– in the Scottish Parliament on 2nd February 2023.
The next item of business is a debate on motion S6M-07727, in the name of John Swinney, on the Budget (Scotland) (No. 2) Bill. I invite members who wish to speak in the debate to press their request-to-speak buttons.
The Scottish Government, like Governments all over the world, has been faced with a difficult set of choices in setting its budget. As I indicated to Parliament when I addressed the budget settlement in December, the volatile financial environment, including record levels of inflation and a cost of living crisis, have combined to create an exceptionally difficult fiscal landscape. The International Monetary Fund’s report on Tuesday reflects that and indicates that the United Kingdom is predicted to be the only major economy that will shrink this year.
Against that very challenging backdrop, we have taken decisive action to deliver a meaningful and progressive budget for the year ahead that delivers for the people of Scotland. With the powers that are available to us, we have chosen to commit substantial resources to prioritise support for families and the most vulnerable, invest in our public services and support businesses through these difficult days.
A central tenet of the budget is that we have asked the people of Scotland to contribute a fair share of their taxable income—and in the case of higher earners, to pay slightly more than they have in the past—to help to create a fairer society in which we all want to live and where we can enjoy a range of benefits that are not available throughout the United Kingdom. Whether that is free prescriptions, tuition fees, personal care or concessionary travel, the people of Scotland have access to a social contract with the Government that delivers so much more to each and every person who chooses to live in Scotland. Together with our partners in the Scottish Green Party, we are working to create a progressive path for Scotland.
The 2023-24 Scottish budget supports an ambitious path for Scotland that focuses on eradicating child poverty, transforming the economy to deliver a just transition to net zero and providing sustainable public services for the people of our country. The Government leads by example in the bold steps that it is taking to address poverty in Scotland. That is demonstrated through our social security system, which has been developed with dignity, fairness and respect at its heart.
We are committing £442 million in the year ahead to our unique Scottish child payment, which is the most ambitious child poverty reduction measure in the UK. I am proud that the Government has not only delivered the child payment but has expedited its increase, early and above inflation, to £25 per week per eligible child from November 2022. That is an increase of 150 per cent in eight months, and it is providing practical support to families who are most affected by the cost crisis. Indeed, the Scottish Fiscal Commission forecasts that around 387,000 children could benefit from the Scottish child payment in 2023-24.
The Scottish Government recognises that the burden of high inflation is felt most by households that are on the lowest incomes, which is why we are uprating all remaining Scottish benefits by 10.1 per cent from April 2023. We have also gone beyond the energy support that is being provided by the UK Government to provide £20 million for the fuel insecurity fund to help households that are at risk of disconnection, and are continuing that funding into 2023-24, as energy prices continue to bite.
The Deputy First Minister mentioned the Scottish Fiscal Commission. He must be concerned about its projections that, over the next 50 years, the Scottish economy will lag behind the United Kingdom economy. What plans does he have in the budget to try to deal with that problem?
There are two things that I would say to Mr Rennie. The first is that the Scottish Fiscal Commission’s projections about tax indicate a strengthening of the income tax base in Scotland, which is a reflection of the strengthening of the economy that the Fiscal Commission expects. The second thing is that the contents of the national strategy on economic transformation, with its focus on entrepreneurship and on the development of strong regional economies, form a foundation for the economic strategy that will deliver for the people of Scotland.
Mr Rennie is right to raise the issues of economic performance, because they lie at the heart of being able to generate the revenues to create the fair society that I have talked about.
Next year, we will support our investment in ensuring that children get the best start in life by investing around £1 billion in high-quality early learning and childcare provision, with a further £42 million to be invested in holiday food provision and expanding our support for school-age childcare.
From the chancellor’s autumn statement, we know that about £200 million extra for the next two years will be coming to Scotland in the form of Barnett consequentials for education, but, in this budget, less than an additional £100 million is going into education. Where is the other £100 million that does not appear in the budget for education?
I think that that demonstrates a spectacular level of ignorance on the part of Stephen Kerr. Is Mr Kerr unaware that education in Scotland is fundamentally delivered by local authorities, which have seen a £550 million increase in their budget, in addition to the extra money for colleges and universities that the education secretary just put on the record? [
Mr Kerr is shouting at me, “Where’s the £100 million?”. Local government budgets have gone up by £550 million and they deliver education in Scotland and the budgets for colleges and universities are up—[
.] Would Mr Kerr please keep up with the budget, and then we might make some more progress? [
Scotland is built on the foundation of our public services. For those reasons, the Government has prioritised investment in the national health service and I am delighted that we are in the position to provide an increase of more than £1 billion to the health service in Scotland. That will provide more than £13 billion for NHS health and social care services, supporting NHS boards to continue to drive forward our five-year recovery plan.
We are delivering £1.7 billion of improvements for social care and integration as we prepare for the introduction of the national care service, and we will support the delivery of the £10.90 real living wage for adult social care with an additional £100 million.
Investment in local services continues to be a priority and we have reconfirmed our commitment to working with local government, recognising the importance of collaboration, partnership and accountability in delivering high-quality and person-centred public services. The budget provides more than £13.2 billion for local government in Scotland, which is an increase of more than £570 million for essential public services that are delivered by councils.
We will also invest almost £3.4 billion across the justice system in 2023-24, including an additional £80 million for the Scottish Police Authority.
As we look to a more sustainable, greener future in Scotland, our ambitions to deliver economic growth must be achieved through delivering a just transition to net zero. More than a decade ago, the Government led the way with its inspiring climate change targets. As we now work to deliver a net zero future, the Scottish Government will continue to lead the way by investing more than £4.6 billion in our net zero, energy and transport portfolio. That includes more than £1.4 billion to maintain, improve and decarbonise Scotland’s rail network, ensuring that that critical infrastructure continues to serve the needs of the people of Scotland.
We have provided substantial funding to help households face the cost of living crisis. Next year’s budget will continue with that and we will spend more than £366 million across our heat in buildings and fuel poverty budgets.
Protecting Scotland’s natural environment continues to be a priority and we will spend almost £467 million on restoring our peatlands, expanding Scotland’s forests and tackling the causes of climate change and biodiversity loss, which will all contribute to the achievement of the net zero ambitions.
I have just come from an event with the rail unions that was well attended by MSPs and was about getting the right investment in rail. The union representatives told us that the Government said last March that there would be a national conversation on rail, but no date has been set. How can we ensure that we get the right investment when we are not even having the conversation?
I am pretty sure that the Cabinet Secretary for Net Zero, Energy and Transport and other ministers are regularly engaged in the discussion about rail, but we will reflect on the comments that Monica Lennon has put on the record because she is right to say that it is important that our rail network and infrastructure meet the needs of those who require to use them. That is why we are pleased to bring forward our proposals on peak rail fares, which should remove some of the disincentives to the full utilisation of our rail network.
The Scottish Government is committed to sustained investment to support businesses and our economy, which is why we are providing the Scottish National Investment Bank with an additional £244 million to continue its investment in Scottish businesses, projects and communities. Over the next five years, we will invest £42 million to boost entrepreneurship by supporting start-ups in Scotland through our national network of tech-scalers and pre-scalers—that will be one of the most significant investments that the Scottish Government will make in that regard.
Of course, as we manage the transition to net zero, we must ensure that communities are well supported, which is why we are investing £50 million in the just transition fund for the north-east and for Scotland.
In the course of the pre-budget dialogue, businesses asked me to freeze the business rates poundage, and the Government has been able to do that. It is expected that that will save ratepayers £308 million in the forthcoming year, which, combined with the transitional reliefs that will be applied to the forthcoming revaluation and the continuation of the small business bonus scheme, will remove 100,000 properties from business rates altogether. That ensures that Scotland has the lowest poundage in the UK for the fifth year in a row and supports a package of reliefs worth an estimated £744 million.
This budget delivers the priorities of a progressive Government. It provides us with an opportunity to demonstrate how we can collaborate successfully as a Parliament, in the most difficult of times, to deliver the best outcomes to the people of Scotland.
I believe that this budget represents a fair and ambitious package, and I urge all members across the chamber to support it.
That the Parliament agrees to the general principles of the Budget (Scotland) (No. 2) Bill.
I call Kenneth Gibson to speak on behalf of the Finance and Public Administration Committee.
A key theme of the Finance and Public Administration Committee’s report on the Scottish Budget 2023-24 is the need for the Scottish Government to strike a better balance between responding to immediate pressures and undertaking long-term strategic financial planning. It is understandable, given the current economic climate, that ministers are focused on the here and now. However, the committee believes that more attention is now needed to ensure Scotland’s financial sustainability.
The immediate challenges of high inflation and interest rates, the cost of living crisis and on-going demands for improved public sector pay offers will persist into 2023-24. Only today, we saw interest rates rise to 4 per cent, and interest payments on UK Government debt are already an eye-watering £115 billion a year. To put that in perspective, that is more than five times Scotland’s public sector wage bill.
The chaos of the short-lived Truss Government and the economic policies that Tory MSPs such as Murdo Fraser and Stephen Kerr urged us to emulate lead directly to the imposition of £55 billion in tax increases and spending cuts amidst rocketing inflation. As a result, households across the UK will endure an average fall in living standards of 7.1 per cent over the next two years—the biggest fall in living standards since Scottish records began in 1998, according to the Office for Budget Responsibility.
On a point of order, Presiding Officer. I may have misunderstood, but is Mr Gibson speaking on behalf of his committee or on his own behalf? The comments that he has made in his speech so far lead me to believe that the latter is the case, not the former.
My understanding is that Mr Gibson is speaking on behalf of the committee.
Could Mr Gibson therefore clarify whether all members of his committee would sign up to the comments that he has just made?
I have to say that most of them probably would, to be honest, in terms of the comments that have been made regarding the fall in living standards of 7.1 per cent. I know that Liz Smith, who is sitting next to Mr Fraser—and who may also intervene if she wishes—was not a great supporter of the policies that were imposed by Mrs Truss, which Mr Fraser was so keen on us adopting in this Parliament.
I shall move on.
Balancing the books this year will be a herculean feat given that, in early January, the Deputy First Minister’s budget was £200 million to £500 million short. An update on that in winding up would help. That shortfall adds to the 2023-24 budget pressures. In addition, the Scottish Fiscal Commission expects resource funding to increase by only £279 million in real terms compared with the latest funding position for 2022-23. That assumes inflation at 3.2 per cent using the Treasury gross domestic product deflator, but the reality is much different, given that inflation under the consumer prices index exceeds 10 per cent. A week ago today, the Institute for Fiscal Studies said:
“After taking account of in-year funding” one-off
“top-ups” that will be unavailable next year,
“funding will fall by 1.6% in real terms”,
even after the GDP deflator is used. Tough times lie ahead.
Following the UK Government’s real-terms cut to the capital budget of 9.8 per cent last year, the budget for 2023-24 includes a further real-terms cut of £185 million from the UK, even after the GDP deflator is used. However, construction inflation is at more than 14 per cent. The Deputy First Minister confirmed that Scottish ministers cannot now fund all the projects that were planned as part of the capital spending review. The committee therefore asked the Scottish Government which projects will be deprioritised and how the fall in capital spend will impact on the Government’s ability to achieve its net zero ambitions and the delivery of national outcomes.
