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Tax and Public Spending

– in the Scottish Parliament on 5th February 2020.

Alert me about debates like this

Photo of Christine Grahame Christine Grahame Scottish National Party

The next item of business is a debate on motion S5M-20716, in the name of Murdo Fraser, on there being no case for tax increases or further cuts to public spending. We have time in hand for interventions.

Photo of Murdo Fraser Murdo Fraser Conservative

T omorrow, the Cabinet Secretary for Finance, Economy and Fair Work will set out his budget for the coming financial year. I think that we are all looking forward to that occasion; it is the highlight of my year, Presiding Officer. We think that this afternoon is good opportunity to set out what we believe his budget priorities should be, and to allow members of other parties to set out their thoughts.

I am not so naive as to think that what is said in the debate will necessarily influence the finance secretary’s thinking ahead of tomorrow; indeed, I fully expect his budget documents, if they have not already been printed, to be on their way to the printers.

However, tomorrow is just the start of the budget process. Over the next four weeks, there will be discussion, scrutiny and negotiation. Today, we are setting out our stall. I hope that the debate will be positive and constructive. Who knows? We might be able to find a degree of consensus about our collective priorities for the budget for the coming year.

I start by setting out a little of the background to this year’s budget. I appreciate that with the United Kingdom budget not being delivered until 11 March, we do not yet have precise figures to inform our budget settlement. Nevertheless, a great deal of information is already in the public domain, which enables the Cabinet Secretary for Finance, Economy and Fair Work to go ahead and put proposals to Parliament. That is what the Welsh Government has done; indeed, it presented its budget proposals to the National Assembly for Wales back in December.

Therefore, let no one pretend that the timing of the UK budget has made it impossible for the finance secretary to bring forward his budget plans. Indeed, historically, Scottish budgets have been presented in September, well ahead of UK budgets in March of the following year. The current fiscal framework was negotiated and agreed by the Scottish Government against precisely that backdrop. I therefore hope that we will hear no more faux outrage from the Scottish National Party about budget timings.

We know from spending decisions that have already been made that the block grant from Westminster will grow by at least £1.1 billion from this year to next year. According to the Fraser of Allander institute, that amounts to a 2.1 per cent real-terms increase. That Boris bonus gives the finance secretary considerable extra money to spend.

However, that is not the entire picture, because the block grant has to be adjusted in two respects. First, we know that we are carrying forward a negative reconciliation of approximately £200 million that is due to overestimation of tax revenues by the Scottish Government three years ago.

Photo of Murdo Fraser Murdo Fraser Conservative

If the finance secretary wants to intervene and explain to me why that is not true, I will give way.

Photo of Derek Mackay Derek Mackay Scottish National Party

Does Murdo Fraser not understand—or, indeed, know—that the tax forecasts are made by the Scottish Fiscal Commission and not by the Scottish Government?

Photo of Murdo Fraser Murdo Fraser Conservative

I regret to tell the finance secretary that he is wrong, because the overestimate that I referred to was an estimate that was made by the Scottish Government before the Scottish Fiscal Commission took on that responsibility. He does not even understand his own brief.

On top of that £200 million reconciliation, there is likely to be a negative impact because Scottish income tax receipts are expected not to grow as much as those in the rest of the UK. That is according to the most recent Fiscal Commission set of forecasts. Of course, we will get updates on those tomorrow.

According to the Fraser of Allander institute, those factors combined take block-grant growth down from 2.1 per cent in real terms to just 1 per cent. In other words—and to put it bluntly—more than half the benefit of the Boris bonus that is coming to Scotland from Westminster is being lost because of the Scottish Government’s inability to grow income tax revenues by at least the UK average rate. Our ability to fund public services is being damaged because our economy is not growing fast enough.

Photo of John Mason John Mason Scottish National Party

Does Murdo Fraser accept that it was not entirely the Government that was responsible for that estimate, and that Her Majesty’s Revenue and Customs did not know how many Scottish taxpayers there were, who Scottish taxpayers were and how much tax they were paying?

Photo of Murdo Fraser Murdo Fraser Conservative

John Mason makes a reasonable point in relation to the original forecast of tax revenues, but my point is that we now have much better information for the forecasts. We cannot blame the relative drop in income tax receipts on a forecasting error when the problem is the inability of our economy to grow fast enough or, at least, in line with the UK average.

In our discussions on the issue, we should never forget that Scotland benefits from a union dividend that is now worth nearly £2,000 for every man, woman and child in Scotland. That is the value of the fiscal transfer from the rest of the United Kingdom to support higher public spending in Scotland than is possible elsewhere. That payment is not primarily because the Scottish economy is performing worse than the UK average, although that is a factor; it arises substantially because of the much higher public spending levels here than exist elsewhere in the UK.

SNP members who want to draw a comparison between public spending rates in Scotland and those south of the border—as they often do—need to be honest and tell people that if we were to go down the route of independence that they propose, all that benefit would be lost, and that they have absolutely no idea how they would make up the difference or how that fiscal transfer of more than £10 billion would be replaced.

Ahead of the budget tomorrow, we have set out our position on what the finance secretary’s priorities should be. I will spell them out again for members.

With the Boris bonus and increases in the block grant, there can be no justification for any additional tax rises or further cuts to public spending. We have put forward a set of measured proposals that we have costed fully.

Photo of Murdo Fraser Murdo Fraser Conservative

No. Let me make some progress.

Our proposals are costed at £777 million. I was therefore rather surprised to see that the Government’s amendment to our motion claims that our proposals would cost more than double that, at £1.5 billion. That is fake news from the people who brought us the 2014 independence white paper, promised an oil price of $110 a barrel and said that we could set up a whole new country for the sum of £200 million. We cannot trust a word that they say. Financial illiteracy seems to be a qualification for being in the Scottish Government.

Talking of financial illiteracy, I give way to the Minister for Public Finance and Digital Economy.

Photo of Kate Forbes Kate Forbes Scottish National Party

Would Murdo Fraser be willing to publish his costings and associated lines?

Photo of Murdo Fraser Murdo Fraser Conservative

I would be absolutely delighted to do that. I will pass them across the chamber to the finance minister right now.

The two areas that we view as priorities for the budget are measures to grow the Scottish economy and support for vital public services. We will assess any budget proposals from the SNP Government against those priorities.

Let me deal first with the question of income tax. Over the past two years, as a consequence of the finance secretary’s nefarious deals with the Green Party, Scotland has become the highest-taxed part of the United Kingdom, with everyone who earns more than £27,000 per annum paying more income tax in Scotland than they would in the rest of the UK. To put that in simple terms, it means that public servants including police sergeants, senior nurse managers and principal teachers now pay more tax than their counterparts south of the border—in some cases, more than £1,500 a year more.

The SNP will argue that the tax increases are justified because they are supporting better public services. However, the reality is somewhat different. That was confirmed in the evidence that Mairi Spowage, who is the deputy director of the Fraser of Allander institute, gave to the Finance and Constitution Committee just last week. She confirmed that the additional tax that has been raised by the changes to rates and bands has been offset by reductions in income tax more generally, because of slower overall income-tax growth in Scotland than in rest of the UK. She said:

“Looking ahead, the effect of the higher tax rates in Scotland is broadly cancelled out by the fact that the outlook for wage growth in Scotland is slower than in the rest of the UK.”—[

Official Report, Finance and Constitution Committee

, 29 January 2020; c 12.]

In other words, if we were to grow the Scottish economy at just the same rate as the UK average and if we were to grow income tax receipts at the same rate as the rest of the UK, there would be no need whatever for the income tax differentials, and we would raise the same amount of money.

The evidence from the respected Fraser of Allander institute gives the lie to the notion that better public services in Scotland can be supported only by higher tax rates. In reality, the same outcome can be achieved by growth in the economy and tax take.

Photo of Murdo Fraser Murdo Fraser Conservative

Mr Rennie caught my eye first, so I will give way to him.

Photo of Willie Rennie Willie Rennie Liberal Democrat

I hear what Murdo Fraser is saying, which is why I am confused that his motion and budget proposals implicitly support the tax rise by refusing to reverse it. Why is that? Will he clear that mess up?

Photo of Murdo Fraser Murdo Fraser Conservative

I am grateful for Willie Rennie’s intervention, because I was just going to make precisely that point. He has given me a cue to do that.

I would dearly love the finance secretary to reverse his tax increases in the forthcoming budget, but I am realistic enough to know that that is unlikely. At the very least, we want no further divergence between Scotland and the rest of the UK.

At this point, we do not know what the Chancellor of the Exchequer has in mind for income tax south of the border, and we will not know that until 11 March. However, it is reasonable to expect that the thresholds will be uprated in line with inflation, which is the least that we expect from the Cabinet Secretary for Finance, Economy and Fair Work. We do not want to see the benefit of any tax cut following on from an increase in the threshold for paying national insurance—which would benefit workers in Scotland as in the rest of the UK—being clawed back by higher tax rates from the finance secretary in Scotland.

Income tax is not the only tax lever that is under the finance secretary’s control. Yesterday, we had a long debate on the Non-Domestic Rates (Scotland) Bill—we will return to it later this afternoon. We believe that the business rates system is in need of comprehensive reform. In the short term, we suggest a minimum of two measures. First, there should be a reduction, at least to the same level as is paid in the rest of the UK, in the large business supplement, which penalises Scotland by being set at a rate that is double that for the rest of the UK. Secondly, there should be retention of all existing reliefs, including the small business bonus and the reliefs whose removal is included in the Non-Domestic Rates (Scotland) Bill.

In addition, we are very clear that we would not support the imposition of any new taxes or levies in the forthcoming budget—so we say “No thank you” to any more daft ideas like the car park tax that was put forward by the Greens last year.

Photo of Murdo Fraser Murdo Fraser Conservative

I need to make some progress.

My colleagues will set out in more detail later in the debate our priorities for public services spending, but when it comes to the national health service, we want all Barnett consequentials that arise from increased health spending in England to be passed on to the NHS in Scotland. Within that envelope, we want a new hospital parking charges refund scheme, whereby the three hospitals in Scotland that still charge for parking—Glasgow royal infirmary, the Royal infirmary of Edinburgh, and Ninewells hospital—can offer refunds for hospital staff and develop a new scheme for protected groups who most need refunds, including disabled patients and sick children’s parents who stay overnight.

We also want an end to underfunding of NHS boards and delivery of NHS Scotland resource allocation committee funding parity.

In order to tackle one of our nation’s greatest public policy failures, we also want a dramatic increase in the number of drug-rehabilitation beds, to be funded by a new £15.4 million scheme to replace the 80 per cent cut in bed numbers under the SNP Government.

In recent years, local government has borne the brunt of budget cuts from the SNP Government, with a 7.6 per cent real-terms cut in revenue funding since 2013—the impact of which we see on communities across the country. We cannot have another year of cuts. As a minimum, core funding for local government needs to be increased in line with inflation, and all the additional extra commitments that have been placed on local councils, which total £497 million, should be funded in full, as should any new or additional commitments.

In relation to justice funding, we recently heard from the chief constable of his worries about cuts to Police Scotland’s budget. We are therefore asking for, as a minimum, an extra £50 million to protect 750 police officer posts.

We want revenue funding for higher education to be protected, at least in real terms, and we want a 2 per cent real-terms increase in capital funding for the sector.

In housing, we want an additional £10 million for expansion of the ending homelessness together fund. I say that on the day on which we have learned about the dramatic increase in the number of deaths of homeless people.

What I have set out in my speech and in our motion does not represent the totality of what we want from this budget; nor does it represent what a Conservative budget might look like. However, it sets out some of our priority areas, and those that we believe the Scottish Government should address, if it wants to win our support for its budget in the coming weeks.

Our package of proposals is not unrealistic, nor is it unduly radical; it represents a credible and affordable package that can be delivered within the overall financial envelope that is available to the Scottish Government. I hope that the Government will sit down and work with us in the weeks ahead to deliver a budget that prioritises growing the economy, expanding our tax revenues and supporting our vital services.

