Before recess, we voted to introduce a rent freeze, after the Government accepted Labour’s arguments that rents must be frozen and tenants protected from eviction—using the powers that this Parliament has—to help people with the cost of living crisis.
The crisis is a national emergency on the scale of the Covid pandemic, and Scottish Labour has been leading the way throughout it. We called for a windfall tax, a freeze on energy bills, a freeze on rents and protection from eviction for tenants, which were all dismissed and then adopted by the United Kingdom and Scottish Governments.
I did not say that that was in the gift of the Scottish Government. I set out a series of policies that were dismissed and then adopted by the UK and Scottish Governments. However, I should point out that they were also dismissed by, and then supported by, Scottish National Party MPs at Westminster. Perhaps that escaped the member.
For months now, people who were managing have found themselves pushed to the brink with repeated financial shocks. Food costs, heating bills, fuel costs, spiralling rents and now mortgages keep on going in one direction, and that is up.
Our plan detailed interventions that would make a real difference to families in Scotland, so we are returning to the chamber to call on the Scottish Government to take further action.
I want to be clear that the unprecedented chaos that has been unleashed on the UK by the Tories at a time when we need stability the most means that this winter will be longer and harder than any of us expected when we put forward our cost of living plan in August. The Conservatives’ disastrous mini-budget crashed the pound and accelerated the rise in costs that families are having to bear.
The Food & Drink Federation put food ingredient inflation at 30 per cent, and because imports are traded in dollars, non-European Union imports have become more expensive.
Even now, the reality of the situation, including vital information about the rate at which pensioners and people on benefits will have their payments uprated, will not be known until 17 November.
The Deputy First Minister—who is not here—recently tweeted that he would not have to recalculate his budget review, because he never expected the mini-budget Barnett consequentials to ever materialise. If it is the case that no recalculation is required, the Government could bring forward its own statement.
Our motion returns to the cost of living plan to help those in need. It calls for the cancelling of school meals debt, increased funding for money advice services and a top-up to the welfare fund—all of which, for the interest of those who have a concern about what this Parliament and Government can do, is within this Parliament’s gift. Those measures are firmly within the gift of this Government and could have a real and substantial impact on people’s lives.
We have come to the chamber again and again to give policy suggestions around income that the Government could bring in to fund those measures. Only in June, Labour and SNP members voted in favour of clawing back the £400 energy supplement for second homes, in particular in order to target that money at cost of living measures. The Government agreed to do that and all its back benchers supported it. However, we have seen nothing—there has been no action on that £400 supplement, which is going to second home owners but which could be going into the pockets of those who need it most. There has been no action at all. We have come again and again with suggestions.
I am sure that Mr Griffin will want to correct the record. After he wrote to me, I confirmed to him that we had written to the Convention of Scottish Local Authorities and engaged. As he will appreciate, although the aspiration is venerable and worthy of respect, the capacity to implement it is a lot more complicated than his rhetoric would suggest.
When I speak to council leaders, all they say to me is, “We have heard about this and we have heard nothing more from Government about how we implement it.” They are desperate to get on with the job and to take in that extra money, which could be going into the pockets of those who need it most. They are simply waiting for the Government to tell them how to do that.
We have set out areas where we think that the Scottish Government should step up—on cancelling school meals debt, on topping up the welfare fund and on support for advice services. We have come to the Parliament regularly to speak about how those steps could be funded through better income generation and by cutting out the waste that this Government seems to grow more of than it does support for those who need it most.
People are absolutely sick of the chaos that they see going on in the UK Government. They are sick of seeing it push their bills only one way, which is up and up and up. They want to see more action, and there is action that can be taken that is within the gift of this Government. People want that reassurance, and they want it now.
That the Parliament notes that inflation again reached 10.1% in September 2022, driven by rising food prices and energy bills; condemns the mini-budget set out by the UK Government, and recognises that the cost of living pressures that households are facing will be exacerbated by the economic damage it caused; believes that the priority for every government must be preventing further instability and addressing the cost of living; considers that there is more action that could be taken by the Scottish Government, including the cancellation of school meals debt, increased funding for money advice services and a top up to the welfare fund; remains deeply concerned about households in Scotland that are struggling to make ends meet over the winter, and calls, therefore, in the interests of transparency, for the Deputy First Minister to set out the outcome of the Emergency Budget Review to Parliament as a matter of urgency.
I thank Mr Johnson and, indeed, Mr Griffin for bringing the motion to Parliament. It is a very timely motion about exactly the issue that our constituents would expect us to be debating—the cost of living crisis that is exacerbated by the continuing fallout from Brexit and by the recent chaos that the UK Government has unleashed on our economy, people, communities and businesses, which means that they are facing soaring inflation, rising costs and spiralling energy bills. The severe economic shock that everyone is facing is leading to cases of hardship and poverty.
The Scottish budget is not immune to the rising costs and budget pressures. As the Deputy First Minister has set out, our budget is now worth around £1.7 billion less than when it was set in December because of increasing inflation. We know that the Welsh Government is in the same position. We recently saw the Welsh First Minister Mark Drakeford point that out to the Tory Prime Minister, when he indicated that the Welsh Government’s budget is—as I understand it—now worth up to £4 billion less in real terms than it was when the three-year funding settlement was set last year.
The reality is that the decisions facing us are stark. Every additional pound that we spend in one area means a pound less has to be spent in another area. We have already taken action with the £500 million of savings that we announced last month, and which we have been clear were just the beginning of the hard choices that will be required to ensure that we can balance our budget while also supporting those in greatest need and providing fair and affordable public sector pay awards.
Although I understand the difficulties in providing budget updates given the chaos from the Tory Government in the UK, there are non-fiscal measures that do not require spending that could be brought forward now, such as a review of regulation. Will the minister provide an update on where that review is?
Certainly. The member will be aware that that commitment was given when the Deputy First Minister set out the initial savings on 6 or 7 September.
It is still our intention to bring forward an emergency budget review. The member will appreciate that we anticipated a fiscal statement on Monday from the UK Government, but that has now been pushed back to 17 November. As a consequence of that, we face even more uncertainty.
We will do all that we can, and we will set out what we will do in relation to considering regulation, but the reality is that on the fiscal matters that pertain to the autumn budget revision, we are in a more uncertain situation because of the decision taken by the UK Government to delay its fiscal statement.
