Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.

Donate to our crowdfunder

Scottish Government Budget

– in the Scottish Parliament on 7th January 2020.

Alert me about debates like this

Photo of Rhoda Grant Rhoda Grant Labour

To ask the Scottish Government, in light of today’s announcement that the United Kingdom budget will be published on 11 March, when it expects to publish its own budget.

Photo of Derek Mackay Derek Mackay Scottish National Party

The UK Government gave no prior notice before announcing its budget date, showing complete disrespect for the Scottish Parliament and our budget process. I received no response to our repeated calls for clarity on the budget date, including my most recent letter to the Chancellor of the Exchequer of just two weeks ago. The UK Government’s approach to the Scottish budget is completely unacceptable. The delay of more than four months since the original planned budget date cannot be blamed on the general election, and it suggests a total disregard for devolution and a lack of fiscal responsibility.

Despite that, we remain focused on introducing a Scottish budget for 2020-21 at the earliest practical opportunity. We will continue to engage with the Scottish Parliament and the Scottish Fiscal Commission on how best to respond to what are exceptional circumstances. An announcement on the proposed date for the introduction of the Scottish budget will be made in due course.

Photo of Rhoda Grant Rhoda Grant Labour

On 22 December, the finance secretary published his letter to the chancellor, in which he wrote:

“It is essential that the Scottish and UK Governments co-operate closely in order to enable a Scottish Budget to be in place by the beginning of the next fiscal year.”

Will the cabinet secretary outline the risks relating to the timing of this year’s UK budget, particularly the risks to local government budgets? Local government provides essential front-line services to our communities. What action is he taking to mitigate those risks?

Photo of Derek Mackay Derek Mackay Scottish National Party

Rhoda Grant has asked very fair questions. I confirm to the chamber that I have had no response from the chancellor to that letter, or to my previous letter, in which I raised some of those issues and particularly highlighted the risk to Scotland’s public services of the UK budget being later.

My understanding is that the UK budget was ready in November, but the Tories chose not to go ahead with it. They did not go ahead with it after the general election. They could go ahead now but—for whatever reason, and without explanation—they are choosing to hold the budget back until 11 March. That is a key date, because it is the final date by which councils must have set their budgets and council tax levels.

Clearly, the UK Government’s decision to delay the UK budget once again will have profound consequences. Even with the clarity of now having a date—although, when it comes to Boris Johnson, we will believe it when we see it, because the Prime Minister told us that the budget would be in February but it is now to be in March—we need the detail on the block grant adjustment and the economic forecasts to determine the Scottish budget. I was able to share with Opposition spokespeople some of the risks and scenarios if there was such a delay to the UK budget.

I agree with Rhoda Grant that the UK Government’s actions are disrespectful of devolution. The UK Government knows the consequences but does not care about them. It appears to me that, in not wanting to make our established processes work, the Tory UK Government has given up on the union altogether. Having wrecked their own processes, the Tories are trying to wreck the Scottish Parliament’s processes, too, but we will not let that happen. I just wonder whether this is a sign of things to come from the Tory Government.

Without that certainty on the numbers, we will try to work with the UK Government, but it appears that it does not want to work with anyone. We will engage with Opposition parties, with Parliament, with the Finance and Constitution Committee and with the Fiscal Commission so that we can take forward a transparent, orderly, consensual and constructive approach, in order to give Scotland the certainty and confidence that it needs and deserves.

Photo of Rhoda Grant Rhoda Grant Labour

I thank the cabinet secretary for that response, and I share many of his concerns. He will be aware that the Scottish Parliament will have very little time to adequately scrutinise the Scottish budget this year, because of the timeline. How does he plan to maximise that scrutiny, and will he publish his current plans for the Scottish budget, as it would be prudent to understand any significant changes that are planned at this point?

Photo of Derek Mackay Derek Mackay Scottish National Party

Clearly, the traditional process that we were establishing—and, indeed, the most recent agreement that we have with the Parliament—will not be fit for purpose because of the UK Government’s actions. We will need an exceptional, bespoke process for this year’s budget approach.

Rather than my setting out a plan—by the way, I found out about the date like everyone else did, through the news, as I came into our nation’s capital this morning—I will engage with the Finance and Constitution Committee, as I have said I would, so that we can set out in partnership a proposed way forward, rather than my presenting one as a fait accompli.