I move,

That the Parliament believes that there can be no justification for either further tax increases or further cuts to public spending and vital public services in the coming financial year, given analysis by the Fraser of Allander Institute, which shows that the UK block grant to the Scottish Government will increase by 2.1% in real terms from 2019-20 to 2020-21 as a result of increases in spending by the UK Government, and therefore calls on the Scottish Government to bring forward a Budget for the coming year that includes measures to help boost economic growth, with no widening of the tax gap between Scotland and the rest of the UK, a reduction in the Large Business Supplement for non-domestic rates to the same rate payable south of the border and protection of all existing reliefs, an investment of all health Barnett consequentials in the Scottish NHS, a scheme for the refund of hospital parking charges, a £15.4 million national drug rehabilitation bed fund and strategy, the delivery of NRAC funding parity, an increase in core funding for local government at least in line with inflation, a protection of revenue funding for higher education and a 2% real-terms increase in capital funding, an additional £50 million for the police to spend on protecting 750 officer roles, and an additional £10 million for the expansion of the Ending Homelessness Together Fund.

The Deputy Presiding Officer:

I call Kate Forbes to speak to and move amendment S5M-20716.4.

Photo of Kate Forbes Kate Forbes Scottish National Party

Why have a budget debate once when you can have one three, four or five times? I am delighted to be here again to talk about the budget, which will be published tomorrow in the context of unprecedented uncertainty. The UK Government’s decision to defer the UK budget from 6 November to 11 March means that we still do not have the certainty that we would normally have when we publish our budget for the coming year.

We have been forced to publish our budget ahead of the UK Government’s budget in order to provide the clarity that local authorities, third sector organisations and ratepayers expect. Without the UK Government’s tax and spending decisions and the updated fiscal forecasts, we do not have as much clarity on public services as we would like. As the Scottish Government’s budget will come out before the UK Government’s budget, I can only assume that the Tories’ call for no tax divergence is actually targeted at the UK Government, which will have the opportunity to replicate the Scottish Government’s decisions to reduce any such divergence.

As a responsible Government, we have a duty to balance our budget this year, as we have done every previous year. We are well aware of the challenges that the Fraser of Allander institute has set out. It is worth reflecting on the points that have repeatedly been made by the Conservatives about the so-called Boris bonus, because, since 2010, the Scottish Government’s budget—in terms of day-to-day spending—has fallen. That is the reality of UK Government funding over that decade. I do not think that even Murdo Fraser would argue that this year’s potential increase in funding reverses the decade of austerity that the Scottish Government has had to operate in.

By contrast, the Scottish Government has taken action to deliver certainty for our public services. That can be seen in relation to, for example, local government funding, with the finance spokesperson for the Convention of Scottish Local Authorities saying that councils in Tory-run England and Labour-run Wales are “collapsing”, whereas, in Scotland, we see local government working in partnership with the Scottish Government to ensure that the people of Scotland receive the services that they expect.

I will turn to the specifics that have been raised in the amendments and in members’ interventions so far. We recognise that tomorrow is an important day. It is important because it will provide clarity and because it will continue the theme that the Government has been developing over the past few years with regard to ensuring that our partners in local authorities are protected from the austerity that we have been at the receiving end of.

The Cabinet Secretary for Finance, Economy and Fair Work will announce his tax policy proposals in tomorrow’s budget. Of course, I will not be drawn on those today, but we continue to ensure that Scotland is subject to the fairest and most progressive taxes in the UK. In fact, since the Fraser of Allander institute has been consistently quoted in every budget debate, it is worth quoting that, last year, it said:

“We estimate that the Scottish income tax policy raises approximately around £550 million in revenue compared to a policy to set the same tax parameters as in the UK.”

The question for the Conservatives is, where would they have made cuts in order to meet that £550 million shortfall in the past year?

Photo of Murdo Fraser Murdo Fraser Conservative

On that point, would the minister accept the point that was made in evidence to the Finance and Constitution Committee last week by the Fraser of Allander institute, that the tax rate increases that have been introduced by the Scottish Government have had no net beneficial impact on Scottish income tax receipts? If we had grown income tax receipts in line with growth at the UK average, there would be no need for these tax rises.

Photo of Kate Forbes Kate Forbes Scottish National Party

It is worth reflecting on two points. The first is that, at the beginning of the process of the devolution of tax-raising powers, there will inevitably be questions about reconciliation and forecasting. However, the point remains that, in every budget over the past few years, the Conservatives have consistently taken the stance that they want to prioritise tax cuts for the highest earners. That remains a fact, and it is a fact that Murdo Fraser repeated in his opening speech.

That raises the question, with regard to balancing a budget, of where the money to pay for those tax cuts will come from, because they will inevitably mean a reduction in finance for our public services. At a time when there is economic challenge, which businesses tell us is a result of Brexit and other issues, there is a question of where those cuts would fall.

In contrast to that approach, we have prioritised helping the lowest earners and funding our public services. That is why 55 per cent of Scottish taxpayers are paying less income tax than they would if they lived elsewhere in the UK—that is a result of the policy decisions that this Government has made.

In last year’s budget, we made choices that raised additional revenue to support our vital public services and our economy, and we will do the same again tomorrow.

The vast majority of businesses, as well as income tax payers, in Scotland already pay less than they would elsewhere in the UK. Therefore, the rhetoric that comes from the Conservatives about Scotland being the highest-taxed part of the UK is more damaging than the reality and the substance of the budget.

I will discuss briefly a number of other points that are related to the budget. This year, the Scottish Government is investing over £14 billion in health and care services. We have passed on every penny of health resource consequentials, and we will continue to do that. Ensuring that health spending in every part of Scotland is protected has been a priority of this Government, and that is why health spending is at a record high.

Murdo Fraser mentioned hospital parking. The irony is, of course, that it was this Government that abolished car parking charges at NHS-owned car parks, since when patients, visitors and staff have saved over £39 million. In a number of other areas, too, performance has consistently been at a higher level in Scotland than in the rest of the UK.

I am delighted that the budget that we will discuss tomorrow will be not a Conservative budget but an SNP Government budget that will ensure that, despite all the challenges and uncertainties that we face, most of which have been caused by the UK Government, we will continue to deliver on our vision of a successful Scotland that has health, prosperity and wellbeing at its heart while tackling some of the big challenges that we face.

Photo of Miles Briggs Miles Briggs Conservative

Can the minister confirm that we will not see any more of the cuts that we have seen to drug and alcohol budgets from this SNP Government?

Photo of Kate Forbes Kate Forbes Scottish National Party

I look forward to the member participating in tomorrow’s budget debate. I am, of course, not going to confirm anything that will be in the budget tomorrow, but he can look at our track record in prioritising money going to the front line.

As I draw to a close, I note that I am more than delighted to hear the other parties participating in the budget process. It makes a nice change from previous years, when they just sat on the fence.

I move amendment S5M-20716.4, to leave out from “believes” to end and insert:

“notes that the Scottish Conservative Party’s proposals for additional resource spending and tax cuts would cost almost £1.5 billion; further notes that the UK Government has indicated that the Scottish resource budget will increase by £1.1 billion; recognises that £1.5 billion is greater than £1.1 billion; considers this proposal to lack credibility, and recognises that the Scottish Government will present a balanced budget on 6 February that prioritises wellbeing, tackling climate change, reducing child poverty and boosting sustainable economic growth.”

Photo of Rhoda Grant Rhoda Grant Labour

Austerity has caused untold harm to our communities. Surely, none of us came into politics to see a world in which families are dependent on food banks, malnutrition is an ever-present danger and our communities are suffering with no safety net. A generation of young people are growing up who will be worse off than their parents. It is surely the aim of every generation to leave a better world for their children, and the Scottish Government must help to deliver on that ambition.

Austerity has a devastating effect on the economy. Poverty is on the rise, with our child poverty targets going unmet. Communities are failing to thrive, high-street shops are dwindling, libraries are closing, class sizes are increasing and social care is reaching crisis point. In addition, the gig economy is on the rise, leaving people with no choice but to accept low-paid, exploitative, unstable jobs. Austerity was a political choice. The poorest in our society have suffered the most, and the division between the haves and the have-nots has grown. We need real change.

We are realistic—we know that one budget will not reverse over a decade’s-worth of cuts—but we need to start putting forward spending plans that will invest in our communities, our economy and our services. We need to put our money where it will make the most impact.

The budget is set against the backdrop of a climate emergency. We ignore that at our peril, but there is a real fear that our response will further widen the divisions in our economy—that those in privileged positions will capitalise on changes while the most vulnerable in our society will be left further behind. We need to ensure that Government spending is carried out through the prism of a just transition. We need to address the emergency, but that should not be at the expense of those who are struggling.

Those who can afford it invest in insulation, heat pumps and photovoltaics while those who cannot afford those measures face rising bills and increasing fuel poverty. Everything that we do must address climate change while protecting the most vulnerable in our communities and capitalising on the economic opportunities.

Photo of Patrick Harvie Patrick Harvie Green

I am glad that the member agrees that a climate emergency budget is necessary and that public investment must be forthcoming. Is the Labour Party’s position now to support the proposition that there are unsustainable, traffic-inducing projects in the Scottish Government’s programme and that money should be directed away from those and into more sustainable projects?

Photo of Rhoda Grant Rhoda Grant Labour

That question leads me nicely on to an intervention that we have proposed, which is for free bus travel for the under-25s. That not only would increase the use of public transport, which would mean that more buses would be available to benefit us all, but would form patterns of behaviour that young people would carry into adulthood, reducing the number of polluting car journeys that are made.

Free bus travel would, of course, benefit young people by opening up new opportunities, enabling them to attend work and after-school activities. It is a classic invest-to-save policy: we would get young people on to buses and protect our planet, and we would allow them to become more economically active, boosting our economy and our coffers.

Scottish Labour delivered free bus travel for older people, which has been a huge success, keeping people active as they get older, moving people out of their cars and on to buses while they are able to make the change and meaning that they do not become isolated when they are no longer able to drive.

The SNP Government has turbo-charged Tory austerity for councils. Since 2013, local government has faced the brunt of cuts, with its total revenue funding decreasing by 7 per cent while the Scottish Government has shouldered a 2 per cent cut to its revenue budget. When the “Local Government Benchmarking Framework: National Benchmarking Overview Report” for 2018-19 was published, it was stated:

“Scottish local government is now operating in a more challenging setting with greater demand for services against a tightening budget, with improvements achieved in previous years starting to stall ... the data does highlight that with the status quo there is a ... risk to the future delivery of key services. Councils are delving into their reserves raising questions as to how they will cope delivering services and maintain the momentum they have gained without a change in funding.”

Photo of Rhoda Grant Rhoda Grant Labour

I am quite short of time and I wish to make a number of points.

That approach has had an impact on lifeline services and, in turn, on the most vulnerable people in our communities. Many councils are reduced to providing statutory services instead of being able to bring on front-line services that protect our communities. Since 2007, councils have lost 40,000 jobs—a level of job losses that would have been unacceptable in any other sector. In the budget, they will be expected to deliver additional services to the tune of £497 million, and they must therefore receive a fair settlement to allow them to deliver those additional services and invest in our communities.

Councils must be enabled to deliver care in the community. The failure to tackle the social care crisis and the critical underfunding of local authorities continue to put pressure on the wider healthcare system. People who are fit to go back to the comfort of their own homes to recover are instead stuck in hospitals. It is soul destroying for them to know that they could be at home, where they would be more comfortable, but instead they are stuck in hospital, where visiting hours are restricted and there is a higher risk of infections, so people feel vulnerable.

The Scottish Government set up integration joint boards to deal with that situation. Sadly, all that it appears to have achieved is the creation of an additional layer of bureaucracy without the checks and balances that are faced by health boards and local government. Many of the IJBs are already in deficit, and the situation is not getting better. The latest figures from the Information Services Division show that, in December 2019, 45,404 bed days were spent in hospital by patients who were medically fit to leave, which is a 6 per cent increase on the same month in 2018. Since Jeane Freeman assumed office as the Cabinet Secretary for Health and Sport, the cost to health boards of delayed discharge has reached a shocking total of £197.8 million.

However, local government and social care are not alone in bearing the brunt of cuts. Tuition fee income, which universities can generate from international students and those living in the rest of the UK, has replaced Scottish funding council grants as the single biggest source of income for Scottish universities. Our colleges have also faced a sustained lack of investment although they are the institutions that provide in-work learning. Our economy is in danger if we do not train people in robotics and digital technologies, which will impact on every aspect of industry.

The Deputy Presiding Officer:

You must conclude and move your amendment, please.

Photo of Rhoda Grant Rhoda Grant Labour

I will move to my conclusion, Presiding Officer. Our budget requests are realistic—

The Deputy Presiding Officer:

No—you will sit down. I have given you time for the intervention.