The reality is that we do not know. I already highlighted the amount that we have lost through inflation, and, as members will appreciate, we do not know what our finalised budget picture will be until the end of the year because of supplementary estimates, and there is always the risk of negative consequentials. That makes in-year budget management extremely challenging.
The UK Government’s statement must not inflict further austerity on Scotland as a result of the mess that it has caused. The triple lock for pensions must not be removed again. We cannot have benefits not increase in line with inflation, and we cannot have people not being helped with their energy bills as they continue to soar.
As the First Minister made clear to the Prime Minister last night, the UK Government holds levers over energy, the majority of tax, the bulk of benefits and the business support and regulation that could help address the crisis. It also has borrowing powers and the ability to deploy financial instruments that can transform household and business budgets.
For example, a strengthened windfall tax should be an important source of funding for that support, rather than borrowing and spending cuts. That would help meet the costs of providing additional help for households and business, rather than increased borrowing and cuts to public spending, which would exacerbate the existing situation. We estimate that around £9.3 billion could be raised by broadening the energy profits levy and removing the investment allowance.
There must also be an inflationary uplift to the 2022-23 budget to enable the Scottish Government to take further steps to support people with the cost of living, provide fair public sector pay uplifts and support public services, given the fiscal constraints on devolution. That will allow us to continue to take action to support people at this very challenging time and is how we can build on the almost £3 billion of support that the Scottish Government has already provided this year, including £1 billion of support that is available only to households in Scotland.
This is an extremely challenging period. I look forward to members’ contributions. I hope that they are informed, pragmatic and considered contributions that take cognisance of the limited powers of the Scottish Parliament and the extremely challenging fiscal and economic situation that we face.
I move amendment S6M-06438.2, to leave out from “; believes that” to end and insert:
“alongside the disastrous economic impact of leaving the European Union, which is being felt by Scotland’s economy, businesses and households; recognises that, as a result of increasing inflation, the Scottish budget is worth £1.7 billion less than when it was set in December 2021; welcomes the financial support that the Scottish Government has provided from within its fixed and limited budget to help people facing the impact of the cost of living crisis, including direct cash support, with almost £3 billion allocated to support households, £1 billion of which is support only available in Scotland; recognises that this includes the unique £20 per week per child Scottish Child Payment, which will increase to £25 on 14 November 2022, when it is also extended to under 16s, and £44 million for the Carer’s Allowance Supplement; acknowledges further support with the planned doubling of the December Bridging Payment to £260, supporting up to 145,000 school-aged children; notes the additional costs that the Scottish Government has funded in relation to public sector pay; expresses concern at the prospect of a fresh round of UK Government austerity; believes that the priority for every government must be preventing further instability and addressing the cost of living; calls on the UK Government to use its fiscal statement on 31 October to rule out a return to austerity, further help people with soaring energy bills, reinstate the pension triple lock, confirm an inflationary rise in social security benefits in 2022-23 and provide the Scottish Government with an inflationary uplift to the 2022-23 budget to enable the Scottish Government to take further steps to support people with the cost of living; believes that a strengthened windfall tax should be an important source of funding for this support, rather than borrowing and public spending cuts, and understands that the Scottish Government will finalise and publish the outcome of the Emergency Budget Review once consideration has been given to the implications of the UK Government’s fiscal statement and updated Office of Budget Responsibility’s forecasts.”
After a period of historically low inflation, and low interest rates, we find ourselves in the middle of an economic crisis in which rising costs of living have hit this country, as well as many others, across a range of goods and services.
That presents a real challenge to Governments at all levels. As members of the Scottish Parliament, we see the consequences first hand across our constituencies and regions. We will all know, from the correspondence we receive and the people we meet, that families and businesses face tough conditions and are feeling the impact of circumstances that are beyond their control.
In his September letter, the governor of the Bank of England set out the factors at play behind the rise in inflation—in particular, the role of Vladimir Putin’s appalling act of aggression against Ukraine and its disastrous consequences, which comes at a key moment in our recovery from the Covid-19 pandemic.
Those are not normal economic forces— in many ways, they are unprecedented—but there is, at least, some cause for optimism. Global wholesale gas prices have fallen and Europe has moved towards greater energy security and resilience.
As the Prime Minister did, I do.
If prices can be stabilised, the positive impact on the worst medium-term projections for energy costs will be considerable. However, the hard reality is that the underlying problems will not go away in the immediate term, and they will underlie our economic decision making well into next year. At this stage, it is a vital role of Government to use its best efforts to reduce the impact and support people through the winter.
The UK Government acted quickly and decisively to bring about £37 billion of intervention to help people with energy bills. Many parts of that package have been targeted specifically to help those who are most vulnerable, including low-income families and pensioner households that are often on fixed incomes. That is the right approach, and it will be of immense help to people the length and breadth of the UK.
We should not forget that that support comes on the back of the extraordinary assistance that was provided through furlough and other schemes during the worst part of the Covid pandemic. We were able to draw on the resources of Government to keep people in jobs and avoid the mass-scale unemployment and business closures that could very easily have resulted. The UK Government has gone further and faster than many would have expected. Although the costs borne by the Treasury have been eye watering, we can only imagine the costs of not acting.
Absent from Labour’s motion is consideration of the impact on businesses, including the additional costs that they face, the disruption to supply chains and the wider questions over their future. I was open in my calls for action to help businesses tackle the hike in energy bills that threatened the survival of so many, so I was delighted when that support was given by the UK Government. That has, undoubtedly, saved jobs and livelihoods in my region and beyond.
We agree with Labour that both Governments should be responsive and working with the common purpose of helping and supporting our constituents through this period. More will undoubtedly need to be done, which is why it is particularly galling to see the Scottish Government use its time and resources to call for more division, pretend that a Scotland without a proper central bank or control over its own currency is a good—or even viable—idea and try to wrench us away from billions of pounds of fiscal sharing within the United Kingdom. The idea that this is the time for its constitutional obsession to be pursued is ridiculous. That it would plan to take it forward under the calamitous and discredited economic prospectus that the First Minister outlined only weeks ago—proposals that were described as “utter pish” by one leading nationalist and so bad they would make another vote “no” in a referendum—is an insult to Scottish voters.