Following the UK Government’s November fiscal statement, the Scottish Government’s resource spending review no longer provides the level of certainty or the clear planning scenario that was intended when it was published last May. With that significant change, public bodies must manage their finances and plan service delivery. We have asked for more clarity and certainty about resource spending to ensure that there is confidence in the sustainability of Scotland’s public finances, so we seek an updated resource spending review as soon as possible.
Professor Anton Muscatelli said that this year’s budget protects
“certain public services and welfare payments, so serious thought needs to be given to ensuring that growth can continue”—[
Finance and Public Administration Committee
, 20 December 2022; c 3.]
to improve the economy’s productivity and resilience in the medium to long term.
We often highlight the need to address Scotland’s long-standing challenges of demography, productivity and growing the tax base. When the SFC publishes its first fiscal sustainability report in March, it will be a valuable contribution to how we meet those challenges. The Government’s national strategy for economic transformation must be “pursued with vigour”. We have asked the Government how it is driving forward the strategy and how current financial constraints impact on its delivery.
The SFC forecasts that plans to increase the higher and top rates of income tax by 1p in 2023-24 raise revenues of £30 million on paper but, when behavioural change is factored in, that figure reduces to only £3 million. Such change is not so much from wealthy citizens switching their tax domicile from Scotland to England or even from incorporating to avoid tax; in fact, the SFC asserts that behavioural change is more to do with people deciding to work fewer hours rather than be taxed more. We saw that impact from tax changes for doctors, when Tory tax impositions from April 2014 of up to 55 per cent on doctors’ pensions persuaded thousands to retire early. That was an act of stupidity from which the NHS is still reeling. MSPs who think that imposing an additional income tax burden on the wealthy of, say, £1 billion will mean that an extra £1 billion is made available for public services are deluded.
Behavioural impacts are relevant to other devolved taxes, including the additional dwelling supplement, which was recently increased. We are keen to understand more about the drivers for behavioural change and have asked, as a starting point, for Scottish ministers to work with HM Revenue and Customs and Revenue Scotland to ensure that more data is captured on the behavioural impacts of tax changes.
In spending, social security alone is forecast to cost £5.25 billion in 2023-24, which is to grow to £7.25 billion in 2027-28. The gap between that expenditure and the block grant adjustment is projected to almost double—from £776 million to £1.4 billion by 2027-28—as Scottish ministers work to realise their ambition of reducing child poverty. Resources for that will have to be found from other spending areas. Health and social care expenditure will grow by £1.1177 billion, and there is £102 million more for our railways and £81 million more for the Scottish Police Authority. There is uncertainty about how much might be needed to fund increased pay, which is a major issue across all portfolios.
The resource spending review identified as key priorities digitalisation, innovation, reform of the estate and public body landscape, and public procurement. The Scottish Government committed to reporting the initial outcomes of its public service reform programme in the 2023-24 budget and to setting out proposals for the future of the public body landscape. We seek assurances that the Scottish Government remains committed to those aims.
The Auditor General said:
“There has never been a more important time to consider prioritisation in public services and productivity-enhancing reforms in the public sector.”
We seek a clear and detailed response on how ministers plan to achieve each reform priority, with milestones for delivering each of them, along with anticipated costs, efficiencies and savings. We will scrutinise how public bodies are working towards reform, as well as the support that they are receiving from the Government to do so.
The draft budget for 2023-24 has no details on whether the resource spending review targets for public sector pay and head count remain and, if so, how they might be achieved. A breakdown of areas where head count reductions will be made, and in what timescales, would be helpful.
The committee acknowledges the significant challenges ahead and urges Scottish ministers to undertake more strategic long-term financial planning to ensure future fiscal sustainability, including on public service reform and social security commitments. For our part, the committee looks forward to considering an updated resource spending review, the Scottish Government’s public service reform programme and a new public sector pay policy in due course.
Lastly, I must comment on potential bids for increased spending from the Opposition. Every year—and it seems that this year will be no different—members loudly demand additional expenditure across portfolios. In recent weeks, Annie Wells called for additional non-domestic rates support, which would cost £85 million, Douglas Lumsden sought more unspecified resources for local government, and only yesterday Donald Cameron asked for additional indeterminate funding for the creative sector. Alternatives are fine, but members and parties that demand national funding lack any credibility whatsoever unless they can explain how much they want and where that additional funding should come from.
On a point of order, Presiding Officer. It is very clear that this cannot possibly be the speech of a convener of a committee of this Parliament, because it cannot have been written by a clerk who is employed by the Scottish Parliament. Therefore, this speech of eight minutes, which is, in effect, a second Government speech, is completely out of order.
Mr Kerr, I can hear you from this distance. First, in response to your previous point of order, I have already said that my understanding is that this is a speech on behalf of the committee. Secondly, Mr Gibson has clarified that position for the record. Thirdly, if there are any outstanding questions, that is a matter for the committee to pursue.
Mr Gibson, please conclude your speech.
I have just a slight bit to finish off. Thank you very much for your indulgence, Presiding Officer.
This is a mild speech in comparison with my stage 1 speech last year.
Committee members across the party divide expressed concerns that witnesses to the committee, let alone other political parties, did not give funded alternatives, so we are on solid ground with that point. Alternatives are fine, but members and parties that demand additional funding lack any credibility whatsoever unless they can explain how much they want and where that additional funding should come from. I am not overly confident that that will change today, but I live in hope. Clearly, I have touched a raw nerve with Mr Kerr.
On a point of order, Presiding Officer. I want to check the timing of speeches, because that speech went well over the allocated time.
I am well aware of the time, Ms Gallacher. At this point, there is some time in hand, and when a member takes an intervention, for example, that is duly noted by the chair. That will be the case for other front-bench speakers as well.
I call Liz Smith to speak for around seven minutes.
Last week, I gave great praise for the objectivity and straightforwardness of Kenneth Gibson’s leadership of the Finance and Public Administration Committee
Presiding Officer, I think that I will have to seek to correct the record. [
In the budget debate last week, I thought that John Swinney was uncharacteristically rather unkind, because he warned that he was going to pay far more attention to what Opposition spokesmen had to say on that occasion than he would today, as we set out our political stalls. I am well used to Mr Swinney’s brand of humour, but I thought that that was a rather odd remark for him to make, given that he is always jumping up and down, urging Opposition members to outline their alternative choices for the budget—which, of course, is exactly what stage 1 is all about.
I will begin on a few points of consensus. I acknowledge that the backdrop to the budget is the most challenging on record. There is global inflationary fallout from the war in Ukraine and there are supply chain issues and energy costs. We have the Covid situation, which has still not gone away, although it is hopefully getting better, and labour markets are having to adapt to the post-Brexit and post-Covid landscapes. Also, of course, there is the fallout from the significant changes to fiscal policy that were made in the autumn by the UK Government.
None of those issues has been within the cabinet secretary’s control, so we appreciate the predicament in which he has found himself. He says that budgets must be established on the basis of sound public finance. That is true, but budgets are also about choices, and it is there where we differ from John Swinney. Let me explain why that is, by what evidence we feel our arguments are supported and how we would allocate our rather scarce resources.
At last week’s business breakfast, the Scottish Fiscal Commission set out its usual very objective analysis—I hope that Mr Gibson agrees with that—by showing us exactly where we are with the Scottish economy right now. It was more optimistic about earnings growth and short-run tax revenues, but warned that when the nominal £1.7 billion of additions to the budget are drilled down into with inflation accounted for, the real-terms effect is much more like £279 million.
However, the greatest concerns remain that the Scottish economy has, for quite some time, been underperforming—and is forecast to continue to underperform—against the UK economy, and that the demographic issues relating to a diminishing working-population percentage are still having a major impact on productivity and on overall tax revenues for the future.
I agree very much with Liz Smith about the significance of the population issue and the working-age population. Earlier in her remarks, she mentioned the labour-market implications of Brexit. Does she therefore agree that one of the implications of Brexit has been a reduction in the eligible working-age population? The Scottish Government will do all that we can to boost employability, but does Liz Smith agree that the strategic impact of a measure that has undermined population growth in Scotland is undoubtedly a factor that will undermine economic growth in the forthcoming period?
I say to the cabinet secretary that other countries that have not been through Brexit are not having quite the same problems. I come back to the point again—[
Mr Swinney is going on about growth; I am just coming to that point, because it is most important. I agree on some of the aspects that he has talked about, but I will focus on the growth point, which is extremely important.
Mr Swinney always likes to blame Westminster for the ills in the Scottish economy but, as I said in my response to the budget statement on 15 December, I think that that is disingenuous. The structural weaknesses—this is where the growth point is important—in the Scottish economy are not related to Westminster but to the choices that have been made right here in Scotland during all the time that the Scottish National Party has been in power.
To blame Westminster is also disingenuous because Mr Swinney has had more money from the UK Government than he has been prepared to admit.
I will not, if the member does not mind.
I remind Mr Swinney of the comments in the middle of December from the Fraser of Allander Institute, which I know Mr Swinney respects. It said that the block grant money from the UK Government has “more or less” covered the inflationary pressures on him.
Mr Swinney has said on more than one occasion that there is a “moral argument” for paying more tax because it allows the Government to fund free prescriptions, increased child payments and free tuition fees. The trouble is that the public does not see its higher tax burden delivering far better public services, whether in health, education, transport, policing or housing. At present, all that the public see is cuts, especially in local government, and a stand-off between Nicola Sturgeon and the Convention of Scottish Local Authorities about the lack of flexibility when it comes to council spend, particularly on teacher numbers.
Mr Swinney knows only too well that Scots are cumulatively paying more than £1 billion extra a year, but because there is slower growth here, that is raising just £325 million extra for public services. In addition, the higher tax-rate differentials create disincentives. I am, I regret, well aware from looking at the books that there is not enough money available just now to remove all the income-tax differentials that currently exist, which is what we would like to do.
However, the additional tax on over half a million Scots is due to raise £95 million, which is less than 0.2 per cent of the Scottish budget. That makes a tax rise very much a political choice of the Scottish National Party, rather than one that helps the economy.
So, what has to be done differently? Let me begin with the Scottish Government’s proposal for a national care service. The minimum estimate of its cost, albeit that it is from a seriously flawed financial memorandum, was £1.3 billion over a five-year period. The best estimate of the cost now, albeit that it is from a flawed financial memorandum, is that it will be £95 million for the coming financial year. Would not that money be far better positioned with local governments, which are very much on the front line of delivering health and social care services? The compelling evidence from stakeholders before three committees in Parliament has been that they do not believe that the national care service is workable. I have heard John Swinney virtually admit that. I think that the money would be better spent on local governments, because they are absolutely at their wits’ end about where the extra money will come from, and it is having huge implications for their plans for the future.
We also know that, over the years, the cumulative Barnett consequentials in health and in education have not been fully passed on to the local authorities, as we had originally expected.