Photo of Rhoda Grant Rhoda Grant Labour

I move amendment S5M-20716.1, to leave out from “believes” to end and insert:

“acknowledges the human impact that over a decade of austerity has had on communities, jobs, public services and the economy, and therefore calls on the Scottish Government to bring forward a budget that invests in the future, includes fair funding for local government with a focus on improving and expanding social care, includes a fair deal for further and higher education, extends free bus travel for all young people and ensures that the budget looks forward, linking spending to national outcomes, and puts in place transformative funding to benefit the future of communities and the planet.”

The Deputy Presiding Officer:

I call Patrick Harvie, to be followed by Willie Rennie. We have very little time in hand now for interventions.

Photo of Patrick Harvie Patrick Harvie Green

I have consistently argued that all Opposition parties should engage constructively with the budget process by putting forward positive ideas. That would be good for Parliament and for the country, so I welcome the fact that most parties are now doing so.

It is sometimes hard to remember, but that is how our process was meant to work and it is how modern, pluralistic Parliaments that result from fair voting systems operate across most of Europe. We should try to recapture the spirit that was intended when this Parliament was designed.

There is now only one party that is holding out against that constructive agenda. The Liberal Democrats have lodged an amendment in response to a motion on the budget that talks about federalism and a tired, old no-indyref position. There seems to be no attempt at a solid proposition on changes to the budget. However, the position of most political parties—both Labour and the Conservatives—is now moving toward more positive engagement. Let us look at their positions.

There are some things in the Conservative motion that we can all welcome, such as more spending on drug services and on homelessness, although we acknowledge that those things will be effective only if we also secure a commitment from the UK Government that it will change its failed drugs policy and many of the economic policies that are still pushing people into poverty and making them more vulnerable.

Most of us would welcome spending on drug and homeless services, but does the general Tory position add up? If we assume that the UK Government will grudgingly turn the spending taps on—just a fraction—after 10 years of austerity, there might be more money available overall, and some choices for Scottish Government to make. However, can we commit to following the UK Government’s choices with Barnett consequentials; to introducing new spending in our own priority areas; to increasing local government revenues; and to cutting taxes? The Tories want all of that, and it cannot all be delivered at the same time.

Although most of us agree that investment in high-quality public services is a good thing in principle and something that we would like to increase, I cannot accept the implication in the motion that tax, in itself, is a bad thing in principle and that it is something that should always be minimised. Tax is not only about raising revenue that is adequate enough to meet our investment in services; it is also about achieving behaviour change and redistribution of wealth to achieve a fairer and more equal society. There is good evidence that high rates of income tax at the very top act as a disincentive to excessive pay demands by the super-rich. Those are all positive objectives, and tax has a positive role in principle.

As for the previous changes to income tax, Murdo Fraser knows very well that the Fraser of Allander institute rejected the idea that changes in the income tax base are the result of changes in the income tax rate. We would still see a huge revenue gap if we followed his policy, regardless of changes in earnings. If either he or the Liberal Democrats want to reverse the 2018-19 shift to a fairer five-band tax system, it can be done only through tax cuts for the highest earners, which would make inequality and poverty worse.

Photo of Murdo Fraser Murdo Fraser Conservative

The member asked Mairi Spowage, who is from the Fraser of Allander institute, a question on changes in the income tax base being the result of changes in the income tax rate. Her response was that there is no evidence on that either way. It is a fair debating point, but he cannot quote her evidence in support of his position.

Photo of Patrick Harvie Patrick Harvie Green

There is certainly no evidence to support Murdo Fraser’s position. All there is his ludicrous ideological attachment to the Laffer curve, which has been pretty much blown out of the water in the past.

There is some overlap between Labour’s position and our arguments on the budget, and I welcome the fact that Labour is adopting something that is closer to the Green Party’s approach of offering positive ideas that we know that the Government can deliver. It is, of course, aware that we have advocated free bus travel for young people as a step toward completely fare-free public transport in the longer term.

The final word of the Labour amendment is “planet”. Presumably, that is a reference to the need that the Green Party has set out for a climate emergency budget. That means investing in public transport and active travel; it must also mean shifting away from the multibillion-pound road building programme to which the Scottish Government is still committed. I am put in mind of my first years as a member of the Parliament, because, when I was first elected, I argued against all other parties in the chamber, by opposing the M74 extension. That project was a relic of 1960s transport thinking, and it often feels as though we still have not moved away from that approach to transport.

Even the Scottish Government’s infrastructure commission for Scotland says that there should be a presumption against new road capacity and in favour of maintaining and repurposing existing infrastructure. That would free up the spending that we need if we are to make serious commitments to getting our homes and buildings off the gas grid and hooked up to renewables and district heating systems.

The Government amendment provides an enjoyable demolition of the Conservative sums but then proposes that the Parliament

“recognises that the Scottish Government will present a balanced budget ... that prioritises wellbeing, tackling climate change, reducing child poverty and boosting sustainable economic growth.”

Quite apart from my tediously predictable rejection of the contradiction that is inherent in the phrase, “sustainable economic growth”, we simply do not yet know whether the Government will indeed present a budget that prioritises any of those objectives.

That is because, even in this extraordinary year, when the timescale is so constrained because of UK Government choices, the Scottish Government continues to play its cards close to its chest instead of co-producing the budget with Opposition parties prior to its introduction. If the Government did that, the budget process would be incapable of descending into brinkmanship, as it has done in the past, and would produce a result that is driven by the public interest.

That kind of mature approach to such issues feels unlikely here only because this Parliament has often been so polarised. Many of our European neighbours are better at this. We should take lessons from them.

Photo of Willie Rennie Willie Rennie Liberal Democrat

The budget tomorrow is an opportunity to move beyond division. I think that people in this country have had enough. We have had years of division over Brexit and, if Patrick Harvie has his way, we will do that all over again with independence.

Members will forgive me for being concerned about the economic impact of independence, which I cannot countenance. I do not believe in independence.

It is therefore important that we look for an opportunity to move beyond that division. Whatever our views on independence—and I know that there are members in this Parliament who support the idea whole-heartedly—it is clear that there will not be another independence referendum in the next financial year. The First Minister admitted that last year. There should therefore be no objection to there being no line in the budget at all on independence. We should be able to move beyond that, because we will not have a referendum. That would remove a massive boulder that stands between those who support independence reaching agreement on the budget with me and other members. If it is that simple, let us remove it from the budget.

Photo of Kate Forbes Kate Forbes Scottish National Party

Will Willie Rennie confirm to the Parliament how much money for independence was in last year’s budget?

Photo of Willie Rennie Willie Rennie Liberal Democrat

We know from the permanent secretary that a significant sum of money has been devoted to independence. If we can have a guarantee that that will not happen, because there will be no independence referendum this year, we will have created a golden opportunity for members of all parties in the Parliament to work together.

However, even though the First Minister has set out that there will be no referendum, the Government refuses to take independence out of the budget. Let us not accuse others of blocking the way to an agreement; the block has been created by the SNP Government.

There is an opportunity to consider what we can do together. We would like to make a constructive contribution to the budget process. We would like to ensure that local government is given the finance that it deserves, because the Scottish Government has made significant commitments—commitments worth half a billion pounds—on local government’s behalf. The Government says that that is partnership; I think that local government’s arm was tied behind its back when those commitments were made. That was no partnership.

The Government should follow through on its commitments, and it should account for inflation on top of that. Local government has significant requirements if it is just to stand still and meet its commitments. For example, we support the big expansion in nursery education, and that should be properly funded. We have heard about the state of our police estate—the buildings—and about the mental health of our police officers. The police need support, too.

On mental health, a lot of young people—more than 800—are waiting beyond a year to get mental health treatment, which is meant to be a top priority of the Government.

We need to work together on the massive challenge of the climate emergency, which is why we are pleased to participate in the cross-party effort to find solutions to deal with the issue, live up to our obligations and meet our world-leading targets.

All those things need support from the budget and there is an opportunity for us to provide it, because there is an awful lot of common ground on those issues. I hope that the Scottish Government lives up to that.

It is disappointing that the Conservatives refuse to take responsibility for the rather chaotic way in which we are having to agree the budget this year. We are going right up to the cliff edge of when we need to make decisions and when local authorities need to set their budgets. It is a reckless act that I hope is not repeated next year, because we cannot be forced into a rushed budget process. We need time to consider and deliberate on such important matters. If we had a federal structure in the United Kingdom, in which there was no effort by one part to commit detriment to another part, we might avoid such situations. Those things are important for the long-term stability of the United Kingdom.

I am utterly confused by the Conservatives’ position on tax. They still condemn the apparent tax bombshell—the rip-off—of two years ago that made Scotland the highest-taxed part the United Kingdom. If that has been so important ever since, why is it not on the Conservative priority list for this year’s budget? I suspect that I know the reason why: it is because the Conservatives are refusing to set out where the cuts to public services would happen. They will not set them out, because they know that the price is too high. They also know that the detriment to the Scottish economy has not been what they claimed—we have not seen the brain drain that they were claiming would happen in Scotland. They have been caught out and they now realise that it is a price that they cannot afford to pay. Therefore, they are not prepared to spell it out in their budget proposals for this year.

The Deputy Presiding Officer:

The member is concluding.

Photo of Willie Rennie Willie Rennie Liberal Democrat

I am sorry, but I am sure that Murdo Fraser and I can have a discussion at a later stage.

Just like yesterday, when the Conservatives made a screeching U-turn on uniform business rates, we have had another screeching U-turn from them today.

I urge the Scottish Government to remove the boulder of independence so that we can all work together to achieve a budget that is sustainable for Scotland.

The Deputy Presiding Officer:

We move to the open debate and speeches of a tight six minutes. There is very little time for interventions, so members will have to absorb them.

Photo of Ruth Maguire Ruth Maguire Scottish National Party

Today, the Conservative Party is demanding millions in additional funding for public services. It wants millions of pounds of investment while wanting to slash taxes for Scotland’s highest earners. Both leadership candidates have outlined their plans, which mirror Boris Johnson’s tax regime at Westminster. The

Institute for Public Policy Research Scotland argues that those plans would cost Scotland more than £1 billion across four years and the think tank has described the plans as “unaffordable”.

There is a growing list of spending demands, despite both candidates for the next Tory leadership vowing to hand top earners tax cuts. Public services need investment and it is fair that higher earners pay their fair share to fund our schools and hospitals. If the Tories want to promise top earners a handout, they have to explain what public service they would cut to fund it.

Tomorrow, the Cabinet Secretary for Finance, Economy and Fair Work will set out the Scottish budget—a balanced budget that prioritises wellbeing, tackles climate change, reduces child poverty and promotes sustainable economic growth. Our public services are vital to the people whom we serve, and there is an onus on every party in our Parliament to act responsibly on budget matters.

It will not be a secret or a surprise that I oppose the Tory approach to taxation and public services, but it is healthy and right that our Parliament has parties with different ideologies and political positions—the communities that we serve all certainly do. Characterising those differences as division is at best unhelpful and at worst pretty irresponsible.

If the Tories want to cut tax for the rich and wish to promise high earners a handout, they must, if they wish to be taken seriously, be clear and honest about where they will take the money from.

The motion asks for a £15.4 million national drug rehabilitation bed fund. We debated the national emergency of drug deaths last week, and I believe that there was consensus that no one Government or organisation and no one single intervention can end that tragedy of preventable and avoidable death.

I welcome the work of the drugs task force, and I reiterate my calls of last week for the Scottish Government to do all that it can to ensure immediate action on the things that we have power over. We have to make sure that a range of services and interventions are available to people and their families, when and where they need them. Of course that includes residential rehabilitation beds, but I am concerned that that is being flagged as the one solution. As good as the intention of those who propose it as such might be, that is a bit simplistic.

Photo of Ruth Maguire Ruth Maguire Scottish National Party

No, thank you. Of course I urge increased investment in services—in harm reduction, in treatment and in recovery. As important as that is, however, transparency and accountability in how money moves through health and social care systems, and responsibility for measuring and assessing outcomes, are a whole other new debate.

The Tory motion also calls for an additional £10 million for the ending homelessness together fund. The fund is already allowing the Scottish Government to deliver the actions that have been recommended by the homelessness and rough sleeping action group. One person without a home is one too many, and additional investment in housing would be very welcome, but it has to be said that the Scottish Government would have not just £10 million but £100 million were it not having to spend that protecting people in Scotland from the worst effects of Tory austerity.

That same austerity—the years of Tory austerity—is putting people at risk of homelessness, squeezing more families into poverty and leaving them struggling to afford food and rent. We cannot stand by and simply allow UK benefit cuts to hit the poorest in Scotland. We must mitigate what we can, but it is simply not feasible to completely mitigate all the impact of UK cuts, and surely we all aspire to more than just mitigating harm that is imposed on us from elsewhere—spending just to stand still or to prevent the worst harm. We can do better.