We cannot underestimate the seriousness of the cost of living crisis. It is hitting hard those who are already some of the most disadvantaged in our country. Scotland’s Governments must step up, work together and ensure that their actions are well targeted and that families and businesses are protected.
I move amendment S6M-06438.1, to leave out from “condemns” to end and insert:
“recognises that an increasing rate of inflation is a challenge faced by many countries around the world; welcomes the cost of living support provided by the UK Government to both businesses and households, including freezing the unit price of energy and giving payments to the most vulnerable in society worth up to £1,650, and calls on the Scottish Government to end its campaign to hold another independence referendum during this cost of living crisis and for both the UK and Scottish governments to work together to tackle the current crisis.”
Last week, I visited the food bank in Anstruther.
Those who are familiar with Anstruther and the east neuk of Fife may be surprised that there is a food bank in that area, but it is now an essential part of the fabric of that community.
I was informed by food bank organiser, Richard Wemyss, about the real impact of inflation. He told me that the cost of a basket of 16 goods had increased from £7 in the pre-Covid period to £14.10 now. The items in that basket are not luxury items but basic, essential goods or savers options from Lidl. That is the reality for people on the front line who face the cost of living crisis. Nationally, soaring prices for food and drink were the biggest driver of the latest inflation rise of 10.1 per cent. There has been an annual rise of almost 15 per cent in the price of bread, cereals, meat, milk, cheese and eggs. That is the fastest annual jump since April 1980— it is quite staggering.
It is not right to say that the cost of living crisis is solely the responsibility of the Conservative Government. We all know that Putin and the knock-on effects of the pandemic are significant reasons for the increases, and we also know that United States interest rates are a factor, but it is also wrong to say that the Conservative Government has not made the crisis a whole lot deeper. It chose to make
Those mortgage agreements will not be renegotiated, the increased cost of Government borrowing will not be recouped, and the steps taken to recover the economic reputation of the Government are set to be incredibly harsh.
The failure to act timeously with an energy package earlier on this year when it was announced that the energy prices were to be increased caused immense anxiety for those who were already struggling to pay their energy bills. Refusing to introduce a comprehensive energy package of measures to cover off-grid fuel users in rural areas leaves them in dire straits; £100 for off-grid oil users is simply an insult. By refusing to guarantee that benefits will rise with inflation, this Government is contemplating inflicting an even harsher, darker, colder winter on some of the most vulnerable people in this country.
I do not think that I would disagree with that, but it is not all about this place. There is so much that needs to be done across the United Kingdom. The safety and security that the United Kingdom provides is essential and that is why the lack of guarantees when the pension triple-lock is coming under threat is incredible.
I want to see action on benefits, on pensions, and on supporting rural energy users. I also want to see action to make sure that we drive down inflation, the cost of borrowing and the cost of mortgages.
There is one specific thing, in addition, that I want to see. It is in relation to the carers allowance. An increase of 3.1 per cent is simply not enough. That increase means only 30p extra a day. With a rise in inflation of 10 per cent, that means that the carers allowance is now 6.4 per cent lower in real terms compared with last year.
We need to take action across the UK to help people who are vulnerable at this incredibly difficult time. We will support Labour’s motion and the measures that are proposed within it.
The cost of living crisis is having a massive impact on people’s lives. Mortgages are rocketing and inflation is massively increasing people’s food costs and it is those on the lowest incomes who are hit the hardest.
In Edinburgh, around six in 10 people say they fear that they will not be able to pay their energy bills; four out of 10 are worried that they will not be able to afford their rent or mortgage; up to a quarter fear that they could be made homeless; and up to 30 per cent say that they might have to resort to food banks.
A couple of days ago, Homeless Project Scotland shared a picture that really brought home the shocking reality that many of our constituents will be facing this winter. It is a picture of people standing in the cold waiting to receive a hot soup, sandwiches, and a coffee. Homeless Project Scotland said:
“We need a building to bring people indoors this winter. Glasgow City Council, Nicola Sturgeon and the Scottish Government: you have the power to help.”
However, the problem is that our Governments are failing people. In Scotland, we have a Government that avoids responsibility and action, driven by its independence obsession—as we have heard today—and in the UK, our third Tory Prime Minister this year is leading the party that caused the chaos that is now hitting people and damaging our economy.
SNP and Green MSPs will say that their hands are tied because Scotland is not independent. However, as we debate the need for action, I am disappointed and angry about the lack of forward thinking and the lack of priority given to insulating our homes and building community heat and power networks. That would have given our communities more investment and more protection from the cost of living crisis that we are now in—15 years in power and none of the political leadership to deliver the warm, energy-efficient, low-carbon homes that we desperately need across Scotland.
No, I am very short of time.
We need action now. Labour-led City of Edinburgh Council is proposing to use libraries and community centres this winter as spaces where people can come together and stay warm during the difficult months ahead. We need out-of-the-box thinking.
Many organisations in our arts and culture sector are now on the brink of collapse, so the Scottish Government must explore creative solutions and utilise our cultural spaces to provide multiple benefits for our communities. I have spoken to many arts and culture organisations, and the general consensus is that there is a gap between what is said about the value of culture and the action required to support the sector now. As a result of Covid, people became isolated and were unable to access culture. As we build Covid recovery this winter, there are still people who are nervous about going to venues and people who cannot afford to access them. Those who work in the culture sector need support now.
Trade union Equity is clear that people are leaving the sector as a result of precarious employment and low salaries. Scotland’s Workshops said:
“Many of our staff are finding that they are deeply affected by cost of living increases, with sub average (£26,000) salaries common in the sector and many people working part time hours.”
Another quotation is that:
“27% of creative workers aged under 25 left creative occupations after lockdown in 2020, compared with 14% of workers aged 25 and over.”
If that continues, it will be catastrophic for Scotland’s culture, with the impact cutting across generations to come, affecting our tourism, our incomes, our economy, our communities and who we are. Therefore, we need action—not just in the culture sector but right across the public and private sectors, to give people decent work, decent salaries and an end to precarious and short-term employment.
In the previous debate, Paul O’Kane spoke powerfully about the need for fair pay for our carers. Yesterday, I joined posties in the Communication Workers Union who were protesting against the 2 per cent—2 per cent—pay rise that they are expected to live on. It is not acceptable. We have a cost of living crisis. People need support now, not warm words for our Government. That is why this debate is so important.
