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 am grateful for that clarification and I am more sympathetic to the amendment in that context.

The Conservative amendment says that the fiscal framework is

“currently operating as it should”.

It might well be operating as it was designed to, but it was designed to hamstring and shaft the Scottish Government. I criticised it at the time and, had I been in John Swinney’s shoes, I would not have signed it off. However, it is what we are working with now. It is not enough simply to say that it is working as it should any more than it should be enough to say that the operation of any part of our economy is working as it should when people are being exploited or when we have unsustainable economic activity.

The phrase

“maxed out the credit card” comes up time and again. Saying that the Scottish Government has

“maxed out the credit card” is, in fact, a telling analogy. It is quite honest in saying that that is the kind of economic power that a Scottish Government ought to have. It can have a wee credit card, it can pay through the nose to use it and it can have none of the meaningful powers that any other Government would expect to have. What a piece of nonsense is the phrase

“maxed out the credit card”.

I will move on to talk about the elements that are raised in my amendment, because further steps are absolutely going to be necessary, as other Governments are recognising. In fact, on 27 May, the European Commission presented in the European Parliament a €750 billion economic stimulus plan, which is in addition to the action that is being taken by member states. I deeply regret that the UK will not have access to the ability to work collectively with other EU countries as a full member state, but that is a result of UK Government choices.

As for the affordability of the stimulus package that will be necessary, I refer members to the work of the Resolution Foundation, which says:

“while borrowing is high, there is no sign that the government is struggling to finance itself.”

It points to the

“healthy levels of demand for the record volume of gilts issued since the lockdown” and the fact that

“the Debt Management Office has successfully raised over £89 billion from gilt auctions since mid-March.”

It goes on to say:

“Even under a 12-month lockdown, the debt interest-to-revenue ratio (a measure of the financial burden that debt imposes on the public finances) remains close to historic lows.”

There is therefore no question about the affordability of the stimulus package that is necessary—and it is, clearly, necessary.

I very much agree with Jackie Baillie that the job retention scheme clearly needs to be extended beyond the immediate cut-off, particularly in areas such as hospitality, if we want to avoid the horrendous levels of unemployment that we may be about to see.

Building back better will require the bold, courageous and creative role of the state not only in stimulating recovery but in steering it, and not only in rebooting the economy but in redesigning it to ensure that we achieve the fairer, more equal and greener economy that so many members talk about. We need to put that into practice.

I move amendment S5M-22033.3, to insert at end:

“; recognises that economic recovery from COVID-19 will require a very substantial fiscal stimulus package as well as continuation of the job retention scheme in at least some sectors such as the hospitality industry; notes that the need for these further measures is recognised at EU level and regrets that the UK will be unable to participate in the EU’s stimulus package as a result of the UK Government’s choices, and believes that all fiscal interventions to respond to and recover from the COVID-19 pandemic must be designed to build back a better, fairer and more sustainable economy, and that investment in a green economy must be the most urgent priority for all governments, instead of supporting the continuation of exploitative and unsustainable practices.”