Scottish Government Draft Spending and Tax Plans 2019-20

– in the Scottish Parliament on 12th December 2018.

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Photo of Kenneth Macintosh Kenneth Macintosh Labour

The next item of business is a statement by the Cabinet Secretary for Finance, Economy and Fair Work, Derek Mackay, on the Scottish Government draft spending and tax plans for 2019-20. The cabinet secretary will take questions at the end of the statement, so there should be no interventions or interruptions.

Photo of Derek Mackay Derek Mackay Scottish National Party

This Scottish budget prepares our economy for the opportunities of the future, enables the transformation of essential public services and builds a more inclusive and just society. It does so in the context of continuing United Kingdom austerity and against a backdrop of a UK Government careering toward Brexit at any cost. In sharp contrast to the chaos and uncertainty of the UK Government, the Scottish Government will keep on delivering good governance for Scotland.

Just this week, we have had confirmation of 80,000 affordable houses built since 2007, record low unemployment, the numbers of teachers and teaching students increasing, school attainment improving and the new best start grant starting to provide help for low-income parents. For the benefit of the Tories in the chamber, that is strong government—some might even say strong and stable government—doing its job, delivering for the people. This budget builds on that strong base. It provides an economic stimulus and supports the sustainability of our public services. It is a budget that safeguards the people of Scotland as best we can from the risks that we face using all the powers and resources at our disposal.

We all know that, despite the UK Government’s promises, it has not ended austerity. The UK budget in October 2018 failed to provide much-needed direction and leadership for our longer-term finances and wider economy. On spending, the Office for Budget Responsibility confirmed in October that the UK Government could spend £15.4 billion more and still meet its fiscal rules in 2020-21. There can be no doubt that the Prime Minister did not keep her promise to end austerity. Instead we have austerity that is delivered by choice and not necessity and which has been condemned by the United Nations. The price that Scotland is paying as part of the UK is economic and social vandalism.

The facts are these: Scotland’s resource block grant will be almost £2 billion lower in real terms in 2019-20 than it was in 2010-11, which is a fall of 7 per cent. If this year’s budget consequentials for investment in the national health service are excluded—which is reasonable, given our commitments to pass all those consequentials on to health—our 2019-20 resource block grant is £340 million less in real terms than it was in 2018-19. That puts a huge strain on public spending, which this budget works hard to manage.

It is not just austerity that puts pressure on our budget; economic consensus warns us of the damage of Brexit. Two weeks ago, in a watershed moment, the UK Government admitted that it does not matter what kind of Brexit it secures; any kind of Brexit will make us poorer. The Scottish Government’s position is clear. The best option for the future wellbeing and prosperity of Scotland is to remain in the European Union. If Scotland is forced out of the EU as a result of the actions of the UK Government, it is vital that the UK Government ensures that there is no detriment to the Scottish budget.

The UK Government’s decision to take us out of the EU single market and the customs union—a market of more than 500 million people—is reckless and unnecessary and our growth forecasts are subdued as a consequence. Today, the Scottish Fiscal Commission has published its latest set of independent economic and fiscal forecasts for Scotland. The commission has revised up its forecasts for gross domestic product growth in every year. It now forecasts GDP in Scotland to grow by 1.4 per cent in 2018, which is faster than the growth expected in the UK as a whole. The commission then expects the Scottish economy to grow by 1.2 per cent in 2019, 1 per cent in 2020 and 2021, 1.1 per cent in 2022 and 1.2 per cent in 2023. However, the commission highlights that Brexit is a key factor that is expected to lead to slower growth in productivity, population and trade in future years. That means less money for public services and it risks making Scotland a less attractive place for businesses.

As a responsible Government, we are preparing, as far as possible, for all exit possibilities and we are intensifying preparations in order to protect the Scottish economy, our businesses and our workers. We have set up new teams in the Scottish Government to support preparations, including an international trade and investment policy team. We have doubled Scottish Development International’s presence in Europe and we are investing £20 million over the next three years to enhance and intensify support to businesses that are looking to export.

Significant resources have had to be diverted, not just in the Scottish Government but across the public sector to prepare for the impact of Brexit. A no-deal Brexit and continued chaos from the UK Government will only make that worse. It is disappointing but necessary for me to advise Parliament that, if the UK ends up in a no-deal Brexit, I may be required to revisit the priorities in this budget. However, stepping back from the brink and remaining in the EU would mean that resources could be returned to supporting front-line priorities. That is just one of many reasons why the Government believes that we should remain in the EU.

Unlike the UK Government, we have chosen to use the levers that are at our disposal to boost our economy and support our public services. In 2019-20, we will continue to deliver a public sector pay policy that lifts the 1 per cent cap on public sector pay. I confirm today that I have agreed a public sector pay policy for 2019-20 that will provide a 3 per cent pay rise for all those who earn £36,500 or less, which is higher than forecast inflation. It will cap the pay bill at 2 per cent for all those who earn between £36,500 and £80,000, and it will continue to contain pay rises at the higher end, capping any increase for those who earn more than £80,000 to £1,600. That is a reasonable and affordable public sector pay approach, which continues the journey of restoration of public sector pay. However, I must disappoint my colleagues by saying that ministerial pay will once again be frozen at 2009 levels. Our commitment to public sector workers is part of our commitment to high-quality public services.

The Government has made it clear that our priority is closing the attainment gap and improving education. We are determined to improve the life chances of children and young people in Scotland, and to change the lives of our future generations for the better. That is our defining mission, and it is why I announce today that the education portfolio will receive a real-terms increase in investment in 2019-20. We will provide almost £500 million to expand early learning and childcare, by supporting the recruitment and training of staff and investing in the building, refurbishment and extension of about 750 nurseries and family centres. We will invest more than £180 million to raise attainment in schools and close the attainment gap. That includes £120 million that will go directly to headteachers through the transformational pupil equity fund.

We will invest more than £600 million in Scotland’s colleges, and we will maintain investment in Scotland’s universities at more than £1 billion. To ensure that a range of avenues are open to young people, we will invest more than £214 million in apprenticeships and skills, in order to support the on-going expansion of apprenticeships in Scotland as we progress towards 30,000 starts per year.

The Government will continue our work to tackle poverty and mitigate the worst impacts of the UK Government’s welfare cuts. We are already using the newly devolved social security powers to create a social security system that is based on dignity and respect. In a recent report on the UK, the UN rapporteur on poverty and human rights condemned the UK Government’s

“punitive, mean-spirited and often callous” treatment of the country’s poorest and most vulnerable. I welcome the rapporteur’s references to the very different approach that is being taken by the Scottish Government. The report notes the establishment of a social security system that is guided by evidence and the principles of dignity, fairness and respect. It recognises that we are mitigating the worst of the UK Government’s welfare cuts and it describes our plans for tackling child poverty as “ambitious”.

The Government will continue our work to tackle poverty, support new families and ensure that every child has the best possible start in life. We will also continue to mitigate the worst impacts of the UK Government’s welfare cuts. The delivery of the new social security system and the safe and secure transition of the new powers will continue to be key priorities for the Government.

In 2019-20, we will deliver fair and dignified social security assistance, over and above what the UK Government provides, with a total forecast expenditure of £435 million. That will include a forecast spend of £37 million for the carers allowance supplement, which will provide vital support for our carers. It will include £12.4 million for the new best start grants, which will assist low-income families with essential expenses on the birth of a child and at key transitions in the early years. The grants will support families with young children who are feeling the impact of the UK Government’s welfare cuts. We will provide £6.2 million for our new funeral expense assistance, which will help those who are on lower incomes with funeral costs. We will provide nearly £100 million to continue our mitigation of the bedroom tax and the UK Government’s welfare cuts. We will increase the budget for our fair food fund from £1.5 million in 2018-19 to £3.5 million in 2019-20, with £2 million being provided specifically to tackle food insecurity during school holidays.

To safeguard Scotland, we will continue to protect the police resource budget in real terms, provide over £5 million of additional resources to the Scottish Fire and Rescue Service to support its transformation and increase Crown Office and Procurator Fiscal Service funding by £5 million for the recruitment of additional legal staff to manage increased case loads.

The Scottish economy is the powerhouse that fuels ambition for Scotland, and we are determined to unlock its potential. I want to see a country that is globally competitive, with innovation, sustainability and fairness at its heart. That is why this year I launched our new economic action plan with a number of decisive measures to improve the competitiveness of our business environment. We will support an advanced manufacturing challenge fund of up to £18 million to ensure that all parts of Scotland benefit from developments in advanced manufacturing; invest £5 million as part of our three-year £20 million plan to boost exports; and work with partners to enhance the digital skills that businesses require, including a new £1 million digital start fund to support people on lower incomes. We will also invest around £2.4 billion in our enterprise and skills bodies and develop the work of the enterprise and skills review and the Enterprise and Skills Strategic Board.