I turn to businesses, especially the small businesses in our retail, hospitality and leisure sectors. We welcomed the announcement that the Scottish Government is freezing non-domestic business rates, but we also note that, as a result of various measures that have been announced by the Chancellor of the Exchequer to reduce the rates burden on businesses, there will be £222 million of Barnett consequentials, which could well go towards a 75 per cent rates relief package. We do not have to remind the cabinet secretary of just how important our business sector is.
We welcome the £20 million that has been transferred from indyref 2 to
additional fuel payments, but we question why as much as £35 million is designated for the external affairs budget. It is absolutely right to fund international development and humanitarian aid, but we have an issue with the SNP’s spending on various aspects of external engagement that could be done by the United Kingdom Government.
Budgets are all about choices. I do not doubt that the choices are extremely tough, given the limited resources that are available. However, we on this side of the chamber do not believe that the SNP’s priorities are in line with the priorities of the people of Scotland.
I think that right now everyone in Scotland is asking themselves two fundamental questions. First, they ask, “Can I afford to get ill? I don’t know when an ambulance will turn up to take me to hospital or if there will be a bed for me when I get there.” Secondly, they ask, “If it has been a struggle to pay bills this year, what will it be like next year, once UK Government help is withdrawn?”
The budget needed to provide the answers to those two big questions, but it does not. The budget has no new plans, no new solutions and no new answers to those big problems. These are challenging times.
I will give way in just a moment.
Inflation has eroded the spending power of Government. However, challenging times require decisive actions, and this budget simply does not offer such actions.
I am grateful to Mr Johnson for giving way so early in his speech.
I just want to be clear about the line of argument that he has begun. Is Mr Johnson saying that, should the United Kingdom Government, which has proper responsibility for management of the energy market, fail to deliver support for paying the outrageous energy bills that members of the public are facing, the Scottish Government should use its resources to support such an endeavour? That is exactly what he has just put on the record.
Let me be very clear. There is an overarching need to help people to lower their reliance on gas. I am talking about mitigations so that people can make their homes more energy efficient, yet what this Government wants to do is repeat a scheme that it cut in September because it was not working due to a lack of demand. How on earth did the Government manage to devise a scheme for energy efficiency and insulation, fuelled by utility bills during a cost of living crisis, but find a lack of demand? The Government wants plaudits for repeating the very budget line that it cut in September last year. It is nonsense.
More of the same—which is all that the budget is offering—will not fix the delayed discharge crisis. Repeating policies that were cut will not help energy bills, and leaving local councils with a £600 million shortfall will not fix a single pothole, reopen a single library, pay for a single extra social worker or help our kids to learn.
Ultimately, the so-called national care service sums up everything that is wrong with this budget and this Government. It is a plan that assumes that centralisation will solve everything. It is a plan that is losing the support of those who work in the sector and those who need the sector, and it is a plan that will cost billions but will not add a single penny to the front line. It is a budget that is so lacking in transparency that it does not even specify how much it contains for that plan.
For the people who actually deliver care, the budget offers just 40p an hour extra—even less than the 50p an hour they got last year. That is a 3.8 per cent rise, when others in the health sector are being offered 7.5 per cent and inflation is running at more than 10 per cent. It just does not make sense. We all know that the front door of the NHS is jammed because the back door is broken. Why? It is because we cannot recruit care workers to deliver care packages, which means that people who are well cannot go home.
Payment of £12 an hour is not just a budget call—it is a budget imperative to save the NHS. Let us be clear: £12 an hour is affordable. According to the Scottish Parliament information centre, creating a £12 an hour floor for adult social care workers would cost £150 million. According to the Government’s own figures that it used in 2021, the amount would be £200 million. That money can be found. The Government could reallocate the £100 million in the miscellaneous line item in the central NHS budget. It could save £100 million by reducing delayed discharges, and it could pause the national care service, which would save £95 million in the coming year. That is where £12 an hour can be found. It is affordable, but the Government chooses to pursue a ministerial power grab instead of doing what would be right, which would be to pay social care workers a fair wage.
Mr Johnson suggested deleting the miscellaneous line item in the NHS budget. Can he tell us what that would result in cuts to? What services are in that line item?
T he fact that Ross Greer does not know that shows the lack of transparency in the budget—[
.] Let us have the discussion. There is a wider context here, because there are 300,000 people in the public sector earning less than £15 an hour. The Government cannot and should not build public services that are based on low pay. A budget that does not even have a public sector pay policy, let alone a workforce plan, is, frankly, deficient.
The budget damages local services. SNP council leaders are clear: the £600 million shortfall will cause them to consider 8,000 job losses. They also point out that the claim that there are additional funds is bogus, because the money is all so ring fenced that it is forcing finance directors to consider whether councils can continue to afford to deliver statutory services.
The reality is this: It is not a single budget or a single budget line that has caused the situation, but 15 years of underfunding—15 years of decisions from the SNP to cut front-line services. The absurdity of that is that those service cuts impact health, learning, poverty, transport, employment and inequality, which will ultimately cost this Government more.
I am afraid that I do not have time to take another intervention.
Labour would deal with that structural problem by scrapping the council tax and non-domestic rates and replacing them with fairer and more progressive levies. The Scottish Trades Union Congress estimates that that could raise as much as £450 million. However, instead of a plan for local government, all we have is vague promises of a concordat mark 2.
We live in challenging times. Resources are tight, but challenging times require decisive action and a clear plan. However, there is no plan from this Government to deal with NHS crisis, no plan to secure the vital services that are delivered by local government, and no plan to help people to manage their bills. Just like the Government, the budget provides nothing new and no new answers to the challenges that people up and down Scotland face. Its priorities are wrong, which is why Scottish Labour will vote against the budget.
We have approached this budget in good faith, and we are ready to support it if it is right—not perfect, perhaps, but good enough. After all, we reached an agreement in the heat of the pre-election period before the last Scottish Parliament election to show that we were prepared to cross the constitutional divide because, at that stage, the budget was good enough—in particular, we secured an extra £120 million for mental health. I hope that the Deputy First Minister agrees that my party leader, Alex Cole-Hamilton, has engaged constructively in the budget process so far.
I accept that this is a more difficult environment, which has been compounded by the actions of a Conservative Government in utter chaos. We should be able to agree that innocent people should not be left to pick up the bill for the Conservative Government’s wrecking of the economy, including in this week’s desperate economic news that the UK will lag behind even Russia in its performance this year. That should sink in and terrify us—so much for the great Brexit bonus that was promised.
We will continue to make the case at Westminster for the investment that should come to the various regions and nations of the United Kingdom. One needs only to look at today’s report of the Shell profits—unprecedented in UK company history—to see why we need a proper windfall tax.
We have also told the Deputy First Minister where we think money could come from to make the investments that I will set out in my contribution.
It is worth dwelling on the performance of the Scottish economy.
The Scottish Fiscal Commission believes that the Scottish Government might be losing out on almost £700 million of income tax revenue because of weaker economic growth. It has also projected that Scotland’s economy will grow more slowly than even that of the UK over the next 50 years. That is staggering and should be sobering, too, for this Parliament. We need to do something dramatically different from what we have been doing, particularly over the past 15 years.
Would the member accept that some of that has perhaps to do with a flawed fiscal framework?
Always reaching for the idea of flawed frameworks and flawed relationships with the United Kingdom will not deal with the fundamentals of the Scottish economy. I am afraid that the business community has a perception that the Scottish Government is not interested in it. That needs to change if we are to use the skills and talents of the people of this country to invest in our economic growth. We will continue to lag behind if we reach for constitutional grievances every time. Therefore, I reject what Mr Mason has said. There might, of course, be flaws in the fiscal framework, but they are not the reason why we have lagged behind for the past 15 years and are projected to lag behind for the next 50 years.
It is the same with productivity. The Productivity Institute said that Scotland’s productivity “has been very weak” over the past decade and trails behind that of similar foreign countries. That sets the context for this budget.
I would have loved to do so if I had had more time, but I have only six minutes.
The Liz Truss budget was reckless, of course, and Brexit has, without doubt, damaged our economy and made us poorer. However, the Scottish Government, too, has a tremendous responsibility for turning these matters around. The slower growth and poorer productivity in Scotland affect our income, and that needs to change.
Let me set out our costed proposals. The first is for the NHS.
When the NHS recovery plan was launched, one in five children was waiting too long for mental health treatment; from one in five, it has now become one in three. Young people are battling the long shadow of lockdown and the rising cost of living. So, we are opposed to the freezing of the mental health budget at £290 million in cash terms, which will also be substantially eroded by inflation. That freeze comes on top of the £38 million cut from the mental health budget this year, which was announced on 2 November last year. I am disappointed, too, that the Scottish Government is ending its excellent work on providing mental health counsellors for students at universities and, especially, colleges.
I hope that the Scottish Government reflects on that, because young people have suffered greatly through the pandemic and we should not cut support for them at this time.
We also want more money for people who are suffering from long Covid, which Alex Cole-Hamilton has referred to repeatedly. An extra £20 million would triple the size of the Scottish Government’s existing commitment. The 158-page draft budget was completely silent on that. We need action on mental health and long Covid, which would help the fundamental problems that the whole NHS is facing.
The Institute for Fiscal Studies says that the Scottish Government has understated the real-terms cut to councils once existing pay awards and ring fencing are taken into account. Even the SNP president of COSLA, Shona Morrison, says that it is a bad deal. Not unreasonably, the Scottish Government challenges members in the chamber when we ask for more investment in certain areas: we have to spell out where it will come from. That is not unreasonable, as I said, and that is why we have a costed plan. The Scottish Government is telling local authorities that they should not cut teacher numbers, but I think that it is equally incumbent on Scottish ministers to tell local government where it should get the money from. If the approach is good enough for us, it should be good enough for the Government.
I hope that the Government acts responsibly through the budget process, that it is fair to local authorities and that it provides them with the money that they need to pay for the teachers to get the recovery in our education system that it desperately needs. If the Government does all those things, we will look seriously at the budget at stage 3. We want to act constructively. This country needs a Government that is working for people. So far, I am doubtful as to whether the budget will meet that requirement, but we are prepared to look at and vote for it if the Government does the right thing.
We face a whole range of issues as we go into the 2023-24 budget. The economy has taken a massive hit because of Covid, and a range of sectors—especially health—need financial and human resources to get on top of things again. On top of that, there is the war in Ukraine, with its impact on food, energy and steel production, and the impact of inflation both here and around the world. It is worth noting that, however difficult we, in Scotland, find our situation, many other countries, including our partners in Malawi, are finding things much more difficult.
I want to say a little on another major challenge, which I hinted at earlier: the fiscal framework. I know that we signed up to it fairly voluntarily, although, if I remember correctly, the Conservatives wanted us to agree to a previous version that was even more disadvantageous for Scotland.
The framework is to be reviewed, which is welcome. In retrospect, we can see that we are not in a fair fight, because so much depends on how our economy fares in comparison with that of the rest of the UK, which, in practice, means how we do against London and the south-east. Even before the union, in 1707, Scotland found it difficult to compete with England and, in particular, with London, and the union has tended only to re-emphasise that challenge. Ireland has shown that it can be done, by leaving the UK and developing its economy in a different way. However, that is not an option for us in the next couple of years. In the meantime, we have to adhere to the UK’s economic, taxation and immigration rules.
