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Budget (Scotland) (No.2) Bill [Session 5]

Overview

The Budget Bill is the final stage in the annual budget process. The Bill allows parliament to set public spending in Scotland for the financial year 2018-19.

The overall figure budgeted for is £36 billion. 

This figure includes spending on: 

  • Health and Sport – £13.8 billion
  • Communities and Local Government – £11.2 billion
  • Public Pensions – £4.4 billion
  • Education and Skills – £3.7 billion
  • Finance and Sustainable Growth – £3.4 billion
  • Justice – £2.5 billion

This is the second Budget Bill for Session 5 of the Scottish Parliament. 

You can find out more in the Scottish Government's Budget 2018-19 document that explains the Bill.

Why the Bill was created

The Scottish Parliament has a statutory duty to produce a Budget each year.

Statutory duty is the law that a company, a government organisation, or the members of a particular profession must obey.

 

You can find out more in the Scottish Government's Budget 2018-19 document that explains the Bill.

Where do laws come from?

The Scottish Parliament can make decisions about many things like:

  • agriculture and fisheries
  • education and training
  • environment
  • health and social services
  • housing
  • justice and policing
  • local government
  • some aspects of tax and social security

These are 'devolved matters'.

Laws that are decided by the Scottish Parliament come from:

Becomes an Act

The Budget (Scotland) (No.2) Bill passed by a vote of 70 for, 56 against and 0 abstentions. The Bill became an Act on 28 March 2018.

Introduced

The Scottish Government sends the Bill and related documents to the Parliament.

Budget (Scotland) (No.2) Bill as introduced

Related information from the Scottish Government on the Bill

Opinions on whether the Parliament has the power to make the law (Statements on Legislative Competence)

Information on the powers the Bill gives the Scottish Government and others (Delegated Powers Memorandum)

Scottish Parliament research on the Bill 

Stage 1 - General principles

Committees examine the Bill. Then MSPs vote on whether it should continue to Stage 2.

Committees involved in this Bill

Who examined the Bill

Each Bill is examined by a 'lead committee'. This is the committee that has the subject of the Bill in its remit.

It looks at everything to do with the Bill.

Other committees may look at certain parts of the Bill if it covers subjects they deal with.

What is secondary legislation?

Secondary legislation is sometimes called 'subordinate' or 'delegated' legislation. It can be used to:

  • bring a section or sections of a law that’s already been passed, into force
  • give details of how a law will be applied
  • make changes to the law without a new Act having to be passed

An Act is a Bill that’s been approved by Parliament and given Royal Assent (formally approved).

Delegated Powers and Law Reform committee

This committee looks at the powers of this Bill to allow the Scottish Government or others to create 'secondary legislation' or regulations.

It met to discuss the Bill in public on:

6 February 2018:

Read the Stage 1 report by the Delegated Powers and Law Reform committee published on 6 February 2018.

Finance and Constitution Committee

The committee may consider:

  • the costs of the Bill
  • whether there has been enough information provided about the costs

The committee questioned the Scottish Government team that looks at the costs of the Bill on 7 February 2018:

Debate on the Bill

A debate for MSPs to discuss what the Bill aims to do and how it'll do it.

Video Thumbnail Preview PNG

Stage 1 debate on the Bill transcript

The Presiding Officer (Ken Macintosh)

We move to the debate on motion S5M-10183, in the name of Derek Mackay, on stage 1 of the Budget (Scotland) (No 2) Bill.

14:52  



The Cabinet Secretary for Finance and the Constitution (Derek Mackay)

I am delighted to lead this debate on the principles of the Budget (Scotland) (No 2) Bill. I welcome the Finance and Constitution Committee’s report on the draft budget, and I will respond fully to the report before stage 3, as agreed.

We all know that the bill is of huge importance to Scotland, which represents the maturity of our Parliament. We are a Parliament of minorities and must work across the chamber to find compromise and consensus so that we can give support, sustainability and stimulus to our economy and our public services. Reaching consensus is a task for us all, and I thank those members who have engaged properly and constructively.

The bill seeks approval for spending plans that will use the powers of this Parliament to build a fairer, more prosperous country and put the progressive values of this Government into action. The budget will invest in our public services, in our people and in our businesses to enable them to develop and thrive. We set out a bold and ambitious agenda in the programme for government, and the budget provides the resources that are necessary to deliver that vision.

Our public services require a strong economy. Equally, the most successful economies in Europe are built on the firm foundation of strong public services and inclusive societies. We must support our economy to keep pace with changing technology and access new markets in the most challenging economic and fiscal environment of any budget of the devolution era. That is why we have prioritised measures that will bring stability and stimulate growth.

The budget invests almost £2.4 billion in enterprise and skills, through our enterprise agencies and further and higher education bodies. That includes a 64 per cent increase in the economy, jobs and fair work portfolio, an initial £10 million to support the new south of Scotland enterprise agency and £18 million for the new national manufacturing institute. It also doubles, to £122 million, the funding that is allocated to city region deals.

In total, we are investing £4 billion in infrastructure, with £1.2 billion for our transport system, which will include turning the A9 into an electric highway and delivering new railway investments such as the electric trains between Edinburgh and Glasgow.

Knowing the views of the Parliament, I am sure that all members will welcome the news that I have reached a deal with the leaders of the northern isles councils on the support for internal ferries for the northern isles. In the light of that agreement, and as part of a wider agreement with the Scottish Green Party on the budget, I will allocate an additional £10.5 million to the Shetland Islands and Orkney Islands councils in 2018-19 while we continue to explore a long-term model of fair funding.

Scotland has a world-leading reputation for our efforts to tackle climate change. To support our transition to a low-carbon economy, the budget delivers £137 million for energy efficiency and heat decarbonisation, and it confirms £600 million of investment in our reaching 100 per cent programme to make superfast broadband available to every home and business premises in Scotland. The budget allocates £60 million for a low-carbon innovation fund and £20 million to support the transition to electric vehicles and more green buses, and it doubles investment in active and sustainable travel.

The proportion of the Scottish Government capital budget that is spent on low carbon is increasing from 21 per cent to 29 per cent. As part of my agreement with the Scottish Green Party, we will continue to increase, year on year, the proportion of our capital budget that is spent on low-carbon projects beyond this year’s budget. I also intend to provide an additional £2 million of capital to the home energy efficiency programme and a further £2 million to explore a proposal for a pipeline fund for local rail projects, and I intend to provide the funding necessary to accelerate the delivery of the four marine protected areas.

If we are to achieve our full potential, we must do more to address the inequalities that exist in our society. Regrettably, we do not have many of the levers that are necessary to do that, but we will do all that we can to mitigate the worst impacts of the United Kingdom Government’s welfare reform, with £100 million of support. The attainment Scotland fund will increase to £179 million, including £10 million to provide support to children and young people with complex additional support needs, and a total investment of £243 million will support the expansion of publicly funded early learning and childcare entitlement. In 2018-19, we will invest £10 million in an ending homelessness together fund and the first investment in a new £50 million tackling child poverty fund, which will address the underlying social and economic causes of poverty.

Alongside the draft budget, we have published a fair and progressive public sector pay policy. We were already the only Government in the UK to lift the pay cap and offer a real pay rise to our public sector staff. Today, I can confirm that we will go further. I will increase the threshold for the 3 per cent uplift to £36,500, which will increase the proportion of staff groups that receive the inflationary pay increase from 51 per cent to 75 per cent. That will include nearly 80 per cent of national health service staff and the vast majority of our teachers. The policy also provides for an increase of up to 2 per cent on the pay bill for people who earn between £36,500 and £80,000. I again urge the UK Government and the Welsh Assembly to follow our lead and recognise public sector staff.

In our draft budget, I set out proposals for progressive taxation that offers significant protection to the lower paid. Under my proposal to introduce new starter and intermediate rates and to increase the personal allowance, no one who earns less than £33,000 will pay more than they did last year. More than half of taxpayers will pay less than if they lived in the rest of the UK. Those changes, combined with an increase in the higher rate threshold and changes to the personal allowance, created an anomaly by which a small number of higher rate taxpayers would have seen their bills reduce. I can confirm today that I will act to remove that anomaly. Rather than pursue my initial proposal, I will instead increase the higher rate threshold by 1 per cent to £43,430. That will raise around £55 million over and above the draft budget proposal, with final costings to be determined by the Scottish Fiscal Commission.

Overall, our tax decisions will deliver an additional £420 million to protect the NHS, to invest in Scotland’s public services and to support our economy.

Murdo Fraser (Mid Scotland and Fife) (Con)

Will the cabinet secretary give way?

Derek Mackay

Not at the moment.

I have previously set out in detail why the local government settlement that we proposed was a fair one. However, I have also consistently said that I am willing to compromise and find common ground. Through constructive discussions, I have been able to do so. I intend to use the additional £55 million of tax revenues to underpin the delivery of local services. I also plan to utilise an element of the funding that is available in the Scotland reserve and a level of additional underspend from 2017-18 to further support local government.

Those decisions have enabled me to identify an additional £159.5 million of funding to add to the local government settlement to ensure that the revenue settlement, along with the capital settlement, receives real-terms growth. Of course, local authorities can also raise an additional £77 million from council tax. Of the additional money, £34.5 million will be allocated to local authorities in 2017-18, and the balance of £125 million will be allocated as an amendment to the Budget (Scotland) (No 2) Bill at stage 2.

In three weeks’ time, we will return to debate the Scottish rate resolution that underpins those spending plans. Our tax proposals will safeguard the lowest-earning taxpayers and, coupled with our spending decisions, they will protect and grow the economy.