In addition, the Scottish Government has committed around £1.3 billion to support Scotland’s seven cities and their regions in maximising economic opportunity. In 2019-20, we will secure fully agreed city region deals for Stirling and Clackmannanshire and for the Tay cities region; progress growth deals for the Ayrshires, the borderlands and Moray; progress discussions on Argyll and Bute, Falkirk and the islands; and continue our financial commitment to the city region deals in Glasgow, Aberdeen, Inverness and Edinburgh. Those investments will benefit all of Scotland, creating thousands of jobs, upskilling local labour markets and building on the economic strengths and opportunities for each region.

As part of our clear commitment to fair work and employability, we will invest £5 million over three years to support around 2,000 women to return to work following a career break; support parents in addressing barriers to work and provide in-work support to help low-income parents remain in work; and develop our fair work first principle for public procurement to ensure that as much of our funding as possible supports a fair and inclusive economy.

Investment in people is crucial, and creating meaningful employment is the best social policy. We also know that greater investment in infrastructure improves quality of life, boosts productivity and makes our country a more attractive place to do business in. That is why this Government will increase capital investment by £1.56 billion per year by the end of the next Parliament, and the budget begins that journey by setting out capital investment of more than £5 billion over the coming year, including investment of £1.7 billion in our transport infrastructure; more than £180 million towards city region and growth deals; and £175 million of investment in nursery and childcare buildings.

Of course, it is vital that the right investments are made to generate inclusive growth and to deliver our low-carbon objectives. After all, we must act on climate change. Our investments in broadband, transport and utilities will provide the foundation for companies to invest and bring new economic opportunities across Scotland. As part of that vision, I will continue our groundbreaking work to establish a Scottish national investment bank, with the budget providing £130 million to establish the bank and precursor investments.

The next £50 million of the £150 million building Scotland fund announced last year will provide debt and equity support to the private sector, and organisations such as housing associations and universities, to support the development of housing across all tenures; to develop modern industrial and commercial space; and to support industry-led research and development. In 2019-20, we will invest a record £826 million as part of our total investment of over £3 billion to deliver 50,000 affordable homes over the course of the Parliament across the length and breadth of Scotland. We are building for Scotland, and building new homes, too.

As well as building more homes, with our progressive land and buildings transaction tax we are continuing to protect those who are buying their first home and those who are progressing through the property market. For those purchasing additional properties, I propose to increase the additional dwelling supplement from 3 to 4 per cent. Legislation will be laid before Parliament tomorrow and, if approved, the rate change will come into force on 25 January 2019.

I have listened carefully to the business community; it seeks investment in skills, people, innovation and infrastructure. This budget delivers such investment. We are committed to providing the best possible environment for businesses, supported by a competitive non-domestic rates regime. Last year, I limited the increase in business rates to consumer price index inflation. This year, I will go further—I announce today that we will cap the increases in the rates poundage in Scotland in 2019-20 at the below inflation level of 49 pence, limiting the increase to 2.1 per cent. That will ensure that over 90 per cent of properties in Scotland and all small and medium-sized businesses will pay a lower poundage than they would in other parts of the UK. I can also confirm that I will continue to uprate the poundage in line with the CPI for the remainder of this parliamentary session. Our package of business rates relief, including the small business bonus, is the most generous anywhere in the United Kingdom. It is worth an estimated £750 million in 2019-20, and continuing the growth accelerator will give us a further competitive advantage.

I also propose changes to non-residential land and buildings transaction tax that will mean that Scotland has the most competitive rates in the UK. Under those proposals, two thirds of all non-residential transactions will pay less tax in future than at present. Again, I will lay legislation on that change before Parliament tomorrow, and, if approved, the rate change will come into force on 25 January 2019. Those measures will help our businesses to grow, prosper and be successful.

We are proceeding with the Barclay review recommendations to reform non-domestic rates. Businesses have asked me to rule out the introduction of an out-of-town levy, which was a recommendation of the Barclay review. Although the Barclay review recommended that we explore that possibility as a means of supporting our town centres, in light of proposed UK taxes I do not believe that it would be right or fair to introduce such a tax at this time. We will, of course, keep that under review. However, I share the view that our town centres require support in a changing retail environment and I therefore announce that we will establish a new £50 million capital fund to support our town centres to diversify and develop, ensuring that they are thriving and sustainable places where people choose to spend their time.

Last year, we took the decision to introduce a new, progressive, fair and balanced income tax system that raises additional revenue from those who can most afford it, and to protect public spending. Those decisions help us to make Scotland the kind of country that we want it to be—they fund our public services and support our economic infrastructure and those most in need. Our income tax proposals will continue to follow the four key tests that the Scottish Government introduced last year: protecting the lowest-paid taxpayers, improving progressivity, raising additional revenue for public services and protecting the Scottish economy.

I have decided that, this year, I will not increase any of the rates of income tax: tax rates will remain the same. As a result, 99 per cent of all taxpayers will see no increase in the tax that they pay. However, in 2019-20, I will increase the starter and basic rate bands by inflation to protect our lowest and middle-earning taxpayers. The higher rate threshold will be frozen. That will ensure that 55 per cent of Scottish taxpayers continue to pay less than they would if they lived elsewhere in the UK, and that Scotland will continue to be the lowest-taxed part of the UK. For example, a pensioner who earns £15,000, with access to free personal care, free bus travel and cheaper council tax, will be better off by around £9,700 in 2019-20 relative to the rest of the UK. However, someone earning £62,149—the same as an MSP—will pay just over £30 a week more in income tax in Scotland than they would elsewhere in the UK. That is before we consider any of the benefits of Scotland’s social entitlements, such as state-funded university tuition, which we will continue to protect.

At a time of constrained growth, prolonged austerity and growing economic uncertainty, all as a result of a failing UK Government, it is not the time to cut tax for the highest earners at the expense of our public services. Instead, I will use the additional resources that are raised through my tax decisions in this budget to support our public services and ensure that our health service gets all the additional money that was promised. The UK Government failed to deliver in full the resources that it promised our health service, leaving us £55 million short. My decisions will ensure that we can restore that amount, which is the right decision for Scotland.

Our tax policy supports our public services and investment in our economy, while Scotland continues to be the fairest-taxed part of the UK. Our economy has grown faster than the rest of the UK in the first six months of this year, and there is no evidence in the Scottish Fiscal Commission’s report that our income tax policy is slowing growth in Scotland. However, I always want my decisions to be based on the best evidence, so I will ask our council of economic advisors to expand its analysis of the potential impact of behavioural effects on future revenues.

Providing the necessary investment for health in a fair and balanced way is equipping our front-line services to take forward the measures that are set out in the health and social care financial framework and waiting times improvement plan. We recognise that our NHS and wider health and social care system must continue to adapt to the changing needs of our population and, in 2019-20, we will continue our improvement of those vital services.

I announce today that I am increasing the health portfolio resource budget by almost £730 million, which is an increase of almost £500 million in real terms. That decision confirms that health is a top priority for the Government and will take spending levels to £754 million above inflation since 2016-17, which is the equivalent of 19,000 nurses.

We will also deliver a further shift in the balance of spend towards mental health and primary, community and social care. As part of that, we are increasing our package of investment in social care and integration to more than £700 million in 2019-20. We will increase our direct investment in mental health services by £27 million, taking the overall funding for mental health to £1.1 billion in 2019-20, which includes our work to improve mental health services support in schools.

The decisions that I have taken in this year’s budget will also allow me to increase funding for local government in 2019-20, providing total support of £11.1 billion. That provides a real-terms increase in revenue and capital funding, and an overall real-terms increase in the total local government settlement of more than £210 million.

This budget safeguards Scotland, using all the powers, resources and tools that are available to do so. If Opposition parties choose to argue for additional spending in any area above what I have set out in the budget, to have any credibility they need to indicate where the money should come from. Should it come from a rise in the basic rate of income tax and hit those on lower incomes, or should it come from a cut to public services? If the latter, which public services would they cut: the NHS, education or local government?

The Scottish Government cannot completely protect Scotland from the recklessness of the UK Government, but the decisions that we have taken in this budget ensure that we protect what matters most. We have chosen to transform our early learning and childcare; protect funding for education and improve attainment; invest record sums in our health services; provide a real-terms increase in total funding for local government; expand free personal care; and deliver a fair and just new social security system that will support those who are most in need.