I do not disagree with some of the things that Mr Mason has said. Nonetheless, does he accept that the Scottish Government signed up to the current fiscal framework in 2016?
I think that I said that. I was on the Finance Committee at that time, and we all looked at it and thought that it was a better deal than we had been offered previously. However, in retrospect, we now find that there are some disadvantages to it, which I do not think any of us foresaw.
We are expected to outperform England if the block grant adjustments are to work in our favour. The odds are stacked against us and the fiscal framework needs to change. The UK either has to make it more advantageous for us to remain in the union or more and more people in Scotland will come to the conclusion that the present set-up does not work for any of us. There is clearly no union dividend.
Turning to the detail of our budget, we need to maximise the resources that are available to us, and I very much welcome the various measures to increase tax, including 1p more on income tax for people who are better off and an increase of 2 per cent on the current additional dwelling supplement for people who buy a second home either for their own use or to let. I hope that that will be a boost for first-time buyers, too.
Does the member agree that the additional dwelling supplement being charged for local authorities is the wrong way to do it and that that should be addressed by the Government as soon as possible?
I think that the Government has made a commitment to review that because, in one sense, that money is going round in a circle—it is public money that is staying in the public pot. To an extent, I accept Douglas Lumsden’s point.
We should also remember the point that was made by Professor Anton Muscatelli and the expert panel, which was that, although our income taxes are fairly progressive compared with those of the UK and beyond, our property taxes are not as progressive, yet they are devolved.
I realise that it takes time to make major changes in taxes, but, at some point, we need to grasp the thistle, look at changes to council tax and consider having wider property taxes and possibly wealth taxes.
I think not, as I have given way twice already—unless the Presiding Officer is giving me a lot of extra time.
The most recent council tax valuation took place in 1991. I understand that, since then, house prices have gone up by more in richer areas than they have in poorer areas, so people in richer areas are paying comparatively less council tax than they probably should be, and, relatively speaking, people in poorer areas are paying too much. Councils will decide by how much they need to put up council tax this coming year, but the system has to change, and—from my perspective and, I believe, that of many people in my constituency—the sooner, the better.
Whatever resources we manage to bring in, we still need to make difficult choices about how we spend. The idea that we come to the budget and just present a list of demands is unrealistic and has the effect of misleading the public as to what is possible. Therefore, I was slightly disappointed when, in last Thursday’s debate, the subject of colleges came up and I asked the convener of the Education, Children and Young People Committee whether they would recommend a reduction in university funding so that more money could be given to colleges but she declined to comment.
On Monday, I was at the launch of a report on the City of Glasgow College, and I can assure members that the principal, Paul Little, answered that question. According to him, that college receives £10,000 for a student to get a degree, whereas, across the road, the University of Strathclyde gets £30,000 for a student to get a degree. Although I did not investigate his figures, and I suspect that there are some nuances to that, the point remains. I hope that, when the Education, Children and Young People Committee looks at colleges and their funding, it not only asks for more funding for colleges but looks at whether the balance between funding for colleges and funding for universities is right.
I am sorry, but I am not giving way to Mr Doris.
I think that the Finance and Public Administration Committee would be keen for other committees to work on the issue of priorities within portfolios. Rather than just saying that colleges and universities need more money, it would be helpful if the committee came back to the Government and said, for example, that colleges should get more and universities less, or vice versa.
I accept that that would require a degree of courage from committees—
I am sorry, but I have taken two already and I think that I need to wind up. [
.] Well, if it is a point of order—
Yes, I think that it is just Mr Kerr who misuses points of order.
I will end by mentioning local government. Primarily, the debate is about how much cash local government should get. We face hard choices between the NHS and local councils. Colleagues in Glasgow have suggested that there be less ring fencing and more flexibility, and that councils be allowed to increase penalty charges by more.
I commend the budget to the chamber and I hope that we can all support it.
As a former council leader, I well remember the yearly merry-go-round of budget negotiations with the Government. Letters would fly back and forth, and meetings would be demanded and sometimes even granted. The Greens would demand more money for local government, and the pantomime would close with money being found down the back of the Derek Mackay sofa.
Unfortunately, we no longer have that pantomime. The Greens’ slavish devotion has been bought for the price of a couple of gas-guzzling ministerial cars. It is shameful. Despite the SNP-Green devolved Government having the largest core grant since devolution, it is local government, yet again, that will have to provide more essential services for less.
I have long argued that the only way to deal with some of the key issues in our communities is to deal with the problems at the grass roots and to fund community projects, which leads to much less funding being required further down the line.
A prime example of that is our men’s shed network, the funding for which accounts for a tiny amount in the scale of the budget, but which has proven to massively reduce health and social care costs further down the line. By investing in small community projects, we can address many issues such as loneliness, ill health and social isolation in a personal and local way, but the Government is slashing the budget for the men’s shed network. It talks about early intervention and prevention, but that is all talk and warm words without action. I challenge the Government to put its money where its mouth is and to correctly fund men’s health organisations.
The reduction in funding for our councils and the likely increase in the cost of our teachers, along with much-needed additional money to pay for social care staff, mean that services in our communities will be cut. The money has to come from somewhere. If it does not come from Government, it has to come from the roads, parks, refuse collection, leisure and education budgets.
Daniel Johnson was very honest about how he would find more money for councils. He would rob £100 million from Scotland’s NHS. Where would Douglas Lumsden get the money from?
I am not sure that Daniel Johnson did say that. I am not going to defend Daniel Johnson, but Liz Smith has already set out where additional funding for local government would come from, and I will come to that too.
For many years, councils have been asking for a fair funding settlement so that they can continue to meet the needs of our communities. The Government has continually squeezed those budgets to breaking point. The COSLA finance spokesperson, who is a member of the SNP, said that, in recent years, local authorities had faced
“extremely difficult financial choices due to real terms cuts” and wider economic pressures. She added that
“There is a real danger that, as well as cuts, some essential services may stop altogether.”
To have essential services stopping altogether is quite a legacy for the SNP-Green coalition.
There is a different way. Given that the national care service appears to be dead in the water due to key unions withdrawing from the process and ministerial back-pedalling, perhaps the £1.3 billion that has been earmarked for that can be diverted to the bodies that are currently struggling to deliver social care—our local councils. Continuing to pour money into a dead-duck policy that no one thinks is a good idea, given the current financial pressures on our social care providers, is a disgrace and the SNP-Green devolved Government needs to wake up to that reality. There is a crisis in delivery and care that has happened on their watch.
My apologies—I am struggling for time.
I turn to the impact that the budget will have on business. The Fraser of Allander Institute has described the budget as taking a “hardline approach” to business, with
“No additional reliefs ... being applied to hospitality and retail, as is the case south of the border.”
The devolved Government has further cut £66.4 million in cash terms from the cities, investment, strategy and regeneration budgets. That is vital funding that drives growth in cities such as Aberdeen.
Last week, I spoke about the impact that the budget will have on growth: zero. It is a short-term budget with short-term goals. There is no financial planning or growth planning. It is a budget that lacks ambition from a Government that has run out of ideas.
It is the public that pays the price for that lack of ambition or solutions, not only in the demise of our services but in their pockets, because we have higher taxation than in the rest of the UK. Middle-income earners, such as teachers and healthcare workers, will be hit by increased taxation while the rising cost of living is also hitting them hard. The Government is making life more difficult for hard-working families in Scotland.
Although the tax gap between Scotland and the rest of the UK sees Scottish taxpayers paying £1 billion more in tax each year, that adds only £325 million to our public services. That is a result of slower growth in earnings and employment. Without growth, increased taxation becomes meaningless. Without ambition, growth is impossible.
As my colleague Liz Smith pointed out, services are not improving. In fact, they are getting worse. More and more people see their bins being collected only once a month; police numbers are falling; the attainment gap is not improving; NHS waiting times are increasing; the number of social care staff is falling; the drug deaths figure is not improving; growth is stalling and our high streets are closing. The list goes on and on.
The Government has more money to spend and more opportunities than ever before, but it has run out of ideas. The budget is short-sighted and short term. It is damaging to Scotland’s economy and to the pockets of hard-working Scots, it will see services cut and higher taxation for many of our constituents, and it does nothing to deal with the problems that this Government has created and has failed to address. It will harm growth, business and hard-working Scots, who will be left picking up the bill for this failed Government.
Context is key in politics and in any political decision that is made, particularly at budget time. An article in the
Financial Times on 31 January said:
“The IMF consigned Britain to the economic doghouse on Tuesday. As the only leading economy likely to contract this year, the UK’s growth forecasts were revised down by the fund at the same time as it boosted those of most other countries.
Even Russia is expected to grow more than the UK in 2023, in the fund’s outlook.”
The longer-term problem about capital expenditure and productivity growth persists. UK productivity growth rates dropped more than those in other countries after the 2008-09 financial crisis.
I will not at this stage. I want to make some progress.
Business investment has not grown since the 2016 Brexit referendum. The Tories talk about business growth, but Scottish Government modelling shows that Scotland’s economy and social wellbeing have been disproportionately impacted by Brexit, with Scotland’s GDP set to be £9 billion lower in 2016 cash terms by 2030—which represents a 6.1 per cent cut—compared with the position under continued EU membership, yet Labour and the Tories still support Brexit and want to “make it work”.
Why does all of that matter? Along with high inflation, low growth impacts on our Scottish economy and its ability to raise taxes.
Denmark tops the International Institute for Management Development’s seventh annual world digital competitiveness ranking, which is an assessment of 63 countries’ capacity and readiness to adopt and explore digital technologies as a key driver for economic transformation in business. While the UK lags in 14th place, small, independent Denmark, which has all the powers over its economic levers, came first. I will return to that later.
Families, businesses and our public finances—
I thank the member for taking the intervention. He talks about more powers. Why does the Scottish Government not use the powers that it has?
It does. I will touch on other powers that we should have but do not have within the devolved set-up.
Families, businesses and our public finances are under sustained economic pressure and the Scottish Government has acted decisively to provide what support it can within its limited resources. The budget focuses on steps that we can take now that will help to ensure that Scotland emerges from the current crisis a stronger, fairer and greener country.
The Scottish Government would of course like to go even further, but the cost of living crisis has laid bare the fiscal constraints of devolution. The Scottish Government has proposed changes to a number of devolved taxes that will raise additional revenue to support our NHS and other public services.
I have already taken an intervention.
The finance secretary has set out plans to add 1p to the higher and top tax rates, maintain the starter and basic rates at their current levels and reduce the threshold above which people pay the top rate from £150,000 to £125,140. According to the Scottish Fiscal Commission, that will raise £129 million. The maintenance of the higher rate threshold at its current level will generate a further £390 million.
The Scottish Fiscal Commission estimates that the tax decisions that have been made in Scotland since income tax powers were devolved could raise around £1 billion more in 2023-24 compared with the income tax policy decisions made by the UK Government. I support the approach. Of course those who are able to contribute more to society should do so.