Seven weeks ago, Liz Truss was ready to become Prime Minister. She was backed, overwhelmingly, by the Tory party membership, and who can forget the Scottish Tory party graphic that was shared by many of the Tory MSPs sitting just over there: “In Liz we Truss.” That went well, did it not?
The disastrous impact of the mini-budget cannot be overstated. The pound is at an all-time low, inflation is soaring, pension funds have had to be bailed out, future interest rate projections have trebled and mortgage offers have been withdrawn overnight. Faulty economics and a party that cannot promise an ounce of stability have sent mortgage rates through the roof and hard-working families deeper into poverty. The impact of Brexit on the cost of living crisis also cannot go unnoticed. Soaring prices and labour shortages are consequences of a decision that we in Scotland did not make.
The Resolution Foundation has estimated that there will be an £870 cost of living increase due to the currency fluctuations. Food costs have risen by 6 per cent. Ireland’s Economic and Social Research Institute reported that trade from the UK to the EU fell by 16 per cent in 2021. Peter Norris, the Virgin Group chair and co-convener of the Brexit monitoring group, the UK Trade and Business Commission, said that
“recovering lost trade with Europe should be a top priority” as the country enters a recession.
This is a Labour debate. Unbelievably, Keir Starmer, in his own words, wants to “make Brexit work”. Brexit does not work and it will not work. There are no Brexit opportunities. I will give any Labour MSP who wants to stand up and give me one benefit of Brexit a chance to do so.
I did not think that anybody would stand up. Brexit impacts on the costs and the viability of businesses and, as we enter recession, it is adding to business worries.
I only have four minutes and I am conscious of the time. [
.] I only have four minutes.
We need to rejoin the EU at the earliest opportunity. The only way to do that is through independence. People would expect an anti-EU stance from the Tories, but from Labour and the Lib Dems—really? Many times, we have heard Willie Rennie stand up and support the EU, but now he does not do that because he cannot.
Over the past couple of months, up and down East Lothian, I have met businesses that are suffering from rising energy prices and Brexit. My office carried out an extensive survey over the past four months. Of the businesses that I have spoken to, more than a third are considering having to make redundancies, more than half said that the situation has affected their training plans, and three quarters said that rising energy costs are affecting the viability of their business.
A similar picture is being painted by my constituents. Many families were already struggling to get by on stagnant incomes, but a poll that was conducted this month found that 72 per cent of East Lothian residents fear being unable to pay their energy bills. To put that in context, it represents 70,000 people. Some 43 per cent fear being unable to pay their rent or mortgage, and a quarter are worried about homelessness. In August, East Lothian Foodbank reported that the number of people who are using a county charity to help to put food on the table has jumped by 77 per cent compared with last year.
Whether in regard to heating homes or ensuring that people have enough to eat, the UK Government is failing. That is the price of a broken UK financial system. Rishi Sunak called the mini-budget “a mistake”, and although he called it out during the Tory leadership campaign, the Liz Truss Cabinet endorsed the moves. Indeed, we heard choruses of Tory MSPs—including Liz Smith, who is in the chamber just now—demand that the Scottish Government follow the Tory party tax cuts. Imagine if John Swinney had listened to those demands.
All of that has been imposed by a Government that we did not vote for. Surely Labour agrees that to take democratic decisions here in Scotland is our only hope—decisions that are made by the people of Scotland for the people of Scotland.
This is an important debate as many of our constituents are facing a winter of worry and concern. Bills are going up, food prices are increasing and interest rates are on the rise. I am contacted every day by people who are looking for help and assistance. The UK Government has been quick to offer support, including by helping with energy bills for the most vulnerable, placing a cap on energy prices until April next year and cutting national insurance contributions, and I am sure that more support will be offered as the crisis develops.
The war in Ukraine has pushed up energy prices and also the prices of many everyday commodities, which has pushed inflation to higher levels than we have seen in many years. It was reported just yesterday by the Office for National Statistics that, as Willie Rennie mentioned, many of our everyday food prices are increasing at an eye-watering rate.
I absolutely acknowledge the impact that Russia’s invasion of Ukraine has had on the global economy. I just wonder whether Mr Lumsden has any idea why the UK has the highest inflation rate of any advanced economy on earth.
If Mr Greer looks into the matter further, he will see that the inflation rates and interest rates in Germany are just as high as those in the UK. Surely that cannot be blamed on a Conservative Government.
The problems that we are facing are not unique. They are being faced by countries across the globe, and our UK Government will address them in the best interests of us all. That is the difference between our two Governments. We have one Government that is helping people and another that tries to use every opportunity to repeat its nationalist call for separation. It wants to act in its own self-interest, rather than in the people’s interest, by constantly talking about independence as the answer to all and any woes. The last thing that our nation needs is further instability, and a hard border with our closest and largest trading partner would give us just that. It is a disgrace that this devolved Government continually bangs that drum rather than focusing on the day job of bringing economic growth to this country.
It is the UK Government that is pushing ahead with free ports that will bring economic growth to our communities; with levelling up, which even SNP councils have welcomed; and with investment zones that will bring benefits for businesses that want to grow, develop and provide employment in our cities. The SNP Government is so full of grievance politics that it is failing to propose any policies that will actually deliver economic growth in this country.
The UK Government is providing a £650 cost of living payment for every household on means-tested benefits, a £300 extra cost of living payment to pensioners who are in receipt of the winter fuel payment, a £300 extra disability cost of living payment, a £400 cash grant to every household for energy via energy suppliers, a national insurance cut that will save 2.3 million Scots an average of £285 a year, and the list goes on. The UK Government is putting money back into people’s pockets when they need it most.
The SNP Government will tell us that it has no money even though it has the biggest core settlement ever. However, setting a budget is, of course, about priorities. The SNP has plenty of money for the things that it really cares about: a couple of hundred thousand pounds for a court case to push a divisive referendum and £20 million in the coffers for the pretendy referendum itself.
The people of Scotland need both Governments to work together to tackle the crisis. We need a laser focus on how we help vulnerable families and communities and grow our economy.
The SNP has no plan on the Scottish economy except independence. It has no credibility in this area and no idea how economic stability would be achieved.