We are doing all that while the UK Government implodes on its journey of economic self-harm. That is why the people of Scotland have entrusted us to focus on the delivery of our public services and the economy. This budget delivers for the Scotland of today and invests for the Scotland of tomorrow. I commend it to the chamber.

The Presiding Officer:

I encourage members to press their request-to-speak buttons if they wish to ask a question.

Photo of Murdo Fraser Murdo Fraser Conservative

I thank the cabinet secretary for advance sight of his statement, heavily redacted as it may have been.

It is a source of regret for us all that today’s big statement has been overshadowed by events at Westminster. I refer, of course, to the £950 million increase in the Scottish block grant that was announced by the chancellor in his October budget, which means that, according to the Scottish Parliament information centre, the finance secretary’s total budget has not been cut by the Conservatives but is up in real terms by nearly £1 billion since 2010.

In advance of today’s budget, every business representative group in Scotland had one key ask from the finance secretary. Those groups asked that the tax differential between Scotland and the rest of the United Kingdom not increase. They were concerned about the impact that a growing tax gap would have on their ability to recruit talented people to Scotland, which is a concern that has been echoed by those in the public sector.

However, the finance secretary has chosen to ignore all those calls with today’s announcement that the threshold for paying higher-rate tax will be frozen. That means that, from April, those in Scotland who earn between £43,430 and £50,000 will face a marginal tax rate of 53 per cent on every extra pound that they earn. It means that a police sergeant who earns £45,942 will pay more than £700 in tax more than his counterpart south of the border; a senior nurse manager who earns £49,000 will pay £1,350 more than south of the border; and a principal teacher who earns £51,330 will pay more than £1,500 more. That is the price of living in the Scottish National Party’s Scotland.

Anyone who earns just over £26,000 will be paying more than their equivalents south of the border. Surely no one will seriously argue that a household with an income of just over £26,000 is rich, yet those are the people who are being punished in the SNP’s Scotland. There was no need to do that, because the finance secretary had more money in his budget—£950 million more in Barnett consequentials. There was no requirement for the tax rises that we have seen today.

We will scrutinise carefully the spending pledges in the budget. We welcome the additional money for the NHS, which was made possible by spending choices that were made at Westminster and a UK Conservative Government’s commitment to health spending. We will look at the figures for local government in detail, but the headline sum that has been announced today falls short by £1 billion of what the Convention of Scottish Local Authorities assessed is needed just to stand still. People will be paying more in taxes, but they will face poorer local services. This is a pay more, get less budget.

It does not have to be this way. There is a different route that the finance secretary can choose. We are happy to sit down and have a serious discussion with him about his budget, if he commits to reducing, not increasing, the tax gap with the rest of the UK, and if he commits to dropping the SNP’s ruinous plans for a second independence referendum. Will he join with us and develop a budget to help the people of Scotland and not punish them?

Photo of Derek Mackay Derek Mackay Scottish National Party

That was an offer from Murdo Fraser on the budget that I would like to refuse.

Our budget from 2018-19 to 2019-20, excluding the health uplift, to which I will return, has a real-terms reduction of £340 million for public services in Scotland. That is the outcome of the chancellor’s budget.

Through our tax position, we are restoring the amount by which the Conservatives short-changed the health service when they took £50 million away from it. Our tax decisions restore that amount, taking NHS funding to record levels.

Of course, the chancellor’s budget does nothing to undo the £2 billion real-terms reduction since 2010, which has had such a damaging impact on our public services.

I wonder whether Murdo Fraser has been discussing the position on tax with Ruth Davidson. Ruth Davidson said that we should forgo tax cuts so that we could invest in the health service, but in her absence the Tories have changed their minds.

I will take no lectures from the Conservatives on the performance of the economy. The Scottish economy is outperforming the UK economy, with higher GDP growth, lower unemployment and more international exports from Scotland.

Of course, if I were to follow the Tory income tax plans, we would have to cut Scotland’s public services by half a billion pounds. That would mean that there would not be £1 billion more for local government; there would be £0.5 billion less for our public services. Those would be the consequences if I followed Murdo Fraser’s plan.

We are investing in innovation, internationalisation and the infrastructure of our country, while the Tories deliver economic self-harm.

Murdo Fraser talked about what businesses are asking for. Right now, businesses are asking us to invest in skills and infrastructure and a competitive tax regime, and that is exactly what we are going to do—with Scotland having the lowest tax in the UK for small and medium-sized businesses. We are the lowest-taxed part of the UK and the fairest-taxed part of the UK.

Yes, the business community is speaking out today, and this is what it is saying. The British Chambers of Commerce said:

“The utter dismay amongst businesses watching events in Westminster cannot be exaggerated.”

The Federation of Small Businesses said that the chaos makes planning ahead “impossible”. Small firms are crying out for some certainty. I will take no lectures from the Conservatives on the economy of our country.

We are aspirational. We are building the country that we seek. We hear talk about tax divergence and divergence between pay packets in Scotland and pay packets in England, but if I were to follow the Tories’ planned cuts to public expenditure, many of those people would not have a job, because of the cuts that the Conservatives would have us deliver.

This is a fair and progressive budget for the people of Scotland, which I am sure will deliver stability and stimulus for our country.

Photo of James Kelly James Kelly Labour

I thank the cabinet secretary for the advance copy of his statement.

Public services are at breaking point. Headteachers are writing to parents about unprecedented cuts. One in four children in Scotland is living in poverty. Our rail system is in chaos.

This is yet another woeful SNP budget that will let the people of Scotland down. Yet again, ministers refuse to use their powers and continue to force cuts on to councils. Scotland is being let down by Nicola Sturgeon’s timid Government and Derek Mackay’s timid budget. Scotland needs a radical budget, which supports public services, tackles rising poverty and fixes the mayhem in our rail system.

If members want to see just how badly the SNP is failing the people of Scotland, they need only look at how councils are struggling. There are nearly 3,000 fewer teachers in our schools, and nearly a third of children fail to reach the required level of literacy by the end of primary school.

Few things better sum up the cruelty of the Tory Government than the two-child cap on tax credits and universal credit, which punishes people for raising a family, yet the SNP has refused to use its powers to put an end to that vile policy. With 230,000 children in Scotland living in poverty, the cabinet secretary should have backed calls to increase child benefit by £5 per week; that would lift 30,000 children out of poverty and put money in the pockets of families across Scotland. With over 4,000 families in Scotland affected by the two-child cap, why has the cabinet secretary sat on his hands, refusing to use the powers of this Parliament to cancel that vindictive policy?

If education really is the SNP’s top priority, why has this SNP Government continued to penalise councils with £95 million in swingeing cuts? At a time when one in four children in Scotland is living in poverty, why has the cabinet secretary retained more than £300 million in reserves?

Photo of Derek Mackay Derek Mackay Scottish National Party

While we have been safeguarding Scotland, the Labour Party has been selling Scotland out, leaving its powers with the Conservatives in Westminster. How about trying this? How about trying to resolve the problems—[



The Presiding Officer:

Let us hear the cabinet secretary, please.

Photo of Derek Mackay Derek Mackay Scottish National Party

How about removing the Tories’ pernicious policies by removing the Tories and taking these decisions in our own Parliament, with the powers to do that? I was waiting eagerly for the Labour Party’s alternative budget, but there has been a leak: there is not going to be an alternative budget from the Labour Party. According to

The Times

, there will be no alternative budget. What Labour has said—[



The Presiding Officer:

Let us hear the cabinet secretary please.

Photo of Derek Mackay Derek Mackay Scottish National Party

In previous years—[



The Presiding Officer:

Order, order. One second please, cabinet secretary. I ask members to please keep quiet for a second. Let us hear the questions without members bellowing out, and I am referring to Mr Swinney and Mr Kelly in particular. Do not bellow at each other across the chamber when a question has been asked and the cabinet secretary is replying.

Photo of Derek Mackay Derek Mackay Scottish National Party

I will try to help the Labour Party out a wee bit. In this budget, the Government is proposing to substantially increase NHS spending in real terms. Spending on education and local government is being increased in real terms. On social security, we are spending over and above what the UK Government has given to us. We are taking an approach that is based on dignity and respect, but if the Labour Party wants an alternative, it has a duty to set out what an alternative budget would look like.

I can see what the Labour Party said. According to

The Times, a Labour Party source said that, in previous years,

“We could justify our spending decisions with how we would raise the money. Now we have nothing. It’s a shambles.”

Yes, it is—it is a shambles from the Labour Party. The same source said in relation to Labour’s budget plans, or lack of them:

“At least when we had a plan, ridiculous as it was, we had a plan”.

