Budget

– in the Scottish Parliament on 1st February 2018.

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Photo of Ruth Davidson Ruth Davidson Conservative

1. There are two contrasting views on the direction of the Scottish National Party Government’s budget. One is the Patrick Harvie view that it is the best thing since sliced bread. The other is that it sends a message that we are a high-tax economy; that is Sir Tom Hunter’s view. Who does the First Minister think that the people of Scotland should trust with their money—Harvie or Hunter?

Photo of Nicola Sturgeon Nicola Sturgeon Scottish National Party

I think that they should trust Derek Mackay, who yesterday put forward a sensible, responsible and balanced budget that reverses the cut to Scotland’s budget imposed by the Conservative Government at Westminster, protects our public services and allows investment in the infrastructure and business support that is so important to growing our economy.

As a result of the decisions made by Derek Mackay, 70 per cent of all taxpayers in Scotland will pay less in the next financial year than they do in this, 81 per cent of basic-rate taxpayers will pay less, and 55 per cent of all taxpayers will pay less than they would if they lived elsewhere in the United Kingdom, which makes Scotland not just the lowest-taxed part of the UK, but the fairest-taxed part of the UK.

Of course, what Ruth Davidson and the Tories are really worried about is that we are progressively asking those who earn the most to pay a little bit more to help protect our public services and invest in our economy. For example, we are asking somebody earning £100,000 to pay less than £50 a month to help protect our public services.

However, the Tories do not want us just to stand still on tax—they want us to cut tax for the very wealthiest in our society. We know that, if we were to follow Tory tax policies, we would have to take more than £500 million out of our budget. Before Ruth Davidson says another word about tax, perhaps she will share with this chamber where she thinks that the axe should fall from £500 million of Tory tax cuts for the richest—is it on our health service or our education system? Perhaps Ruth Davidson would care to enlighten us.

Photo of Ruth Davidson Ruth Davidson Conservative

We would cut SNP Government waste, scrap SNP vanity projects and grow the Scottish economy. That answer was a lot more Harvie than Hunter, and what the First Minister fails to grasp, which everyone in the real world can see, are the consequences of her plan. I will spell them out. If we have markedly higher taxes here, we will—as the Scottish Chambers of Commerce said yesterday—make Scotland

“a less attractive part of the UK for skilled employees to locate and work, or for businesses to recruit and invest.”

Can the First Minister explain to me and the chamber why the Scottish Chambers of Commerce is wrong?

The First Minister:

I will tell Ruth Davidson something about waste—the waste of space that is the Tory party in this chamber. No matter how seriously Ruth Davidson wags her finger at me, she cannot escape the question about where the axe would fall from the £556 million of cuts that would have to be made to the health service, the education system, business support or infrastructure if we were to follow the Tory plans to cut taxes for the very richest in our society. That might be the Tory way; it is not the way of this progressive Scottish Government.

On the issue of the impact on our economy, unfortunately for Ruth Davidson, the evidence does not bear out what she says. The Scottish Fiscal Commission has to do forecasts for our budget and assess the policies that we put forward. In the report that it published accompanying the draft budget, the commission said that our tax policies would have no impact on the economy in the way that Ruth Davidson and the Tories suggest. Let us cut to the chase: the Scottish Government has put forward fair and progressive tax policies that will allow us to protect our public services, reverse Tory cuts and support our businesses, while the Tories want us to cut taxes for the very wealthiest in our society. So, yes, that is a difference between the Government and the Tories. Of course, we know from polling evidence that the majority of people in Scotland are on the side of the Government.

Photo of Ruth Davidson Ruth Davidson Conservative

I am not the one who just lost a third of my seats at the last election. If the First Minister wants to talk about the Scottish Fiscal Commission, let us do so because, since the budget debate began, we have learned that Scottish growth for the year to September was just 0.6 per cent and, according to the Scottish Fiscal Commission’s projections, Scotland is heading for the longest period of low growth in 60 years. The budget should be trying to address that, and it simply fails to do so.

The Federation of Small Businesses has said:

“The next stage of the Scottish Government Budget is a key opportunity for Ministers to put Scotland’s economy first. The economy should be the top priority for every department—not just the finance and business briefs.”

The FSB said that two weeks ago, so why did the First Minister not take its advice?

The First Minister:

We listen to the advice of all stakeholders and we come to balanced decisions. Ruth Davidson is the leader of the party that is slipping back into third place in Scottish politics and, on today’s performance, it is not difficult to see why.

Let us debunk once and for all the Tory nonsense about Scotland’s economy. We should remember that it has lower unemployment than the rest of the UK on average and one of the highest employment rates in the Organisation for Economic Co-operation and Development countries. The Scottish Fiscal Commission has forecast that Scottish tax revenues, even excluding our changes, will grow faster than those in the rest of the UK. It also projects that Scotland will close the gap with the UK on gross domestic product per capita. As the SFC says, the gap in GDP growth is down to slower population growth and, the last time I looked, most of the powers to influence population growth lay with Westminster.

If the Tories are serious about growing our economy, they will back the Scottish Government in arguing for more powers over migration and, especially in the week where we have seen a secret Tory analysis spelling out the damage of Brexit to our economy, they will get behind the Scottish Government in opposing the recklessness of Brexit.

This week, Ken Clarke stood up and said that, because of the impact of the European Union referendum, growth in the UK is

“feeble compared with the rest.”

He went on to say that the UK is

“the laggard in the G7. We are the laggard among the European economies against which we ... match our performance. That is the damaging consequence of the vote ... in 2016.”—[

Official Report

,

House of Commons

, 31 January 2018; Vol 635, c 856.]

The difference between Ken Clarke and Ruth Davidson is that he sticks to his principles, but Ruth Davidson abandons hers. It is not just UK growth that is feeble; Ruth Davidson is feeble.

Photo of Ruth Davidson Ruth Davidson Conservative

Presiding Officer,

“With any Brexit uncertainty affecting the UK as well, it’s hard to argue that Scotland’s relatively weaker performance can be explained by the outcome of the EU referendum.”

That was said by the Fraser of Allander institute—which is used in aid by the First Minister at every opportunity.

We already know that the SNP has put up taxes on buying a house. It has put up business taxes and now it is putting up tax on ordinary working people, which breaks its own manifesto commitment not to do so. Instead of listening to Scotland’s business community, the only person that Nicola Sturgeon listens to is Patrick Harvie. The Greens passed her budget last year, they are passing her budget this year and they have already told her which tax they want her to put up to pass her budget next year. Yesterday, Patrick Harvie told the chamber that he wanted “meaningful progress” on local tax reform. Translated, that means that next year he is coming for the council tax. Surely, even for the First Minister, that would be a tax rise too far. Will she rule it out?

The First Minister:

We have lower average council tax bills in Scotland than in other parts of the UK. Increases in Scotland are capped at 3 per cent, which is much less than the potential increases in the rest of the UK. The difference between Ruth Davidson and the Government is quite simple: we are interested in protecting our public services, we are interested in ensuring that we have the revenue to invest in world-class infrastructure and business support, and we want to protect the most vulnerable in our society from the impact of Ruth Davidson’s Tory cuts, particularly to welfare. All that Ruth Davidson is interested in is tax cuts for the very richest in our society. That is the difference. She is on the wrong side of public opinion and perhaps that is why her party has hit the buffers.