In closing, Presiding Officer, I again point to the assistance that has been given by our UK Government to Scots during this crisis, with more promised over the winter. Some £1,650 will be provided to the most vulnerable in our society. That will be delivered because we are part of the United Kingdom, with the resources and economic ability—
As others have said and as we all know, we are in the midst of a cost of living crisis that affects us all. People and families who would ordinarily class themselves as comfortable or getting by face economic hardship for the first time. In eight out of the 14 years since 2009, real-terms wages have fallen in this country, and next year will almost certainly join that list. That represents an unprecedented long-term decline in living standards. The crisis is now of an equivalent scale to the Covid pandemic and we need a response that is similar to, if not greater than, the response that we saw to that.
Of course, the problems are not helped by the on-going drama at Westminster as the Tory party implodes daily, damaging the economy and the finances of families across the country as it goes.
The impact of bad policy over a decade has been compounded in recent months. The pound is now at its lowest value against the dollar since its exchange rate was freely floated in 1971; the costs of the mortgage deals that we are tied into are increasing due to a Tory incompetence premium; and the certainty that the two-year energy price guarantee once provided has been eroded as the policy was reduced to just six months, because of Tory indecision and incompetence.
That indecision and incompetence was on show again this morning as the delayed fiscal statement, which was due on the 31st of this month, was delayed once again until 17 November. What do the Tories not understand about the impact of their indecision on financial markets and the knock-on impact on people’s household finances? Why do they not realise that it is not some parlour game for millionaires? When will they realise that more of the same austerity economics simply does not work?
The richest man ever to sit in the House of Commons has been crowned as Prime Minister. No one apart from Tory MPs voted for him. He has no mandate and, right now, he has no plan. I find it utterly absurd that the Tories believe that someone with such vast personal wealth—whose family uses non-domiciled tax status and who does not know how to pay for his petrol—could identify or sympathise with the challenges that face working families across the country.
The answer is not more of the same. The answer is that we need a change—the kind of change that comes only with a general election and the election of a progressive Labour Government that has compassion and a clear understanding of what is needed to restore our national prosperity. I accept that we are unlikely to see that soon. After all, we all know that turkeys do not vote for an early Christmas. It is for that exact reason that we need to see more action from the Scottish Government.
I accept that there is an uncertain financial position, that the economic situation that faces Scotland is far from perfect and that the uncertainty and Tory dysfunction mean that the Scottish Government’s job is made ever harder. However, none of that is an excuse for failing to do more to help Scots today. In this Parliament, we can take tangible measures that will improve people’s lives, particularly around targeting support to those who are most in need and addressing our underlying inability to defend against the inflationary effects in our economy that are due to our historically poor productivity.
Indeed, the decline in our trading competitiveness represents a hit to real incomes. Raising real incomes to offset that requires a productivity increase. It is as simple as that, and that is much more important than growth. Raising nominal incomes without productivity improvements will simply fuel more inflation. Sarah Boyack made the important point that investment and efficiency are key to the solution. We must stop the vicious cycle of disinvestment that arises by justifying cuts, which simply lead to economic stagnation and falling living standards. The Government has done that for a decade and it has not worked.
The Labour motion sets out some potential solutions, and I urge the Government to see the proposals for what they are—constructive ways to improve people’s lives and ensure that families can make it through the winter and that no one is left behind. We are in unprecedented times and they require unprecedented action and a sense of urgency. Fundamentally, we need to put fairness at the heart of our response. I have absolutely no faith that the Tories are capable of such fairness, and history proves that they are not. That is why, for the good of our country, we need a general election now.
I am grateful to the Labour Party for giving us this opportunity to debate the stunning economic incompetence of the UK’s Conservative Government and the damage that it has done to people and businesses across Scotland.
The UK is experiencing a rate of inflation that is higher than that of any other advanced economy, as I said a few moments ago.
A range of drivers are behind that, and most of them are entirely self-inflicted by the UK Government. At the very least, they were entirely avoidable.
One of the biggest drivers is the rising cost of food. It is something that most countries are experiencing, but the situation is far worse in the UK than it is elsewhere. The reason for that is simple: Brexit. We import just under half of our food, and most of the imports come from the European Union. Liz Truss might have made the situation dramatically worse in a remarkably short period of time, but much of the problem pre-dates her time, and even Boris Johnson’s time, in Downing Street.
The crisis has been caused by the actions of consecutive Conservative Administrations, but we should not for a second minimise the impact of Truss’s disastrous mini-budget. The numbers vary, given on-going market instability, but the most recent figure that I have seen for UK annual debt interest payments was £10 billion. That is a huge increase as a result of that self-inflicted reputational damage.
As we have already heard this afternoon, the Tories lean heavily on the instability of the global economy and the effects of Russia’s invasion of Ukraine in order that they can claim that what is now happening is simply outwith their control. I will take energy prices as an example: it is a failure of domestic UK energy policy that the bills that households pay are subject to such poor regulation and are so vulnerable to global market shocks.
I absolutely agree. The cost to the UK’s reputation in the global financial market will be felt for years to come by exactly the potential trading partners that the Conservatives have been keen to talk up as being the post-Brexit future for global trading Britain.
To return to the example of the price of energy and the failure to regulate the market, I say that decoupling the cost of electricity that is generated by renewables from that which is generated by gas would have significantly protected consumers and would undoubtedly have sped up the transition away from fossil fuels.
A long-term serious effort to decarbonise our heat networks would have been even better. The UK is more than capable of self-sufficiency in electricity—Scotland already is, more or less. If, for the past decade, there had been investment in decarbonisation rather than cutting of capital budgets, that would have been to the benefit of families, our economy as a whole and our national energy security. The Scottish Government is now taking a much more ambitious approach, but it is hugely constrained by the lack of capital borrowing powers and by the 10 per cent cut to the capital budget that it receives from Westminster.
I welcome what I interpret as a shift in tone in the Labour motion. Mr Griffin and his colleagues normally come to the chamber demanding billions of pounds of additional spending—almost all of which I agree with in principle—but they have little by way of a track record when it comes to explaining how it would be funded, either through savings elsewhere or through tax rises.