That is the clarion call from the Labour Party. Where is the industrial strategy today? We are investing in the infrastructure of our society. You see—[



The Presiding Officer:

Order, please. I am going to ask two things. Cabinet secretary, could you move your microphone slightly closer, and could Labour members in particular please keep the noise down? We cannot hear a word that is being said. I am sitting a matter of feet away from the minister and I cannot hear what he is saying. Please keep the noise down.

Photo of Derek Mackay Derek Mackay Scottish National Party

The Labour Party has no alternative to our budget, because it is no alternative whatsoever in this chamber.

Could Labour’s alternative be tax? Will it propose an alternative tax plan? Bear in mind that, in Westminster, the shadow chancellor has said that he will not reverse the Tories’ tax plans in the budget. That is the position of the Labour Party in the House of Commons. What about here in Scotland? What is the alternative revenue-raising option in Scotland? A Labour spokesperson confirmed that

“an alternative income tax plan would not be set out this year to show how the alternative policies would be paid for.”

There we have it—a totally incompetent Labour Party Opposition. It has no alternative to our plans, which would increase investment in our country by £2 billion. That is what the Labour Party would be voting against, if it opposes this very positive and progressive budget.

Photo of Patrick Harvie Patrick Harvie Green

It is clear that, after two budgets in a row in which the Scottish Government had proposed deep cuts to local government only to reverse them under Green pressure, the Scottish Government no longer feels able to turn the screw on local councils and the services that they provide across the country. I am pleased that that pressure has been brought to bear. It is equally clear that, in the face of rising demand for those services, councils urgently need the power to raise the funds themselves in order to meet that demand fairly.

Why is there no mention in the budget statement of the need to reform local taxation? The cabinet secretary did not say a word on that agenda. Towards the end of the local government section in the budget document, a paragraph is buried away confirming that the Scottish Government continues to commit to ending the council tax, but there is no word at all about the timescale or the actions that it will take to implement that policy. What will the cabinet secretary and the Scottish Government be doing in the coming weeks, months and years to give real effect to the urgent need for local tax reform and to put our local services across Scotland on a stronger footing and make them less reliant on a single block grant every year from the Scottish Government?

Photo of Derek Mackay Derek Mackay Scottish National Party

I am pleased that Patrick Harvie welcomes the package of support—no doubt, he is the first—for local government amounting to £11.1 billion, which represents a real-terms increase of more than £210 million in the overall settlement.

In relation to engagement on the council tax, since I have been finance secretary, the Parliament has looked at and provided a critique of the council tax, but there has been no majority in the chamber for an alternative. My pledge, which I have repeatedly made in the chamber, is that I will work with anyone who is interested on what local taxation should look like—it should be fair and progressive—and I am happy to do that engagement in an open and constructive way.

It is important to find consensus, so that we can give stability to local government finances, and it is important that we design a system that is fair and progressive. I remain open to that dialogue and those discussions, which can be on a cross-party basis.

Photo of Willie Rennie Willie Rennie Liberal Democrat

The finance secretary has rightly focused on the chaos and uncertainty of the UK Government over Brexit, which is bad for the economy and public services. Just this week, the Fraser of Allander institute highlighted the low productivity levels in Scotland. I have asked for a cessation of this Government’s campaign for independence, because that would bring even more chaos on top of the Brexit chaos at a time when we need stability to focus on the big challenges that this country faces.

Our priorities for this budget are investment in mental health services, a decent pay deal for teachers and a fair deal for local government. Why will the finance secretary not agree to put aside independence for now, so that we can work together on those important matters?

Photo of Derek Mackay Derek Mackay Scottish National Party

I did not mention independence in my budget speech. I mentioned how we are getting on with the day job, delivering our services, growing and stimulating our economy and delivering a more progressive tax system. I was not focused on independence, although I happen to support Scottish independence—that should not be a surprise to Willie Rennie and the Liberal Democrats.

Willie Rennie is so obsessed with independence that he could be willing to vote down the resources for which he has been asking for years on mental health, education, the NHS, the local government settlement and colleges. The Liberal Democrats are even willing to vote down the resources that we are offering up for ferries in this budget, which has growth of around £2 billion. That is reckless, which is not the approach that the Scottish Government is taking.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

I thank the cabinet secretary for getting on with the day job and delivering for Scotland with a budget that is fair, balanced and sustainable. In stark contrast, we see Westminster being consumed by constitutional mayhem and the Tory party busy tearing itself apart. The cabinet secretary has set out an income tax policy that will raise additional income. How much would it cost Scotland’s public services if we were to replicate the Tories’ UK plans here in Scotland? Does the cabinet secretary agree that the Tory party recipe would be an absolute disaster for our vital public services? The Tories are causing chaos and crisis at Westminster and are planning to do the same with Scotland’s public services.

Photo of Derek Mackay Derek Mackay Scottish National Party

I agree with Bruce Crawford’s sentiment. On the figure that he seeks, if we were to follow the Tories’ tax plans on income tax alone, it would cost us £500 million from investment in our public services. More widely, if we were to follow the other tax plans that they have, we would have to cut around £650 million from public services to fund their tax cuts. It is interesting: when every other Tory member in this chamber stands up with funding requests and demands over this and that, it is true to say that they want tax cuts at the same time as spending more. The Conservatives’ position is just not credible. If they want to change the budget, let them identify which public services they would cut in order to follow their tax plans.

Photo of Dean Lockhart Dean Lockhart Conservative

The SNP has made Scotland the highest-taxed part of the UK, not only for workers who earn above £26,000 per year but for businesses that are looking to expand. The Barclay review made that clear. The doubling of the large business supplement under the SNP has made Scotland less competitive for business than the rest of the UK. With almost £1 billion of additional funding coming from the UK Government, why has the cabinet secretary not used today’s budget to cut the large business supplement and make Scotland’s economy more competitive?

Photo of Derek Mackay Derek Mackay Scottish National Party

Clearly, Dean Lockhart was not listening when I pointed out that 90 per cent of properties in Scotland will pay a lower poundage than those in other parts of the UK, so every single small or medium-sized business in Scotland will pay less tax by being in Scotland than it would if it were south of the border.

As well as that, we are fairer and more progressive on income tax, we invest more for our public services and we protect the economy. Therefore, in fact, not only are we the lowest-taxed part of the UK, but—even more important—we are the fairest.

Photo of Angela Constance Angela Constance Scottish National Party

Given the on-going uncertainty and chaos at Westminster, will the cabinet secretary tell us what the consequences for Scotland’s public services and our economy will be if the Scottish Parliament does not support this budget in the new year?

Photo of Derek Mackay Derek Mackay Scottish National Party

The total budget for 2019-20 that is proposed for approval will provide £42.5 billion of investment in Scotland, which is almost £2 billion more than in 2018-19. The main elements of that are £660 million in extra capital, £730 million in extra health resource and £340 million more for social security, compared with last year’s budget. That is what is at risk if this budget is not passed.

Photo of Rhoda Grant Rhoda Grant Labour

In the budget proposals there is no mention of an industrial strategy; they simply reheat initiatives that have not worked. There are no new ideas to boost our economy. Yet again, the cabinet secretary has taken the opportunity to announce his intention to set up a Scottish national investment bank, with funding of £130 million, which is some distance short of the £20 billion that Scottish Labour would invest. [



SNP members seem to find that amusing.

Despite the cabinet secretary announcing that initiative over and over again, we do not know when it will happen. When will the funding that has been reannounced today be in place to benefit our businesses? Can the cabinet secretary tell us when the Scottish national investment bank will be open for business?

Photo of Derek Mackay Derek Mackay Scottish National Party

I am sorry—I do not think that I caught all of that question because of the laughter at the mention of Labour’s industrial and economic position. It has asked for an industrial strategy before. I do not think that we need one. We need—and are delivering—industrial actions, such as more investment and more interventions where they are right and proper, and we are supporting the industry of Scotland. Yet again, we hear from the Labour Party empty rhetoric and words that are totally meaningless.

The investments that we are making are clearly making a difference. We have foreign direct investment that is second only to that in London and the south-east of England, we have rising exports and our GDP is outperforming that of the rest of the UK. Unemployment is at a record low level and lower than the rest of the United Kingdom, and our economic efforts include investment in infrastructure of some 50—I was going to do a Labour thing for a moment there and just totally make up a number, but I will not do that. The actual investment in infrastructure under this Government is £5 billion.