Murdo Fraser

In the light of the changes that the cabinet secretary proposes to make to income tax, what is the additional income tax liability of people in Scotland as a result of all his plans compared with the liability elsewhere in the UK?

Derek Mackay

As I have said repeatedly, a majority of people in Scotland—55 per cent of them—will pay less tax than they would if they lived elsewhere in the UK, and 70 per of taxpayers will pay less than they do at the moment. As a consequence of our tax decisions, we will turn a real-terms cut in Scotland’s resource budget into growth for our public services. We will protect our public services by investing more in them.

In addition, our business rates package, which will provide a boost of £100 million, is the most generous anywhere in the UK. We still have lower average council tax bills, and no one in Scotland pays a tax on ill health through prescription charges or on their ability to learn through tuition fees.

The decisions on tax that I have taken have enabled me to reverse the real-terms cut that the Tories at Westminster have imposed on our resource budget.

James Kelly (Glasgow) (Lab)

What measures will the cabinet secretary announce to tackle the scandalous situation whereby 260,000 children are living in poverty?

Derek Mackay

The first thing that I will do is present to the Scottish Parliament a coherent and competent budget that will invest more in housing and support, do more to protect people from the welfare reductions that the UK Tory Government intends to impose and provide more to invest in the health service and to tackle inequality. Through progressive taxation and the right decisions, we will avoid the chaos of what has been put forward by the Labour Party and James Kelly.

On tax, there is divergence from the UK. Our progressive system of taxation will protect our public services that are free at the point of use, including free prescriptions. It will also protect free personal care and free higher education. No business rates will be payable on 100,000 properties. We are reducing the attainment gap, doubling free childcare and delivering 50,000 affordable new homes. We are providing above-inflation investment in the police, in our universities and colleges and in local government services the length and breadth of Scotland. Perhaps most important of all, as a result of our actions, we will be able to deliver on all our commitments and invest an additional £400 million in Scotland’s national health service.

Through all of that investment, this Government is delivering the best deal for taxpayers in the whole of the UK. For our economy and our communities, and for the wellbeing of our nation, I commend the principles of the Budget (Scotland) (No 2) Bill to Parliament.

I move,

That the Parliament agrees to the general principles of the Budget (Scotland) (No.2) Bill.

15:05  



Murdo Fraser (Mid Scotland and Fife) (Con)

You could have knocked me over with a feather when I heard the news a couple of hours ago. The ever-faithful Patrick Harvie has once again saved the Scottish National Party’s bacon; the always-willing Scottish Greens are there to do their masters’ bidding; the wholly owned subsidiary has had its orders from head office and, after the usual pretence of playing hardball, with choreography that the greatest showman would be proud of, it fell sweetly into line exactly as was planned all along.

The price for that, of course, will be paid by hard-working Scottish taxpayers—not the high earners, but families that are struggling to get by, with Mr Mackay’s hand in one pocket and Patrick Harvie’s in the other.

“The perception, if you are a talented person sitting in London, Manchester or Birmingham and Scotland wants to attract you, is that you may think Scotland is a high tax economy.”

Those are not my words, but the words of Sir Tom Hunter, one of Scotland’s leading business figures. Liz Cameron of the Scottish Chambers of Commerce put it this way:

“If Scottish businesses are taxed more and Scottish-based staff are taxed more, then that would not seem to be a situation designed to attract investment and grow Scotland’s economy.”

The SNP should listen to what Scottish business is telling it.

This budget can be summed up in four words: pay more, get less. It is a budget in which the SNP has broken its promise to the taxpayers of Scotland not to increase income tax for those paying the basic rate, and one that will nevertheless deliver cuts to services across Scotland. I need hardly remind members that the promise on income tax was made in the SNP manifesto in 2016, and has been repeated since then some 53 times over the past two years. Nicola Sturgeon said it 10 times, Derek Mackay said it at least 10 times, John Swinney said it at least five times—

Derek Mackay

Will the member take an intervention?

Murdo Fraser

Let me complete the list and then I will give way to Mr Mackay.

It was repeated by Keith Brown, Humza Yousaf, Maree Todd, James Dornan, Ivan McKee, Gillian Martin, Joan McAlpine, Paul Wheelhouse and Angus Robertson. Mr Mackay can be their spokesman and apologise for breaking his manifesto pledge.

Derek Mackay

Where do the Tories propose to cut £556 million, which would be the consequence of following their tax proposals?

Murdo Fraser

It is dead simple. We would cut out the waste and the vanity projects and we would grow the Scottish economy. That is what the SNP should be doing.

At the same time as taxes are going up, people across Scotland are seeing their services cut. Notwithstanding what we heard today about the financial settlement for local government, councils across Scotland are still having to make service cuts: reducing classroom assistants, scrapping school-crossing patrollers, reducing services for children with disabilities, reducing services for older people, and reducing waste collections, all as a result of the choices that are being made by this SNP Government.

The budget cuts spending on motorways and trunk roads by £136 million. That might be good news to Patrick Harvie’s ears, but it is not what businesses and motorists across Scotland want to hear. The budget also cuts by more than half—a reduction of £76 million—the spend on digital connectivity, which is supposedly a key priority for this Government.

It did not need to be like this, because the Westminster block grant is up in real terms compared with the previous year’s, according to both the Scottish Parliament information centre and the Fraser of Allander institute. The SNP does not want to listen to the experts—to those who know. Indeed, at the Finance and Constitution Committee just two weeks ago, the finance secretary accepted that the block grant for discretionary spending is increasing over the next two years.

Derek Mackay rose—

Murdo Fraser

I have given way once already and I need to make progress. It is on the record and the finance secretary can read it for himself.

Any cuts that are being made and any tax increases are purely the result of SNP choices; they are no one else’s responsibility. When we hear SNP members talk about austerity, let us be clear of the fact, stated by the Fraser of Allander institute, that, in real terms, the discretionary spend of the Scottish Government today is equivalent to what it was in 2006-07—the year in which it took office. Over the 10 years of this SNP Government, there has been no real-terms cut in its discretionary spending. That is an undeniable fact, and it puts into context everything that we hear from the SNP about austerity and cuts.

In many ways, the real story of this budget came not in the statements from the finance secretary but in the publication last month by the Scottish Fiscal Commission of its forecasts for economic growth in Scotland. Those forecasts were deeply worrying, for they predicted that the SNP-run economy in Scotland will fail to match UK growth in each of the next five years. They said that, in 2018, the SNP-run economy in Scotland will grow at half the rate of the UK economy as a whole. Scotland is also projected to have the lowest growth of any major economy—in the European Union, in the G20 or in the Organisation for Economic Co-operation and Development—over the next three years. That failure to match even the average UK economic growth for the period from 2007 to 2022 will amount to a growth gap in Scotland that is worth a staggering £16.5 billion in cash terms.

We need to put growing the economy first: that is the way in which we generate the tax revenues that we need. That is why the message from every business organisation in advance of the budget was the same: do not increase the tax burden. The Federation of Small Businesses, the Scottish Chambers of Commerce, the Confederation of British Industry in Scotland, Scottish Engineering and the Scottish Retail Consortium all warned that taking money out of people’s pockets and reducing consumer spending at a time when we need to kick-start economic growth is not the way to go. Even Business for Scotland, the independence-supporting lobby group, backed that call not to increase income tax.

Now, the SNP used to agree with us. It used to say that it was possible to use tax as a lever to grow the economy and generate additional tax receipts. Alex Salmond and John Swinney used to argue for lower corporation tax. SNP members of Parliament for the north-east—back in the days when there were more than one of them—used to argue for tax cuts for the North Sea oil industry. In 2016, 44 SNP MPs—yes, there used to be 44 of them—called for a reduction in VAT in tourism, which was echoed by Richard Lochhead in February 2017. In 2012, Fiona Hyslop demanded a reduction in VAT on repair and maintenance costs, and was backed by Alex Neil. Nicola Sturgeon, John Swinney and Derek Mackay have all argued for a cut in air passenger duty to boost economic growth—a call that was backed by John Mason in a motion in this Parliament just two weeks ago. The SNP is happy to call for tax cuts when it suits it, but when it actually gets power over taxation it breaks its promises and puts up taxes.

This budget should have been a programme for growth. It should have concentrated on cutting out the waste in the Scottish Government. It spent £132 million on delayed discharges in the NHS, £170 million on agency staff due to poor workforce planning and £180 million on an information technology system for farm payments that does not work. It should have cut out the vanity projects and concentrated on growing the economy. Two weeks ago, in the SNP’s now-notorious party-political broadcast, we were asked, “What has the SNP ever done for us?” It has broken its promise on tax, cut services and ignored the interests of the business community and the Scottish economy.

This is not a budget that is fit for purpose. It is bad for business, bad for the economy, bad for taxpayers, bad for families and bad for services. That is why this Parliament should reject it.

I move amendment S5M-10183.1, to insert at end:

“, but, in so doing, regrets proposals to increase tax for 898,000 basic rate taxpayers, which breaks an SNP 2016 manifesto pledge.”

15:14  



James Kelly (Glasgow) (Lab)

Let me say at the outset that this budget falls well short of what is required. There is a lack of investment in public services. It does not properly fund fair pay for public sector workers, lacks ambition in tackling child poverty and does not alleviate the growing crisis in the NHS.