The Scottish Government has invested £1.4 billion in supporting low-income households. We have demonstrated that, when we have the power, we can do better, with aspirations and action to do more than just mitigate harm. When we are free of Westminster, this Parliament will be able to do even more.

Today, the Tories are demanding millions of pounds of additional funding to be invested in public services, while they want to slash taxes for Scotland’s highest earners. The independent Fraser of Allander institute has made it clear that that Tory tax proposals would

“reduce the government’s income tax revenues by around £270 million”.

Calling for spending increases while demanding huge tax cuts does not add up. Some of our constituents might feel that that approach is an attempt to mislead them, and I understand why they would feel that way.

If the Conservatives are serious about public services in Scotland, I ask them to join us in calling for a reversal of the cuts to the Scottish budget and an end to the austerity agenda, which has heaped misery and suffering on so many of the people who we are here to represent.

Photo of Dean Lockhart Dean Lockhart Conservative

Tomorrow’s budget will be one of the most important in recent years, not least because the Scottish Government will benefit from a significant increase in funding from the UK Government.

This year, the resource block grant will increase in real terms by 2.1 per cent, bringing additional funding of more than £1.1 billion to the Scottish budget. That is over and above the £1.2 billion that is being invested by the UK Government in city deals and the hundreds of millions of pounds in financial transactions money that will fund the Scottish national investment bank. The Scottish Government can use all that additional funding to improve public services in Scotland.

The Scottish Government will also be in a position to take direct action to reverse the on-going decline in the Scottish economy. Despite all the denials from Derek Mackay, economic decline is exactly what we are seeing in Scotland. Just last week, in figures published by the Scottish Government, the size of Scotland’s economy was written down by an remarkable 3 per cent, as total gross domestic product declined from £180 billion to £175 billion.

Earlier today in the chamber, Derek Mackay confirmed that, since the SNP came to power, total economic growth in Scotland has been 5 per cent lower than that in the rest of the UK. That means that the Scottish economy is now £7 billion smaller than it should be.

The Fraser of Allander institute has described that as the longest period of low growth in Scotland for 60 years, and it has resulted in Scotland having a record fiscal deficit of 7.2 per cent of GDP, which is the highest in Europe.

It will take more than one budget to reverse that 13-year economic decline, but tomorrow’s budget must make a start. First, it must reduce the large business supplement, which is a tax that discourages firms that are looking to expand. Since the supplement was doubled in 2016, more than £250 million has been paid in that tax by more than 20,000 firms across Scotland—money that they could have invested in the creation of higher-paid jobs, in new technology to improve productivity or in expanding their businesses. Instead, that money has been taken away from them and wasted by the SNP in a multitude of bad investments that, according to Audit Scotland, last year alone resulted in investment losses of £140 million for the Scottish Government.

Photo of Dean Lockhart Dean Lockhart Conservative

I will give way to the minister if she can explain why the SNP has lost all that taxpayers’ money.

Photo of Kate Forbes Kate Forbes Scottish National Party

I just want to clarify a point. I assume that the member is aware that the large business supplement is reinvested through the small business bonus, the retention of which is another of the Conservatives’ asks in the current budget process.

Photo of Dean Lockhart Dean Lockhart Conservative

I am not quite sure how the money that goes into the SNP’s black hole is spent. I say to the minister that the proof of the pudding will be in the eating. As I said, Derek Mackay confirmed earlier today that, under the SNP Government, the Scottish economy has grown by 5 per cent less than that in the rest of the UK. That is the number that really counts.

The other economic priority for the budget must be to stop the increasing income tax burden in Scotland. The minister has called the system “fair and progressive”, but there is nothing that is either fair or progressive about the fact that everyone earning more than £27,000 per annum pays more income tax here than they would pay in the rest of the UK. Those people are not rich.

According to the SNP, the higher tax policy set out in last year’s budget would lead to higher funding for public services, which we now know is not true. According to the Fraser of Allander institute, when those higher tax policies were introduced, they were forecast to raise additional money. That has not come to pass, and higher tax in Scotland will be cancelled out by lower wage growth. There we have it: hard-working people in Scotland are paying more tax and taking home lower wages—not to raise extra public spending, but to subsidise the SNP’s economic failures. The SNP might call that “fair and progressive”, but Scottish Conservatives do not share that view. Such taxes are punishing the hard-working people of Scotland. With such tax policies, it is not surprising that, under the SNP, Scotland has become a low-growth, low-wage and low-productivity economy.

I mentioned that the Scottish Government is on track to receive record levels of funding from the UK Government. The budget process is a game of two halves. In the UK Government’s half, we will indeed see a 2.1 per cent real-terms increase in block grant resource. However, in the SNP’s half, the decline in tax revenues, relative to those in the rest of the UK, means that we will see a downward adjustment of the block grant. According to the Fraser of Allander institute,

“the positivity in the outlook for the resource block grant ... will be ... offset by negative income tax reconciliations”,

meaning that

“the block grant will grow by less than 1 per cent overall in real terms”.——[

Official Report

,

Finance and Constitution Committee,

29 January 2020; c 2.]

In other words, the failure of the SNP to grow our economy means that, in the next two years, we will lose over a billion pounds of funding—

Photo of Dean Lockhart Dean Lockhart Conservative

I am about to enter my last minute.

In the next two years, we will lose a billion pounds of funding that should have been available for public services in Scotland.

The real story of the budget is that, despite falling tax revenues in Scotland and a record fiscal deficit, and even after the downward adjustment in the block grant, the Scottish budget will still increase. That is because the Boris bonus will bail out the billion-pound budget black hole that has been created by the SNP.

I do not expect the SNP to thank the UK Government for bailing it out, but it must recognise the reality of the fiscal position in Scotland. First, the SNP’s economic failure is costing billions of pounds that should have come to public services. Secondly, despite that—and despite a record fiscal deficit—the Scottish budget will still increase, because being part of the UK delivers both a union dividend of £2,000 for every person in Scotland and a fiscal transfer of more than £10 billion a year to fund public services. As we all know, that would all disappear immediately in the event of Scottish independence.

I support the motion in Murdo Fraser’s name.

Photo of Keith Brown Keith Brown Scottish National Party

The motion in Murdo Fraser’s name is incoherent, financially illiterate and intrinsically designed to bolster and increase the inequality for which the Tory UK Government is renowned. A flavour of the incompetence and incoherence of the Tory group could be found in yesterday’s farcical admission that they supported the centralisation of rates only to see how that would play out at stage 3. Their contempt for the small business sector and the rates relief that it depends on makes the Tories the anti-business party. If members do not believe me, Boris told businesses where they could go in words that I am not allowed to repeat in the chamber.

Photo of Keith Brown Keith Brown Scottish National Party

If I am given a chance to get into my speech, I will come back to Mr Fraser.

Liam Fox slated businesses in this country as “lazy”, and every economist will say that Brexit has hit the economy and will hit businesses even harder in future. Apparently, although it does not really matter whether we get a deal with the EU, we can get one that is like Australia’s deal with the EU—except Australia does not have a deal with the EU.

I am happy to take an intervention from Murdo Fraser.

Photo of Murdo Fraser Murdo Fraser Conservative

I am grateful to Mr Brown for taking the intervention. Can he tell us what impact it will have on the town of Dollar that its constituency MSP voted yesterday to impose an additional tax burden on the town’s largest employer—namely, Dollar academy?

Photo of Keith Brown Keith Brown Scottish National Party

I do not know whether Murdo Fraser has spoken to Dollar academy, but I have, and it is completely at ease with the decisions taken by the Scottish Government. If he wants to check that for himself, one day he can come to Dollar—a beautiful town in my constituency, where I live.

Murdo Fraser’s motion says that the Conservative Party wants to help local government, even though every council in the land has told it that not having a UK budget by this time is detrimental to local government, the organisations that councils support and the communities that they serve.

We have heard a lot about taxes. Murdo Fraser does not want any more tax, but the Public Works Loans Board has just increased the cost of borrowing for every council in Scotland. It has done that because of extravagant decisions, as it sees them, made by councils in England. There is not one word of protest from the Tories in the chamber about that Tory tax being applied to every council in Scotland. Is that not Tory MSPs’ function? Are they not meant to be here to defend Scottish councils, or are they here just to do what Boris Johnson tells them to do?

As we have heard a lot about from Westminster, talks about the block grant are frequent, but people do not really talk about how it is arrived at. Yesterday, the UK Government took a decision on health spending that will determine what the Scottish, Welsh and North Irish Governments will get to spend on health. Of course, Scottish, Welsh and Northern Irish representatives were specifically excluded from voting on that. Only after the big spending decisions are taken do Scottish representatives get a say.

When the history of how Scotland regained its independence is written, some of the words that will be used will be those uttered by the Deputy Speaker yesterday when she said, “I discern Scottish voices”. That is similar to saying, “I spy strangers,” or, “There are foreigners in this chamber”. Scots do not have the same rights as other people in the Westminster Parliament because of the offensive outcome of a constitutional perversion called EVEL—English votes for English laws.

What else is spent in our name without our consent and represented as a Scottish deficit before any Scottish block grant is agreed? Murdo Fraser asked us how we can reduce the fantastic fiscal transfer that we get, and there are some suggestions as to how we can do that; in fact, according to some proposals, we could eliminate it altogether. Do not spend £200 billion on nuclear weapons—that would be a start. When the decision is made to have the Airwave emergency system, do not go way over budget by £2 billion and have years and years of delay. Do not double the national debt to £1.9 trillion, or £1,900,000,000,000—that is what the national debt has been increased to by the party of fiscal rectitude. Do not go £70 billion to £80 billion over cost on high-speed rail. Do not go £3 billion over cost on crossrail. The Tory Government’s failures due to its financial incompetence are legion.

The Conservatives talked about a 3.4 per cent increase in funding for the health service. Let us look at the increase in the budget of the Scotland Office from 2011 to 2018—it got a 555 per cent increase in its communications budget, and that is before we take into account the cost of Royal Air Force jets to shepherd ministers around the UK. The Conservatives should not talk about budgets increasing, because 3.4 per cent for the NHS is below the long-term average, and everyone knows that inflation in the NHS is greater than general inflation.

For the Tories, this is about inequality. They are maintaining austerity: they told us before the election that austerity was finished, but now all their departments have been told to make a 5 per cent cut. Of course, the public sector pay cap remains, even for service personnel. Why do the Tories never say that Scotland has the lowest tax rate in the whole of the UK? They do not say that because it affects low-paid people, and they do not represent low-paid people. All their tax proposals are designed to help the better-off.

If Tory members do not believe me, they should listen to the Fraser of Allander institute, which they often quote. It says that the Tories’ policy, which is framed as supporting middle earners, “predominantly benefits” households at the top of the distribution of household incomes. There we have it—the Tories are supporting the high earners at the expense of low earners.

The Tories’ incompetence is evident in the motion in their flagrant inability to account for the £270 million that they want to give to high earners. The Scottish Government, the Scottish Parliament and the country as a whole deserve to have a main Opposition party that at least has the ability to put forward a credible alternative budget. The Tories’ motion is not that.

Photo of Claudia Beamish Claudia Beamish Labour

Scottish Labour is clear that it is time for a budget that invests in the future and in future generations. We must all be clear that the climate emergency is the greatest threat that faces humanity, and it is down to legislators to take drastic action that delivers a just transition for all.

The upcoming budget process is vitally important in enabling the rapid delivery of the regenerative policy that is required for us to meet our targets. Plans must be set in motion, trajectories must be bold, and transformative funding is necessary to benefit the future of communities and of our planet.

Fair funding for local government is a must if it is to be able to take the lead on many of the areas in which emissions reductions are needed. COSLA has asked for that role not to be undermined. People now understand the climate emergency, public expectation has increased exponentially and councils are determined to deliver.

The funding gap means that there are barriers to local action on climate change. A budget that invests in local government is the only way in which local communities will be justly kept in step with emissions reduction efforts. Scottish Labour is clear that the people of Scotland want councils that enable them to get out of their cars and on to reliable public transport. Scottish Labour’s budget ask—which was highlighted at last year’s conference—is for free bus travel for the under-25s. That would be a powerful step towards increasing bus usage, cutting transport emissions and reducing the barrier to opportunity that transport costs represent.