The proposals that are included in today’s motion are considerably more modest. As the MSP who first brought the issue of school meals debt into the public domain, I am happy to see other parties picking it up. However, given the scale of that debt, I am unclear why the Scottish Government, rather than councils themselves, should be responsible for cancelling it. Indeed, following our publication of the debt levels for every council and further pressure from Aberlour, a number of councils, including Edinburgh, Moray and South Lanarkshire, have already cancelled the debts that are owed by families in their areas.
The expansion of family income maximisation services is another proposal that I strongly agree with, but it is one that the Scottish Government is already committed to and is progressing: the Bute house agreement commits to a £10 million expansion of those services. We all want that to happen as quickly as possible, but as the Deputy First Minister’s statement earlier this month demonstrated, any increased spending this winter will mean a consequential cut somewhere else. It is hard to see where that money could come from without serious consequences.
I hope that Labour will take its ideas forward to the budget process and match them with saving or revenue-raising proposals, because I agree absolutely with its statement that tackling the cost of living crisis should be a priority for government at every level.
The Tory amendment tests the definition of “brass neck” by attempting to delete any reference to the economic vandalism of the Liz Truss mini-budget, which crashed the economy and led to the Bank of England having to buy Government bonds to prevent us from losing international borrowing that has been sustaining the UK economy for decades—all to prevent the economy from plummeting into a death spiral. Those are polices that the Tories here urged the Scottish Government to adopt.
As it is, the damage was done—interest rates zoomed to 10 per cent plus, and what was already a bad situation under the former Chancellor of the Exchequer, Rishi Sunak, got worse. He refused to restore the additional £20 per week to universal credit: by the way, 38,000 veterans and 3,000 people who serve in the forces are on universal credit. He failed to commit to the triple lock on pensions and failed to ensure that benefits will rise with inflation. Today at Prime Minister’s question time he refused again to do those things, although he claims that he will be compassionate. I am not holding my breath.
I ask the Tories to write to the most recent Prime Minister to commit to the state pension triple lock, to upgrade benefits in line with inflation, to restore the £20 a week extra universal credit and, as a grand finale, to cap bankers bonuses. While they are cc-ing in the chancellor, I ask that they copy me in, too.
I turn to the Labour motion, which is, like the curate’s egg, good in parts. For example, it recognises the folly of and fall-out from Trussonomics. However, let us consider the calls in the motion for the Scottish Government to take further action. I asked Mark Griffin to provide costings for those actions, but he sidestepped my question.
The motion refers to many good things, including
“the cancellation of school meals debt”.
What funding would be required to action that? It also refers to
“increased funding for money advice services and a top up to the welfare fund”.
How much would those cost?
To those actions, we can add the legitimate calls for quite understandable wage increases across the public sector, including for staff in the health, police, justice and education sectors, to meet the 10 per cent plus inflation rate. Those calls are a result of the catastrophic rise in interest rates, fuel costs and food price inflation. Has that been costed?
No doubt, when Labour delivers its winding-up speech, the figures will be produced and it will state where the funding is to be taken from and whether that will be a recurring cost.
Unless I have missed something, the Scottish Government has a fixed budget—allocated when interest rates were around 5 per cent—extremely limited borrowing powers and limited taxation powers.
Labour can respond when it winds up.
The Labour Party simply cannot come here and, in order to mitigate Tory policies, make uncosted demands and mislead the public as to what can and cannot be done by the devolved Government without it plundering the existing and allocated budgets for our public services.
As the minister has already said, this Government has taken unprecedented steps to help the most vulnerable people. Those measures include the rent freeze, the Scottish child payment, free school meals for all children in primaries 1 to 5, free bus travel for under-22s and over-60s, free prescriptions and free personal care.
I am reminded of the wonderful Mark Drakeford’s reply to the Tory leader in the Senedd, in response to his criticisms of the state of the Welsh NHS. Addressing Mr Davies, Mr Drakeford, trembling with anger, said:
“It is shocking. It is absolutely shocking to me that you think that you can turn up here this afternoon, with the mess that your party has made of the budgets of this country, of the reputation of this country around the world, and that you promise those people that there will be more to come ... And you think you can turn up here this afternoon and claim some sort of moral high ground. What sort of world do you belong in?”—[
Record of Proceedings
, 18 October 2022.]
I could not have said it better myself.
I say the same to the Scottish Labour Party: what sort of world does it live in? Stop demanding that the Scottish Government clean up a Tory mess. What is it thinking? Mitigating Tory polices might be good enough for Labour, but it is not good enough for me or for Scotland.
Along with my Conservative colleagues, I have been clear about the difficulties that the increasing cost of living has created for so many people. With the winter months quickly approaching, those difficulties are only becoming clearer.
The Labour motion speaks to the challenges that are a result of high inflation, and there is no doubt that, as is the case in many other countries, rising food and energy prices are taking their toll.
Although fuel prices at the pumps are, thankfully, well down from their summer peak due to the 5p cut in fuel duty, they remain at 15 per cent higher than they were a year ago.
As far as this year is concerned, the UK Government has taken action in response to the rising cost of living. Notably, we have seen a package of financial support that is worth more than £37 billion, which includes support for every household in the United Kingdom. That is worth more than £1,600 to some of the most deprived households.
I have a lot to cover in a short time.
Those households include many older people on pension credit, who will also benefit. Those individuals will be as concerned as anyone is about their heating bills over the coming months, which is why I welcome the energy price guarantee, which will ensure that energy bills will not exceed £2,500 for an average household. The support is guaranteed until April 2023. We know that targeted support is still to be delivered in the new financial year. That targeted support is crucial.
Going forward, it is important that the most vulnerable people remain protected from significant energy price rises, while it is ensured that value is maintained for the taxpayer as part of a sustainable budget. However, how the UK Government decides to tackle the cost of living crisis will depend on there being a strong economy to support it.
Economic stability is therefore the key to tackling the crisis. I know that the new Prime Minister has set some priorities and made promises today, and I look forward to him continuing to do that. I can assure members that for Conservative members and for me, that will be the priority.
The scale of the current crisis means that both the Scottish and the United Kingdom Governments must tackle it. The Scottish Government has at its disposal levers of power to create approaches and to tackle issues. That can include measures such as increasing the single-person council tax discount to 35 per cent, which we have called for previously.