The grubby deal between the SNP and the Greens that Derek Mackay has announced today just does not cut it. The budget falls short and the deal will be condemned by local communities that are faced with cuts to lifeline services, criticised by workers who have endured years of below-inflation pay rises and rejected by families whose children are living in poverty and who do not have enough money to feed and clothe their kids properly. Scotland’s communities have been sold short by the SNP and the Greens today.

The basis of the reasoned amendment that Labour is asking Parliament to endorse is explicit support for Labour’s £1 billion plan, which would protect—

Derek Mackay

Will the member take an intervention?

James Kelly

No, thank you, not at this time.

Labour’s plan would protect lifeline services, invest £100 million in the NHS, increase child benefit by £5 for every child and introduce a properly funded public sector pay policy. Instead of the SNP tinkering round the edges, Labour would introduce a radical taxation system.

Derek Mackay

Those proposals are predicated largely on an income tax policy. To what extent was behavioural change taken into account in arriving at that income tax policy?

James Kelly

We worked on that policy with the experts in the Scottish Parliament information centre. The fundamental difference between our policy and Mr Mackay’s policy, which is supported today by the Greens, is that we will ask those earning over £100,000 to pay a 50p top rate of tax. That is not an unreasonable ask, when lifeline services are on their knees and the NHS is in crisis. I have to say that I am taken aback by the Greens, whose manifesto pledge is a top-rate tax of 60p but who have signed up today to a tax policy with a top rate of 46p. The Greens really have been sold short.

With regard to what the cabinet secretary has announced today, we should go back to before the draft budget was introduced, when the Convention of Scottish Local Authorities made it clear that to get to a standstill position on the cuts, local government needed £545 million. We should not forget that councils have been penalised to the tune of £1.5 billion since 2011. Because of that, we will continue to see job losses, which are forecast to be 28,000 for the coming period, and a reduction in the numbers of teachers and classroom assistants. How can we possibly grow the economy as Mr Mackay has suggested if we are draining resources out of the education system? Crucially, we will also see, as in my area, a reduction in library services, which will undermine the ability of young kids to improve their learning potential. Again, the SNP has failed to deliver for local communities and front-line services.

We have heard in recent weeks about the continued crisis in the NHS, particularly in relation to delayed discharge, with £132 million being spent on keeping patients in hospital who are fit enough to be released. That has resulted in 532,423 bed days lost across the year in the NHS. That equates to 1,400 beds, which is more than enough to fill—

Derek Mackay

Will the member take an intervention?

James Kelly

No, thank you.

It is more than enough to fill the Queen Elizabeth university hospital. That is a crisis for the NHS and that is why Labour has pledged specific spending to address it.

Despite my intervention, Mr Mackay did not mention the scandalous figure that 260,000 young people are living in child poverty. That is why Scottish Labour endorses the give me five campaign, which aims for a £5 increase in child benefit for every child. We have heard from the Poverty Alliance that some families in this country do not have enough to spend on fresh fruit and have to send their kids out to school in this appalling winter weather with leaking shoes. As a modern country in the 21st century, surely we can do better than that. Surely it is time that the SNP stepped up to the mark and used the powers of the Parliament.

Clare Adamson (Motherwell and Wishaw) (SNP)

Will the member take an intervention?

James Kelly

No, thank you.

Despite the announcements that have been made on public sector pay, there has been a lack of transparency on the issue. Mr Mackay has not been clear about how the measure will be funded.

Derek Mackay

Will the member give way?

James Kelly

No, thank you.

Councils have been left in a situation in which Mr Mackay has announced a policy but has not provided any money to fund it.

The approach of the SNP and the Greens has simply been to tinker round the edges with the budget. The Conservatives have almost a Trump-like approach. They would prefer to run taxation down to lower levels, and if that results in council workers losing their jobs, people living in homes that are not fit for purpose or local libraries being closed, so be it, as far as the Conservatives are concerned.

Christina McKelvie (Hamilton, Larkhall and Stonehouse) (SNP)

Will the member give way?

James Kelly

No, thank you.

Labour’s £960 million investment plan is a progressive plan that tackles the issues that are afoot in this country. It deals with the lack of funding for lifeline services, it will help to tackle child poverty, it will properly fund public sector pay and it will make a real difference in local communities. Labour will oppose the budget all the way to stage 3, because it tinkers and does not meet the challenges. I ask Parliament to support my reasoned amendment and Labour’s alternative budget.

I move amendment S5M-10183.2, to insert at end:

“, but, in so doing, believes that proposed Scottish income tax rates do not raise enough revenue or redistribute enough wealth to tackle poverty, ensure that local services are properly resourced, nor provide the funding for a public sector pay rise.”

The Deputy Presiding Officer

I call Bruce Crawford to speak on behalf of the Finance and Constitution Committee.

15:22  



Bruce Crawford (Stirling) (SNP)

There will be a bit of a change of tone during my speech on behalf of the Finance and Constitution Committee, but I am sure that normality will resume once I sit down.

One of the strengths of the Parliament’s committee system is that it allows us, when we work collegiately, to tackle some of the more complex challenges that we face as parliamentarians. I sincerely believe that the committee’s report on the draft budget is a good example of that approach. I am delighted that my colleagues on the committee have once again put our political differences to one side and produced a unanimous report, which is a bit of a contrast to today’s debate.

That approach is significant, because it allows us to work together in grappling with some of the challenging and complex issues that arise from the operation of the fiscal framework. As colleagues are aware, the operation of the fiscal framework is now an important element in determining how much money is available to the Scottish Government. Colleagues will be equally aware that the framework is a challenge to comprehend. In our report, we have therefore sought to provide some clarity and greater transparency on how the framework works. With some foreboding, I will try to do the same now, if colleagues will bear with me.

As a starting point, I point out that the budget is now subject to greater volatility and uncertainty as a result of the increased dependence on the performance of the Scottish economy. That is because of the obvious strong correlation between economic growth and growth in income tax revenues. Under the fiscal framework, the size of the Scottish budget will be dependent on the relative growth rate of tax revenues in Scotland compared to the growth rate in the rest of the United Kingdom. The block grant is now adjusted to reflect the annual growth in revenues per capita in the rest of the UK for the taxes that have been devolved to Scotland. If those tax revenues in the UK continue to grow, the reduction in our block grant will also grow. That means that we need at least a similar level of growth in revenues per capita from the Scottish taxes in order to protect the Scottish Government’s budget.

That is complex enough, but it is further complicated by the budget’s dependence on two sets of independent forecasts: first, the forecasts that are carried out by the Scottish Fiscal Commission for the devolved taxes; and, secondly, the forecasts carried out by the Office for Budget Responsibility for the equivalent taxes in the rest of the UK. The SFC forecasts determine how much tax revenues are available to the Scottish Government in deciding its spending proposals in its draft budget, and the OBR forecasts inform the size of the adjustments to the block grant.

Critically, as we highlight in our report, that means that the budget is subject to a degree of risk arising from forecast error. To some extent, the risk is lessened if there is a similar level of forecast error by both the SFC and the OBR, so if both forecasting bodies turn out to have been overly optimistic or unduly pessimistic, the net impact on the budget will be minimal. A bigger risk occurs if there is significant variation in any forecast error between the two bodies. For example, if the OBR turns out to be pessimistic about tax revenues in the UK while the SFC turns out to have been more optimistic about the Scottish taxes than reality, the risk to the public sector increases. Of course, if the opposite were to transpire, the public finances of Scotland could be boosted by an unexpected bonus. As you can see, Presiding Officer, it is all pretty simple.

It is important to recognise that that is not intended to be a criticism of either the Scottish Fiscal Commission or the Office for Budget Responsibility. Rather, I simply highlight the critical point that the budget is now significantly dependent on forecasts and that it is inevitable that, to some extent, those forecasts will be incorrect in the future, because forecasts often are. Recognising that, the fiscal framework therefore provides the Scottish Government with the power to borrow up to £300 million annually to address forecast error, within an overall statutory limit of £1.75 billion.

One key issue that the committee is keen to understand more clearly is the relationship between economic growth and tax revenue growth. Robert Chote, the chairman of the OBR, told us that weaker gross domestic product growth means weaker growth in all major tax bases. However, despite relatively pessimistic GDP growth forecasts, the SFC is forecasting that income tax revenues per capita will grow at the same rate in Scotland as in the rest of the United Kingdom. Some of that may be explained by higher employment and wage growth, but the committee has asked the SFC to explain in more detail how it arrived at its conclusion.

We are now entering a new period of devolution, in which our Parliament is responsible for raising much of the revenue that funds our public services. That requires us all to rise to the challenge of using the new powers wisely and of managing the inevitable risks with a pragmatic and reasonable approach. Our report on the draft budget is intended to support that process.

Moving forward, the helpful recommendations of the budget process review group, which we fully support, will further enhance effective budget scrutiny in future years. We welcome the commitment from the cabinet secretary to fully implement the recommendations. The changes to the draft budget that have been implemented to date have already improved the transparency of the process, but there is still much work to do in delivering a more effective budget process in response to the increased complexity of fiscal devolution. That will require the support of colleagues across the chamber, and that is why the committee has asked the Scottish Parliamentary Corporate Body to look at what additional support can be provided to members.

There is also clearly a need for the Parliament and the Government to take a longer-term view of the public finances, and the introduction of the Government’s medium-term financial strategy this spring should start to provide that. The Scottish Government will also set out its broad financial plans for the next five years following the UK Government’s spring financial settlement. That should assist the Parliament in adopting a longer-term outlook, including addressing fiscal constraints and the impact of increased demand. In due course, the committee will provide revised guidelines to subject committees on how the new budget process will work, prior to the publication of the medium-term financial strategy.

