Covid-19 Fiscal Implications

Part of the debate – in the Scottish Parliament on 16th June 2020.

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Photo of Patrick Harvie Patrick Harvie Green

I welcome this debate which, as the cabinet secretary said, we are having in the context of in-year budget revisions on a bigger scale than is typical for us. However, passing the budget revision document is largely a technical decision and what we need is a wider debate about the fiscal situation. Today’s debate will not be the end of that, by any means, but it is an important opportunity for us to begin to broaden out our discussion of the situation.

All Governments are responding to a public health and economic emergency, and it would not be reasonable to suggest that any Government is doing so with perfect foresight or clarity about how exactly they should use all the tools that are available to them. However, the fiscal response by Governments is only one set of tools—it is important, but it is only one set of tools. Most Governments can exercise it freely, without constraint, in the context of wider macroeconomic powers, but the Scottish Government is tightly constrained in the way in which it can fiscally respond to the situation. It is therefore critical that we make the case for wider UK action as well as for wider flexibility for the Scottish Government to take steps.

Important steps have been taken so far, which we should recognise. However, although the motion and the comments from the other parties recognise that, far more will be needed. The motion recognises that and the limitations of what is possible, and is very clear that fiscal flexibility is required.

The Labour and Liberal Democrat amendments introduce very important points in relation to local government, and I agree with the sentiment of what both suggest. Both those amendments also delete substantial parts of the motion. I am not sure that the Liberal Democrat phrase

“additional fiscal flexibilities ... should be considered” is quite strong enough, and I hope that the Labour Party might confirm in its closing speech that, when it says that it

“welcomes the opportunity to review” the fiscal framework next year, it is not closed off to the idea of immediate flexibility being introduced.