Among other areas that we have looked at is financial assistance such as the school clothing grant, which is being received by everyone who is eligible. That grant can be a great help and asset to families who are reaching out for support for school, but we have found that only five of the 32 local authorities carry over the funding into the next school year. That support needs to be looked at, so that we do not have the apparent postcode lotteries that have developed across Scotland.
We have already seen urgent action to address the cost of living crisis, but it is clear that further steps will be needed in order to provide long-term sustainability and security for households across the country.
As we have heard, in the winter months the Scottish public will quite rightly expect both their Governments to work together effectively in consultation to produce bold actions to protect the most vulnerable people in this crisis. The cost of living crisis will continue to have a massive impact on our constituents and our communities. It is up to both Governments, and it is up to us in this chamber and in other places, to work together to secure that goal for the communities that we represent.
This debate is a welcome opportunity to speak about the gravity of the cost of living crisis. We have heard about its heartbreaking impact on Scotland’s people.
I join colleagues in condemning the disastrous mini-budget. However, there has been no time to celebrate its reversal, with the imminent prospect of austerity 2.0 being forced upon us as the alternative. The very last thing that Scotland needs is another Tory Prime Minister who we did not vote for, let alone one who is an austerity-driven Brexiteer intent on squeezing the wages and benefits of working people while slashing taxes and bonus caps for the wealthy. After a decade of Tory cuts and Brexit damage, the UK already had the biggest and fastest-ever increase in millionaire and billionaire wealth. Yet the UK is still choosing finance over industry, austerity over investment and a closed economy over openness to the world. Over the years, a rentier economy has been established, in which the accumulation of key assets, such as housing and energy ownership, is extracting wealth from ordinary people.
Now we have seen the most basic supermarket items rocketing in price—some by two thirds. The reality for many is that this is escalating to a cost of surviving crisis. As many saw on Channel 4 last night, the struggle to put food on the table seems to be driving a 21 per cent increase in shoplifting; it is mostly down to first-time offenders, such as parents who need essentials for their children. People are desperate. Small businesses are selling essentials on tick. Food banks are reporting a tenfold increase in first-time users. Energy suppliers are reportedly refusing to take on new customers. People are living in freezing temperatures when prepayment meters run out. Where will this end? That is the reality for so many people as we prepare for a winter like no other.
Like others here, I am gobsmacked by the Tory party amendment, which frames the crisis as a global issue and applauds the UK Government for its inadequate support while it takes no responsibility whatsoever.
Even the energy price cap, which is now cut short, leaving households in unimaginable uncertainty from April 2023, is another enormous transfer of money from the public purse, this time to private oil and gas companies, further exacerbating wealth inequality in the name of profit. There is a reason why the crisis is so much worse here in the UK. We are a poor country with some very rich people and a Tory party governing in their interest.
Cutting UK budgets for public services that have been brought to their knees since 2010 will mean more jobs lost, wages falling, inflation rising further and the loss of the most basic living standards. If cuts to education, healthcare and more are coming down the line, the Barnett consequentials will affect us here.
We in the Scottish Parliament have a duty to come together and oppose those cruel UK policies, as well as to press the Scottish Government to continue to mitigate as much of the damage as possible. Our priority must remain putting money into the pockets of those at the bottom end of the income scale and supporting families who are struggling the most, but that can be done only within our fixed budget. Others have detailed the £3 billion that has been allocated to support households, £1 billion of which is available only in Scotland. Even the harshest critics of the Scottish Government are commending those efforts.
I join colleagues in urging the UK Government to step up and to rule out austerity, create a windfall tax, reinstate the pension triple lock, raise benefits in line with inflation and uplift this year’s Scottish budget in line with inflation. Generally, I urge the UK Government to find an ounce of compassion and end its callous threats to our basic rights and freedoms. Scotland did not vote for this crisis, Scotland can do better and Scotland needs independence like never before.
Two members have reminded us that it is just six weeks since we debated the Parliament’s deep-seated concern about the cost of living challenge that faces both Scotland’s Governments. That concern is not just about addressing the significant economic problems that we are grappling with as a result of rampant inflation; just as importantly, it is about the resulting social and personal cost in our communities. This afternoon, we have heard that concern amplified and re-emphasised.
We have also been reminded that an awful lot has happened in that time. We have had two Prime Ministers, three Chancellors of the Exchequer and an uncosted mini-budget that has served only to increase the concerns. As Mr Halcro Johnston said, my party has to acknowledge and take responsibility for the fact that those events increased instability and uncertainty, and put at risk the UK’s financial credibility on the markets.
That said, we should not forget that the largest and most expensive part of the mini-budget that was announced on 23 September was the package of direct support to help families and businesses with their energy bills, which was on top of the measures that had previously been put in place. I hope that the other parties in the Parliament, despite their justified criticism, will accept that that part of the mini-budget was warmly welcomed by the public and by businesses across Scotland, many of which have been on the brink, and which matter so much to our economic recovery. The package was also welcomed by all the political parties in this chamber.
I thank Liz Smith for her candour, which is important. Does she acknowledge that the support package to which she is pointing is in doubt? The commentary is that it is under review, and we are yet to see whether it will come through. She is absolutely right that there is a cost of living emergency for people and for businesses.
It is clear that the already high level of pandemic-style support is not enough. The very new Prime Minister and the new chancellor have said today that they are looking specifically at what has to be done to target support more at those who are most in need. That is a critical difference between the Government that is now in place and Liz Truss’s Government. It is important that support is directed at those who are most in need.
People are complaining about the fact that the budget has been put back to 17 November, but it is vital that we get the right data this time. The critical problem with the mini-budget was not the principles behind it—I may say that I fully support those—but the fact that it was uncosted and did not have the credibility of Office for Budget Responsibility statistics or of costings for the borrowing. That is what went wrong and what spooked the markets. Mr Johnson makes a good point, but it is critical that we understand that what did not happen but should have happened, which led to mistakes, has to happen now so that the approach is properly evidenced. I urge all members to accept that circumstance.
It is true that many commentators and economic analysts have said that the central analysis of the mini-budget—namely, that the UK economy has been, for far too long, very reliant on cheap money and not sufficiently focused on improving productivity and economic growth—was not wrong. Mr Johnson and I sit on the Finance and Public Administration Committee, so we know how true that is from the statistics that the Scottish Fiscal Commission sends us in its evidence. At the weekend, Mervyn King was firm in saying that too many countries across the world have endured a very damaging period of interest rates being far too low for too long, with the increase in the supply of money chasing too few goods. That is one of the international problems that Mr Rennie spoke about, and it has meant that there have been inflationary pressures right across the world.