That is real money: real cash and real investment in the infrastructure of our country. We will have a more competitive rates regime that leads to more jobs and to economic growth and stimulus. We are developing the national manufacturing institute for Scotland and building the Scottish national investment bank. There is finance forthcoming and precursor investment, the legislation will be working its way through Parliament next year, and the bank will be operational if this Parliament approves that legislation. However, even before the bank is established, we are investing now through the building Scotland fund to support our economy, so across that range of measures we will be stimulating the economy, leading to more purposeful and meaningful jobs while delivering inclusive growth and fair work at the same time.

Photo of Tom Arthur Tom Arthur Scottish National Party

I agree with the cabinet secretary that this is a progressive budget from a strong and stable Scottish Government that stands in stark contrast to the chaos and confusion of the UK Government. However, given that the Tories’ self-indulgent, self-obsessed, self-centred civil war now risks the UK crashing out of the European Union without a deal, will the cabinet secretary set out exactly what level of risk there is to the Scottish budget spending plans in the event that the shambolic UK Government leads us to a catastrophic no-deal Brexit?

Photo of Derek Mackay Derek Mackay Scottish National Party

I agree with Tom Arthur. I thought that he put it very well. There is a serious point here, because this budget, just like the Chancellor’s own budget, was based on the assumption of a deal with the European Union and an orderly Brexit. That was the basis on which the Chancellor made his budget, and those are the numbers that underpin the Scottish budget. In the event that there is a change, yes, we may have to return to Parliament with a revised budget, but we have been trying for some time to get the UK in a better position in terms of the Brexit negotiations, while recognising that no Brexit would be the best possible outcome. However, if no deal can be agreed and there is a further UK budget, we will need to understand the implications for Scotland’s public finances before revisiting our budget assumptions and presenting revised proposals to the Scottish Parliament.

Photo of Maurice Golden Maurice Golden Conservative

Last year’s draft budget estimated that Scottish income tax revenues would be £12.582 billion in 2019-20. Today’s draft budget estimates that revenues will be £11.684 billion in 2019-20. That is a massive drop. Why?

Photo of Derek Mackay Derek Mackay Scottish National Party

Maurice Golden is not as fortunate as other Conservative members who are on the Finance and Constitution Committee and who understand that the forecasts are based on Scottish Fiscal Commission numbers. The SFC looks at the baseline, and as it gets more evidence, it moves from the estimates that it has been working to and focuses on the actual outturn based on the latest data. I am sure that, if he pays close attention to the SFC’s forecasts, he will find that the difference is explained by forecasting issues rather than by any substantial change in the Scottish economy.

That said, Brexit is the major challenge to Scotland’s economy. The impact that Brexit will have on population, productivity and related issues such as wage earning is what is leading to the subdued GDP growth. If we had all the economic levers that come with being fully empowered as a country, we would be able to make the right economic decisions to grow our country. The SFC has made it clear that the issues are around its methodology and the forecasts that it has set out.

Photo of Ruth Maguire Ruth Maguire Scottish National Party

Scotland has made huge progress in tackling homelessness, but there is still a lot more to do. I know that, like me, the cabinet secretary is not prepared to see the progress that we have made being undone. Will he outline what funding there is in the Scottish budget to tackle homelessness?

Photo of Derek Mackay Derek Mackay Scottish National Party

Local authorities clearly have a function in that respect, as tackling homelessness is partly funded through the local government settlement. The settlement has been increased by £23.5 million in recognition of local authorities’ responsibilities for temporary accommodation. They can choose how best to use the funding to respond to the needs of their areas.

This year, the budget also contains another £10 million from the £50 million ending homelessness together fund, which is to be spent on implementing the transformational recommendations from the homelessness and rough sleeping action group.

Photo of Iain Gray Iain Gray Labour

In real terms, the budget cuts funding for colleges, it cuts funding for universities and it leaves councils unable to restore school budgets, which are currently £400 million lower than they were in 2010. Did the finance secretary not get the memo about education being the Government’s top priority, or did he just choose to ignore it again?

Photo of Derek Mackay Derek Mackay Scottish National Party

Iain Gray should reflect on the fact that the budget includes a real-terms increase for education. We will also support local government with a real-terms increase, and we are investing in skills and the attainment gap. We are making great efforts to support education. If the Labour Party wishes to spend even more on education than we propose, it should set out how it would raise the necessary revenues, rather than hiding away without any serious alternative plan and only making spending requests.

Photo of Stuart McMillan Stuart McMillan Scottish National Party

The finance secretary spoke in his statement about the expansion of free personal care. Can he confirm the amount of resource that has been made available to implement Frank’s law and to expand free personal care to people who are under 65?

Photo of Derek Mackay Derek Mackay Scottish National Party

In 2019-20, we will invest an additional £30 million in the local government settlement to implement Frank’s law and to extend free personal care to under-65s, which was set out in the programme for government.

Photo of Miles Briggs Miles Briggs Conservative

I start by thanking the finance secretary for listening to me and others, and for committing £30 million to Frank’s law. Amanda Kopel, the wife of Frank, is here today in the gallery. I pay tribute to her campaign. [



In the wider health context, could the finance secretary confirm that underfunding of health boards through the NHS Scotland resource allocation committee funding formula will today see no health board in his budget receive parity or above?

Photo of Derek Mackay Derek Mackay Scottish National Party

The front-line health budget is being increased, as is the budget to health boards.

I heard the campaigning that Miles Briggs and others engaged in on Frank’s law. I, too, pay tribute to the family and am delighted that we were able to progress the matter.

It is now incumbent on those who have campaigned on many issues to support the budget so that what they want can happen. I have provided the resources and will produce the necessary budget bill to take Frank’s law forward. I look forward to the support, perhaps of even just some Conservatives, that will allow us to make that investment. There is record investment in the national health service, and more is going to health boards as well.

Photo of Jenny Gilruth Jenny Gilruth Scottish National Party

Can the cabinet secretary confirm that, as in previous years, the money that is made available to schools through the pupil equity fund is to fund additional initiatives that are chosen by schools in order to close the attainment gap, and that it comes on top of the funding for core education responsibilities that councils receive through the local government settlement?

Photo of Derek Mackay Derek Mackay Scottish National Party

Yes. The pupil equity fund is £120 million of additional funding that is allocated directly to schools to invest in targeted interventions to close the poverty-related attainment gap. That money is in addition to the more than £5 billion core funding that local authorities expect to spend to deliver core education responsibilities.

Photo of Monica Lennon Monica Lennon Labour

I am pleased that the cabinet secretary said that health is a priority for the Government. If it had been a priority all along for SNP ministers, perhaps we would not be seeing life expectancy in Scotland fall for the first time in 30 years, health inequalities widen, Audit Scotland warn that the future of our NHS is not financially sustainable, NHS staff overworked and stressed, and a crisis in our underfunded social care services.

We need a transformative budget for health and social care that will end the deprivation gap and give everyone the same chance to live long and healthy lives. Can the cabinet secretary explain how the budget will tackle Scotland’s shocking health inequalities, rather than simply being an attempt to keep health boards afloat?

Photo of Derek Mackay Derek Mackay Scottish National Party

A rough guess leads me to suggest that the investment of more than £700 million that we are proposing in the budget might help. I have this to say to the Labour Party: I do not know whether Monica Lennon is aware of this, but we are delivering more than the Labour Party committed to delivering in its manifesto for the Scottish Parliament elections in 2016. Labour has opposed every increase for the national health service that I have proposed since I became Cabinet Secretary for Finance, Economy and Fair Work. We could do with a bit more support for investment in our national health service, rather than hearing empty rhetoric from members including Monica Lennon.

Photo of John Mason John Mason Scottish National Party

The cabinet secretary knows that many of us do not like the council tax and would like to see it being replaced. However, so far, no alternative has received widespread agreement. A local income tax might be fairer, but would take no account of property, and land valuation tax is not widely understood and has some anomalies. Does the cabinet secretary agree that if we are to replace council tax we want widespread cross-party agreement, so that there can be a longer-lasting—in fact, permanent—settlement for local government?

Photo of Derek Mackay Derek Mackay Scottish National Party

John Mason is always the voice of reason. I agree that we should work together to find consensus and a majority in Parliament on what local taxation would look like. I am open to that, as I have said repeatedly when Parliament has debated council tax and local taxation. My offer is for all the parties to discuss the matter together to see what alternatives we can find.

There are various workstreams under way, including in the Scottish Land Commission. We can also draw from existing evidence. I commit to being open, balanced and fair in respect of how we take the matter forward. A key element for the Government is that we want whatever tax system we have to be progressive.

