Budget 2018-19 (Underspend)

– in the Scottish Parliament on 27th June 2019.

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Photo of James Kelly James Kelly Labour

7. To ask the First Minister for what reason the 2018-19 Scottish budget was underspent by £449 million. (S5F-03474)

Photo of Nicola Sturgeon Nicola Sturgeon Scottish National Party

The finance secretary provided a full statement and a detailed briefing paper to members on 20 June that explained the 2018-19 provisional outturn position. Under the current devolution settlement, the Scottish Parliament is not permitted to overspend its budget and I do not think that it takes too much consideration to understand why we need to plan carefully to make sure that we do not do so.

The underspend, which is part of careful management, represents a tiny fraction of our overall budget and it is carried forward in full through the Scottish reserve, with most of it supporting the 2019-20 Scottish budget. The position also enables us to increase our reserves to ensure that we can respond to future challenges, such as Brexit, and of course every single penny of any underspend is used to support public services in Scotland.

I have to point out that that position is in stark contrast to that of the Labour-led Scottish Executive, which between 1999 and 2007 returned a total of £1.5 billion to the United Kingdom Treasury because it could not work out how to spend it.

Photo of James Kelly James Kelly Labour

Last week, the First Minister told Parliament that every penny in the Scottish budget was accounted for. What she did not—[

Interruption

.] What she did not tell us, and what we know now, is that nearly £0.5 billion was being kept back in a Scottish Government slush fund.

I agreed with Nicola Sturgeon previously—[

Interruption

.]

Photo of James Kelly James Kelly Labour

I agreed with Nicola Sturgeon previously when she said that the Tory two-child benefit cap is abhorrent. Therefore, why did the Government not allocate £69 million in the 2019-20 budget from the £449 million underspend to cancel out that horrendous Tory policy?

The First Minister:

I am really sorry to say this, but I actually feel quite embarrassed for James Kelly right now. After so many years in the Parliament, that he does not have even a basic grasp of the basic principles of government and budgeting is really quite staggering.

Let me try to explain it simply to James Kelly. Every penny of the underspend, as he describes it, that can be allocated is already allocated in the Scottish budget for this year and not a penny of it goes back to the Treasury. Yes, we put some of it into reserves—I think that doing so is common sense. What if we have a major flooding incident or have to respond to Brexit, as we will undoubtedly have to do? It is commonsense budgeting.

I will leave James Kelly with two final things to ponder over the summer recess. I have already mentioned the first thing—the £1.5 billion that the last Labour Government gave back to the Treasury. The second is this fact: the total cash underspend that was reported this week is 0.9 per cent of our budget. That compares to 1.1 per cent in the previous year, so it has gone down. By comparison, in the same year in which the underspend here was 1.1 per cent, the Labour Party in Wales had an underspend of 2.1 per cent. Like us, it knows that it has to budget sensibly.

All James Kelly has done today is demonstrate why fewer and fewer people in Scotland ever want to see the Labour Party sitting on the Government benches.

Photo of Murdo Fraser Murdo Fraser Conservative

As well as a £449 million underspend, according to the Scottish Fiscal Commission, the Scottish Government has a looming £1 billion black hole in its budget. Yesterday, the Fraser of Allander institute told us that the Scottish Government’s £500 million tax raid on hard-working Scottish families will not deliver one extra penny for Scottish public services, because all that money disappears into the black hole.

The finance secretary does not have a clue what to do about the problem. Does the First Minister?

The First Minister:

I know that we are about to break for the summer recess, but when I get James Kelly followed by Murdo Fraser, it feels more like Christmas than summer. What a tremendous way to end the year.

There is no black hole in the Scottish budget, as anybody who understands the figures and what the Scottish Fiscal Commission actually said would know. However, let me tell the chamber what would put a black hole in the Scottish budget: Tory tax cuts for the richest in our society, costing £550 million. That is what would put a black hole in the Scottish budget, which is why fewer and fewer people in Scotland want to see the Tories sitting on the Government benches.

The Presiding Officer:

That concludes First Minister’s question time. There are no questions to be put as a result of today’s business. I will see you all on Saturday—enjoy the recess.

Meeting closed at 13:46.