Of course, this was one of the scenarios of what could happen. It would have been more helpful if the UK Government had engaged with us so that we understood its budget timeline process. However, I will work constructively with Opposition parties on the process and, of course, the content of the budget.

Because the UK Tory party and the UK Government have acted irresponsibly, I think that there is a duty on all Opposition parties in this Parliament to act responsibly in terms of process, so that we can have confidence going forward. I will engage with parties on that process and on the timescale, but if there is a truncated scrutiny period, that will not be because of the actions of the Scottish Government; it will be because the actions of the reckless UK Tory Government have taken us to this position.

Clearly, because of the timelines that Rhoda Grant has raised, we will want to give local government and others as much certainty as possible. I welcome the letter that I just received from the Convention of Scottish Local Authorities and local government, which said that they would be very happy to meet to discuss the implications of budget timing and what COSLA can do to support an earlier budget. I will engage with COSLA and Opposition parties to make the best of a bad situation, which was brought on us by the reckless approach of the UK Tories.

Photo of Kenneth Macintosh Kenneth Macintosh Labour

Six members wish to ask supplementaries, so I appeal for brevity.

Photo of Murdo Fraser Murdo Fraser Conservative

Despite all the bluster that we have heard from the cabinet secretary, I am sure that he is well aware that the budget is delayed because we had a general election in December—a general election that Scottish National Party members in this chamber called for. They can hardly pin the blame elsewhere when they were demanding that general election.

More important than the timing of the budget is the question of how the finance secretary will spend the money. Given what we know already about the Barnett consequentials coming to Scotland as a result of UK spending plans that have already been announced, can the First Minister confirm that this year he will not be cutting local government’s core budgets, unlike the actions that he has taken in the past? Even when his own budget has increased, he has slashed local councils’ budgets. Will he not do that this year?

Photo of Derek Mackay Derek Mackay Scottish National Party

Murdo Fraser inadvertently gave me a wee upgrade in the middle of his question. Just as he got my title wrong, he has probably got the figures wrong as well. As for

Boris Johnson, if he cannot even get the month of his budget right, how am I expected to believe what he says when it comes to the detailed numbers in the budget?

I want to see the colour of the Tories’ money. I want to see the detail of what is coming to Scotland. As Murdo Fraser knows only too well, it is not just the Barnett consequentials but the UK Government’s tax proposition, the economic forecast, the position of the Office for Budget Responsibility and, in Scotland, the position of the SFC that determine the materially significant numbers that drive the budget. For many of those factors, we require the UK budget, which we now understand is to come on 11 March. We will look at the detail, we will engage constructively with parties and we will come up with a process that is the best that it can be in the circumstances.

Finally, on the general election, I understand that the UK budget was good to go in November last year. There is no reason why the UK Government cannot go ahead with its budget now, in January this year, particularly given that we know that it was pretty much good to go in November. If I remember correctly, the general election was in mid-December. The Tories could have got on with the budget, but for whatever reason they have been somewhat distracted from their day job.

Photo of Maureen Watt Maureen Watt Scottish National Party

The cabinet secretary has previously stated that, despite having written to the UK Government urging early dialogue, his requests have gone unanswered. Can he update the chamber on whether he has since received a response and provide a further update on his statement that his officials will continue to work with committee clerks and the Scottish Fiscal Commission on contingency options around the budget process and timetable?

Photo of Derek Mackay Derek Mackay Scottish National Party

The chancellor never writes, never calls and never reaches out.

Members:

Aw!

Photo of Derek Mackay Derek Mackay Scottish National Party

I hear the sympathy of the Conservative members. However, the problem is that this is about not just respect for the Scottish National Party, which of course won the general election in Scotland, but respect for a nation and its Parliament and Government. It is about good governance and responsible fiscal policy and a degree of honour in the established relationships, protocols and custom and practice, which the UK Government has totally disregarded. Although the UK Government shows no interest in working with anyone but itself, the Scottish Government will try to reach out and to work with parliamentary committees to ensure that we have an appropriate process and the best possible numbers in order to go forward.

I say again that it appears to me that the UK Tory party has given up on the union by not even supporting devolution in its working; it will pay the price for that disrespect for this country.

Photo of Patrick Harvie Patrick Harvie Green

It scarcely matters any more whether what is being done by the UK Conservative Party is being done deliberately because it wants to cause chaos or because it simply does not care. The fact that so many Conservative MSPs have been laughing their way through this entire discussion suggests that it is the latter reason, but the effect is the same. I again urge all MSPs, from all political parties, to bring to the table constructive and workable ideas for improving the Scottish budget. In order that we have any time at all for discussion of the budget and to ensure that we achieve some degree of consensus on the budgetary choices, does the cabinet secretary accept that we will have to see, at least in draft form, a budget well before 11 March?

