliver on our climate change agenda and to tackle carbon emissions. That approach runs through a range of policy priorities and choices that have been made.

On cross-party agreement on taxation, we value very much the work that is being undertaken by the commission. Marco Biagi, the Minister for Local Government and Community Empowerment, and Councillor David O’Neill, who were the joint chairs of the commission, are to be applauded for producing a thoughtful and comprehensive piece of work that informs the debate and the choices that must be made. Ultimately, it is up to political parties to look at the material in that report and to consider what propositions they wish to put to the people, which is what I am signalling that the Scottish Government will do.

Patrick Harvie will find that there is willingness on the part of the Government to engage constructively—as was evidenced during the deliberations of the Commission on Local Tax Reform—to design a system that is fairer and related to the ability to pay. That is exactly what the Government will do in the analysis that we are undertaking of that work.

Photo of Kevin Stewart Kevin Stewart Scottish National Party

Many of our constituents are suffering because of swingeing Tory social security cuts. Can the Deputy First Minister assure me that his budget will continue to protect people from the worst excesses of the Tory Government’s social security cuts and austerity agenda through welfare mitigation measures?

Photo of John Swinney John Swinney Scottish National Party

I set out in my statement a number of areas in which we are essentially operating in welfare mitigation territory, whether it be the council tax reduction scheme, the bedroom tax or the establishment of the Scottish welfare fund. I set out to Parliament a challenging financial settlement because of the pressures with which we are wrestling and the reductions in our budget. We have made our choices to protect individuals who are affected by the welfare cuts to the best of our ability, and will continue to do so. A range of further powers will come to the Scottish Government in due course, and we will find the most effective and appropriate ways to take decisions to exercise those powers to support vulnerable individuals.

Photo of Alex Johnstone Alex Johnstone Conservative

In his statement, the cabinet secretary said that he will increase

“the budget for affordable housing next year by £90 million, enabling us to invest around £690 million in housing supply.”

On page 85 of the budget document, the figure projected for the next year is £695.4 million, which is just £1 million more than the budget figure for last year. Has the cabinet secretary got his sums wrong or is a £90 million skelp coming to some budget sub-heading?

Photo of John Swinney John Swinney Scottish National Party

Other priorities in the housing budget were prevalent in 2015-16. For 2016-17, we have chosen to allocate the additional £90 million in the budget to support affordable housing to enable us to deliver the improvements and growth in affordable housing that so many people in Scotland are looking for.

Photo of Willie Coffey Willie Coffey Scottish National Party

In recognising the importance of colleges to our economy, can the Deputy First Minister outline what funding his budget provides for the further education sector?

Photo of John Swinney John Swinney Scottish National Party

We have secured £530 million of resource budget to support expenditure at 2015-16 levels. We have also provided £24.4 million of resource budget to support long-term investment in the capital sector of the college sector, as well as £27 million for further education capital spending.

Photo of Malcolm Chisholm Malcolm Chisholm Labour

Is the cabinet secretary aware of the Audit Scotland report on health and social care integration from earlier this month, which highlighted the failure of the health service and local government to make progress on pooled budgets for the integration bodies? How does he know that the £250 million, which we welcome, for the integration bodies will be additional rather than just deducted from any planned contributions by the health service and local government, especially since local government revenue budgets are being hammered today? Does he not need to do more to support social care, including through the national guarantee of a living wage for care workers, as proposed by the Labour Party?

Photo of John Swinney John Swinney Scottish National Party

First, I challenge Mr Chisholm’s rather gloomy presentation of the Audit Scotland report. That was quite unlike him. The report highlighted that substantial progress is being made on a significant reform that we have waited a long time to deliver. It recognised that we need to give the process greater impetus. I do not think that anybody could look at my budget statement and say that the Government has done anything other than that through the choices that we have made. The substantial investment that will be made in health and social care will be warmly welcomed around the country.

I hear Mr Chisholm. He has been a member of Parliament for many years, so he knows how things work. If there are choices to be made, I would like to hear from the Labour Party what choices it would make. [Interruption.] I hope that Johann Lamont is going to ask a question. I have heard her shouting at me all the way through my budget statement, so I hope that we will get to hear what she has to say, because I have not quite been able to make it out. The choice is there for the Labour Party to decide how it would reallocate the resources that I have allocated today and what different choices it would make.

Photo of Stuart McMillan Stuart McMillan Scottish National Party

I welcome the statement. Will the Deputy First Minister inform members of the expected benefits to Scotland’s elderly of the £200 million investment in six diagnostic and treatment centres?

Photo of John Swinney John Swinney Scottish National Party

The challenges that we face in relation to the ageing population mean that there is increased demand for certain hospital procedures that are generally of relatively low risk. However, if they are undertaken in an emergency hospital environment, there is a great risk that they will be cancelled and that we will not have the necessary throughput of cases and associated efficiencies that we can have in the elective centres. The concept of elective centres has delivered much greater effectiveness in the delivery of such services, which is why the Government has given a commitment to open up that area of activity to more substantial investment and substantial capability in order to create the capacity for individuals to receive the treatment that they require in a timely fashion, without disruption to emergency care.