The people of Scotland also want councils that can bolster energy efficiency, keep everyone in a warm home and bring new, skilled, local jobs. They want councils that make recycling an easy habit and which keep our local environment beautiful and accessible. Green spaces hold great value—they are positive for physical and mental wellbeing, for community cohesion, for delivering nature-based solutions to climate change and for job creation. All those examples can be tied to the strengthening of local economies and the delivery of job creation and opportunities for manufacturing.

It is vital that Scotland has the skills to seize those opportunities. As we structure the economic and societal shift that is needed to get to net zero and meet our interim targets for 2030, we should not talk about the just transition process without taking great care—care for our communities and care for working people and businesses across all sectors—as Rhoda Grant stressed.

There have been too many missed opportunities, not least in renewables manufacturing. One of the keys to unlocking a fair future in the context of the climate emergency is the strategic development of initial and transferable skills. I and many others have long argued that there should be a robust future skills strategy across all lifelong learning, whether to ensure that oil and gas workers have the opportunity to move into the renewables industry without having to take costly safety training courses—they should be able to do shortened courses—or to support plumbers and roofers to gain the skills to install solar panels and air-source heat pumps. That is fundamentally important.

Scottish Labour argues for a fair future for further and higher education, which means that fair funding must be provided in the Scottish Government’s budget. A focus on colleges is vital, not least because colleges are the most common destination for people from deprived backgrounds. Colleges’ funding allocation in the budget must reflect the importance of those institutions to society and help with the green jobs revolution and the rapidly changing jobs market.

Scottish Labour’s amendment highlights that the Scottish Government budget needs to look forward,

“linking spending to national outcomes”.

For a number of years, I have been part of the cabinet secretary’s round-table group on the national performance framework. Its core values include treating all people with “kindness, dignity and compassion” and ensuring that people are able to

“grow up loved, safe and respected” and

“have thriving and innovative businesses, with quality jobs and fair work for everyone”.

Those outcomes are imperative, and it must surely be clear to all members across the chamber that they are of fundamental importance to our future. The outcomes will be analysed by committees during the budget process.

It is disappointing that, in spite of that important living framework, each budget seems to fail to link the national outcomes to spending in a way that can be understood. The Auditor General for Scotland has made it apparent that readers of the budget documents are

“unable to see the links between the money spent by the Scottish Government, what it has achieved, and progress made towards achieving national outcomes.”

In her closing remarks, will the minister address how she will ensure that this year’s budget is better aligned with the outcomes in the national performance framework, so that we can have a truly prosperous Scotland for us all, including future generations, as we move forward with tackling the climate emergency?

Photo of Liam Kerr Liam Kerr Conservative

Murdo Fraser opened the debate for the Conservatives, and he was clear that there are two areas that we view as priorities for the budget: measures to grow the Scottish economy and support for vital public services. In relation to the second limb, it will come as no surprise to members to learn that my fingerprints are all over the demand for an additional £50 million to be spent on protecting 750 police officer roles. As Murdo Fraser made clear, I would rather go much further, but I have ensured, as I shall set out later, that our proposal is realistic and affordable. Ideally, we should go much further and, in short course, we must. This distracted Scottish Government has to get some focus back on the police, so let me do that for it.

Police Scotland is in a terrifying financial situation, with an operating deficit for 2019-20 of £25 million. That is in the context of a funding shortfall in the police capital budget of £56 million compared with what Police Scotland was expecting in November 2018. What is the practical impact of that? It means that planned investment in vehicles, the estate and information technology has been slashed. It means that, according to the Scottish Police Federation, many vehicles are held together with duct tape. The Scottish Government might not be aware that half of the fleet currently operates well beyond replacement criteria. It means that the chief constable has to describe IT capability as “poor”, due to underinvestment and the lack of funding, which has led to the lack of a national network. He said:

“Younger officers coming in now are taken aback by how backward a lot of our approach is. They live in a digital mobile world and they come to work and they almost have to step back into an analogue world.”

It is no news to anyone that police stations are in a desperate state. I say “anyone”, but when the First Minister was challenged about revelations of mould, leaks and rat infestations in police buildings across the country, she claimed that critics had a “nerve” to raise the matter and claimed that the SNP’s funding of the force was perfectly adequate. The Cabinet Secretary for Justice described the warnings as “hyperbole” shortly before the dining room ceiling in Broughty Ferry police station collapsed, leading to the station being evacuated and abandoned.

However, the minister can fix the issue of officer numbers at the stroke of a pen. Nearly every area of Scotland has fewer divisional officers on the front line since the merger. Such officers are the core local resource who patrol the streets and respond to calls. It is important to note that, of those officers, 300 are paid for by external bodies such as our similarly underfunded local councils, and 400 are paid for by the UK Government. I am sure that the minister will accept that none of us can countenance any further reductions in officer numbers. Perhaps most significantly, the Scottish Police Federation has stated that

“community policing is at risk”.

Members will have seen that today’s

Scotsman says:

“Crime in Scotland could soar if the ‘systemic underfunding’ of the national constabulary is allowed to continue”,

according to the chief constable. The SPF says that balancing the budget requires a reduction in officer numbers of 750. Just last month, Audit Scotland warned that, unless an increase in funding of £50 million is made available, up to 750 front-line officers could lose their jobs.

If an extra £50 million is not provided to Police Scotland in this budget, our police force faces cuts of 750 officers. As the chief constable said only yesterday, without it he faces the very real prospect of simply not having the money to investigate crimes. Let us not forget that violent crime is rising under the SNP Government.

This is the reason for my budget demand. We ask our police to put their lives on the line for us day in, day out. The Government has demanded that they work in crumbling buildings, drive cars held together with duct tape, use prehistoric IT systems and multitask to cover a huge number of services that we would not think of as policing. The Government cannot, surely, be prepared to accept a situation in which the police have to do all that, but with 750 fewer officers. It seems, however, that it does.

The minister’s amendment makes no mention of the police and yet it specifies what else she thinks should be a priority. She did not mention the police once in her eight-minute speech, but she did talk about money. Officers will not be persuaded, if there is any attempt to suggest that there is no money, because, as today’s motion makes clear, the block grant will grow by at least £1.1 billion in real terms, which is a 2.1 per cent real-terms increase, all thanks to the unprecedented investment by the Conservative UK Government and a Barnett formula that pools and shares resources around our United Kingdom—a Boris bonus indeed.

In 2008, former Scottish Conservative leader Annabel Goldie forced the SNP Government to increase police numbers by 1,000. Just imagine the situation that we would be in if she had not. We will continue to follow that example and argue for the respect and resources that our police officers need. The Scottish Conservatives are committed to supporting our police and to providing the extra £50 million that they need to ensure that those 750 police officers continue to keep our communities safe, catch criminals and police our streets. The minister must do likewise.

The minister must be aware that failure to deliver that will represent a failure to support our police, protect our communities and govern Scotland effectively. Our police officers are watching. The people of Scotland are watching. Will she put the needs of the Scottish people first, with a modest investment in our police, or will she continue to prioritise her own narrow political agenda?

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

I welcome the fact that the Tories have submitted a wish list, but their motion and what I have heard so far in the chamber omits robust and realistic costings. After having listened to Liam Kerr, I am astonished that none of the Conservatives made any comment over the past decade when their colleagues down south were cutting 20,000 police officers. That tells us what would have happened if they had been in power here in Scotland.

The alleged 2.1 per cent real-terms increase that has so thrilled Murdo Fraser during these past weeks appears to be spread very thinly. Indeed, today he answered that it is only 1 per cent in real terms. Why do the Tories never fully cost their proposals? It is the most basic of tasks, yet they do not seem to be willing or able to be serious about it.

We already know that tax cuts for high earners would cost Scotland £270 million, and the Fraser of Allander institute has identified that people earning more than £100,000 would benefit the most. Therefore, it is good that Murdo Fraser appears to have abandoned that proposal. If we adopted the same policy as the UK Tory Government and increased the higher rate to earners of £50,000-plus, that would mean service cuts of a whopping £1 billion over four years.

How would the Scottish Government pick up such a tab, when we have more in-work poverty and food bank usage than at any time in recent history, thanks to Tory welfare cuts, and where would the money be taken from? Do the Tories want us to stop spending £100 million a year mitigating the effects of the UK Government’s welfare cuts? Incidentally, figures published by the National Records Scotland show no signs of the Tory-predicted high earner exodus to England since the devolution of income tax—another scare tactic that has failed to have any impact.

As for non-domestic rates, it was daft to support the Greens amendment 9 at stage 2 of the Non-domestic Rates (Scotland) Bill to begin with, but I commend both Labour and the Tories for belatedly voting to keep the powers and responsibilities to set non-domestic rates where they currently lie. Ultimately, it is about the organisations from shops to nurseries and others that benefit from those reliefs. The Tories know that Scotland has the most substantial package of rates relief across the UK, but if they wish to make it more generous, they should tell us what public service should be cut in order to finance that.

The UK Government’s delay in announcing its budget makes it difficult for the SNP Government to allocate its resources as accurately as it must. The Cabinet Secretary for Finance, Economy and Fair Work will tomorrow provide a degree of certainty for local government and vital public services, but it will remain extremely challenging for local authorities to set budgets when they do not know exactly how much will be allocated to them.

As a member of the Local Government and Communities Committee, I share the desire for well-funded council services, so I was glad last year when the SNP Government delivered a funding package of £11.2 billion for local authorities. That represented a real-terms increase of more than £310 million, despite the Government having its own budget cut by the UK Tory Government once again.

The irony of Conservatives playing the knight in shining armour for council budgets in Scotland is not lost on this side of the chamber, given the huge cuts that the Tories have imposed in England. Last November, the Trades Union Congress and Unison published an extensive analysis revealing that overall, councils in England have £7.8 billion per year less to spend on key services than they did when the Tories and Lib Dems came into power in 2010. That equates to a cut of £150 million a week. Coincidentally, it also showed that the 20 councils with the biggest funding gaps were overwhelmingly metropolitan boroughs in London and the north of England, with 18 under Labour control. Meanwhile, 16 of the 20 councils that suffered the smallest cuts were Tory led. Fortunately, the SNP has more regard for the fair allocation and distribution of funding to local authorities.

I welcome that, in its amendment, Labour

“acknowledges the human impact that over a decade of austerity has had on communities, jobs, public services and the economy”.

Given that Labour was in power at Westminster until the summer of 2010, I am pleased by its mea culpa in finally acknowledging responsibility for kickstarting austerity—a policy that Labour’s London bosses supported well into 2015.

A majority of members of the Scottish Parliament, and the last three opinion polls, support independence, but Willie Rennie thinks that the majority in the chamber should yield to his wee rump of five MSPs—liberal democrats indeed!

The Green Party’s demands that we stop building new roads, such as the A9, is not one that I agree with. The A9 is being dualled to enhance connectivity, improve safety, and reduce the congestion that increases pollution and driver stress. It is not a new road, and buses will also travel on it. Surely, any abandonment of such projects would not only throw hundreds, if not thousands, of construction workers on the dole, but would mean a hefty penalty for breach of contract imposed on the Scottish Government, while leaving part of the route looking like a building site. Siren calls to cancel that key infrastructure project should therefore not be heeded.

From an Ayrshire and Renfrewshire perspective, I am keen that the A737 is also upgraded, to help to improve safety and reduce the congestion that has to be endured by many of my constituents. Local Conservative, Labour and independent politicians also support that position. In any case, billions more are raised in fuel taxes—albeit that such revenues accrue to the UK Treasury—than are spent on the roads, allowing for investment in public transport, cycling and walking.

Despite the delay to the UK budget, the SNP Government will confirm individual local authority funding allocations. We already know that flexibility remains for local authorities to raise more revenue by increasing council tax by up to 3 per cent in real terms.

Tomorrow, the SNP Government will propose a budget that focuses on wellbeing, tackles climate change, reduces child poverty and promotes sustainable economic growth. It will be well considered, fair and progressive. I hope that all parties, including the Tories, will contribute in a constructive manner and provide full costings for any amendments that they propose.

Photo of Pauline McNeill Pauline McNeill Labour

It was Naomi Eisenstadt, the Government’s adviser on poverty, who said that the age group that needed most policy attention was the 19 to 24-year-olds— those young people who have left school and are trying to form their plans for the future, and those not going into higher or further education. They get very little return from the state. It is time to focus policy on how we can help young people in that age group, and I would be only too delighted to work with the Greens or any other party on the proposal that we have made in our amendment.