I thank colleagues who have made constructive contributions. I recognise at the outset that we face a unique combination of global circumstances: Russia’s illegal invasion of Ukraine; the energy shock that that created, with inflation feeding through from that; and the end of an era of cheap money, with central banks across the globe beginning to tighten monetary policy.
However, that was all clearly understood when Liz Truss became Prime Minister. It is staggering to think that, in that context, with that set of circumstances and those prevailing economic headwinds, the decision was taken to proceed in such a reckless and uncosted way with what I can describe only as a crackpot libertarian experiment and discredited economics. That decision has had material consequences, because the energy support for households, which had originally been guaranteed for two years, is now to come to an end in April. That has created greater inflationary pressures, has further reduced aggregate demand and has increased the risk of an extended recession.
The reality is that we find ourselves in a situation in which all the mood music that is coming from the UK Government suggests that there will be another round of austerity. That is a failed prescription. We cannot go back and make those mistakes again.
Stephanie Callaghan described the UK as a “poor country” with “very rich people”. I think that it is well understood by most mainstream economists that the UK has a fairly average economy overall, with wealth concentrated in a particular part of the country and in a particular sector: financial services. That has been the prevailing model for decades, and we have to get beyond that.
Paul Sweeney touched on the issue of long-term decline. The reality is that we cannot cut our way to increased productivity and increased growth. That requires investment, and it is heartbreaking to think of the money that was squandered as a result of the mini-budget. Imagine what that resource could have achieved had it been deployed in relation to skills or net zero or, in the here and now, had it been targeted at the most vulnerable to assist them in getting through the winter. There has been a dereliction of duty by the UK Government.
I am interested in whether the minister accepts that a lot of analysts across the world are very much focused on what has happened in lots of countries, including the UK, where we have persistently had a very low-growth and high-tax economy, which has caused lots of problems, including productivity problems. The minister knows exactly the difficulties that the Scottish Government faces in that regard. Does he accept that that analysis applies internationally and not just to the UK?
Both members recognise that there is a broader trend. The route out of that trend is through investment.
It is paramount that, when we have the autumn statement on 17 November—presuming that it remains on 17 November—it absolutely must not be a return to austerity.
“Mistakes were made.” I will return to that phrase in a few moments.
Let us remember the context of the past week. As Tom Arthur has pointed out, the world economy was recovering from a global pandemic the like of which we had not seen for 100 years. We had just withdrawn from a deeply integrated political and economic union, introducing borders that, despite the claims about electronic means to get around them, brought new complexity. On top of that, the invasion of Ukraine has sent grain and oil prices around the world soaring. Against that context, the UK Government decided to embark on a reckless project of what can be described only as discredited Reaganomics: borrowing in order to fund tax cuts; announcing £45 billion for—as Liz Smith graciously and astutely observed—an uncosted budget; prioritising tax cuts for bankers and millionaires; and reducing the top rate of tax.
What were the consequences? We have already heard from Paul McLennan and others about the plummeting pound; it is more fundamental that gilts jumped in a single day by the biggest amount since black Wednesday. That is the historical comparison, but the difference is that black Wednesday happened as a result of other global economic trends, whereas what happened seven weeks ago was a direct result of decisions that the UK Government actively made.
I have to say that I found today’s debate slightly bizarre. In some ways, we have been having three parallel debates. If we were to listen to most speakers from the Conservative benches, bar the last one, we would think that the crisis had nothing to do with them—that it was just global calamity and nothing to do with that uncosted budget.
To say that mistakes were made is one of the biggest understatements that I have heard in politics in my lifetime—almost as big as describing the UK Government’s budget as a “mini-budget”. The truth is that that mini-budget led to a major economic catastrophe.
There is much on which I agree with Mr Arthur. Indeed, he summarised quite well that context, which has placed huge pressure on the Government and its decisions. However, let us be clear that, in the circumstances, we need honesty and straightforwardness. To describe the Scottish Government’s response to the cost of living emergency as a £3 billion package when the Scottish Parliament information centre itself can identify only £490 million-worth of additional spending, apart from anything, detracts from the measures that the Scottish Government introduced, such as the extension of free school meals and the increase in the Scottish child payment. Using the figure of £3 billion undermines the Scottish Government’s own efforts. Of that £3 billion, the funding for 1,140 hours of free childcare is the biggest single item—and one cannot describe a policy that was first proposed in 2014 as being a response to the cost of living emergency. That is nonsense.
In a moment.
If there is a lesson to be learned from both the calamities and the mistakes that the Conservatives made in the UK, it is that we need straightforwardness, honesty and clarity of planning. The Scottish Government should think carefully about those lessons when it presents its plans.
The point that I am making, and that my colleagues have made, is that that package is support for households. The reality is that £3 billion had to be authorised in the annual budget process—something that the Labour Party did not support. Does the member recognise that it is money from the Scottish Government, in a budget passed by Parliament, that will support households across Scotland?
My point is that using the figure of £3 billion detracts from the good that those pre-existing policies and the new ones might have done. It is a bit like describing the work that the doctors in A and E undertake as an emergency response to a person who has just broken their leg, when what that person actually needs is an ambulance to be sent out. The ambulance is the additional bit—it is the emergency response, not the stuff that is already being done. Frankly, using the £3 billion figure in that way is dishonest politics.
I turn to the speeches of other members. Willie Rennie was absolutely right to frame the issue in the context of the broad range of costs that are going up. A number of people who are not expecting it will find themselves in crisis.
I have noticed the time, so I will rush through this point. The cost of doing business is absolutely part of the cost of living emergency. Earlier today, I spoke to businesses that face a sixfold increase in their energy bills.
In summary, we need an emergency response. I do not have time to go through the detail that I would like to provide for Christine Grahame, but we have published costings for our proposals. In next year’s budget and the one for the year after, the Government is planning to carry forward budget from the previous year into the next one. The proposals that we have outlined today would cost around £20 million; we published others in the summer.
That is well within the envelope of what the Scottish Government could do if it chose to engage and look at what it has in front of it and the flexibilities that it might have in its own budget.