I want to focus on child poverty. The Deputy First Minister mentioned the investment of £442 million this year. The briefing from the Child Poverty Action Group states:
“We welcome the prioritisation of child poverty in this budget. Prioritising investment to reduce inequality and eradicate child poverty is absolutely the right thing to do. We know that this investment is working.
Our Cost of a Child in Scotland report analyses the difference the commitments that have already been made will make to families in Scotland.”
It goes on to say that the investment in the Scottish child payment and other low-income benefits, free school meals, free bus travel, funded childcare and reducing the costs of the school day are all having welcome impacts on low-income households.
Scotland is the only part of the UK that has introduced a child payment. The Scottish child payment has now been increased to £25, which represents a 150 per cent increase in eight months. It has also been extended to under-16s, which is estimated to lift 50,000 children out of poverty.
Of course the Scottish Government would like to do more, which takes me back to the financial constraints of devolution. The Scottish Government cannot borrow to support day-to-day expenditure when times are hard in order to assist us through these difficult days.
I will not. I have taken two interventions.
John Mason touched on the fact that fiscal framework discussions are taking place with the UK Government. The UK Government has to give more fiscal flexibility, including additional borrowing powers, particularly over social security and housing, which are demand-led services. Labour MSPs should support that.
I am just about ready to conclude.
That takes me on to my final and fundamental point, which is about where powers lie—what the Parliament cannot and can influence.
We cannot control the UK’s having runaway inflation, which impacts on our budget not only this year but next year and affects every person in Scotland. We cannot control how much profit energy companies make and what their contribution is to tackling fuel poverty. Recently, Shell announced profits of £68.1 billion for 2022—a 53 per cent increase—due to soaring oil prices, despite the fact that many people cannot afford to eat or heat.
No, as I am about to conclude.
We know that Tories will always cosy up to corporate giants. Just imagine that the powers to introduce a windfall tax lay in this Parliament—yet neither Scottish Labour nor the Lib Dems will support giving power to the Parliament to deal with a windfall tax. Why not? What is the logic?
I welcome the Scottish budget proposals, but we need full powers over all economic levers to ensure a fairer, prosperous and greener Scotland.
Generally, a stage 1 debate is about the principles of a bill. Although the annual budget bill is slightly different, we should still be able to have an open debate about priorities and the strategic direction in which the Government plans, through its budget, to take the country.
However, that has been almost impossible. The smoke and mirrors, the political spin and, at points, the verging-on-dishonest presentation of the figures and their impact mean that we cannot have such a debate with the Government, because its response is just to deny reality.
The Scottish Government talks about the changes to its budget in real terms but, in the same breath, talks about the changes to the local government budget in cash terms. The Government talks about increases to local government budgets but does not bother to mention that the extra funding is already set aside for new commitments.
Given the way that the Deputy First Minister handled my intervention about the £100 million, does Mark Griffin share my concern that, because of the situation that he has outlined, that sum will not be in addition to local authorities’ current education budgets?
Absolutely. The Government asks us to come to the table and have an honest discussion about where we would spend additional funding and where we would cut, but, until we have the transparency of an honest starting point, that is impossible for anyone in the Labour Party without the support of the Government and civil servants.
We have seen it year on year. The Government announces extra funding—it is a trick of so-called extra funding. It announces with fanfare a new and welcome policy. I will give the example of the 1,140 hours of nursery provision: a warmly welcome policy that is hugely important in getting working parents back into the economy through supporting kids with extra early learning and childcare. The funding is announced, is allocated in year 1, is then combined with the general grant and is never updated with inflation. The Government gets the plaudits and councils are left with the need to squeeze other areas of the budget in order to maintain that commitment. Alternatively, as we have seen recently, they are threatened with legislation to keep it going.
It is not good enough for the Government to come to the chamber and talk about shared priorities and shared commitments. If those are shared commitments, there must, surely, be a shared commitment to pay for increases in costs year on year, rather than leaving the burden with local government.
We also cannot have an honest debate with the Government on ring fencing, given that the Government maintains that just 7 per cent of a local authority’s budget is ring fenced by relying on a strict legal argument, although there are billions of pounds more in directed spending, over which councils have no control. The Government’s recent announcement of legislation, in response to Glasgow City Council considering cutting its teacher numbers, shows that that 7 per cent figure was always just spin.
In addition, what does the impact on councils of that announcement say to other council staff? Is it that the Government cares only about teachers and that teachers are the only jobs in local government that are worth protecting? My five-year-old daughter can tell you that the janitor, the catering staff, the cleansing staff, the bus driver and the school crossing patroller are just as much a part of her education as teachers. However, it seems that they are not worth protecting because the Government seems to value only teachers when it comes to education. Now, all those extra staff, who do just as much work and work just as hard to support my daughter’s education, will take a bigger hit as a result of the budget. I am sure that they will hear the message of the Government’s priorities loud and clear.
The Government talks about the huge cuts to the housing budget, which is appalling in the year in which we have just seen the highest homelessness figures since records began. It talks about that huge cut as just “reprofiling” of the £3.5 billion that it planned to spend anyway. That is taking us and the public for absolute fools. Given that inflation is at the highest level that it has been for years and that inflation in the construction industry was already running out of control before general inflation caught up, it is clear that spending the bulk of that funding further down the line means that it will be worth less. Fewer houses will be built and fewer people who are experiencing homelessness will find a home, and that will all be because the Government wants to pretend that a budget cut is not a cut. Shelter and SPICe tell us that it is a cut; the Government says that it is “reprofiling”. I know who I will be listening to.
When the cabinet secretary announced his budget, I asked him some questions. What are the costs to the health service of raiding budgets? What happens when people cannot access a local authority’s preventative services because they simply no longer exist as a result of cuts? I have not had an answer, and councils have not had an answer. What does that do to our NHS? All of that amounts to cuts, and someone will have to pay the bill. Given the preventative nature of spending on communities and housing, we know that it will be the NHS and ordinary people who will pay that price.
A budget debate is not my usual métier, but the principles of budgets are not a mystery. With an individual’s domestic budget, income needs to be balanced against expenditure, or borrowing will be required. The Scottish Government’s budget is no different, except that its income is, in the main, set by the UK and we have no borrowing powers for revenue.
Likewise, an individual’s budget has first to prioritise payments for necessities such as mortgages, rent, utilities and so on. Then, as inflation erodes the value of that income and costs rise, choices about savings or cuts have to be made. For some folk, the choice is now quite simply between food bills and energy bills. It is much the same for the Scottish Government. It has responsibility for billions of pounds, but the principles remain the same.
The necessities of government are the responsibilities that we all know about: delivering public services, including health, social care, education, the justice system and policing, and providing funding to local authorities. In most cases, some 80 per cent of what is provided is fixed in nature. For example, in health and social care, there are fixed costs associated with hospitals, all the staff, their salaries and pensions, ambulances, medical treatments and so on. That might seem obvious to us in Parliament, but many people do not understand that cutting into one budget and moving money to another would, if it were to have any substantial effect, perhaps mean cutting into staffing levels, for example.
The biggest slice of the Scottish budget rightly goes to health and social care, which accounts for nearly 33 per cent of the total. I do not think that we would argue with that being a priority. The next large chunk—almost 20 per cent—goes to local authorities via COSLA, which then divvies up the money to councils under an agreed formula that takes into account, inter alia, demographics, population, rurality and so on. The Scottish Government does not negotiate separately with each of the 32 local authorities in Scotland. I say that to start with in order to put the budget choices in context.
In my many years in Parliament, I have never known such pressures, which are felt across the UK, on Government budgets. In more than a decade of Tory Government, austerity—indeed, stagnation—was inbuilt. That was tolerable while interest rates and inflation were low and borrowing was cheap, but the UK economy was fragile. We can factor in the years of Covid, the war in Ukraine, Brexit and four Chancellors of the Exchequer in one year. We have a rudderless shambles of a UK Government that has no clear or consistent idea of how to manage the UK economy—otherwise, why were there four chancellors in 2022?
We have ended up where we are today, with general inflation at 10 per cent and food inflation reckoned to be nearer 15 per cent, while energy companies swim in unearned profits of billions of pounds. The Scottish Government, which is almost wholly dependent on the UK for its budget and is dealing with inflation of at least 10 per cent and pay demands to match, is firefighting as it has never had to do before.
Does Christine Grahame accept the Fraser of Allander Institute’s analysis that the Scottish Government’s budget for the coming year has been more or less protected against inflation by the increase in the block grant from Westminster?
I will address that by quoting from the Finance and Public Administration Committee’s report—I do not know whether Mr Fraser is on that committee. In its preamble, the report says:
“It is clear from our scrutiny of the Scottish Budget 2023-24 that the Scottish Government is firefighting on a number of fronts.”
No wonder there is little opportunity for long-term planning. The problem is not only that so many costs in individual portfolio budgets are fixed but that there are horrendous pressures on those budgets.
I welcome progressive policies such as free travel for all under-22s and over-60s, as well as for people with certain disabilities and their carers; no tuition fees; free prescriptions; free school meals for pupils in primaries 1 to 5, with the proposal to extend that to all primary pupils; the baby box; and the Scottish child payment. Those policies prioritise families and children, who are Scotland’s future.
Incidentally, the Deputy First Minister referred to the small business bonus scheme, under which some businesses pay no rates whatsoever. That came into the Scottish Government’s budget after negotiations with the then Conservative finance spokesperson Derek Brownlee, who was a big loss to the Parliament. That Tory group supported the budget and amended it so that the scheme would be included in it. Those were the days when the Tories did not just oppose for opposition’s sake.
Other financial commitments will be needed to mitigate harsh Westminster policies and underfunding. No one pays the bedroom tax, which is imposed by Westminster, but that costs the Scottish Government £70 million. This year, £20 million has been allocated to the fuel insecurity fund. Those are just some examples of the millions of pounds that are spent to mitigate Tory austerity. However, there are limits. The Scottish Government has perhaps been a victim of its own success over the years, as we tend to take those mitigations for granted.
I am in my last minute.
I have listened with interest to the contributions so far. Opposition members always fail to say how much proposals will cost on a recurring basis and from which existing budget the money will come from. Neither is there essential recognition of the devastating impact of inflation.
I will go back to where I started. Every household in Scotland, including the dogs in the street, knows that its money is not going as far as it did before. Savings are having to be made. Choices are having to be made—shrinking back to the basics: rent, mortgage payments, heating bills and food. The Scottish Government is no different, just as it is no different for the domestic budgets of Wales and, indeed, England.
As has been noted a number of times in the debate and in the Finance and Public Administration Committee meeting last week, this is by far the most difficult context yet in which a Scottish Government has had to set an annual budget.
At this point last year, inflation was running at around 2 per cent. The UK Government had cut the Scottish block grant by just over 5 per cent in real terms, and we were rightly describing that budget-setting process as the most challenging that the Parliament had ever faced. However, since then, a combination of the continuing damage from Brexit, Russia’s invasion of Ukraine and the spectacular disaster of Liz Truss and long-term Tory mismanagement of the economy have created a set of circumstances that are much worse than what at that point was—we hoped—our worst-case scenario.