Photo of Elizabeth Smith Elizabeth Smith Conservative

With reference to the investment in infrastructure section that is set out on page 40 of the budget paper, can the cabinet secretary confirm how much money will be available from the Scottish Government for the essential cross-Tay link road?

Photo of Derek Mackay Derek Mackay Scottish National Party

I will need to refer the question to the Cabinet Secretary for Transport, Infrastructure and Connectivity, who takes forward the work on infrastructure in both the city region deals, but I am happy to get back to Liz Smith.

Photo of Emma Harper Emma Harper Scottish National Party

The budget outlines a significant investment in Scotland’s health and care services, which will go towards reducing health inequalities for my South Scotland constituents. How does the increase in the Scottish health budget compare with the uplift in England?

Photo of Derek Mackay Derek Mackay Scottish National Party

By passing on the resource consequentials and reinstating the UK Government’s reduction of £55 million to health funding, the uplift for the health budget in Scotland amounts to 5.5 per cent, which compares with 5.1 per cent for the health budget in England.

Photo of Mark McDonald Mark McDonald Independent

Yesterday, I spent some time volunteering with the giving tree appeal that is being run by Instant Neighbour Aberdeen, which is a charity in my constituency. Thousands of children across the north-east will have to rely on the kindness of strangers to enjoy a merry Christmas this year, because of the poverty that they and their families are experiencing. Can the cabinet secretary outline how his budget will help to support families in my constituency, whose poverty is often masked by the wider prosperity of the city of Aberdeen?

Photo of Derek Mackay Derek Mackay Scottish National Party

In the budget, I have outlined the support that is available through our new social security system, and I have said that we will be spending more than was allocated to us by the UK Government for food and other payments, including the best start grant. We are also supporting housing investment and other welfare measures.

It is important to recognise that a range of partners have roles in supporting people who are in times of hardship. That is why I have tried to protect public services and have made a different choice from the Conservatives, whose choice is, of course, tax cuts.

The package of measures that we are undertaking will help us to mitigate poverty as far as we can, but it would be better if we had all the powers for the economy and welfare in Scotland. The damning report from the United Nations about the pernicious welfare reforms of the Conservatives and the impact that they are having should cause us to reflect on where power lies and how we use the resources that we have. However, there are in the budget a range of measures to support families who are in need throughout the year.

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

I warmly welcome the announcement of a new £50 million capital fund to diversify and develop our town centres and to help them to thrive. Can the finance secretary advise Parliament how communities and local authorities will be able to access those funds?

Photo of Derek Mackay Derek Mackay Scottish National Party

I am glad that Kenneth Gibson welcomes the £50 million capital fund for town centres. I will deliver the fund in partnership with local authorities, and I will engage with them in the period ahead on how it will be designed. I want it to be a stimulus for our town centres so that we can unlock their potential, support the economy and help them to diversify and adapt, which we know is what is required at this time.

Photo of Rachael Hamilton Rachael Hamilton Conservative

I draw members’ attention to my entry in the register of members’ interests.

The SNP minority Government will need allies to get the budget through—allies of the Green variety. Patrick Harvie wants local tax reform and a tourist tax. UKHospitality has pointed out that a tourist tax would be detrimental to Scottish tourism businesses and detrimental to businesses that already pay hundreds of millions of pounds in business rates. Will Derek Mackay give an assurance today that businesses will not have to endure a tourist tax? Will he rule it out once and for all?

Photo of Derek Mackay Derek Mackay Scottish National Party

I know that Rachael Hamilton is very interested in this subject. As part of the Scottish Government, I am engaging in a national conversation. As I said in my budget speech, I am looking at the evidence in relation to taxation including, specifically, the transient visitor levy—or tourist tax, as it is sometimes called. We are having that national engagement and I look forward to seeing the evidence.

Rachael Hamilton might want to welcome some of the other elements of the budget, including the lowering of the poundage for non-domestic rates. I think that I am getting a thumbs-up to that from Rachael Hamilton. We also have the most competitive package of business rates relief anywhere in the United Kingdom and the continuation of the growth accelerator, as well as all the investments that we are making to stimulate the economy.

I am quite sure that the tourism sector will welcome the further infrastructure investment in housing, digital and transport. That will all be very well received as, too, will the transitional relief for the hospitality sector that I am continuing in our non-domestic rates regime.

The Presiding Officer:

For the cabinet secretary’s information, I note that we have made good progress through questions. About 15 members still wish to ask questions, and we have just under 30 minutes to go. Several members have added their names. If others wish to press their request-to-speak buttons and add their names, they may do so, or we might finish early or the cabinet secretary might take longer to reply.

Photo of Shona Robison Shona Robison Scottish National Party

The cabinet secretary has set out plans to invest almost £500 million in the expansion of early learning and childcare, which will be warmly welcomed across Scotland. Is he aware that some councils are already delivering the 1,140 hours in some nurseries, including in Dundee, where an estimated 290 extra jobs will be created by 2020? Will he join me in urging all councils to use the money to deliver the policy as soon as possible?

Photo of Derek Mackay Derek Mackay Scottish National Party

Presiding Officer, some people have said that I might wish to engage in time travel. That is an interesting request to keep going until 5 o’clock.

On the specific question from Shona Robison, some councils have gone ahead and delivered the commitment in advance, but the delivery phase of the expansion is now well under way for early learning and childcare. That is why the multiyear revenue and capital package is so important for funding the expansion fully.

I encourage local authorities to continue to use the funding that we are providing to phase in increased hours in line with their local delivery plans and the expansion planning guidance, in order to ensure that children who will benefit most from the expansion also benefit first. I also encourage them to continue to work together with us to ensure that all eligible children benefit from the expansion from August 2020.

Photo of Daniel Johnson Daniel Johnson Labour

I was wondering whether the cabinet secretary could expand on the single sentence that he devoted to justice issues in his statement.

The Scottish Police Authority states that the recently agreed police pay deal will cost more than £125 million and, indeed, the police overspent by £38 million last year. The modest increase in the budget will be more than swallowed by that overspend alone. Therefore, will the cabinet secretary confirm that the police will need to make savings to meet their commitment on pay? What assessment of the impact on front-line police numbers has been made as a result of that?

Photo of Derek Mackay Derek Mackay Scottish National Party

It was the SNP Government, of course, who committed to increase police numbers, and that is exactly what we have done. In sharp contrast to the decrease in numbers in England and Wales, numbers have grown in Scotland.

There is a real-terms protection for the police resource budget, which is £19.1 million. It is important to say that, as is right, we have allowed the Scottish Police Authority to retain the spending power from the decision to enable VAT to be reclaimed. Further, the Scottish Police Authority would be in an even better financial situation if we got back from the Conservatives the VAT that they took from the police, and the same thing applies to the Scottish Fire and Rescue Service.

We are investing in the justice system and we have, once again, given real-terms protection to our police resource budget.

Photo of Fulton MacGregor Fulton MacGregor Scottish National Party

Can the cabinet secretary set out what provision there is in the budget to ensure that the Scottish Government funds the inquiry into child abuse, to ensure that victims’ voices are heard?

Photo of Derek Mackay Derek Mackay Scottish National Party

The Scottish Government will continue to fully fund the inquiry, which, like any enquiry, operates entirely independently of Government, to ensure that the voices of survivors of in-care abuse are heard.

The purpose of the Scottish child abuse inquiry is to raise public awareness of the abuse of children in care. It provides an important opportunity to publicly acknowledge the suffering of those children and a forum for the validation of their experience and their testimony.

Photo of Michelle Ballantyne Michelle Ballantyne Conservative

I thank the cabinet secretary for advance sight of his statement.

The budget states that the devolved elements of the social security system will be administered by Social Security Scotland, with a total administrative budget of £41.5 million in 2019-20. Earlier this month, it was reported that the Scottish Government has asked the Department for Work and Pensions to control the carers allowance for two more years at a cost of £2.4 million, and we know that the devolution of disability benefits will be delayed until the end of this parliamentary session. Will the cabinet secretary confirm that there will be no further delay, past 2021, in the Scottish Government assuming executive competence for those benefits?

Photo of Derek Mackay Derek Mackay Scottish National Party

To be fair, I think that that is a question for the Cabinet Secretary for Social Security and Older People, who could give an accurate answer about how the position stands. However, I have outlined in the budget the resources that we are allocating towards the new social security system and the commitments that we have made around the payments, and I have also mentioned what we are doing with regard to the safe and secure transition. We are putting investment in place.

I have to say that the Scottish Government’s view of fairness is quite different from the Conservatives’ view of fairness. We are putting in place the necessary infrastructure and resource to deliver the commitments that we have set out, but I am happy to defer to the social security secretary on the specifics of the question.