Photo of Derek Mackay Derek Mackay Scottish National Party

That is a very helpful approach. My door is open to all political parties to have discussions on constructive and workable ideas and solutions. I will, of course, continue to engage on the process and content of the budget.

On the timescales, I said that I want an orderly process that inspires confidence, achieves the ambitions set out in the programme for government and allows us to give certainty to our valued public services. The matter of timing also involves tax decisions. The budget has complexities, such as the Scottish rate resolution, which must be passed in order to raise any income tax revenue at all, which is a huge part of the Scottish budget, and the non-domestic rates resolution, which has to be passed to raise the necessary non-domestic rates to invest in our local services. There are so many areas of complexity that have to be considered. However, I will absolutely have that early engagement and, in terms of the timing, return to Parliament once we have a decision after having engaged with the Finance and Constitution Committee.

The important point, though, is that we have enough confidence to be able to proceed in a way that will put us on the strongest possible footing going forward. It will be for all parties to act responsibly to ensure that the position in which we find ourselves does not lead to a precarious position for the budget. It is unthinkable for the budget in Scotland not to be passed, because such a situation would bring about terrible calamity for our public services and communities, and the people of Scotland. This is the year when, like never before, we should work together to ensure that, following the UK Government’s irresponsibility, we have a consensus on the Scottish budget that shows responsibility.

Photo of Gordon MacDonald Gordon MacDonald Scottish National Party

With the UK budget being delayed until 11 March, what impact will not knowing the level of the block grant from the Treasury have on setting Scottish income tax and thresholds?

Photo of Derek Mackay Derek Mackay Scottish National Party

That is about the interrelationship between UK tax rates and Scottish tax rates in relation to income tax. The block grant adjustment has a huge impact on how much income tax we can raise.

It would have been far better if the UK Government had gone first, as was expected. We could then have responded accordingly. However, we will look at the options and then return to Parliament. Income tax is now a massive part of Scotland’s budget and therefore we take it very seriously.

Photo of Willie Rennie Willie Rennie Liberal Democrat

It is pretty shoddy and out of touch for the UK Government to hold back the budget until March— that is certainly true. It is not the inconvenience to the Scottish Parliament that really matters, though; it is the potential impact on public services that counts.

Will the Scottish Government be proposing a temporary amendment to section 93 of the Local Government Finance Act 1992 to allow local authorities to set their council tax rates after 11 March?

Photo of Derek Mackay Derek Mackay Scottish National Party

That is one of the options, but all of this is very complex. I am happy to engage with the Convention of Scottish Local Authorities, which has just written to me today to suggest a meeting about how it can provide support following the UK Government’s decision. I will engage with local government to find out whether that is the kind of thing that it wants to explore. It is one of the options that is on the table.

Photo of Tom Arthur Tom Arthur Scottish National Party

As the cabinet secretary has highlighted, without the UK budget we do not have clarity on the funding that is available for public services in Scotland. Does the cabinet secretary agree that the UK Government’s approach shows not only a complete lack of respect for Scotland but for all devolved nations, and for the potential impact that its decisions can have on vital devolved public services?

Photo of Derek Mackay Derek Mackay Scottish National Party

Its failure to communicate and respond certainly does exhibit disrespect. I sometimes wonder why we engage so intensively with the Chief Secretary to the Treasury and others if this is how they choose to treat us when it comes to such important matters. I hope that they learn a lesson from this.

Apart from the Conservatives—although possibly even the Conservatives, privately, agree— the rest of the Parliament shares concerns about how Scotland’s devolved arrangements, public services and taxpayers have been treated through this shoddy process, at the hands of the chancellor. By the way, I have been advised that there might be a reshuffle of the UK cabinet in February, so who knows whether Sajid Javid will be the chancellor post-reshuffle and who knows who will deliver the UK budget on 11 March. The point is that the UK Government has shown a total lack of respect and has disregarded devolution and the usual custom and practice. Given the complexities in the budget process I thought that this year, with all the Brexit turmoil that we are going to face, it would have taken a more constructive and helpful approach. It is not too late for it to do that, but it has shown no sign of doing so. We will work through these issues to give Scotland the leadership and the competent Government that it deserves.