Despite the challenges that are outwith our control, this is the greenest budget ever. Scrapping peak-time rail fares from September will save travellers hundreds of pounds and will end what the Associated Society of Locomotive Engineers and Firemen—ASLEF—has correctly labelled a tax on commuters.
In addition, 20,000 more children will be eligible for free school meals and £80 million will be invested in expanding school catering facilities, so that eligibility can be expanded to even more children as soon as possible.
Tomorrow afternoon I will take part in a cross-party briefing from Jim Logue of North Lanarkshire Council, which has a projected £67 million budget deficit. What am I going to tell people about the difference that the Green element of the SNP-Green Government is making? This Government is doing exactly the same as previous SNP Governments have done, which is cut services and cut local jobs. What is the Government asking councils to do? Have they to wait for a de facto referendum before anything changes, because it is carrying on just as it was before? Where is Ross Greer’s wealth tax now?
That is a bold comment from a Labour Party that, about 20 minutes ago, proposed cutting £100 million from the NHS without even knowing what that £100 million was for.
Does Ross Greer acknowledge that that money would be redirected within the health budget because it would go to social care?
Of course Mr Johnson proposed that the £100 million would go towards increasing the wages of social care workers, which is something that everybody in the Greens and the SNP wants, I am sure. The issue is that Mr Johnson does not know what he would be taking that money from. That would be a cut to healthcare services—[
The Labour Party has proposed that cut, but it does not know what it is actually proposing to cut. That is just comically irresponsible.
What we are delivering in the budget is funded in part by the most progressive tax system in the UK. By raising the higher and additional rates of income tax and the additional dwelling supplement, the highest earners and people who buying holiday homes and extra properties will pay a bit more to fund the public services that are so desperately needed during the cost of living crisis.
Scotland has extremely limited devolved taxation and revenue-raising powers, but although we certainly need more financial powers it would be wrong just to make that argument without making the best use of the powers that we have. Therefore, in 2018, the Greens worked with the Scottish Government to deliver progressive changes to income tax. We lowered the tax that was being paid by the lowest-paid workers and increased it for people on higher incomes. Those progressive changes have raised hundreds of millions of pounds for public services.
However, given the monumental pressure that the Scottish budget is now under, and given the need for high-quality public services during the economic crisis, we need to go further. We might be in a cost of living crisis—one that is pushing many households towards crisis point—but there are plenty of high-income and wealthy people in this country who can afford to pay a bit more. Those who are on the highest incomes can afford an extra penny on the tax rate that is paid on the top slice of their salary, and people who are able to buy a second home or holiday home can absolutely afford—
Does Ross Greer nonetheless accept the comments from many people in business and industry—in particular, groups such as the Confederation of British Industry—that Scotland is desperate for more well-paid jobs?
Of course we are desperate for more well-paid jobs, including for the purpose of raising additional tax revenue. However, as we see from the SFC forecast for income tax over the next couple of years, the fact that Scotland has a more progressive income tax regime than the rest of the UK has clearly not had any detrimental effect on our ability to raise income tax revenue.
As I said, this is a budget that we are proud of, because it will see people on the higher and top rates of income tax and those who pay the additional dwelling supplement paying a bit more.
Between those rate changes and freezing of income tax thresholds, about half a billion pounds more will be raised to support public services and to deliver vital additional interventions including free school meals expansion.
I have taken a number of interventions. I apologise to Mr Kerr.
I was intrigued by the point that Liz Smith made about the £95 million that will be raised from the income tax rate increase, because she identified it with the national care service spend and quite legitimately said that the Conservatives would not spend the money on that, because they would rather see that £95 million going to local government. Given that, I look forward to seeing the Conservatives vote for the rate resolution that will deliver that £95 million of additional funding for our public services.
As I said last week, fair pay for public sector workers is now one of the biggest challenges that the Scottish Government faces. To be absolutely clear, I point out that the Greens believe that all workers—in the public, private and third sectors—deserve pay rises that are at least in line with inflation, and we support their right to take whatever industrial action they believe is necessary. However, with inflation rising above 10 per cent, a real-terms budget cut from the UK Government and extremely limited tax powers, it is impossible for the Scottish Government to deliver that level of pay increases in the short term without paying for it with devastating service cuts and job losses. It would cost about £2.5 billion.
That is why I think that the STUC and Unison proposals are so important and why I welcome Labour’s commitment to reforming and replacing the council tax and the non-domestic rates system, perhaps with what is in the STUC and Unison papers. The last time council tax was in date was before I was born. We have an opportunity in this session of Parliament to deliver the kind of systematic structural change that should have been delivered a long time ago. I hope, from the contributions that Labour members have made this afternoon, that Labour will join the two parties in the Government that have already committed to doing that
I want to focus my speech on the housing crisis and the homelessness emergency in Scotland. I could not believe that the finance secretary did not mention housing or homelessness once in his speech—he had more to say about peatland restoration than about the housing emergency that we face.
Figures that were released this week show that as at 30 September 2022, 28,944 open homelessness cases were recorded in Scotland, which is the highest figure since records began in 2002, and an 11 per cent rise on the previous year.
I am disappointed that the Deputy First Minister is leaving the chamber.
In a written answer to me on the time that children in Scotland are spending in temporary accommodation, I learned that Scottish Government data shows that 447 households that include children in their homelessness application have spent more than three years living in temporary accommodation. Let that sink in for a minute: under this Government, in Scotland today, children and their families are living in bedrooms in former guesthouses for three years or more. If that is the progressive pathway that the Deputy First Minister outlined, I want nothing to do with it.
Hundreds of Scotland’s children are spending years in that sort of accommodation, which will have a hugely detrimental impact on their physical and mental wellbeing. This Parliament should be doing something about that, but we are not.
The numbers are getting worse. In the past year, there has been a 10 per cent increase in the number of children living in such conditions. SNP and Green ministers cannot continue to fail to act, and making cuts to the housing budget is not going to help. Our young people are paying the price for the SNP-Green Government’s inaction.
Last week, the Scottish Conservatives called on the Scottish Government to declare a housing emergency, but ministers failed to act. It is deeply concerning that the budget once again seeks to target the housing budget for significant cuts, at the very time when pressures on our housing system are increasing, especially here in the capital.
As Shelter Scotland says in the briefing that it issued ahead of today’s debate:
“The Scottish Government often talks about living up to the preventative ambitions outlined in the Christie Commission, yet failing to adequately invest in social housing simply damages health and education, and will leave children trapped in temporary accommodation for longer periods of time and cost the government more in the long-term.”
We all recognise that there is massive pent-up demand and a chronic shortage of housing. Given that, will Miles Briggs support my calls for a massive increase in the capital borrowing powers of the Scottish Government for exactly that sort of project?
Michelle Thomson really should consider what she is about to vote for, because SNP and Green members will very soon be asked to vote to cut the housing budget by 16 per cent—£113 million. I am not sure how she thinks that will have a positive impact, but I would say that those members need to think twice about supporting the budget later today.
I agree with Michelle Thomson that increasing the supply of social housing in Scotland is crucial if we are to address the housing emergency. Developing new and sustainable tenancies with the housing sector is also critical if we are to deliver the tenancies that people who are homeless or are in a housing emergency need.
However, we are not seeing that happen. We need the Government to find solutions. That requires funding that is adequate to ensure that enough homes are delivered to reduce housing need and get people permanently out of temporary accommodation. Charities such as Shelter and Crisis that work day in and day out to end homelessness are clear about the impact of the cut to the housing budget; they say that it could derail the Scottish Government’s ability to reduce housing need in this parliamentary session.
Just as with the drugs death crisis, SNP ministers do not seem to understand the growing need for direct emergency action to address the housing emergency in our country. I think that, in years to come, we will see them come to the chamber to acknowledge that, but I say today that this is when we should be taking action, not cutting budgets. The decision that has been taken by the SNP and the Greens to cut the affordable housing supply programme at the very time when we are seeing significant increases in homelessness is wrong, and the policies that have been pushed—especially by Green MSPs—in Parliament recently are also undermining the potential for the private rental market to address homelessness and deliver homes for people here in the capital and across Scotland.
As far back as January 2022, concerns were being raised here in Edinburgh with regard to the capital losing out on £9.3 million of homelessness funding due to a bureaucratic anomaly. I raised those issues with the cabinet secretary several times in Parliament, but no more action was taken to address that. More resources must be given to Scotland’s cities. Glasgow and Edinburgh are at the epicentre of the homelessness crisis, so they need the necessary resources.
At the election, all parties pledged that we would work to end homelessness during this session of Parliament. After this week’s shocking figures, that pledge looks unachievable without a totally new approach from the Scottish Government.
To conclude, I return to an issue that I have consistently raised in previous budget debates, but which ministers continue to fail to engage on or act to reform—the underfunding of the City of Edinburgh Council and of NHS Lothian. We receive the lowest level of funding per head of population for our council and our health board. That is driving many of the crises that my constituents face and a lack of opportunities to find solutions. Edinburgh deserves a fair funding deal, but it is clear that, after 16 years in office, the SNP Government is content to continue to short-change the communities that I represent. That is not fair and it must change.
This is another budget where the reality has fallen way short of the Government’s rhetoric. The Deputy First Minister repeated today the claim that local government has an extra £550 million to spend, but he failed to say that he has ring fenced almost every single penny of that entirely for central Government commitments. As SNP-led COSLA has said, the actual increase is just £32.8 million, at a time when local government needs £612 million just to avoid more cuts, and that would not return a penny of the £6 billion that has been stripped from local government in the past decade.
When he outlined the budget, the Deputy First Minister said—I welcomed it—that he wanted a new partnership with local government, an end to the fractious debates about resources and accountability for spending, and a more effective way of working. I wonder whether he has even read his own budget. It is clear that SNP councillors have. COSLA’s resource spokesperson, Katie Hagmann, said:
“Council Services will now be at absolute breaking point and some may have to stop altogether.
This is a result of cuts to our Councils’ core budgets”.
SNP councillor Shona Morrison, who is COSLA’s president, said:
“The reality of the situation is that yet again, the essential services Councils deliver have not been prioritised by the Scottish Government.”
Just two days ago, the finance director of SNP-run Glasgow City Council told the Parliament that councils are on a knife edge and that this has been the worst year that they have ever had. There is no new way of working; it is the same old anti-council, anti-local services approach that we have seen for the past seven years.
As a direct result of the cumulative effect of budget after budget that SNP and Green MSPs have voted for, councillors of all political persuasions and none will, once again, have to wrestle with the painful choice of which of their community services to cut and which of their neighbours’ jobs to axe as part of the 7,000 jobs that COSLA warns could be lost because of the budget. The debates that will take place in council chambers up and down Scotland in the next few weeks will be about not which local services to trim but which services to scrap altogether.
I recognise the difficult financial position that we find ourselves in, which has been made more difficult by the Government presiding over years of low growth. We need to focus what funding we have on how best we can protect services such as social care, deliver fair pay for workers and support people through the cost of living crisis. Those priorities are connected. We will not protect social care and the NHS without addressing the scandal of low pay in social care. A day rarely goes by when my inbox—like, I am sure, those of others—does not contain another heartbreaking case that exposes how utterly broken our care services are.