Photo of Joan McAlpine Joan McAlpine Scottish National Party

The cabinet secretary will be aware of submissions that have been made to the Culture, Tourism, Europe and External Affairs Committee by residents and traders in the Garnethill and Sauchiehall Street areas of Glasgow, whose lives and businesses have been completely disrupted in the aftermath of the most recent fire at the Glasgow School of Art, as has the whole area around that part of the city. Will the budget offer them any comfort?

Photo of Derek Mackay Derek Mackay Scottish National Party

The Glasgow fire recovery fund, which I established in July, is providing up to £5 million to Glasgow City Council to support businesses that have been affected by the fires at the Glasgow School of Art’s Mackintosh building and Victoria’s nightclub.

The fund has provided 200 businesses with around £3 million in direct support—£20,000 for businesses within the immediate fire cordons and £10,000 for eligible businesses within the wider Sauchiehall Street area. I will shortly be announcing plans for the remaining £2 million and I can assure all members that businesses that have been affected by the fires will benefit from the full £5 million.

Photo of Pauline McNeill Pauline McNeill Labour

The discretionary housing payment budget is split into two parts, which are for bedroom tax mitigation and “other”, and that “other” budget has remained static for two years, at £10.9 million. The cabinet secretary will know that termination of tenancy due to rent arrears is a major driver of homelessness and that, in universal credit areas, the rate of such termination is two and a half times higher. In fact, there is a case to be made for universal credit now being the biggest driver of poverty. To enable local authorities to tackle that, Labour is calling on the Scottish Government to double the “other” part of the discretionary housing payment budget to £20 million. Will the cabinet secretary consider that if that was included in his budget, he would prevent more evictions due to rent arrears and would do a great deal to prevent homelessness?

Photo of Derek Mackay Derek Mackay Scottish National Party

If I put that in the budget, would the member vote for it? It seems that she would. [


.] I understand that the purpose of this is for the Opposition to ask me questions, and I absolutely am answering questions. However, it is important to point out that when I ask whether the member would vote for the budget if I did what she is asking of me, I get silence. There is silence because the Labour Party has no alternatives to our budget, which invests more in social security, welfare, housing and supporting the most vulnerable in our society. If the Labour Party wants any amendments or changes, the duty is on Labour members to show how they would fund those. I am open to constructive engagement with the Labour Party to ensure that we have consensus to pass a budget.

Photo of Derek Mackay Derek Mackay Scottish National Party

I hear Pauline McNeill heckling me. If I made the change in the budget that she has asked for, would the Labour Party vote for it? If Labour comes up with a credible set of alternatives and a position, I will of course engage constructively with it, but I fear that, as a Labour source has suggested, the Labour Party right now is just a shambles.

Photo of Alex Cole-Hamilton Alex Cole-Hamilton Liberal Democrat

I thank the cabinet secretary for heeding the repeated calls of those on the Liberal Democrat benches for extra resources for mental health. What confidence can the cabinet secretary give the chamber that the money will do anything to reverse the national scandal that is waiting times for child and adolescent mental health services? Will the resources that are defined in his statement for mental health support in schools ensure that sufficient resource is available to ensure that every child in Scotland has access to the services of a trained mental health counsellor?

Photo of Derek Mackay Derek Mackay Scottish National Party

I understand the point that Alex Cole-Hamilton is making. It is right to reflect on the evidence that we have heard and the calls that have been made. We have been asked to increase mental health funding to improve signposting, provide support across the mental health landscape and recalibrate systems to ensure that support is there when it is needed, including in schools and in the education environment. It is a serious question, which is why we have allocated more. The Cabinet Secretary for Health and Sport and the Cabinet Secretary for Education and Skills take a close interest in the subject. We are confident that those extra resources will, indeed, make a difference.

However, I say again that if the budget is not passed, those resources will not be released to the health service, to schools and colleges and to those who will benefit from the investment. Members ask me what difference the extra investment will make. If they support that investment—if it is so important—surely they should vote for it.

Photo of James Dornan James Dornan Scottish National Party

At the Local Government and Communities Committee this morning, Graham Sharp, the chair of the Accounts Commission, confirmed to me that, despite the desperate claims of our political opponents, if we include council tax and other revenue-raising measures, the funding available to local authorities has not fallen at all. What action is being taken to ensure that local authorities continue to be protected, despite the on-going austerity cuts that the Scottish Government continues to receive from the Conservative Westminster Government?

Photo of Derek Mackay Derek Mackay Scottish National Party

I have set out a budget that ensures that the total core funding package for local government amounts to £11.1 billion, which is an increased settlement in cash terms and real terms. The budget provides a real-terms increase in the revenue and capital settlements in 2019-20 and a real-terms increase of more than £210 million in the overall settlement.

Photo of Alexander Burnett Alexander Burnett Conservative

I refer members to my entry in the register of members’ interests.

Can the cabinet secretary explain why he is proposing a decrease in spending in real terms on the prevention of flooding, while so many communities remain at risk, including several in my constituency?

Photo of Derek Mackay Derek Mackay Scottish National Party

Would that be another funding request from the Conservatives? They want to cut spending at the same time, of course. The funding of flood prevention and the work of our environmental agencies take into account the evidence. The resource is satisfactory, and the member should not be scaremongering about flood prevention measures.

Photo of Elaine Smith Elaine Smith Labour

Does the cabinet secretary agree that tackling poverty effectively depends on increasing household incomes and on moving away from the unacceptable society in which the use of food banks is the norm? Since he will not boost family incomes and immediately lift thousands of children out of poverty by implementing the £5 per week child benefit top-up, will his Government at least bring forward the planned implementation of the income supplement? Yesterday, churches, charities and experts on eradicating poverty called for it to be introduced. Families who are living in poverty cannot wait until 2022.

Photo of Derek Mackay Derek Mackay Scottish National Party

If members have alternatives, they should explain the alternative revenue-raising mechanisms that they would use to pay for commitments, over and above what is already in the budget. I am sure that Elaine Smith will welcome the extra investment in health, education, housing and all forms of infrastructure to support our economy. I believe that the best social policy is getting people into employment, so surely unemployment being at a record low is to be welcomed. We want fair, meaningful and purposeful employment. The support for families includes a social security system that is based on dignity and respect.

We are working on our more targeted income supplement measures, because targeted measures will make a greater difference than some of the alternatives that have been proposed would make.

Photo of Derek Mackay Derek Mackay Scottish National Party

I hear Labour members shouting, “Bring it forward.” My job is to deliver a balanced and competent budget, and that is exactly what I am doing. We have to make available the necessary revenues to fulfil our commitments, and that is what we have done. We have committed to investing in the national health service, to tackling the attainment gap and to mitigating the pernicious UK welfare policies. Labour members need to reflect on the fact that, for as long as they leave the economic and social levers at Westminster, there is only so much that we can do to safeguard Scotland and to mitigate the impact of Westminster’s decisions. That is why the Scottish Parliament should have the power and resources to fully protect the people of Scotland.

Photo of Rona Mackay Rona Mackay Scottish National Party

Tackling climate change is one of the most pressing challenges that faces the world today. In what ways will the budget help Scotland to meet its climate change obligations?

Photo of Derek Mackay Derek Mackay Scottish National Party

I will give some examples. We are doing more work on energy efficiency. We are on track to make £0.5 billion available over the four years to 2021, in order to improve energy efficiency through the energy efficient Scotland route map. We are investing nearly £59 million in forestry priorities, including support to stimulate and enable woodland creation across Scotland. We are investing £80 million in active travel to help to build an active nation and to make our towns and cities friendlier and safer places. We are investing £50 million in low-carbon transport measures, which include the expansion of electric vehicle charging infrastructure. We are continuing to deliver the climate justice fund, and to invest £42 million annually in local authority flood prevention projects, which were mentioned earlier. That is a flavour of some of the actions that we are taking to protect the environment. In addition, we will introduce the most ambitious climate change targets in the world.

Photo of Andy Wightman Andy Wightman Green

The cabinet secretary and his predecessor have talked much about progressive taxes. Data from Her Majesty’s Revenue and Customs shows that the bottom 20 per cent of earners pay 38 per cent of their income in direct and indirect taxes, while the top 20 per cent pay 37.4 per cent. He knows that a tax is progressive when the rate rises with the tax base. Given the data that I have noted, and given that a large reason for it is the regressivity of the council tax, when will he provide leadership by delivering the commitment that was made, in the commission on local tax reform, by his party, my party, the Labour Party and the Liberal Democrats that

“The present council tax system must end”?