I appreciate that none of that is easy and that understanding the complexities will require a significant degree of effort from us all. As highlighted by the review group, cultural change will be required, as well as procedural change. It is a challenge, but I am confident that we can rise to it to ensure effective scrutiny of an increasingly complex budget process.

The Deputy Presiding Officer (Linda Fabiani)

We move to the open debate. There is a little leeway for interventions.

15:30  



Patrick Harvie (Glasgow) (Green)

Back in October, our party conference gave us a clear task for the budget process: we could not vote for a budget that contained unjustified and unsustainable cuts to aviation tax. That absurd policy has been shelved for the coming year and we will continue to press the Government to scrap it altogether.

We also could not vote for a budget that continued to throw money at high-carbon capital projects. We know that we are supposed to be aiming at 70 per cent low-carbon capital spend. That cannot be achieved overnight but, as a result of our work, the budget makes a change for the better, with low-carbon project spend rising from 21 per cent to 29 per cent as a share of the budget. More than that, we have secured a commitment for that increase to continue, year on year, throughout the current parliamentary session, alongside commitments to additional progress on rail, fuel poverty and protecting the marine environment.

Further, we could not vote for a budget that continued the 1 per cent pay cap for public sector workers. We made it clear that an inflation-based increase was necessary and that an above-inflation increase was justified, and we continue to take that view. The progress that has been made in negotiations to increase the threshold for an inflation-based offer to £36,500, which covers 75 per cent of the people affected, is a significant and welcome step. The result is still not ideal and we continue to believe that a restoration of the value of public sector pay is fully justified. Although the progress that today’s announcement represents is welcome and will allow us to vote for the budget, we will continue to back the unions that are arguing for an above-inflation settlement. If, as I hope, they are successful in making their case, the cabinet secretary will need to return to Parliament to find a solution.

We also made it clear that local government, which, once again, showed up near the bottom of the priority list when the draft budget was published, deserves better. We consistently pointed to the SPICe analysis that shows a real-terms cut of £157 million. Although the finance secretary did not accept that assessment, we were very clear that we could not vote for a budget that imposed the cut or ignored the other pressures that local government faces.

Those other pressures come from increased demand, an expectation of a fairer pay settlement than the 2 per cent that most councils have already budgeted for and some specific local issues such as the interisland ferries in Orkney and Shetland. Today’s total package of £170 million is substantial. It more than reverses the cut and leaves councils around Scotland in a stronger position to meet the pressures ahead.

Colin Smyth (South Scotland) (Lab) rose—[Interruption.]

The Deputy Presiding Officer

Your card is not in, Mr Smyth. Please start your question again.

Colin Smyth

Given that much of the proposed local government settlement in the budget is for new and additional responsibilities, such as childcare and the £66 million that is to be transferred to integration joint boards, what does Mr Harvie’s analysis show us about the hundreds of millions of pounds of cuts that local councils will have to make and the thousands of jobs that will be lost as a direct result of the budget?

Patrick Harvie

We are very clear that the £157 million cut has been more than reversed—we will see that as the local government finance orders are presented. The reversal package is substantial.

Unlike the Scottish Government, we will never treat local choices over council tax as part of the national funding package. Nevertheless, it is true that councils that decide to increase their council tax revenue will gain additional flexibility to invest in services.

Last year, we reversed a £160 million cut to local services and, according to SPICe, that resulted in a settlement that was broadly flat in real terms instead of a drastic cut. This year, we have gone further, with a £170 million package for local government as well as the progress that we have made on pay and low-carbon investment.

That has been made possible because of a redesign of income tax powers that has shifted the debate fundamentally since we first proposed change in 2016. The Conservatives still want tax cuts for the richest, which would strip half a billion pounds out of our public services. However, nobody talks now about increases for all basic rate taxpayers. The Green argument has been leading the change in tax policy, showing that we can raise additional revenue while protecting people on low and middle incomes.

On tax, as on pay, I acknowledge that I urged the Government to go further, but the progress that has been announced today will make a meaningful difference in people’s lives and in public services in every community of this country. That is the result when Opposition parties accept the responsibilities and the opportunities that present themselves in a period of minority government.

I have two final points to make. There is a strong case for early, positive and constructive engagement in the budget process, to avoid last-minute brinkmanship by the Government and the futile activity of Opposition parties producing dramatic new proposals at the very last minute, too late to make meaningful negotiation even possible. I repeat my suggestion that, in future, Opposition parties should be called to give evidence to the Finance and Constitution Committee as part of the budget scrutiny process. [Interruption.]

The Deputy Presiding Officer

Excuse me, can we have a bit of quiet please? Mr Harvie is just rounding off his contribution.

Patrick Harvie

Opposition proposals that are ultimately taken up by the Government deserve to be subject to proper scrutiny, and parties that choose not to engage with serious proposals would lose some of their later grandstanding opportunities. [Interruption.] I name no names.

This year’s budget negotiations, like last year’s, have been dominated by the issue of local government funding. How much do councils need for their core services? Are responsibilities properly resourced? Should the freedom to increase council tax be counted as part of the national funding mix? The overwhelming problem here is the absurd overdependence of local government on national Government for grants, and the marginal freedom that it is permitted by a Government that has stalled on local tax reform. That cannot go on. We are not willing to allow the national budget process to become an annual rearguard action against local funding cuts.

The Deputy Presiding Officer

You must finish, Mr Harvie.

Patrick Harvie

We therefore give notice that we will be unable to enter negotiations on next year’s budget, unless meaningful progress has been made on local tax reform.

The Deputy Presiding Officer

You are pushing it now, Mr Harvie.

Patrick Harvie

We will enter that debate in the same constructive spirit that has allowed us to make progress on this budget. Local tax reform can wait no longer.

15:38  



Willie Rennie (North East Fife) (LD)

The budget does not deliver the transformational change that we need for our country. We face huge challenges in the next two to three years because of Brexit. We have a sluggish economy that is lagging well behind that of the rest of the United Kingdom. The budget should therefore have been used as an opportunity to make transformational investment in education. Only by investing in the skills and talents of our people can we revitalise the economy.

We have argued for a modest penny on income tax to invest in education. We believe that we should be investing in nursery education, but we have already heard that the nursery education roll-out is facing difficulties. We have argued that nursery education should be expanded to cover two-year-olds: the Government eventually accepted that, reluctantly. There is a big roll-out programme in the next few years, but there are difficulties with that. We should make the necessary investment to recruit people and give them the required skills and create the necessary infrastructure for the nursery education sector.

Yesterday, with great fanfare, John Swinney announced the pupil equity fund. However, we have discovered that the figure has been frozen from last year—there was no increase in the pupil equity fund. We were already lagging way behind the equivalent fund in England—the pupil premium, which was advocated for by the Liberal Democrats in Government and which closed the attainment gap by five percentage points. We were already behind, and the budget has been frozen for this year. We should have been investing in that, too.

On college places, this week we have found out that 140,000 college places have been cut from the sector under the SNP. That has cut training, opportunities and education for women, mature students and part-time students. We should be investing in that sector in order to make the transformational change for our future, because by investing in the skills and talents of our people we can grow the economy.

We could also grow the economy by investing in the skills and talents of people through investment in mental health. We have argued that the mental health budget should be raised by £1.2 billion. I believe that that is necessary in order to deal with the deep-seated problems that we have with child and adolescent mental health services and with other services for children and young people, which are lagging well behind. Last autumn, 3,000 people were waiting for mental health treatment, and 10,000 young people have had their mental health treatment delayed in the past three years alone. That situation is appalling and needs to change, which is why we believe that investment in those services is required.

We believe that there should be investment in integrating mental health professionals with other services, such as those that are provided in accident and emergency units, and in embedding them in the police and primary care services. Further, there should be more investment in CAMHS.

We need investment in the skills, talents and abilities of people in order to make the necessary change for our future. That is why we have argued for the extra penny on income tax. We were open and frank about it at the election—unlike the Government, which said that there would be no increase in the basic rate of income tax. We said to people that if they made a small sacrifice, they would have a big return. We said that if people paid, they would get a transformational change for their country—a specific tax rise for a specific purpose to get a specific benefit.

There is a danger with the Conservative approach of cutting taxes ever more, irrespective of the consequences, and with the Labour Party’s approach of increasing taxes ever more, irrespective of the consequences, and sometimes just with 48-hours’ notice. That is not the way in which to have a mature, open and frank debate about the future of our country. We need honesty at the election. We need frankness from all the parties about the opportunities for our country.

We have always been constructive in budget debates. We have always sought to work with the Government where we could. In previous years, we have voted for the Government’s budget on a couple of occasions. In those cases, we decided that although the budget was not perfect, it was good enough, and that it would result in investment in nursery education, in free school meals and in colleges. In those years, we had frank and open discussions with the Government about the political differences between our two parties. This year has been different, however.

This year, the Government identified two small and remote constituencies with lifeline ferry services and reneged on a commitment that it had given over the past six years in order to lever in the support of those constituencies’ MSPs. [Interruption.]

The only reason why the funding for the ferries in the northern isles is in the budget is because we made the case, we committed the debating time, we secured an amendment in committee and we enabled separate discussions to enable it to happen. [Interruption.] If the Government had been left to its own devices, the islands would have been left wanting, and everyone knows that. That is not the way for a Government to behave—picking off remote and rural constituencies for its own devices—and we will not play its game.

The Deputy Presiding Officer

Let us have a wee bit of quiet, please; Mr Kenneth Gibson likes things to be quiet.