Labour’s budget ask for free bus travel for under-25s is the right thing to do for the times that we live in. We propose to do that using the £1.1 billion Barnett consequentials. That would revolutionise the lives of young people, especially those from less well-off families in the 16-to-19 age group.

It is a serious anti-poverty measure as well as being a climate change measure. It would help families with teenagers who are at school or college, or are going to work. I tried to bring a bill to Parliament to extend half fares for young people up to the age of 18 for the same reasons. Young people have not got the best deal out of the current parliamentary session. It is a costly policy, but I believe that the cost is justified and we are whole-heartedly committed to it.

In the past 10 to 12 years, a great deal of damage has been done to people’s lives. I say to Kenny Gibson that it is a matter of historical fact that it was the virtual criminality of some in the banking sector that virtually brought the country to its knees.

Photo of Pauline McNeill Pauline McNeill Labour

No one is blameless in this, but it is childish to say that the Labour Government was responsible for the sub-prime mortgage scam in which people’s mortgages and savings were put at risk.

Photo of Pauline McNeill Pauline McNeill Labour

I will take a brief intervention, but please stick to the facts, Mr Gibson.

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

The fact is that, seven years after the banking crisis, Labour MPs in the House of Commons voted for a £30 billion budget cut, including a £3 billion cut to Scotland’s budget. That is why Labour lost 40 of its 41 MPs in Scotland weeks later.

Photo of Pauline McNeill Pauline McNeill Labour

Thank you very much; that is enough.

I find it quite interesting that Kenny Gibson’s analysis does not include the role of George Osborne, the then chancellor. It was he who imposed the greatest level of austerity on this country that we have ever seen. I am sure—at least, I hope—that we agree that the 10 to 12 years of austerity have damaged people’s lives. Therefore, it is really important that we take people with us on this budget. We cannot leave people behind, as Rhoda Grant said.

During that period, household incomes shrunk; energy prices are still rising; the cost of living has increased; food banks were not a feature then but are now; and, according to Crisis Scotland, Scotland has, by a long way, the highest rate of homeless deaths in Britain, of which 53 per cent are drug related. No party is blameless.

When we look at how people’s lives have been damaged over the past 10 years or so, we see that billions of pounds have been taken out of the welfare budget, creating real poverty. In fact, universal credit, which should definitely come to an end—I think that we agree on that, too—might have had a chance of working if £12 billion had not been taken out of it.

The Parliament must use the powers that it has to improve the lives of Scots. It is becoming crystal clear, if it was not before, to ordinary people that years of underfunding local authorities is reaching crisis point. Maybe ordinary people did not notice that when we tried to tell them about it five or six years ago, but we have reached the point at which they are beginning to notice.

It is important that local authorities, when using their powers, whether to increase council tax or something else, explain to people why their taxes are increasing and what they will do with them.

Only a few weeks ago, charities in the city of Glasgow, which I represent, expressed concern that they were being ruled out of applying for funding on a technicality. If I was of a cynical view, I would say that that was perhaps done deliberately. Thankfully, the matter has been resolved after pressure was put on this Parliament.

The local government revenue settlement has decreased at a much faster rate than the Scottish Government revenue budget. Scottish Parliament information centre figures show that the former has been reduced by 7 per cent and the latter has been reduced by 2 per cent.

Every local authority service is under noticeable pressure. Last week, the

Evening Times reported that, for starters, Glasgow City Council may have to sell off the gallery of modern art in order to pay for the services that it is trying to provide.

Councils are increasingly drawing on their reserves. Some 23 councils have reduced their reserves by £45 million. That is a serious concern.

Earlier this afternoon, I put a question to Michael Matheson, the Cabinet Secretary for Transport, Infrastructure and Connectivity, about the vision for transport. It is vital that, in this budget—Claudia Beamish addressed this point, too—we take poor people and the less well-off with us when making changes in that area, including when dealing with the climate change emergency. I am astonished to learn that the Government thinks that a loan repayable over six years is the answer to those who cannot afford electric vehicles, when only this morning “Good Morning Scotland” reported that electric vehicles are still at a very early stage and that the battery requires replacing after three years. I plead with the Government to think in more detail and more carefully about the policies that will be needed to make sure that every single person is included and not left behind in a budget that is about making people’s lives better and about tackling the climate change emergency.

Photo of Stuart McMillan Stuart McMillan Scottish National Party

It is fitting to have this debate on the eve of the finance secretary’s budget announcement, so I welcome the fact that the Tories have brought the topic to the chamber. I also welcome the Tories’ showing their inability to count yet again. Their demands far outstrip any possible additional finance that is coming to this Parliament—their demands are worth £1.5 billion, but the available resource is £1.1 billion.

Photo of Murdo Fraser Murdo Fraser Conservative

Can Mr McMillan do what the finance minister failed to do and explain how he arrived at the figure of £1.5 billion for measures that would cost a maximum of £777 million?

Photo of Stuart McMillan Stuart McMillan Scottish National Party

Murdo Fraser needs to do his own research.

Today, the Tories have yet again shown their inability to understand the devolved situation that the Parliament operates in, but that is no surprise because, as we know, the Tories did not want the Parliament in the first place.

The Lib Demsamendment was not selected for debate, but I was not surprised by it, as it once again proved that the Lib Dems are obsessed with the constitution. They attempt to make every debate a constitutional one, and they refer to federalism. When a Lib Dem member actually speaks later on, perhaps they could provide a coherent explanation of their view of federalism. I would have thought that, after about 100 years, the Lib Dems would by now have managed to produce some sort of proposal. However, the Lib Dem amendment started out well, by highlighting the farcical situation that the Parliament faces annually, and particularly this year.

Returning to the Tories, once again, their true colours have shown through. Yesterday, the Tories fought and failed on the issue of the independent school sector, and today they are arguing for a tax cut for the rich that, according to the Fraser of Allander institute, would remove £270 million from the budget. It is clear that the Tories are focusing their attention on a reducing number of supporters and voters, which is entirely up to them. It tells a story that, in the recent election, they lost seven seats and 3.5 per cent of their vote, or 65,000 votes.

Cutting the tax take would make things harder for many communities. I assure members that not many of the constituents who come to me or contact my office earn more than £100,000 per annum, but I hear from many people who earn a lot less and who are at the lower end of the scale. I am proud to represent my home of Greenock and Inverclyde. My community has always had its challenges, and we have not fully recovered since the reduction in the shipbuilding and heavy engineering industries in the early 1980s, as I have mentioned in the chamber previously. We have lost more than 30,000 people, who got on their bikes because they had to do so.

My community still faces challenges, despite the measures that the Scottish Government has introduced in recent years. However, since 2007, more than 1,300 new social homes have been built, bringing more than £40 million into my constituency, and more than £10 million has been spent on building and refurbishing schools. We have had nearly £5 million from the pupil equity fund over the past two years and more than £770,000 from the welfare fund this year. There has been more than £20 million for the new Greenock health centre and more than £7 million for the new continuing care hospital in Greenock. In addition, the Scottish Government has invested £12 million in helping to bring Diodes to Greenock, saving 300 jobs, and has taken over Ferguson Marine Engineering in Port Glasgow, saving more than 300 jobs.

If the tax cut for the rich that the Tories want went ahead, my community and others would face even more economic challenges. Murdo Fraser jokingly spoke of the Boris bonus, but, for some people, that is just about money coming back to the Parliament after the deep austerity measures and cuts that the Tory party has inflicted on Scotland and the rest of the UK.

Photo of Tom Arthur Tom Arthur Scottish National Party

Does the member agree that the real Boris bonus has been the bounce in the opinion polls for independence?

Photo of Stuart McMillan Stuart McMillan Scottish National Party

I could not agree more.

We know that Holyrood “doesn’t matter one jot” to Boris Johnson, although I am happy to hear from any Tory who wants to stand up now and defend Boris on that. Today, the Tories are lauding Boris Johnson, but I wonder whether they will laud him for his thoughts on the Parliament.

I welcome the fact that 55 per cent of Scottish taxpayers pay less income tax than they would if they lived elsewhere in the UK; that the health budget is more than £14 billion this year; that local authorities received £11.2 billion this year, which is a real-terms increase of £310 million; and that car parking charges in NHS car parks were abolished. Sadly, however, our Government cannot abolish the private finance initiative contracts that were agreed to by the Labour-Liberal Democrat Administration.

Photo of Stuart McMillan Stuart McMillan Scottish National Party

No, I am sorry—time is short.

Rhoda Grant mentioned food banks. Last year, more than 8,000 three-day food parcels were issued in Inverclyde, many of which were issued as a result of the UK austerity agenda and the welfare reforms of the Tories.

While the Tories defend the rich and wealthy and want tax cuts for their pals, I support the income tax proposals that, thus far, have helped my constituents. Today, we heard more of the same from the Tories. I look forward to the budget being delivered tomorrow.

Photo of Graham Simpson Graham Simpson Conservative

I welcome the chance to take part in the debate, which comes a day before Derek Mackay unveils his latest spending proposals to a waiting world.

I apologise to members for the length of the Conservative motion. I could read it out and that would be my speech. The reason for its length is that we have so many good ideas. I will focus my remarks on housing and local government.

Before I get into that, I add that I was interested to read at the weekend that Mr Mackay and Ms Forbes might have ended their friendship with Patrick Harvie and could be cooking up something with Labour and the Lib Dems. They would certainly be right to shun Mr Harvie’s advances this year. [

Interruption

.] Perhaps there was a murmur of approval there from Mr Rennie. Mr Mackay and Ms Forbes would be right to shun Mr Harvie, because the economy under Mr Mackay’s stewardship is in enough trouble without the help of the Greens.

We have engaged constructively with the budget process. Murdo Fraser, collegiate player that he is, asked us for ideas to share with Mr Mackay, and they are all listed in the motion. I hope that the cabinet secretary will see fit to support some, if not all, of them. We will see tomorrow.

My idea—extra money for councils to fight homelessness—came about because I heard that councils’ plans in that area are not quite covered by the generous amount that has been given to them so far by the Scottish Government.

Photo of Kate Forbes Kate Forbes Scottish National Party

The motion refers to

“an increase in core funding for local government at least in line with inflation”.

I will understand it if Graham Simpson does not have the figure to hand, but c an he tell me what figure the Tories are using for that specific costing?

Photo of Graham Simpson Graham Simpson Conservative

I was speaking about the extra money that we want for homelessness. I spoke to various stakeholders to come up with the figure—it is based on evidence.

We asked for another £10 million for the expansion of the ending homelessness together fund, specifically to allow additional resourcing of councils for their rapid rehousing transition plans. We think that £10 million would do the job.

Figures on homelessness that were published last week show why that money is needed. As at 30 September 2019, there were 11,432 households in temporary accommodation, which is an increase of 477 households compared with the previous year. That is the highest figure since the provisions of the Housing (Scotland) Act 2001 were commenced, in 2002. Further, there were 3,500 households in temporary accommodation that included children or a pregnant member of the household, which is an increase of 8 per cent on the 2018 figure.

Money does not solve everything, but it is vital when it comes to tackling homelessness. As well as funding the fight against homelessness, there is more that the cabinet secretary could consider.

The target of completing 50,000 affordable homes in this parliamentary session is commendable but, without a guarantee that the programme will continue beyond next year, building is starting to stall. We have serious concerns about the future supply of affordable housing. As yet, local authorities and housing associations have no guarantee of grant funding beyond March 2021. There is a risk that the building of affordable developments will grind to a halt and the progress that has been made to date will be lost, which would be a shame.

The sector can stimulate the economy through the continuation of investment in affordable housing. The Fraser of Allander institute’s assessment of the economic contribution of Glasgow Housing Association found that it had contributed approximately £2 billion to the GDP of Scotland and had supported, on average, 2,425 jobs a year through its investment programme since 2003.

Investing in housing can reduce child poverty, as is evidenced in the Joseph Rowntree Foundation’s “Poverty in Scotland 2019” report. It can also reduce homelessness, as the lack of affordable housing was highlighted by Crisis as one of the main challenges in preventing and alleviating homelessness.

The minister could look beyond producing new homes to the existing stock. She will be aware of the work of the Scottish parliamentary working group on tenement maintenance. Investing in existing stock can help us to meet climate change targets, which should please Mr Harvie. However, the annual public investment made by the Scottish Government in fuel poverty and energy efficiency initiatives has remained at approximately £119 million since 2016-17. Analysis carried out by the Existing Homes Alliance shows that investment must be increased to at least £240 million a year if we are to meet the climate change targets.