Photo of Chic Brodie Chic Brodie Scottish National Party

We acknowledge the year-on-year increase in the latest proposal from the comprehensive spending review on capital expenditure. However, capital expenditure will still be £600 million, or 17 per cent, lower in real terms than it was in 2010-11. We also welcome today’s announcement of a reduction of 8,000 in the unemployment figures and of the higher rate of employment. Given the strong link between capital expenditure and long-term employment, what sectors of the economy will the Government prioritise in capital terms to maximise further long-term employment opportunities?

Photo of John Swinney John Swinney Scottish National Party

The capital programme takes forward a range of priorities. A number are focused on strengthening the transport infrastructure, which is essential to the country’s connectivity. There is also a significant investment in digital connectivity, which we realise can, if it is used properly and effectively, be an enormous economic asset and resource for people in Scotland.

We are struck by the economic data that shows that, in the recent economic downturn, areas of the country that suffered severe economic hardship as a result of economic downturns in the past have managed to overcome that. I ascribe that principally to the effectiveness of digital connectivity and the related improvement in opportunities for people. Those are some of the key priorities that will form part of the Government’s capital investment programme.

Photo of Claudia Beamish Claudia Beamish Labour

In light of the global agreement in Paris that commits all countries to reducing emissions to meet the 1.5°C target, what specific new measures does the cabinet secretary have as part of this budget process—or what measures would he consider—to address that worldwide recognition of the imperative need for a fast change to the low-carbon economy? Such measures could include a low-carbon focus for the innovation centres and specific support for research and innovation.

Photo of John Swinney John Swinney Scottish National Party

I agree entirely with Claudia Beamish’s point. One thing that disappointed me in the United Kingdom Government’s comprehensive spending review in November was the cancellation of the Peterhead investment, which was an excellent example of long-term investment that would create technology of global potential and capability for Scotland. That represents a missed opportunity.

Claudia Beamish raises the importance of targeting some of the investment that we make in the research process on achieving such gains. I warmly welcome the point that she made, which illustrates the way in which we have to ensure that, in different areas of policy, we absorb the necessity to respond constructively to the Paris challenge that has been placed in front of all of us.

Photo of Rob Gibson Rob Gibson Scottish National Party

Later today, Parliament will debate stage 1 of the Land Reform (Scotland) Bill. A key ambition of the Scottish Government’s radical plans is to have a dramatic increase in the amount of land that is in community ownership. What provision has the Deputy First Minister made to increase the funds that are available to support community ownership and reach the Government’s 1 million-acre target?

Photo of John Swinney John Swinney Scottish National Party

In the budget, we make provision for increasing the Scottish land fund from £3 million to £10 million to enable more of the successful instances of land acquisition by communities to take their course. That will lead to the flourishing of the wider economic activity that I know that Mr Gibson has championed in taking forward his constituents’ interests and his political interests in the parliamentary session.

Photo of Fiona McLeod Fiona McLeod Scottish National Party

Will the Deputy First Minister elaborate on how the budget will ensure that we continue to make progress on closing the gap in educational attainment between children from the most deprived areas and those from the least deprived areas?

Photo of John Swinney John Swinney Scottish National Party

The learning budget is being set at £33 million and will contain the resources that will enable us to deliver some of the priorities of the Scottish attainment challenge. That is the key budget through which we will drive the reforms that are necessary to close the gap that has caused concern for many years and to create better opportunities for young people.

Photo of Patricia Ferguson Patricia Ferguson Labour

Last week, I asked the Deputy First Minister whether he felt that the funding allocation to Glasgow City Council for kinship care was appropriate, given that Glasgow has 32 per cent of kinship carers and only 15 per cent of the funding. He explained to me that that was because of an agreement with the Convention of Scottish Local Authorities. From the cursory consideration that I have been able to give the draft budget since receiving it this afternoon, I see nothing to suggest that that situation will change. The funding might involve an agreement with COSLA, but will the Deputy First Minister indicate whether it is fair to Glasgow and its kinship carers?

Photo of John Swinney John Swinney Scottish National Party

I was struck by the point that Patricia Ferguson made last week and I considered it carefully because, at face value, the arrangement that she cited to me did not strike me as being fair. I had two options—I could reject the recommendation from the settlement and distribution group or take the decision that I have taken, which I explained to Mr Martin, to set the funding floor at a level that gives Glasgow much greater protection than it would have if I just remedied the issue that Patricia Ferguson raised with me last week.

The decision that I took, which I recounted in answer to Mr Martin’s question, was to set the local government funding floor in a fashion that protects the city of Glasgow from a substantial reduction in its budget of a much greater magnitude than the figure involved in the issue that Patricia Ferguson raised with me. I am happy to explain my thinking to her in more detail, but I reassure her that I was concerned when I heard what she said to me last week and that I have looked into the details and put in place a solution that is substantially better for Glasgow than just remedying the issue that she raised with me.