15:44  



Kenneth Gibson (Cunninghame North) (SNP)

Compromise, collaboration and consensus are integral parts of the budget process and the work that we strive to do in Parliament. In these challenging times, with a tough economic climate and, courtesy of the UK Tory Government, a real-terms cut of over £211 million to our resource budget for the forthcoming year, producing a balanced and fair budget for Scotland is no mean feat.

Nevertheless, our finance secretary has delivered a progressive and responsible budget that is determined to ensure a health service that is fully equipped for the future. That is why the budget will increase funding for front-line NHS boards by a real-terms increase of £208 million. We want Scotland’s health service to be among the best in the world, and we are investing in a new general practitioner contract and mental health services. The budget also supports increased research and development, it supports infrastructure, and it supports strengthening collaboration between the NHS, industry, academia and the third sector.

After years of pay restraint, thousands of nurses and healthcare staff will benefit from a minimum pay increase of 3 per cent for staff who earn up to £36,500. That has been welcomed by the Royal College of Nursing and by Unison.

As an MSP with 6,300 island constituents, I understand how crucial lifeline ferry services are. I was therefore delighted when the SNP Government invested £12.6 million in a new hybrid environmentally friendly ferry, the MV Catriona, which began in service from Lochranza on Arran to Claonaig in Argyll some 16 months ago, and when it invested £48.5 million in MV Glen Sannox, which will sail from Ardrossan to Brodick from next year. Having lobbied hard for that investment, I congratulate Liam McArthur and Tavish Scott—sadly, they are not in the chamber to hear this praise—on their tenacious lobbying of the finance secretary to secure £5.5 million for Orkney and £5 million for Shetland to help to resource their interisland ferry services. It is a shame about Willie Rennie’s curmudgeonly comments a few minutes ago.

Colleagues will touch on the £66 million to support additional investment in social care, the £24 million to fund fully the pay offer to teachers, the £52.2 million in revenue and £150 million in capital to support the expansion of funded early learning and childcare, and the many other positive aspects of the budget.

A fortnight ago, I spoke in Labour’s daft no-confidence debate. I must apologise to members: in pointing out numerous incidences of Labour-imposed austerity, I neglected to mention the £500 million cut that was imposed on Scotland in 2009-10 by the last UK Labour Government, and the future plans of the then Chancellor of the Exchequer, Alistair Darling, which were revealed on 25 March 2010. Mr Darling was asked on “Newsnight” how his plans compared with Mrs Thatcher’s attempts to slim the size of the state. He replied:

“They will be deeper and tougher”

and added that, if re-elected, he would

“impose reductions in capital spending of almost 15% a year for the next four years.”

The Institute for Fiscal Studies said that Labour’s plans implied cuts to public services of £46,000 million in real terms over four years. Hefty tax rises and Whitehall spending cuts of 25 per cent were in prospect, with a squeeze that would have lasted until 2017. It is simply laughable for the same Labour MSPs who fought for the re-election of Mr Darling and his austerity policies in 2010 now to pretend to champion anti-austerity. Are repentant sinners overcompensating? They have form.

On Labour’s proposals, I, like many, waited patiently for a glimpse of Labour’s tax plans after James Kelly said:

“Labour will take adequate time to put forward its proposals.”—[Official Report, 17 January 2018; c 23.]

In fact, we have had little time to scrutinise its meagre dabblings. For Labour, it is about playing to the gallery. There has been nothing on the economy, transport, justice, the environment and so on. Not only is the total revenue that Labour says would be raised by its proposals a fantasy, but many of Labour’s suggestions would not raise any revenue this coming year. What does that say to families? The people of Scotland merit genuine engagement and debate, not political posturing and gesture politics.

There has been no mention of the behavioural impact of Labour tax rises, even though James Kelly sits on the Finance and Constitution Committee, where that was discussed. To be fair, his campaign to turn back the clock in the fight against sectarianism has kept him busy. I understand that some of the old songs are already being sung again.

The Tories make Labour’s proposals seem rational and coherent. On capital, they equate loans with grants. I wonder how many Tory MSPs would like their salaries in the form of a loan. Their pitiful efforts to con folk that £556 million in tax cuts can be delivered with a £211 million real-terms resource cut to Scotland’s block grant and a bewildering array of Tory spending demands—70, at the last count—beggar belief.

Ruth Davidson will be querying all the lefties who have infiltrated her group. Among the many are Brian “the Bolshevik” Whittle, who has called at least 11 times for an increase in spending on issues that range from the port of Cairnryan—cutting across his colleague Finlay Carson—to sport and local government.

Meanwhile, “Red” Rachael Hamilton demands more investment in roads and the Borders railway, which her Tory predecessor criticised, and Maurice “the Menshevik” Corry wants us to double our housing programme from 50,000 to 100,000 homes, but has yet to tell us how that would be funded and delivered, given Westminster’s financial straitjacket and the UK’s Brexit policy, which will increase skills shortages in the construction trades.

Adam Tomkins was once a real Marxist of course, having addressed a rally on Calton Hill in 2004 calling for the establishment of a Scottish socialist republic. The impetuosity of youth—he was only 35 at the time. [Interruption.] These days, Mr Tomkins no longer wants to storm the Winter palace; he is just asking for a few bob to upgrade the Scottish exhibition and conference centre.

The Tories do not really care about Scotland; they are simply following the shambolic lead of Mrs May in London. A couple of years ago, during negotiations on the fiscal framework, they urged the SNP Government—as did Labour for a time—to accept a cut of up to £7,000 million over ten years to this Parliament’s budget, and were foiled only by the determination of the now Deputy First Minister, backed by the First Minister, not to give ground.

Throughout this year’s budget process, the Tories have failed to engage: the people see through them. The Greens have engaged and can claim credit for helping to deliver a more progressive budget for the people and communities of Scotland.

A vote for the budget is a vote for high-quality public services, a vote for strong support for business, a vote for measures to tackle poverty and inequality, and a vote for a fairer Scotland. I urge colleagues to support it.

15:51  



Dean Lockhart (Mid Scotland and Fife) (Con)

Scotland’s economy is facing what the Fraser of Allander institute has described as the “longest period” of weak “growth in ... 60 years”. That is reflected in recent figures. Scotland’s economy is growing by only 0.5 per cent—less than a third of the rate of growth in the rest of the UK. Trade figures show a 5 per cent decline in total trade from Scotland, and data confirm that business investment in Scotland declined by 15 per cent last year.

The outlook for the economy is equally challenging. The Scottish Fiscal Commission—which, I note, Derek Mackay did not mention once in his opening statement—is forecasting average growth of 0.6 per cent in the next four years. Let me put that into context: under the SNP, Scotland will experience the lowest growth of any economy in the developed world.

Those growth forecasts are of real concern, but even more alarming is the conclusion of the Scottish Fiscal Commission that the Scottish economy is currently running at or above capacity, which means that the growth capacity of Scotland’s economy has declined from a long-term average of 2.2 per cent to half a per cent today. In other words, economic growth of half a per cent is as good as we can expect under this SNP Government.

Ivan McKee (Glasgow Provan) (SNP)

Will the member give way?

Dean Lockhart

I will give way to Ivan McKee if he will help me to understand why the long-term growth potential of Scotland’s economy has fallen in the past 10 years.

Ivan McKee

Absolutely. Dean Lockhart will be aware that the Scottish Fiscal Commission said that the main reason for Scotland’s economy being at capacity and unable to grow any faster is population issues—the biggest issue being the lack of skilled labour, which will be exacerbated by Brexit. That is what it has taken into account in its forecast, as the member well knows.

Dean Lockhart

I think that Mr McKee will find that lower productivity in Scotland than elsewhere is the key driver of the SFC’s forecast. He will also find that there is a direct correlation between population growth and migration and the strength of an economy. The stronger our economy is, the more skilled workers we attract into that economy.

The fundamental problem that the budget should be addressing is that after a decade in power, the SNP economy has become a low-growth, low-wage, low-enterprise and low-productivity economy. That economic stagnation is not inevitable, nor is it something that we should accept. With world-class universities, international cities and a skilled workforce, Scotland has real potential to perform at much higher levels. To realise that potential, the absolute priority of the budget must be to increase the productive capacity of the economy. The Scottish Government, despite denying that it does, has all the powers that are necessary to make that happen. It has full control over skills, enterprise and economic development policy—which has an annual budget of more than £2.5 billion—as well as significant new tax powers.

Derek Mackay

In that case, is the Scotland Office being not entirely accurate when it says that the UK Government has control over macroeconomic policy for the whole UK?

Dean Lockhart

I think that Mr Mackay will find that the UK Government has control over monetary policy and interest rates, which are at record lows. The SNP has control over enterprise policy and economic growth, which are also at record lows. Instead of using those substantial powers to grow the economy, increase productivity and promote business growth, the SNP has decided to double down on its failed economic agenda and to make Scotland the highest-taxed part of the UK for skilled workers, the highest-taxed part of the UK in which to expand business, and the highest-taxed part of the UK for business rates.

The budget means that there will be a reduction in the net salary of skilled workers in Scotland: they will have lower take-home pay than colleagues elsewhere in the UK.

Tom Arthur (Renfrewshire South) (SNP)

Will the member give way?

Dean Lockhart

I need to make progress.

To increase productivity, it is vital that we keep existing skilled workers and attract more. However, there is already evidence that higher tax is adversely impacting the decisions of business to expand and locate and skilled workers to locate in Scotland. Productivity in Scotland has declined in every one of the past seven quarters.