To do all that, the cabinet secretary and the Minister for Public Finance and Digital Economy have to change their approach to local government and properly fund councils. All the political parties that they are reaching out to are saying that. Let us hope that the cabinet secretary delivers tomorrow and that we get a budget that we can all support.

Photo of John Mason John Mason Scottish National Party

I always enjoy speaking in a Tory debate. They are so much fun.

When I read the Conservative motion, I wondered whether the writer understood basic arithmetic or maths, given his whole list of extra funding demands but no additional taxation. The Conservatives seem very definite about what Westminster will give us and seem to be spending that money several times over, despite the fact that the UK budget is not due for over a month.

I accept that the Opposition may see its role as demanding lots more money for many different sectors, with little thought as to where it will come from. I had expected a little better from the Conservatives b ut, clearly, I was overly optimistic in thinking that they would come up with a fully funded list of demands.

Photo of John Mason John Mason Scottish National Party

I might give way later.

The Fraser of Allander institute, in its autumn budget report, also warns us to expect negative tax reconciliations of £200 million in 2021 and £600 million in 2021-22. Those were not mentioned in the motion, although I accept that Murdo Fraser referred to them in his speech.

It is worth noting that the UK Treasury’s interpretation of the 2017-18 reconciliation is described as “somewhat disingenuous” by the Fraser of Allander institute, and I understand that the UK Statistics Authority upheld a complaint from Derek Mackay that the UK Government’s interpretation of the reconciliation was “incorrect”.

There seems to be a fundamental weakness in the fiscal framework in that we have to match UK economic growth or we lose out. We should aim to match or better UK growth, and we match Wales, Northern Ireland and most English regions, but the problem of London remains. Whether we call London the driver of the UK economy or a black hole that sucks resources out of the rest of the UK, it is difficult to compete with it. It would be helpful to know what will be in the UK shared prosperity fund. We have now left the European Union, yet we still have no details.

We recently debated local government finance, and one of the themes was that more money for local government effectively means less money for the NHS, or vice versa. I therefore struggle to see how all the Barnett consequentials that the Tories are asking for could go to health while increasing local government core funding at a time when we also have commitments such as increasing childcare— which I thought the Conservatives supported—that cost money, too.

Photo of Dean Lockhart Dean Lockhart Conservative

It is interesting that none of the SNP members who has spoken in the debate has mentioned growing the economy as an option for increasing funding to public services. Is that because the SNP is simply not capable of growing the economy?

Photo of John Mason John Mason Scottish National Party

The point that I was going to make when I tried to make an intervention during a previous speech is that we cannot possibly grow the economy when we have a shortage in our workforce. We do not have enough young people ourselves. If we cannot bring in people from other countries, how can we possibly grow the economy? It does not matter what we want to do if we do not have enough people.

I find the Tories’ motion fascinating for some of the things that are in it and for some that are not. They are against widening the tax gap and they want non-domestic rates to be the same as they are in England. They want spending on the health service to be the same as it is in England, with no suggestion that preventative spending in other sectors might take pressure off the health service. That seems to demonstrate a fear on their part of being different from England in any way. However, the point of devolution is that we can and should do things differently in Scotland, even while we stay, for the time being, in the UK. I have to say that that is a pretty sad level of ambition. I presume that, if—hypothetically—England were not there for us to compare ourselves with, the Conservatives would have no policies at all.

If the Tories want to have lower non-domestic rates, they are certainly entitled to argue for that. However, it would be more convincing if they gave a reason for a particular level of NDR and told us what public spending cuts there would be to compensate for that. Further, if the Conservatives want everything to be the same as in England, it might be more honest of them to say that they do not want a Scottish Parliament at all.

Let us consider what the Conservative motion does not say. There is no mention of poverty; no mention of the gap in income and wealth between the wealthiest and the poorest in our society; no mention of the environment; and only a passing reference to drugs and homelessness, which strikes me as window dressing.

Photo of John Mason John Mason Scottish National Party

I do not think that I have time. Sorry.

The Tory motion also refers to NRAC. I am certainly in favour of having a fair funding formula across Scotland, and we should be moving towards that—I understand that we are doing so. Obviously, the islands and remote areas have particular challenges, but funding according to need must be paramount. As I understand it, only 6 per cent of people in the Grampian health board area are in the poorest 20 per cent of the population, whereas 34 per cent of the people in the Greater Glasgow and Clyde health board area are. Therefore, the question remains whether that formula gives adequate weight to poverty and deprivation. The deep-end GP practices represent about 100—that is, 10 per cent—of Scotland’s GP practices and are in the poorest areas. They would argue that a sufficient share of GP funding does not go to the areas experiencing the greatest deprivation.

I look forward to tomorrow’s budget. I am sure that there will be some imaginative and progressive measures. However, we must remember that we are unable to affect corporation tax or the basic structure of income tax and national insurance, and that we cannot make VAT more progressive. Therefore, although devolution gives a certain amount of latitude, we are still setting a budget with one arm tied behind our back. Only real freedom for this country will let us achieve our ambitions.

Photo of Tom Arthur Tom Arthur Scottish National Party

I am grateful for the opportunity to speak in this debate, which has turned into the annual pre-budget warm-up match. It has been more constructive than some of the debates that we had last year. There has been more of an exchange of ideas and a willingness on the part of the Conservatives and the Labour Party, and, latterly, from Willie Rennie, to engage constructively. I echo Patrick Harvie in welcoming that approach.

On the public spending calls in the Conservative motion, there is little to disagree with. The only issue that I would raise is that of their affordability. When Derek Mackay challenged him, Murdo Fraser, like Neville Chamberlain, waved a piece of paper in the air. I hope that he will publish that document and, by putting it on the record, allow the Government and members to scrutinise the Conservatives’ spending proposals, just as the Government will set out its calculations with regard to them.

I want to pick up on a couple of points from Conservative speeches, one of which concerns the aspiration with regard to income tax receipts in Scotland and how they should measure against those in the rest of the UK. I think that that concept of rUK is quite problematic, because of the fundamental imbalance in the rest of the UK.

Earnings is one of the key drivers behind income tax receipts. The latest statistics, which are from April last year, suggest that a typical annual gross salary in Scotland is £24,486, while the figure for the UK is £24,897. The difference is marginal. However, if we consider how the rest of the UK is structured, we see that there is a huge imbalance. In the south-east, the figure is £26,199 and in London it goes up to £33,750.

When we speak about the rest of the UK, we are speaking about an economy that has more variance in earnings and productivity than exists in the whole of the European Union. Indeed, there are parts of England where productivity is at a lower level than in some of the poorest states of the United States. It is a highly imbalanced economy. The rUK figure is to some extent artificially inflated by the performance of the London economy, which has significant implications for the operation of the fiscal framework.

Photo of Dean Lockhart Dean Lockhart Conservative

I agree with Tom Arthur. London does indeed generate great wealth for the UK. However, the last time that I looked, London was not going to join an independent Scotland—or does he know something different?

Photo of Tom Arthur Tom Arthur Scottish National Party

I am sorry, but I missed the last part of the member’s comment. Will he repeat it, please?

Photo of Dean Lockhart Dean Lockhart Conservative

The point was that London generates huge wealth for the UK budget as a whole, including the Scottish budget, but London will never in any situation join an independent Scotland, so an independent Scotland would lose the wealth that is generated by London.

Photo of Tom Arthur Tom Arthur Scottish National Party

That raises an interesting point. That line of thinking is common among unionist politicians. I see that Johann Lamont is not in the chamber, but when she was leader of the Labour Party, she referred to the “city state of London” as an engine for generating income for redistribution. One of my concerns is that, if we have that model, with an engine room located in one part of the country, it attracts jobs, skills and inward investment, which makes it less desirable for people to live in other parts of the country. It creates a challenge around, for example, outward migration, which is a challenge that we have in Scotland.

I suppose that the Tories’ core argument for the union is now that we get what they describe as a union dividend, but I do not think that we should accept an underperforming Scottish economy that is propped up by subventions from London. That is, in effect, the model, but it is not the one that I want for Scotland. I appreciate that that might be the level of the Tories’ ambition for Scotland, but it is not the level of my ambition for Scotland. Our challenge is to go and match the advanced small economies.

There are certainly measures that we can seek to implement within the current devolved framework. For example, the Scottish visa that the Scottish Government has proposed, which would exist within the current constitutional arrangements, would seek to create an opportunity to increase the number of inward migrants to Scotland. That constructive proposal had widespread support across civic Scotland and the business community, which showed an openness and willingness to engage, but the UK Government dismissed it within a matter of hours without seriously considering it. That raises a real issue about how we can grow our economy in Scotland.

If we compare GDP in the rUK and in Scotland, we see that there is a difference in that the rUK performs better. However, if we look at it per capita the difference decreases, and if we look at it per capita for the working-age population, it starts to decrease further. The reason is that we have a demographic challenge in Scotland. I am not saying that that is the only challenge that we have, but it is a key challenge and one that we have to address. If the Conservatives really want to make the union work for Scotland, they must be more open and willing to admit that and to engage constructively with the Scottish Government when it puts forward detailed sets of proposals on how we can address challenges such as our ageing population.

My central disappointment about the speeches that we have heard from Conservative members—I ask them to forgive me if I misheard anyone—is that I did not hear a single reference to climate change or to social security. I hope that the Conservative front-bench member who sums up will address that. Climate change is the biggest challenge that we face and I commend the Scottish Government for putting it front and centre in its budget tomorrow.

Photo of Linda Fabiani Linda Fabiani Scottish National Party

We move to the closing speeches. It is disappointing to note that not everyone who took part in the debate is back in the chamber.

Photo of James Kelly James Kelly Labour

It is always interesting to take part in the annual pre-budget debate. This time, it has come the day before the budget will be published, so for some members it has been a bit like the night before Christmas; they have been getting a bit giddy and excited in their speeches as we wait to see whether Derek Mackay will appear as Santa Claus or Mr Scrooge the following day. Tomorrow, all will be revealed.

First, I will make a point about the budget process, which Willie Rennie described as “chaotic”. For the UK Government to publish its budget on 11 March, so late in the financial year, shows its scant regard for the devolved Administrations and for local councils, which are right up against the wire not knowing what their settlement will be. Patrick Harvie underlined that, particularly in our new budget process, the Scottish Government could have done more to share information on different scenarios during the year. The process has been far from satisfactory.

A number of members spoke about fair funding for local councils, and Rhoda Grant described the problem very well. In recent years under the SNP, there has been a reduction of 7 per cent in revenue funding for councils since 2013-14 and 40,000 fewer jobs since 2007. Against that, the SNP Government has asked councils to do more, with an additional £497 million of commitments. The climate is very challenging for councils and, against that backdrop, the demand for fair funding is very reasonable indeed.

Pauline McNeill set out very well the case for bus travel for under 25s—not only its legitimacy, but the fact that it would tick various policy boxes. It would help with tackling poverty for low-income households, climate change targets and getting young people to work, college and university, which is vital with regard to making an overall contribution to the economy. The budget should give a fairer settlement to colleges and universities. In recent years, there have been cuts to research and teaching grants in universities; we should remember that the grants fund projects that involve innovation and link to industry and the economy, so cuts in that area undermine economic growth.

A number of members spoke about the importance of climate change. Claudia Beamish put her finger on a key issue when she referred to the linking of spending to outcomes, which has been spoken about in a number of budget debates in recent years. It is all very well to commit to action on climate change, but we have to see the outcomes.

Murdo Fraser and a number of Tory members spoke about a Boris bounce. In reality, it is a Boris brass neck. Yesterday we saw the priorities of Tory MSPs when Parliament debated the very reasonable proposal to cancel relief to private schools. Speaker after speaker rose to their feet from the Tory benches. Someone said to me, “It looks as if there are a number of selection meetings coming up with the Tory associations”. Perhaps they were playing to the public gallery. Thousands of people in Scotland from different communities rely on food banks, but we do not see Tory MSPs rising to complain about that. Hundreds of thousands of people in Scotland are not being paid the living wage, and some have to do three jobs to make ends meet and support their families, but we never hear complaints about that from the Tory benches.

Photo of James Kelly James Kelly Labour

No. I am running out of time.

The latest update to the Scottish index of multiple deprivation was published last week. If a Tory MSP was taken to some of the areas that have the highest levels of poverty—such as Springhall in Rutherglen, or Whitlawburn in Cambuslang—they would be strangers. They would be out of their depth and unable to relate to the situation that they would see before their eyes.