Today, a third of beds in Dumfries and Galloway royal infirmary are occupied by patients whose discharge is delayed by a lack of carers. More than 3,000 hours of assessed care is not being covered because there are no carers to cover it. Everybody except the Government knows that we will not recruit carers with the derisory 3.8 per cent pay rise that the Government is giving social care workers. The SNP and the Greens should listen to the calls for a delay to their unpopular, unworkable and uncosted national care service plan and instead use the funding for that to give our carers a pay rise, which would save money in the long term by reducing the bill for delayed discharge.
We need to better focus how we spend our budget not just in social care but in how we support people during the cost of living crisis, as their energy bills rise. It was shameful that the Deputy First Minister, with the Greens’ support, cut this year’s energy efficiency budget by £133 million, given the shameful level of fuel poverty in Scotland and given that properly insulating our homes cuts not only fuel bills but fuel use and therefore emissions. Last year, the Government’s warm homes funding helped fewer people than it did in the year in which the scheme was launched. Only around half the funding that was allocated for energy efficiency schemes, which were administered by councils, was ultimately spent. The Government should tackle low uptake not by cutting the budget but by dealing with the reasons why the current, poorly designed schemes are not being utilised.
We all know that, when one particular budget is underspent, that money does not disappear—it goes back into other public services. However, does Colin Smyth acknowledge that, as a result of changes that we have made recently, Scotland now has, by far and away, the most generous and flexible package of grants and loans—not only better than any other part of the UK, but much better than Scotland has ever had—and that the industry is stepping up and making sure that the capacity is there so that people can use those grants and loans?
There is no point in having schemes and grants if they are not actually being spent.
They are not being spent. The Government has just returned £133 million to the budget because those schemes were not actually allocating funding.
I know that, for this financial year, the minister has made some changes, which I welcome, but he knows perfectly well that organisations such as the Existing Homes Alliance want him to go a lot further. They want him to ease the restrictions that are still imposed on councils and other bodies for currently unworkable schemes. There needs to be more flexibility and owner contribution levels to make those schemes affordable. We need to tackle the utter failure in Government workforce planning, to make sure that we have the trained workers to deliver the schemes under the new regimes that the Government has set. That also means providing more certainty on future funding, such as by writing to councils and setting out the minimum funding levels for future years. That will allow councils to plan longer-term projects and give supply chains a proper pipeline of work, which enables them to plan and invest. We cannot find ourselves in the same position next year, in which households are crying out for investment to keep their families warm but the Government is not able to spend funds that should be invested in rapidly insulating people’s homes.
Scotland is facing dual crises, as the cost of living soars and as social care and the NHS face the greatest crisis in living memory.
This budget debate already feels like groundhog day. Unless Scotland gets many more meaningful economic powers and—ideally, from my perspective—independence, I confidently, albeit sadly, predict that my speech will be replicated in the coming years.
There is no prospect of the UK doing anything other than continuing to fall behind the economic performance of comparable states. We talked earlier about the IMF’s damning verdict that the UK is predicted to be the only country facing a shrinking economy in the coming year. It is expected to be the worst-performing state economically among the G7 and G20, and it is predicted to perform worse than sanctions-hit Russia. I concede that those are uncertain predictions for the future, so let us look to the certainty of the past.
Over the past four decades, and particularly since the financial crash of 2008, data shows that UK economic growth has lagged behind the average for large and small advanced economies—especially over the past two decades, when the economic growth gap has widened. However, small, advanced economies of a similar size to Scotland experienced cumulative economic growth that was double that of the UK between 1999 and 2019. To put it another way, by 2019, the gap between the small economies’ average output and the UK’s output had grown to more than £12,700 per person.
That has real-world, practical consequences. For example, in the past few days, data from the UK Insolvency Service reveals that the annual number of company insolvencies in the UK shot up in 2022 to more than 22,000, which was a rise of no less than 57 per cent and means that jobs, self-respect, livelihoods and ambitions have been destroyed. As Faisal Islam reported, that is exactly the sort of pattern that was predicted by those who opposed Brexit. However, Labour and the Tories are as one in accepting the Brexit debacle. They have become the handmaidens of Brexit and are intent on forcing the Scottish people to accept it regardless of the cost in jobs and services.
I traipsed round the streets to campaign against Brexit. Can Michelle Thomson explain why the SNP spent more on the Orkney by-election than it did on opposing Brexit in Scotland?
I am sure that Jackie Baillie does not think that that is an excuse for standing idly by while exactly my point is made about the loss of jobs and services. [
In this context, the efforts of the Deputy First Minister, acting as finance minister, in particular, should be applauded. As if being faced by the UK failures that I have just described is not enough, the devolution settlement ties his hands behind his back in multiple ways. I will outline two examples of that. I have spoken before about the severe restrictions placed on borrowing powers. First, if the Opposition parties were sincere in their concern about productivity, they would be actively supporting calls to give the Scottish Government the same freedom to borrow, particularly for capital projects, as that enjoyed by the Westminster Government. Secondly, if they were sincere in their concerns about the Scottish economy, they would be insisting on the transfer of all fiscal powers to Scotland.
The Scottish Government’s budget documents price inflation for the building sector at 17 per cent, which I know the member is aware of. Why, therefore, is the capital investment budget being cut at a time when investments are most desperately needed?
Mr Briggs needs to look at the wider context of the budget. My point is that, if we had greater powers—over cap ex, in particular—we could do a great deal more. Until Mr Briggs starts joining me in those calls, although he claims to be looking for more housing, his words are shallow—that is a fact.
We know that the unionist brigade will do nothing but deny Scotland the necessary powers to tackle the key challenges that we face.
As I have said before in the chamber, and as recent reports from Transparency International, Open Democracy and authors such as Oliver Bullough have evidenced, there is corruption at the heart of the UK Government and key institutions, leaving aside the individual records of recent Prime Ministers, chancellors, baronesses and goodness knows who else. Corruption destroys the potential effectiveness of markets and puts obstacles in the path of the many decent businesses that are seeking to survive, compete and progress.
The historic legacy of Labour and Tory actions of years past continues to haunt government, including local government in Scotland. In my patch, Falkirk Council has a £13 million obligation legacy from private finance initiatives, and that is not the only legacy that it faces. Commenting in 2016, Audit Scotland’s best value audit report criticised previous Labour and Tory administrations for failing to grasp the nettle of major challenges and instead squandering money, which led directly to a deficit of £67 million.
In such circumstances, the Scottish Government—and the acting finance secretary, in particular—have faced huge challenges with imagination and with a clear commitment to the interests of the Scottish people.
I will conclude with an appeal to the finance secretary. In the midst of all the challenges, let us work to unleash the contribution of female entrepreneurs, who have faced historical disadvantages, including cultural ones. It is never enough to look only to Government when facing challenging times or new opportunities. We need to mobilise all our talents regardless of sex, race, age or other characteristics.
We, on these benches—
We want to look forward and outwards. We have global ambitions. We are European.
As ever, the SNP presents a sleight-of-hand budget, in which its cuts are magically spun as generous settlements, particularly for those who are in local government, but, otherwise, it is always somebody else’s fault.
Welcome to the SNP’s Alice in Wonderland approach to budget setting.
SNP members are keen to tell us that there is a fixed budget, but there are fiscal levers that the Government can pull, including on income tax and land and buildings transaction tax. Goodness, it could even reform council tax, which was promised in 2007 but never delivered.
What people are seeing is their taxes going up but services being cut at the same time. The budget is about setting out priorities. Where are the measures for growing the economy, on which our future tax take will rely? Where are the measures to tackle to cost of living crisis and for investing in our public services?
The national performance framework sets out what the Government believes are the priorities, but it is interesting that there is no link with the budget. Spending more than £45 billion in revenue but not linking it to the delivery of its priorities is, frankly, absurd and out of step with almost every other country in the Organisation for Economic Co-operation and Development.
Let me start with local government. COSLA said that it needed £1 billion to cope with the cost pressures for the year ahead. Instead, the non-ring-fenced money that it got amounted to around £32 million. Mark Griffin was absolutely right to point out that funding for new commitments does not help with core budgets. The consequence of this is libraries closing, teacher numbers being reduced, funding to repair our roads being slashed, and deep cuts across every local service. According to a leaked report from COSLA, almost 7,000 staff could lose their jobs. This is a centralising Government that has decided to sacrifice local democracy and services. It is criticised by its own SNP councillors but is deaf to their concerns.
Let me move on to health and social care, which are inextricably linked and must be equally valued. The Royal College of Nursing tells us that it wants to see in the budget fair pay for nursing staff and a focus on retention and reversing the growing number of vacancies, which is having an impact on patient safety. We agree. However, the words “social care worker” could be substituted for “nurses” and the same would apply. Poor pay leads to many social care workers leaving their jobs and taking ones in retail and hospitality, because there they get more money and less responsibility, and because the increasing number of vacancies makes it a challenge to ensure the safety of those cared for.
The crisis in health and social care cannot be resolved without addressing the scandal of low pay in social care, yet this budget offers little. The 40p pay uplift is an insult to staff. A social care worker is comparable to a band 3 nurse. Social care workers got 3.8 per cent; nurses got double that. The Scottish Women’s Budget Group was also very clear that care workers’ wages should be set at £12.50 in the short term, rising to £15 per hour—a move that Scottish Labour has repeatedly called for over three successive budgets.
The Coalition of Care and Support Providers in Scotland also makes the point that more money for social care workers, who are a predominantly low-paid female workforce, means more spend in the local economy, but of course the Deputy First Minister stripped £50 million away from the fair work budget in his emergency budget, so he has shown where the SNP’s priorities lie.
The cost of increasing pay for adult social care is £150 million—that has been verified by SPICe. Daniel Johnson set out several budget lines from which that money could be drawn, resulting in more than would be required to meet the policy. The Government should take it from the national care service and take it from delayed discharge.
I have to say that it is a bit rich for Ross Greer to falsely claim that we were moving money out of the health and social care budget. I remind him that it was, after all, the Greens who promised £15 an hour to social care workers in their manifesto before the election but then sold out for the ministerial Mondeos instead.
The Deputy First Minister knows my view of the current framework bill for the national care service. Instead of a vision and an approach that delivers cultural change, we have expensive structural change that does not invest one single penny extra in a care package. It is nothing more than a national commissioning service, with no answers about what happens to the pensions of the 70,000 public sector workers who will be transferred in, or indeed the potential for an additional 20 per cent VAT cost to be imposed on the centralised service. COSLA is unhappy. Trade unions are unhappy. The voluntary sector is unhappy. People with lived experience are beginning to understand that this is the emperor’s new clothes.
The Government should pause the bill and listen to what the sector is telling it. It should use the money that that would release to fund social care. We all acknowledge that we are living through one of the worst cost of living crises in a generation. At a stroke, the SNP could end non-residential care charges. At a cost of £68 million, that would help the same older people and vulnerable people, including those with disabilities, in their local communities. It is in the SNP’s manifesto, and the Government can do it now and help some of the most vulnerable people in Scotland.