Gillian Martin (Aberdeenshire East) (SNP)

Will the member take an intervention?

Dean Lockhart

I need to make progress.

The budget imposes higher taxes on skilled workers, so it is not surprising that the SFC is forecasting that the trend of lower productivity will continue.

The budget means that 20,000 businesses in Scotland will pay £17 million more in rates than do businesses elsewhere in the UK, because of the large business supplement. The budget also means that business will pay an extra £85 million as a result of an increase in the poundage rate. Scotland already has the lowest business creation and survival rates in the UK. Hammering business with an extra £150 million of rate payments will serve only to damage the economy further.

The most effective way to increase Government tax revenues and public spending is to grow the economy. The negative impact of low economic growth on public spending was highlighted by the Scottish Fiscal Commission in December, when it reduced the projected level of tax receipts over the next four years by £2 billion, as a result of lower than expected economic growth. That means that the Scottish Government will have £2 billion less to spend on vital public services as a result of the weakness in the economy. The £2 billion reduction is a multiple of what Derek Mackay will raise in revenues by increasing tax on the hard-working people of Scotland.

Instead of increasing tax, the SNP should listen to the leading organisations across Scotland that are calling for a reversal of the decision to make Scotland the highest-taxed part of the UK, for a new direction in economic policy and for urgent action now to address the longest period of weak growth in Scotland for 60 years.

I support the amendment in Murdo Fraser’s name.

15:57  



Elaine Smith (Central Scotland) (Lab)

I remind the chamber that I am a member of Unite the union.

The budget debate is being closely watched right across Scotland: it is being watched by councillors, who have to deal with the fallout of the on-going cuts to their budgets; it is being watched by public sector staff, who have not had a decent pay rise in years; and it is being watched by the people of Scotland, who are suffering from cuts to the public services on which they depend. They all know that things could be very different if the SNP Government stopped being so timid and used the powers of the Parliament to create a fairer Scotland.

Like me, many of those people campaigned and voted for a Scottish Parliament, but they did not expect that, 20 years later, this Government would simply pass on Tory austerity. There is the opportunity to do things differently, be radical instead of tinkering about the edges, and begin to reverse the damage of years of cuts in our communities. That is what Labour would do in government, and it is what we demand that the SNP does.

Our budget plan, which was laid out clearly and concisely by James Kelly, is based on progressive taxation.

Derek Mackay

Will the member take an intervention?

Elaine Smith

I will in a moment, cabinet secretary.

As socialists, we believe in the redistribution of power and wealth to eradicate the obscene reality of poverty in a rich country.

Derek Mackay

The Government has outlined a pay policy of a 3 per cent uplift for those earning up to £36,500. What does the Labour Party believe the pay threshold and percentage increase should be?

Elaine Smith

Perhaps the cabinet secretary could answer what the pay policy is for local government, as I asked him to do when we were in front of the Local Government and Communities Committee, because local government has not been funded, but expectations have been raised.

It is long past time that the SNP took radical action to eradicate poverty and the inequality that underpins it. I note that there was no answer earlier from the cabinet secretary on child poverty. The Government’s own report on poverty and income inequality states that, after housing costs, 26 per cent of children in Scotland were living in relative poverty in 2015-16; that is nearly 260,000 children, which is 40,000 more than the previous year. That appalling rise in child poverty is happening under this SNP Government.

Shockingly, forecasts also show that up to 100,000 more children will be pushed into poverty in Scotland by 2020. Of course, I recognise that we now have the Child Poverty (Scotland) Bill, which provides a framework and sets targets, along with setting out some policy steps in the right direction. However, Scottish Labour is clear that this year’s budget must tackle the shameful growth of child poverty, because children cannot wait any longer. The Scottish Government’s plans simply do not go far enough.

Given that, by definition, a child is living in poverty if their household income is insufficient to meet their basic material needs, the Scottish Government should understand that the most immediate and effective way to lift children out of poverty is to directly raise family income levels. For parents at the lower end of the income scale, child benefit is vital to provide their children with adequate clothing and nutrition and allow them to participate in sporting activities and school trips. However, given that one in four children in Scotland lives in material deprivation, we know that far too many children are going without, which of course has a severe impact on their wellbeing and their future life chances.

Under the Tories, child benefit has risen by just 2 per cent since 2010-11 and it has not changed at all since 2015.

Fulton MacGregor (Coatbridge and Chryston) (SNP)

Will the member give way?

Elaine Smith

I am afraid that I do not have time.

Coupled with the increased cost of raising a child, that is part of the reason why ever-increasing numbers of households with children are being pushed into poverty. That is why a coalition of charities, faith groups and trade unions back the give me five campaign, which urges the Scottish Government to top up child benefit payments by £5 per week. To support that, Scottish Labour’s Mark Griffin has lodged amendments to the Social Security (Scotland) Bill that back the top-up of child benefit because research shows that that would lift 30,000 children out of poverty. It could fund a nutritious breakfast every day, a good-quality winter coat or taking part in school trips, which could stop children being hungry, cold or left out of school activities.

Topping up child benefit is undoubtedly an extremely effective way to reduce material deprivation for all households that are struggling, but I note in particular that 70 per cent of children in Scotland who live in poverty live in working families. Low wages, precarious employment and zero-hours contracts mean that work does not always provide a route out of poverty. In months where wages are lower than expected, parents are often forced to use food banks or rely on vicious pay-day loans.

Given that child benefit is a universal benefit, a £5 top-up would provide a stable and reliable source of additional income for families, benefiting those who are in work as well as those who are not in work. If the Scottish Government was to use its taxation powers progressively, in line with Labour’s budget plans, the cost of topping up child benefit could be met.

The eradication of child poverty should be an absolute priority for this Government, but it will not be tackled with an inadequate, lightweight and, frankly, feeble budget. After 10 years in office, is it not time that the SNP used the powers of this Parliament to their full extent to redistribute wealth and power, eradicate poverty and create a fairer Scotland for the many? That is what Scottish Labour would do.

16:03  



Emma Harper (South Scotland) (SNP)

This is a budget for a stronger economy and a fairer society, with increased funding for the NHS and protection for low and middle income earners. Given that I have mentioned the NHS, I refer members to my entry in the register of interests and remind them that I am a registered nurse and soon to be a volunteer at the new Dumfries and Galloway royal infirmary.

The foundations of the budget—investing in our NHS, stopping Tory cuts, protecting public services and growing our economy—were welcomed by the majority of organisations that gave evidence to the Finance and Constitution Committee. There is a strong consensus across Scottish society that backing this budget is necessary to keep driving Scotland forward and that politicians from all parties should get behind these progressive plans.

The actions of the Scottish Government that are set out in the budget make Scotland the fairest taxed part of the UK. Next year, those earning under £33,000 will pay less. That includes thousands of nurses and healthcare workers. Dean Lockhart just said that this Government is raising taxes on skilled workers. Is he suggesting that nurses, who will be paying less tax, are not skilled? I challenge him on that.

Dean Lockhart

I was just repeating the Government’s figures, which show that the tax cuts will not apply to anyone on less than £26,000 and will impact on more than 900,000 workers in Scotland. Nurses absolutely are skilled workers; I am just repeating what the Government’s figures show, which is that 900,000 workers in Scotland will be impacted by higher tax. [Interruption.]

The Deputy Presiding Officer (Christine Grahame)

Excuse me, Mr Arthur. Ms Harper is going to deal with that.

Emma Harper

Thank you, Presiding Officer. I have big boots, and I can challenge the member. The nurses who are making less than £33,000 will pay less tax—and I reiterate that they are skilled workers.

I am a member of the Finance and Constitution Committee, and in my questions to witnesses I focused on how the structural changes that are proposed in the budget will benefit women. For example, many of the employees who fall into the first three tax bands are women. Some 89 per cent of skilled nurses are women, a high percentage of healthcare support workers are women, and most people who work in care in the community are women.

The budget therefore directly reflects the Scottish Government’s equalities agenda, in respect of both revenue and expenditure. Given how the finance secretary has aligned pay policy and tax policy, and given his overall expenditure plans, it is clear that equality has been at the forefront of his mind.

Elaine Smith

Will the member take an intervention?

Emma Harper

I have just taken one.

The finance secretary has taken those actions against a backdrop of tough economic and public expenditure conditions. Scotland’s block grant for day-to-day expenditure is decreasing, and a decade of Westminster austerity has left families across Scotland worse off and has put enormous pressure on the Scottish budget.

Throughout the process, the finance secretary has attempted to engage Opposition parties about their plans. He wrote to them formally some months ago to ask for confirmation of their proposals on income tax policy, so that the proposals could be included in a discussion paper, as was announced in the programme for government. Despite that, Labour neglected to publish a tax plan until 48 hours before the vote on the budget bill.

Two weeks ago, Labour used its parliamentary debating time to bring a debate on what it claimed was a motion of no confidence in the budget. For a party to call a debate on the budget and then admit that it does not have a policy on income tax goes beyond incompetence.

The Tories’ plan would create a £500 million hole in our public services. Despite demanding a £500 million tax giveaway for high earners and big business, and while the UK Government continues to hammer Scotland with cut after cut, the Tories have made more than 100 demands for increased public spending.

It is time for the Tories to tell us what funding they would cut so that they could hand out £500 million to high earners. It is time for the Tories to tell us what their plans would mean for the NHS and our schools. The consequences of the Tories’ proposals are unimaginable. It is difficult for me to envisage how our NHS would function and how many nurses’ livelihoods would be under threat. The Tories’ approach would be devastating for the service in all areas, from A and E to mental health services.