A lot of SNP members painted a rosy picture, but the reality is that after 13 years there are public services in crisis, people are waiting more than 12 hours in accident and emergency departments, class sizes are rising and pass rates in key subjects are falling. Pauline McNeill mentioned people dying on the streets because of homelessness; we have the highest rate in the UK—195 people died last year. There is an appalling train service; only this morning I received reports of people who were not able to get on to trains. Police stations are falling down.

The jury is out on the SNP as we consider the budget. Let us have a budget that delivers for people, for communities and for public services.

Photo of Kate Forbes Kate Forbes Scottish National Party

Despite all the promises that have been made over past years to end austerity, the UK Government has thus far failed to deliver; worse, it has increased uncertainty for Scotland.

In October 2018, the UK Government’s budget failed to deliver on its promises. The UK Government delayed its 2019 budget, and instead delivered a lacklustre spending review. The UK 2019 spending review has been delayed. However, we wait in anticipation for this year’s budget. In sharp contrast, the Scottish Government has taken unprecedented action to deliver certainty for our public services and local authorities. The full details of that will be set out by the cabinet secretary tomorrow.

The Scottish Government is willing to listen to constructive ideas from all round the chamber, so that the Parliament can pass a Scottish budget that delivers stability for Scotland’s economy and public services.

We heard some very thoughtful speeches—from Tom Arthur, Graham Simpson and John Mason—that offered constructive thoughts. We also heard speeches—from Ruth Maguire, Stuart McMillan, Kenny Gibson, Keith Brown and Patrick Harvie—that highlighted the inherent hypocrisy in the motion.

There were some great lines, particularly from James Kelly, who described budget day as Christmas day; Willie Rennie, who repeated several times that he was confused; and Tom Arthur, who rightly acknowledged the Boris bonus for independence polling.

Clearly, members have different priorities for tomorrow. Some, like Claudia Beamish, focused on climate change. Liam Kerr mentioned police and justice and Dean Lockhart referred to the importance of economic growth.

Costings are important when it comes to budget asks, and I look forward to seeing the Conservatives’ figures. The A4 page of text does not fill me with great confidence, but I will reserve judgment until I have seen the costings that Murdo Fraser agreed to give me.

The Tories might have shifted slightly from slashing taxes for the highest earners to just calling for no divergence in this year’s budget. No doubt they recognise that the Scottish Government’s position on income tax has been far more in line with public opinion than their own ridiculous position over the past few years. The irony is not lost on me that, for the past two months, the Tories have supported the removal of tax reliefs on businesses and nurseries to name just two. The business community will not forget that, for all that the Conservatives claim to champion Scottish business.

Willie Rennie’s position is somewhat ridiculous. The budget is a critically important process every year; it literally keeps the lights on. I get the impression that Willie Rennie is so obsessed with independence that he sees it in the budget document even when it is not there. The only block to the budget is the Lib Dems, who every year have prioritised the union over funding for education, infrastructure and everything else.

Photo of Willie Rennie Willie Rennie Liberal Democrat

Can the finance minister guarantee that there will be no spending on independence from the Scottish Government in the next financial year?

Photo of Kate Forbes Kate Forbes Scottish National Party

I asked Willie Rennie a very simple question earlier, which he could not answer. I asked him where the independence line was in last year’s budget.

The irony is that the budget process is entirely designed to give security and certainty to the thousands of people who work in our public services, and to ensure that teachers, doctors and nurses are paid and our children are educated. That is what the budget process is about, and to make it about the constitutional issue is nothing short of irresponsible when it comes to ensuring that our public services get the investment that they need.

Tomorrow is an opportunity to deliver certainty and investment for the people of Scotland.

In all the years since 2016, the Tories have voted against Scottish Government budgets. That means that they voted against the revolutionary expansion of early learning and childcare, they voted against investment in raising attainment in schools, they voted against record-high health spend, they voted against mitigating the damaging effects of UK welfare changes and they voted against increased spend on mental health.

Photo of Dean Lockhart Dean Lockhart Conservative

We voted against the budget because it made Scotland the highest-taxed part of the UK for people who earn more than £27,000.

Does the minister recognise what the Fraser of Allander institute said, which is that the SNP’s tax increases have not raised additional finance for public services in Scotland?

Photo of Kate Forbes Kate Forbes Scottish National Party

I was just coming on to say that, as far as I can see, the Tories’ biggest concern with those budgets was that they contained no tax cuts for the richest, for the highest earners and for the biggest businesses. Dean Lockhart has summarised, in a nutshell, the Tory position over the past few budgets, which was that unless there were tax cuts for the biggest businesses and the highest earners the Tories would not invest in all the areas in which this Government has been determined to invest.

Photo of Kate Forbes Kate Forbes Scottish National Party

I am more than delighted that this Government has not followed Tory ideology when it has set budgets, and I am delighted that there is a change of heart on the part of the Tories. I will take another intervention, because that is making this more fun.

Photo of Dean Lockhart Dean Lockhart Conservative

I clarify that we voted against tax increases because we said that they would damage the economy. Earlier today in the chamber, Derek Mackay said that the Scottish economy has underperformed by 5 per cent, relative to the UK economy, since the SNP came to power. In the past year, the Scottish economy has been growing at half the rate of growth of the rest of the UK. We warned the SNP that that would be the case but it did not listen to us. That is why there is economic decline in Scotland.

Photo of Kate Forbes Kate Forbes Scottish National Party

I will tell the member why there is economic challenge in Scotland. Business is quite clear that the biggest issue that it has faced in the past year has been the uncertainty that the member’s party, in the UK Government, has created over Brexit. It is pretty clear from all the business organisations that that has been the reason for the challenge.

I quoted the Fraser of Allander institute, which has been clear in analysing our tax position, and I do so again; it said:

“We estimate that the Scottish income tax policy raises approximately around £550 million in revenue compared to a policy to set the same tax parameters as in the UK.”

That is a hard, cold figure, which the Tories would see cut from our public services.

Photo of Kate Forbes Kate Forbes Scottish National Party

The motion that is before us suggests that the Tories have suddenly woken up to the budget process and the need to look like a more competent Opposition than they have appeared to be over the course of the past year. As I said at the beginning of the debate, we are willing to work constructively with all parties and look forward to the parties’ welcome of Derek Mackay’s draft budget when it is published tomorrow.

Photo of Miles Briggs Miles Briggs Conservative

I am pleased to close today’s debate. We have had a largely useful discussion ahead of the finance secretary’s imminent budget announcements, and the Scottish Conservatives have presented a positive and pragmatic proposal for investment across our public services.

As Murdo Fraser said, it is important that we understand the financial background to this year’s budget. Scotland is set to receive at least £1.1 billion in additional Barnett consequentials as a result of extra UK Government spending. The Fraser of Allander institute has said that that will amount to a 2.1 per cent increase in the funding that is available to ministers. We might expect SNP ministers to welcome that. SNP ministers need to accept that this year’s budget will provide the biggest increase in the block grant and the resources that are available to them.

I believe that the run-up to the budget is an appropriate time to look at how effective SNP ministers, and their agencies that are responsible for overseeing public spending, have been in ensuring value for money for Scottish taxpayers in public expenditure. Sadly, the public sector landscape in Scotland is littered with reports and audits that contain damning criticism of financial overspends and mismanagement by SNP ministers and public bodies. We had an IT delivery cost increase of 79 per cent since the original business case was made for the common agricultural policy futures programme, and NHS 24’s long-delayed IT system saw a cost increase of 73 per cent on the £75.8 million that was included in the original business case. As Liam Kerr outlined, the weak financial leadership of the Scottish Police Authority has led to warnings that it is facing a deficit of £0.2 billion.

Numerous NHS health boards have had to be bailed out with loans from Scottish Government ministers—in many cases with little indication of how and when the loans will have to be repaid. Let us not forget that, as I stand here, half of mainland NHS boards are in special measures. If not for the record NHS health funding that has come to Scotland over the past decade from the UK Conservative Government, where would SNP ministers have got the resources over that time to write off the debt and to fund the ever-expanding debts that are stacking up?

Perhaps the totemic symbol of SNP ministers’ mismanagement of NHS resources is the new sick kids hospital and the construction project around it. It is a £150 million project that is much needed by my constituents and their children and families. The hospital was meant to open in 2012: it is now eight years delayed. An additional £80 million has been spent on enabling works at the site, which go beyond the deal that was reached with the consortium that is building it. A further £11.6m has been given to end a contract dispute and, as things stand today, NHS Lothian has been given an additional £16 million by the Scottish Government to try to refit the hospital, given concerns about building standards and the ventilation system. Taken together, the extra costs mean that a project that was set to cost the Scottish tax payer £150 million will cost £520 million over its lifetime.

No wonder that the

Evening News today declared that the SNP Government’s handling of the project was “worse than the trams”. There is growing anger among Edinburgh and Lothians residents whom I represent—I am sure that other Lothian members in the chamber will agree—because we are now paying £1.4 million a month for a hospital that patients and NHS staff cannot use.

Therefore, it is abundantly clear that SNP ministers and their agencies need to look at how robustly they are managing vital taxpayers’ money, so that we deliver value for money for all the taxpayers whom we represent.

Photo of Miles Briggs Miles Briggs Conservative

My colleagues have talked about some of the extra investment in public services. Maybe the former Minister for Transport and Infrastructure needs to think about the ferries project if he is talking about “failings”, but we have been looking at the investments—

Photo of Miles Briggs Miles Briggs Conservative

I do not have time, just as Keith Brown did not have time.

All of us accept that we need investment in our health service. There is no bigger public health emergency than the drugs deaths emergency in Scotland. As I said in the debate last week, we need to be honest and to recognise that SNP cuts to drug budgets have destabilised services across our country. We therefore need resourcing of additional capacity in order to deliver the wraparound care that we all want to be available. Scotland has seen a devastating reduction in vital drug-rehabilitation beds—from 352 in 2007 to just 70 today. We need a rapid reversal of that situation, which is why we are committed to asking ministers to invest £15.4 million for a co-ordinated national drug-rehab bed fund, and a strategy to go with it.

Equity in funding of health services and boards is a key issue that many members have raised. The Health and Sport Committee’s budget scrutiny has already demonstrated that a number of boards still do not have NRAC parity. That is a particular issue for my region and for North East Scotland colleagues, who have long advocated for change.

As health secretaries have come and gone, from Nicola Sturgeon, to Alex Neil, to Shona Robison, and now to Jeane Freeman, they have been content to stand by and watch our health boards being underfunded. I hope that the cabinet secretary will use the budget to finally end underfunding of health boards.

Despite my region having the fastest-growing and fastest-ageing population, the lack of parity means that our health board is underfunded. That is one of the key reasons that NHS Lothian chairman Brian Houston outlined this week when he handed the Cabinet Secretary for Health and Sport his resignation letter. We need parity; I hope that the finance secretary will deliver that tomorrow.

SNP ministers have the resources: we know that the UK Government is providing the single biggest cash injection of funding in the history of our health service. That will give the opportunity for the gaps to be closed.

Kate Forbes touched on hospital parking in her opening speech. We need to see progress being made on that tomorrow, as well. An additional £7.5 million in Barnett consequentials is coming to Scotland because England will scrap parking charges at hospitals. Scottish Conservatives want additional resources to be made available to hospitals across Scotland, and we want a comprehensive review of hospital parking to assess the capacity for development of a free parking scheme for protected groups, including disabled patients and sick children’s parents who are staying overnight.

In addition, we know that there are three hospitals in Scotland at which staff still have to pay parking charges. We can do something about that. We are calling for a refund scheme to be adopted, at a cost of £2.7 million of the £7.5 million that is coming to Scottish ministers.

Graham Simpson highlighted important points about the need for resources to go to councils to address homelessness, which I endorse. Specifically, there should be additional resourcing for local authorities to be used for the rapid rehousing transition plan, which was discussed last week.

Before I conclude, I emphasise a concern that all of us should be considering today. Scotland’s economy is projected to grow at the lowest rate in the UK over the next four years. That is something that none of us wants, and which Government ministers have an opportunity to change. We believe that higher taxes would just risk decreasing economic growth further. In any case, as Murdo Fraser correctly highlighted, changes to tax rates and bands are not leading to an increase in tax take.

We will support new measures by SNP ministers to incentivise businesses and to bring jobs and growth to Scotland. We will support the vision that is needed to support the development of a business environment that will ensure the jobs of the future.

I hope that when this year’s budget is announced tomorrow, it uses the more positive financial outlook to support our key public services, to boost the economy and to avoid increased tax levels for all hard-working Scottish families.

I support the motion in Murdo Fraser’s name.