After 15 years of the SNP, its cuts to training places for nurses, its cuts to primary care, its reduction in the number of full-time equivalent general practitioners, and the cut of £1 billion by Nicola Sturgeon when she was health minister have all contributed to the crisis in health and social care. Scotland cannot afford to pay the price of SNP mistakes any longer. Vote against the budget.
Early in the debate, we had a bizarre contribution from Kenneth Gibson, the convener of the Finance and Public Administration Committee. I have been the convener of three committees in my time in this Parliament and I had always understood that the role of committee convener in a stage 1 debate was to speak on behalf of the committee and express the views in the committee report. It is not to be a partisan lapdog for the Scottish Government, which is what we heard from Mr Gibson during his speech. I hope, Presiding Officer, that if committee conveners being partisan is going to be the trend in future debates, you and the Parliamentary Bureau will reflect on the time that is available to committee conveners to speak in stage 1 debates.
Is the reason why the member and his colleague Mr Kerr are so upset the fact that people were reminded of the rather ridiculous comments that he and Mr Kerr made post-budget last September? If they had not been named, they would not have intervened. Last year, I was more partisan than I have been this year. If Mr Fraser had listened to my speech, he would have found that most of the criticism levied was about issues such as the lack of reform. It was a very balanced speech, but the reality is that it was Mr Fraser’s ego and that of Mr Kerr that made them intervene.
That was a second speech by the convener of the
Finance and Public Administration Committee
. Let me come to some of the points of substance that he raised. There was a theme on the SNP benches, and he seemed to suggest, that the economic challenges that are being faced in the United Kingdom are somehow unique to the United Kingdom. However, that is not the case. It is true that inflation is high, but inflation is coming down. Inflation is also high in Europe and is coming down. In fact, in November, UK inflation was lower than the EU average. In December, UK inflation was lower than in many other European countries.
No. I need to make this point.
It is true that, this morning, the Bank of England increased interest rates in the United Kingdom by 50 basis points. It is also true that, today, the European Central Bank increased interest rates by exactly the same level—50 basis points. It is also true that, yesterday, the Federal Reserve in the USA increased interest rates there. It is also true that, today, interest rates in the United Kingdom are lower than they are in the USA and Canada. Maybe it is the case that Liz Truss is to blame for what is happening in the USA, Canada, Germany, Italy, France and the rest of Europe, but I think that that is somewhat unlikely.
I am wondering how many of those countries withdrew hundreds of mortgage products in September, as happened after the mini-budget and Liz Truss’s intervention.
There are plenty of mortgage products available today. Mr Johnson needs to keep up with the news and see what is happening.
I turn to the overall size of the budget. I think that it is widely accepted that there was, in the current financial year, a record high block grant from the UK Government to the Scottish Government. For the year that is coming—the year that we are talking about—the Fraser of Allander Institute says that the block grant “more or less” protects the money going to the Scottish Government against inflation.
In historical terms, if we look back over the period of devolution, we see that the Scottish Government has more money to spend than in virtually every year previously and yet, at the same time, taxes are going up and services are being cut, thanks to the choices that the Scottish Government is making. We should never forget in all this that, in Scotland, we have more than £2,000 more than the UK average to spend for every man, woman and child in the country, thanks to the Barnett formula—the Barnett formula that the Scottish Government wants to get rid of. That is the union dividend that John Mason was looking for.
This is about choices. Liz Smith set out the approach that we would take that would be different. Starting with the national care service, we see that at least £1.3 billion is to be spent on that over the next five years. That is money that could be reallocated elsewhere. We could look at the constitution budget and the money that is being spent on civil servants preparing for another independence referendum that will not now take place. We could look at the money wasted on projects such as BiFab, Prestwick airport and the ferries.
However, there is a more fundamental point here. We know that, since 2014, the Scottish economy has grown at precisely half the UK average rate. If we could just match the rate of growth of the UK economy, we would have hundreds of millions of pounds extra in tax revenue to spend. That is a matter that the Scottish Government needs to pay attention to. That is not just a historical issue but one for the future, as both Willie Rennie and Liz Smith have pointed out.
We set out our ask for this budget. We believe that the support for business that is available elsewhere in the UK—the 75 per cent rates relief for businesses in the retail, hospitality and leisure sector—should be available in Scotland.
We believe, as Douglas Lumsden has pointed out, that the settlement that is being proposed for local government is unfair. Mr Swinney set out how he is giving councils more money, yet all that we hear from them is that they are having to cut services. Yesterday, I got a letter from the leader of Fife Council, Councillor David Ross, who expressed deep concern at the cuts in Fife Council, saying that
“despite identifying £22 million of savings for the coming year”,
the council is
“still facing another £11.5 million rising to £33 million next year and £54 million the year after.”
That situation is reflected across the country. Perth and Kinross Council, with which Mr Swinney is familiar, is looking at a funding gap of £26 million in the coming year. It is not just Labour or Conservative-led councils that have those concerns—SNP council leaders have exactly the same ones.
The local government settlement will lead to cuts in services and hikes in council tax. We will see school crossing patrollers go; we will see the scrapping of breakfast clubs and educational psychologists, the closing of libraries and the cutting back of the cultural offer. We do not know yet what will happen to teachers, because we are waiting to hear whether teacher numbers will be protected. Mark Griffin made the really good point that, even if teachers are protected, that will come at the expense of classroom assistants, janitors, catering staff and all the other people who work in education, which will be to the net detriment of our young people.
At the outset, John Swinney said that he was going to take “a progressive path”. We now know what that progressive path looks like: despite having more money to spend than ever before, John Swinney is hiking taxes, including income tax and council tax, and at the same time cutting vital services for people across Scotland. That is what this budget delivers and that is why we need to vote against it.
In his speech to Parliament this afternoon, the convener of the Finance and Public Administration Committee asked me to provide an update on the current financial year and the degree to which I am wrestling with securing a path to balance. For completeness, I say to the convener that, at this stage—a very advanced stage—of the financial year, I am still wrestling with an estimated overspend of approximately £100 million. We are still working to secure balance despite the steps that we have taken in the course of the year to reallocate public expenditure, which will be reflected in the spring budget revisions that I put to Parliament and to the committee for scrutiny.
I thank Willie Rennie for his constructive contribution to the debate and assure him that I will follow up the points of dialogue that he raised in today’s discussions. He raised serious issues about the mental health budget and long Covid, and I agree with his reflections on the energy market and the significant opportunity for windfall taxation that has arisen out of the ludicrous profits that energy companies are making at a time when our constituents are facing such hardship. I very much welcome Willie Rennie’s constructive contribution, and we will try to build on that.
I obviously value the support that our partners in the Green Party are giving to the budget—Ross Greer referred to this budget as “progressive”—and I welcome the party’s contribution to ensuring that the issues of taxation are properly considered in the budget process and result in our being able to afford our priorities. That would not have been the case had we not taken those decisions, so the Green Party’s input into the discussions has been welcome.
It is not the first time in life that Kenneth Gibson has found himself in some controversy, but let me try, as always, to be the peacemaker in Parliament. [
.] Murdo Fraser took great exception to the contribution of my colleague and friend Kenneth Gibson and asked whether members of the committee supported the reflections that Mr Gibson was putting on the record. I want to put on the record the words that I was met with when I went to the Finance and Public Administration Committee on 4 October 2022, in the aftermath of the disastrous and catastrophic Kwarteng budget. I was met with:
“Good morning, Deputy First Minister”,
which is always a nice warm welcome, from my friend Liz Smith. She then said:
“I put it on record that I understand and accept that your job is much more difficult because of the difficulties that have been introduced by the Westminster Government, particularly with regard to the forecast.”—[
Finance and Public Administration Committee
, 4 October 2022; c 8.]
It is important that Murdo Fraser’s bravado is disarmed by the calm and realistic contribution of Liz Smith to the Finance and Public Administration Committee debate, which I appreciated, because she was right: at that moment, I was wrestling with significant difficulties, and I continue to do so. I am, of course, delighted to hear more from Liz Smith.
That is very kind, Mr Swinney. In my calm demeanour, I ask the cabinet secretary whether he agrees with the political aspects of the speech of the convener of the Finance and Public Administration Committee and considers that they were appropriate in a convener’s speech.
It is really important that Government ministers do not interfere in the business of committees, so I shall resist the temptation to get myself into trouble, which I constantly try to avoid. [
On that subject, I want to explain to members how the budget operates, because I think that a few members, including Stephen Kerr, have struggled with the concept today. I think that Mark Griffin struggled a little bit, too; I am normally very appreciative of his contributions, but perhaps his cold put him under the weather today and derailed his speech.
When we get Barnett consequentials, they flow into the total funding envelope that is available, and then the total funding envelope gets allocated. What is in the budget document is the sum total of all the resources that are at my disposal. Therefore, when Stephen Kerr asks me where the £100 million of education consequentials from the UK Government are, the answer is that they are fully allocated in the budget. I will give two examples of where they have ended up.
Oh, no. Let me finish the explanation, because Stephen Kerr needs to hear it—he is desperately in need of hearing this explanation. The £100 million of education consequentials are allocated to support the expenditure in the budget that will result in an increase for universities and colleges of £46 million and an increase in the local government budget of £550 million. Local government are the people who deliver education services in our country. I hope that that helps Stephen Kerr to understand the situation.
I thank the Deputy First Minister for his explanation. That is exactly what I was asking when I intervened: where is the additional £100 million? He has now explained that it is in the local government budget, yet that is the same local government—through COSLA—that is complaining about the fact that it has to make cuts. I am asking whether the Barnett education consequentials will be added to the education spend, and the answer to that is clearly no.
I think that Stephen Kerr has demonstrated that he does not have a single clue about how the public finances of Scotland work. I am not going to explain it again; he will have to go and read the
, because I have just given the explanation. He has demonstrated that he is singularly unfit to contribute to today’s debate. It is absolutely appalling. The same explanation applies to Mark Griffin’s point about the £550 million for local government.
In the course of the debate, Kenneth Gibson made the fair point that, where alternative choices are suggested, there must be a funding source for them.
I will marshal what the Conservatives have said. They have said that they want more money for housing—Miles Briggs said that. They want more money for city deals—Douglas Lumsden said that. They want more money for local government—Miles Briggs and Douglas Lumsden said that. They want more money for business rates—Douglas Lumsden and Liz Smith said that. They oppose the tax increases. I point out, for the sake of completeness, that if we did not make the tax increases, we would have less money available to us. Stephen Kerr wants education to get more money and Miles Briggs wants health to get more money.
I simply say to Parliament that that is economic illiteracy of the highest order, because no source has been identified for those funding resources. [
.] I would give way, but the Presiding Officer wishes me to close my remarks.
I will happily engage with Mr Rennie and anyone else who wants to talk about which area of the budget we can take money from to allocate to another to support priorities, but it is not helpful to the dialogue and the discourse in Parliament to put forward proposals that play to a gallery or a lobby, but which do not have a hope of ever being delivered, because the money does not exist—
—because of the failure of the economic management of the United Kingdom Government, which is the problem that I am wrestling with today.