It is fortunate that members of the Scottish Parliament have the opportunity today to vote for fair and progressive tax plans, as well as a growth package that includes real-terms increases in funding for colleges and universities, investment to expand early learning and childcare and the establishment of Scotland’s first national investment bank.

A vote against the budget will be a vote against those progressive measures. It will be a vote against investing in children and in our schools, hospitals and other vital public services, to give them the funds that they need. I urge politicians from all parties in the Parliament to get behind the Government’s progressive plans and vote for the budget today.

16:08  



Miles Briggs (Lothian) (Con)

I am pleased to take part in today’s budget debate. I will focus my remarks on the NHS and social care and on the settlement for local authorities in my region.

Since 2010, the UK Conservative Government’s protection of the NHS budget has seen investment in our NHS, with more than £2.154 billion in extra money for our NHS in Scotland since 2011. We all accept that health inflation is a driver of pressure in the overall health budget, as are the demographic challenges that face the population across the UK, and it is legitimate to scrutinise the SNP Government’s spending of taxpayers’ money—and we should remember that it is taxpayers’ money—on our health services.

It is sadly all too easy to find examples of where the SNP Government is having to use vital resources to fill the gaps that are left by its poor decision making on health. It is an indictment of its failure to build capacity in our social care sector that delayed discharge cost the NHS £132 million last year. SNP ministers’ failure to put in place long-term NHS workforce plans means that private agency staffing costs have rocketed across Scotland. In 2017, NHS boards spent £171 million on agency staff, which was a real-terms increase of 79 per cent in just five years. Meanwhile, spending on locum staff has reached £0.25 billion pounds in 2016-17 and some health boards have almost doubled their locum spend in a year.

While I am on the subject of NHS staff retention and recruitment, I was disappointed but perhaps not surprised that, in a response, the Cabinet Secretary for Health and Sport confirmed to me earlier this week that the SNP Government has undertaken absolutely no assessment of how higher taxes in Scotland will impact on the recruitment and retention of NHS staff. That is despite public warnings from the British Medical Association and others that SNP tax hike proposals for middle and higher earners will make it more difficult to recruit GPs, consultants and other highly-skilled NHS professionals in Scotland. That is another example of the Government’s lack of joined-up thinking and its inability to see the bigger picture.

I move on to local authority funding. Until just a couple of hours ago, this SNP Government wanted Edinburgh City Council to have a cut of £3 million. That was a political choice that was being taken by the Government.

Kate Forbes (Skye, Lochaber and Badenoch) (SNP)

Miles Briggs has called for additional spend on healthcare and, now, on local government, yet he supports tax plans that would see more than £500 million cut from public services. Where should those cuts land?

Miles Briggs

Part of this debate, as a number of speakers have already said, is that we need to grow the Scottish economy. [Interruption.] Under the SNP—members on the Government back benches need to listen to this—Scotland is on course for the slowest growth in the developed world. Is the Government proud of that? I do not think so. I never thought that I would say, “Bring back Alex Salmond to the Parliament,” but at least he had an idea about growing our economy.

Did SNP ministers believe that cutting Edinburgh City Council’s budget yet again was going to help councils to address the social care crisis in Edinburgh—

Derek Mackay rose—

Miles Briggs

I do not have time. The facts stand.

The Deputy Presiding Officer

Sit down, cabinet secretary.

Miles Briggs

The Cabinet Secretary for Finance and the Constitution and the SNP Government have received real-terms increases in the block grant and in Barnett consequentials from the UK Government. Their decision to raise income taxes for so many hard-working families in this budget is a political calculation that SNP ministers need to be held accountable for. That is why I believe that the finance secretary has lost his way. Growing the Scottish economy is not an added extra to a budget; it is central to everything that he and the Scottish Government should be about if we are going to continue to provide the services that we all rely on.

We were told by many in the media that this SNP budget is an attempt by Nicola Sturgeon and the Government to demonstrate their left-wing high-tax credentials in a desperate bid to outflank Richard Leonard and Jeremy Corbyn, as we have heard from red Ken Gibson today. Is that really where the finance secretary and the SNP find themselves today: trying to be a cheap version of Jeremy Corbyn? If that is where the SNP wants to find itself, I wish it good luck. It is little wonder that the SNP lost almost a third of its seats and almost half a million votes at the Westminster election. After 11 years of SNP mismanagement of our public services and a Scottish economy that is going nowhere under Nicola Sturgeon, we need to look to the future and how we as a country can grow our economy and deliver the sustainable public services that we should all want to see. [Interruption.] Is independence always the answer for you lot?

Last week, I said that the closure of the children’s ward at the Royal Alexandra hospital in Paisley would go down as Nicola Sturgeon’s Nick Clegg moment. Today will go down as Derek Mackay turning into the Artful Dodger from “Oliver”—he has certainly picked a pocket or two today. The people I represent across Edinburgh and the Lothians are once again being badly let down by this SNP Government. They will be hit hard by SNP income taxes as we become the highest-taxed part of our United Kingdom. They will have the pleasure of paying more under this SNP Government and receiving less. I support the amendment in Murdo Fraser’s name.

16:14  



Ivan McKee (Glasgow Provan) (SNP)

Today’s debate is about the Scottish Government’s budget for next year, but it also demonstrates in stark terms why the present Government is the only credible option for running this country’s finances.

The people who elected us expect us to do a professional job, to evaluate the evidence before us and to make decisions about how best to proceed, taking into account the likely results of our actions. They do not expect us to ignore reality and just mouth soundbites. They also trust us to make sure that the numbers add up. In other words, they expect us to behave like adults. Nowhere is that more important than when it comes to the pound in their pocket.

In scrutinising the budget, members of the Finance and Constitution Committee took evidence from the Scottish Fiscal Commission, which is the body that was set up to provide independent analysis and forecast data for the budget process. We heard about the work that the commission does to evaluate the tax plans of Government to ensure that they are evidence based and do not defy the laws of mathematics. We heard about the importance of correctly estimating the value of taxable income elasticity, or TIE, in calculating how much revenue any changes to the tax system will generate, taking into account what actually happens in the real world. Along with Mr Kelly, Mr Bibby and others, I listened while the SFC explained in great detail the care and attention that it had taken to do a professional job and give the Government the robust data that it needs to bring forward a budget that will deliver what it says on the tin. Indeed, the impact that taxable income elasticities have on revenues is covered in some detail in our committee’s unanimous report.

To ignore the SFC’s work—to pretend that the world is somehow different from the reality before us and that two plus two somehow does not equal four—is not only an insult to the people of Scotland, who expect better from their politicians; it trashes the credibility of the people who make those claims. Even judged on its own terms, that approach takes us nowhere because, as the members of Labour’s front bench know full well, if the Scottish Government were, in some strange circumstance, to adopt Labour’s tax plans, the amount of money that the Scottish Fiscal Commission would allow the Government to spend in its budget would be hundreds of millions of pounds short of the fantasy data that Labour has in its back-of-the-envelope analysis.

James Kelly

On tax policy and evidence, does Ivan McKee think that it is fair that, even taking into account the correction that Mr Mackay announced earlier, somebody on £45,000 will face the same level of increase as somebody on £150,000? Is that a fair tax policy?

Ivan McKee

The problem that Mr Kelly has is that every time he opens his mouth, people understand that none of the numbers that come out of it has any credibility. He has no idea what he is talking about and he cannot add up the numbers. He just makes stuff up.

Mr Kelly cited SPICe. I will tell members what SPICe actually said. It said:

“our estimates of the income tax revenue raised under different scenarios are static estimates i.e. they do not take account of any behavioural responses that might result from the policy changes outlined. We make this very clear in all our costings, and in all of our published work on the topic”.

SPICe went on to say that any analysis that was done without taking into account the SFC’s behavioural assessments would not be accurate from a modelling perspective.

That is not the only area in which Labour’s tax plans have been holed below the waterline. On the non-domestic rates pool, which is the source of another magic £174 million in Labour’s alternative reality budget, Mr Kelly knows fine well—or, at least, he should—that Audit Scotland has stated that the pool must be brought back into balance by the end of 2018-19, and that is what the budget does.

Iain Gray (East Lothian) (Lab)

The member must know that Audit Scotland has said no such thing. It has said that the Scottish Government has said that that is what it will do and that that is entirely a matter for it.

Ivan McKee

No, it has said that the non-domestic rates pool needs to be brought back into balance. Labour has said that it will not do that—it seems that it would continually take money out of a pool that does not exist. That is another example of Labour’s lack of credibility on its budgeting process.

It is now clear why Labour left the publication of its tax plans till the last minute—it wanted to avoid any scrutiny of its proposals. Well, that gamble has failed. The credibility of Labour’s analysis is in tatters and the party is seen as unfit to do any more than carp from third place. Labour’s tax proposals are more worthy of Screaming Lord Sutch than of a supposedly serious political party.

On the other side of the chamber, we have a different kind of reality denial. I have here a list. It is not a short list; in fact, it is rather a long list that runs to eight pages. It is not a list that I wrote; it is a list that others have written for us. It is the list of spending demands that have been made by Tory members in this Parliament—more than 70 different demands, the cost of which adds up to hundreds of millions of pounds. They go from air-quality monitors through to zebra crossings—the full A to Z of Tory spending demands—but nowhere are there any plans on how to raise the cash. That is because, as everyone can see, when it comes down to it, Tory tax and spend just does not add up.

Dean Lockhart

Will the member take an intervention?

