Covid-19 Fiscal Implications

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

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Photo of Kate Forbes Kate Forbes Scottish National Party

This debate matters, because we are living through an extremely challenging time. Combating coronavirus has required investment in and support for the NHS, our front-line workers and our care homes. The next chapter cannot be dressed up: it will be challenging. However, we are determined to get through it.

In the past, we have debated the choices that we face at this time in our history, which are about building a fairer society, positioning our economy for sustainable growth and embracing opportunities. That is in the middle of one of the greatest challenges of our time. Many members have made that point, and have provided ideas as to how we can do that.

However, in highlighting the many challenges that we face, we take our responsibilities seriously. We are committed to using all our resources, efforts and creativity to invest in communities, to support the economy and to protect public services. That is why today’s announcement of £230 million of capital stimulus is so important.

Investment in high-growth companies, construction projects, regeneration, transport and digitalisation will be just the first phase of our economic response. Larger programmes will follow, as we prepare a fuller response to aid long-term recovery against the economic and social harm that has been caused by the pandemic. That is in order to restore the economic confidence that Willie Rennie mentioned, based on managing the health crisis.

As we do that, I will keep listening to the many ideas that have been offered by Angela Constance, Alex Rowley, John Mason and others on how to navigate these choppy waters. However, we will be making decisions and taking those actions with one hand tied behind our back, unless there is change.

Michelle Ballantyne made the point perhaps better than I will, when she told members that the UK Government’s funding figures are not guaranteed until the end of this financial year. During a crisis, that is far too long to wait.

Willie Rennie asked what types of powers and flexibilities we are seeking. They include protection against negative consequentials. Alexander Burnett will be interested to hear that they also include the ability to use capital underspend to meet our revenue needs. I am sure that he knows full well the difference between capital and revenue. However, perhaps he does not know that, right now, we cannot use underspends in capital projects to meet revenue shortfalls. Local government, business and the national health service need revenue, not capital, so that is one of the flexibilities that we need.

We have talked about other flexibilities. They include being able to use our borrowing powers for the things for which we actually need them—for example, responding to a pandemic. We need greater flexibility to carry over our capital budget from the Scottish reserve, and we need the ability to manage reconciliations over a longer time.

I will address the remarkable argument that has been deployed by the Tories: that borrowing is bad, at a time when it is forecast that the UK Government will increase its borrowing by £300 billion. That is how it has funded its very welcome interventions in our economy. That is what has bankrolled the furlough scheme and the self-employment income support scheme. Those are welcome, but we cannot dress the situation up as though the UK Government has reprioritised its budget in order that it could make those funding choices. To ask the Scottish Government to reprioritise our budgets, and thereby in the process potentially to jeopardise key front-line interventions, is therefore hypocrisy.

Graham Simpson’s well-made point sums it up. His speech illustrated the core issue. He asked, as is his right, for more funding for local government. He can ask for that, as he can ask for more funding for anything.