Photo of Derek Mackay Derek Mackay Scottish National Party

The Scottish Government was elected on a 2016 manifesto that outlined a more progressive council tax, which I have delivered through increasing the higher-value bands and through council tax caps. I have been delivering what was in the SNP manifesto.

However, I recognise that this is a minority Government, and we need to look at the matter in a consensual, cross-party way in order to find alternatives. I am going to be constructive and open in engaging in that discussion, and I am sure that Andy Wightman will be, too.

Photo of George Adam George Adam Scottish National Party

I know that the cabinet secretary is a keen sports fan and that the Scottish Government is committed to improving health and wellbeing. With that in mind, can he tell me what funding has been made available to sportscotland to boost activity and participation in sport?

Photo of Derek Mackay Derek Mackay Scottish National Party

I thank George Adam for what I think was a compliment. I did not realise that supporting St Mirren qualified me.

Photo of Derek Mackay Derek Mackay Scottish National Party

I hear the member shout “Of course it does” from a sedentary position.

In 2019-20, sportscotland will receive a 3 per cent funding uplift to support the priority of getting Scotland active, and the Scottish Government will continue to underwrite the potential shortfall in lottery funding of up to £3.4 million for sportscotland in 2019-20 and to encourage the UK Government to take the necessary actions to address lottery reductions.

Photo of Peter Chapman Peter Chapman Conservative

We have been promised for some time that, under the reaching 100 per cent programme, there would be a spend of £600 million to deliver superfast broadband to everyone in Scotland. However, I see from the budget just published—[



Photo of Peter Chapman Peter Chapman Conservative

I see from page 146 of the budget just published that total spending on digital connectivity in 2019-20 will be only £32.9 million. What has happened to the £600 million and when will superfast broadband be delivered to remote and rural areas?

Photo of Derek Mackay Derek Mackay Scottish National Party

We are still committed to spending that £600 million to take superfast broadband to every part of the country. That is an incredible investment, considering that it relates to the UK Government’s responsibility with regard to telecommunications. We are investing in our infrastructure, with a total infrastructure spend of £5 billion proposed in the budget. That is a fantastic investment in the infrastructure of our country, and it is no doubt opposed by the Conservatives.

Photo of Colin Smyth Colin Smyth Labour

This week, ScotRail introduced a new timetable, but it is business as usual for Scotland’s hard-pressed rail passengers with delays, overcrowding and cancellations, and performance at its worst since this rail franchise began. However, come January, fares will increase by 10 per cent. Why did the cabinet secretary not use the budget process to try to give Scotland’s long-suffering rail passengers a break instead of simply rubber stamping yet another fare hike?

Photo of Derek Mackay Derek Mackay Scottish National Party

As a former transport minister, I know that it would be helpful if we had control of Network Rail in Scotland instead of leaving it to the UK. That is a significant issue, and the Labour Party could greatly help the rail network if it supported us in transferring that power to Scotland.

Of course, it is this Government that is investing in more trains, in new trains, in an electrified service that will be better, in Queen Street and in the Edinburgh to Glasgow improvement project. The Labour Party talks about the railway network, but we are actually getting on with delivering.

Photo of Derek Mackay Derek Mackay Scottish National Party

I hear James Kelly shouting about the rail fares freeze that the Labour Party is proposing. What Labour is proposing is a shambles of an alternative budget—it is not a competent budget whatsoever. Rail fares in Scotland will go up by an average 2.8 per cent in January 2019, which means that the average rate of increase in Scottish rail fares will remain lower than the average increase across Britain, which is 3.1 per cent.

Photo of Gillian Martin Gillian Martin Scottish National Party

Can the cabinet secretary outline what his announcement today with regard to the health budget means for NHS Grampian?

Photo of Derek Mackay Derek Mackay Scottish National Party

I do not have the specific figure to hand, but I am quite sure that Gillian Martin will welcome the overall increase that the health service will enjoy.

Photo of Liam Kerr Liam Kerr Conservative

In its programme for government, the SNP promised to drive forward police transformation, including vital IT upgrades. The budget appears to cut police funding by around £25 million. Has the cabinet secretary broken his promise to police officers?

Photo of Derek Mackay Derek Mackay Scottish National Party

No, I have not—the commitment was to protect the resource budget in real terms and that is exactly what we have done.

Photo of Neil Findlay Neil Findlay Labour

People are supposed to be Scotland’s greatest asset, yet 1,000 of them a year are dying on our streets due to drugs. There is no extra money in the budget to address that national crisis; it is a crisis not just in this city, but in every town across Scotland. However, it is not even mentioned in the whole of the budget. Why?

Photo of Derek Mackay Derek Mackay Scottish National Party

The Scottish Government invests in strategies through health and local government, and those portfolios will enjoy an increase in real terms. As I have set out clearly, had I left it to the numbers that I inherited from the Conservative Party, it would have been real-terms reductions in all portfolios other than health. However, I have invested in both health and local government, and there will be strategies and support in those areas to support the people mentioned by Neil Findlay.

Photo of Gil Paterson Gil Paterson Scottish National Party

Significant building of affordable houses is taking place in my constituency; unfortunately, we need more. Will the cabinet secretary outline what the budget can do to continue that welcome and vital work? If I get a good answer, I will definitely vote for the budget.

Photo of Derek Mackay Derek Mackay Scottish National Party

I really hope that I can get Gil Paterson’s support for the budget, otherwise I really am in trouble.

The specific commitment for housing that I have set out in the budget is more than £800 million for the next financial year. That is a contribution to the £3 billion commitment to housing to reach the 50,000 target. We are on track—it is good news. That is necessary and welcome investment in housing, and I am sure that it will cover every part of the country, including Gil Paterson’s constituency. I hope that that, and everything else in the budget, will encourage Gil Paterson and all other members to vote for it.

Photo of Edward Mountain Edward Mountain Conservative

On a point of clarity, the Scottish Government has set aside £121 million for the next two years for two new ferries. I believe that the cost of the two new hybrid ferries was £97 million. Is the Scottish Government committing to a further new ferry, or is it anticipating that the contract for the two hybrid ferries will exceed the £97 million cost by £24 million?

Photo of Derek Mackay Derek Mackay Scottish National Party

We are investing in the ferry network. We have clearly set out a position on the current procurement issue at Fergusons. We continue to invest in our ferry network, including direct investment around the road equivalent tariff. We have also set out a vessel replacement and investment strategy. I am sure that the transport secretary will be keen to set out more about that in due course.

Photo of Sandra White Sandra White Scottish National Party

This afternoon, I hosted a successful meeting of the cross-party group on older people, age and aging. Loneliness and isolation came top of the agenda with regard to what older people expect. Is there a timescale for the framework policy and strategy on older people?

Photo of Derek Mackay Derek Mackay Scottish National Party

That is a matter for other colleagues, principally the Cabinet Secretary for Communities and Local Government. However, I know that significant investments have been put in place around social inclusion and that the uplift to local government will also be welcome. We are taking a preventative approach, and there will be further welcome action to support people in their own homes through health and social care integration.

Such investments will help to tackle social isolation. We are doing everything within our powers to support older people in our society.

Photo of Jackie Baillie Jackie Baillie Labour

I refer the cabinet secretary to the section in his budget document on Scottish Water. Try as I might to find it, there is no mention of the single person’s discount. Could he therefore confirm that he has abandoned proposals to cut the single person’s water discount, or is he still intent on robbing half a million people in Scotland, the majority of whom are on low and fixed incomes?

Photo of Derek Mackay Derek Mackay Scottish National Party

I can advise Jackie Baillie that

Roseanna Cunningham is taking that consultation forward and will look at the submissions to it. No decisions have been taken, but I am sure that the chamber will be updated in due course.

Photo of John Scott John Scott Conservative

Although I welcome the increase of £175 million in the budget for education and, in particular, nurseries, will the cabinet secretary ensure that support that is intended for capital investment in infrastructure will be reasonably and fairly distributed between public and private sector providers, particularly in South Ayrshire?

Photo of Derek Mackay Derek Mackay Scottish National Party

The Deputy First Minister and Cabinet Secretary for Education and Skills will take forward that exciting programme. The arrangement that we have with local government, to which we have committed, is for a multiyear settlement, which has been agreed with local government in a formula and fashion that represent a partnership approach. The resources that we are putting in to meet our commitment on early learning and childcare are substantial, and of course we want to work with private sector and partnership nurseries, too.

We are taking forward our investment in early years and childcare in a constructive fashion, and we are putting our money where our mouth is. We are ensuring that that entitlement, which is welcomed around the country, is being delivered in accordance with the plan set out by the Deputy First Minister.