Ivan McKee

I am sorry—I have already taken two.

This budget delivers for the people of Scotland. It reduces taxes for more than 70 per cent of earners, it means that the majority will pay less tax in Scotland than they would if they lived in the rest of the UK, and it makes Scotland the lowest and fairest-taxed part of the UK. It does that while meeting manifesto commitments to invest funds over and above inflation in our key public services, and it provides the resources to enable the Scottish Government to deliver quality public services, including the best health service in the UK.

It is a budget that exists in the real world, where real people make real decisions to deliver real revenue and real services. It is not a game of fantasy economics in which the books do not have to balance and individuals are assumed to behave as we want them to, not as they actually do on planet earth. Labour and the Tories are competing for the gold medal in the economic incompetence Olympics, one failing to explain how its shopping list would be paid for and the other ignoring the laws of mathematics—clowns to the left of us, jokers to the right. Meanwhile the Scottish Government gets on with the grown-up work of putting together a budget that delivers for the people of Scotland.

16:21  



Iain Gray (East Lothian) (Lab)

What an opportunity the budget should be for the Government to set a new direction for our country in the year to come. A Government with real vision, the courage of its convictions and a willingness to win the argument for real change could choose to end the miserable narrative of austerity, begin to invest again in our public services and the people who work in them and kick-start our pitiful levels of economic growth—more so this year than ever before, because of the new powers that we have over taxation, which allow us to make new choices that would raise more money to invest and redistribute across income levels.

Ending austerity, progressive taxation and reducing poverty are all principles that this Government loves to espouse, but it is never prepared to put them into action. This year, the Government yet again proposed a draft budget for passing on cuts. Local government alone was to get £150 million less, when it had been clear that it needed more than £500 million just to stand still. The Government proposed a tax plan that yet again bottled out of the 50p tax rate for top earners, which the SNP famously and regularly supports every five years when an election comes round.

Kate Forbes

If Iain Gray was so keen to change the budget constructively, why did he wait until 48 hours before the stage 1 debate to bring forward these budget proposals?

Iain Gray

Because this is stage 1, when the budget is proposed. We have two further stages during which we consider it in detail—that is the parliamentary process.

The truth is that this is hardly the first time that we have raised the issue of the 50p tax rate, is it? We have repeatedly asked the SNP to support a 50p tax rate and it has repeatedly refused, except when elections come round. Indeed, on the 50p tax rate, the SNP truly is the very definition of all mouth and no trousers.

Derek Mackay

Will the member take an intervention on that point?

Iain Gray

No, I am sorry; I have just taken one.

Even better, the tax plan turned out to be a tax increase for someone earning £40,000 and a tax cut for someone earning £50,000, which raised only £164 million and handed most of that back to businesses, leaving local service budgets woefully short again. What a timid effort, circumvented by lack of ambition and fear of upsetting high earners, simply managing the austerity that the Government rails against on any other day of the year.

But of course, the Government always knew that it would get away with that, because, with a tweak here and there, it would have the Greens in the bag—and so it proves. I heard Patrick Harvie on “Good Morning Scotland” this morning, saying that he has had enough of a budget process that is only about deciding where the cuts will fall. Me too! However, he then went straight from the studio to meet Derek Mackay and agree exactly where the cuts would fall. I know that he claims that he is trying to mitigate austerity, but he must see that he is colluding in the cuts.

Patrick Harvie

Will the member give way?

Iain Gray

Yes.

Patrick Harvie

I acknowledge that Iain Gray thinks that—

The Deputy Presiding Officer

Could we have Patrick Harvie’s microphone on, please?

Patrick Harvie

I beg your pardon, Presiding Officer. I have done a Colin Smyth. I am so sorry.

I acknowledge that Mr Gray thinks that the process should go further, but can he not at least admit that the £157 million cut to local government has been more than reversed as a result of the work that we have done and compare that with what his party has achieved, which is nothing?

Iain Gray

No, I do not accept that, for two reasons. First, the letter from Mr Mackay to Mr Harvie reveals that, in 2018-19, the uplift will be £125 million, which is already £50 million less than he was claiming only minutes ago. Let me give members an example of how dishonest I think all this is. The Government draft budget estimates income from non-domestic rates at £2.8 billion, but it plans to distribute only £2.6 billion to councils. There is £142 million of councils’ own money that is being held back from them. The extra money that Derek Mackay and Patrick Harvie have been dealing with over these weeks was local councils’ money all along. It is just like last year, when £300 million was skimmed out, £150 million of it was put back in and Mr Harvie wanted congratulating on it.

In the real world, that deal leaves local services facing cuts. There will be more reductions to teaching and support staff and higher charges for social care. Mr Harvie might like to note that local energy efficiency projects will be put at risk, threatening further increases in fuel poverty. In the real world, 260,000 children live in poverty and will get no help at all from this budget. In the real world, it is still the rich who benefit most from the Government’s timidity on tax. The Greens, who proposed a 60p top rate, will vote through a budget that asks those on the highest incomes to contribute only a penny more in the pound. What a sell-out.

We could have a budget that would stop austerity cuts, invest £1 billion more in public services and start to invest in schools and hospitals again—at last. It would ensure that all public sector workers could have a real-terms, fully funded pay increase after years of pay erosion, lift thousands of children and their families out of poverty by boosting child benefit and ask the most highly paid in society to pay a fair share. That would be a budget of vision and of conviction—and one worth supporting.

16:27  



Ben Macpherson (Edinburgh Northern and Leith) (SNP)

Last week, I visited two primary schools in my constituency. As I was there, meeting the teachers and chatting to some of the children, I thought about how young people of primary school age across Scotland have grown up in a context of on-going Westminster austerity. That is a sobering fact, and something on which we should all reflect—particularly those who believe in the UK state.

Since 2007, when Labour started slashing Scotland’s budget, there has been a significant reduction in the finances available to this Parliament, including a staggering £2.6 billion Tory cut to Scotland’s discretionary budget between 2010-11 and 2019-20. To put that in context, it is the equivalent of the entire education budget.

Despite that Westminster austerity and the backdrop of tough economic and public expenditure conditions, under SNP leadership, Scotland has moved forward with growing confidence.·Devolution has protected vital public services. Our nation’s economy has progressed significantly in a whole range of areas, with higher productivity growth than that in any other part of the UK—

Dean Lockhart

Will the member take an intervention?

Ben Macpherson

Yes, I will.

Dean Lockhart

Mr Macpherson mentioned the economy developing. Based on SFC forecasts, the Scottish economy under the SNP will grow at the slowest rate of any developed economy over the next four years. Is that a record of which he is proud?

Ben Macpherson

I thank Dean Lockhart for his intervention. It gives me the opportunity to point out this week’s news that, in a Tory Brexit, the UK will be worse off under any possible scenario. It also allows me to highlight the fact that Brexit threatens to cost the Scottish economy around £11 billion a year by 2030. Dean Lockhart would do better to support the fact that the Scottish economy has had higher productivity growth than any other part of the UK.

Dean Lockhart

rose—

Ben Macpherson

I will take no more interventions from Mr Lockhart.

Given the positive outlook for the economy and despite the negativity of Brexit, the people of Scotland have many reasons to be hopeful. For me, today’s budget is about how all of us, as Scottish politicians, do our part to help to make a real and positive difference for the current generation and future generations. Since 2007, the SNP has delivered increased healthcare spending, more support for schools and many more affordable homes, and the budget is about building on that strong record.

Iain Gray

Will the member take an intervention?

Ben Macpherson

No. I want to get on to an important point, as I have limited time.

Last year, Edinburgh was voted the second-best city in the world for quality of life and Scotland as a whole has been ranked as the best place to live in the UK for quality of life. Talented and well-motivated people, despite the negativity from the Tories, are moving here more and more. One of the overarching reasons for that is that in Scotland we value the balance between social progress and economic development. We understand that strong public services and a vibrant economy go hand in hand, and businesses understand that a healthy social environment is vital for a growing economy.

I will support today’s budget because it will deliver a variety of things, including making our country the fairest-taxed part of the UK, with the best deal for taxpayers, alleviating Tory Westminster cuts to public services where possible and investing in a range of new initiatives and investments. I cannot list them all, but particularly important proposals for me are an extra £400 million of spending for the NHS; £120 million for pupil equity funding; lifting the cap on public sector pay; protecting the police budget in real terms; investing £756 million in building more affordable homes, with 50,000 by 2021; and the expansion of free childcare.

As I said earlier, it is important to remember that the Scottish Government’s proposals will assist both the economy and individuals. The proposed tax changes will mean that, overall, 70 per cent of taxpayers in Scotland will pay less tax and 55 per cent will pay less than they would if they lived in England. That is fair and progressive, and there is strong public support for it, as a recent YouGov poll has shown. Moreover, there are proposals for the economy, with a 70 per cent increase in investment for research and development, for example; £340 million to provide capitalisation for the Scottish national investment bank; an additional £6.6 million for Creative Scotland and the creative industries; significant investment in low-carbon infrastructure, thanks to the Greens’ constructive input; and childcare investment.

I do not have time to go into the amateurish proposals from Labour, which are bereft of serious detail on any robust analysis, but I will comment on the Tories’ budget plans. The Tories have at least been honest, unlike Labour, because they have proposed slashing £500 million from Scottish revenue. Every time that the Tories ask for more spending on health, people will remember that Ruth Davidson, Miles Briggs and their colleagues wanted a cut of £500 million from the money that is available to spend on our hospitals, on supporting our working families, on building new homes, on keeping communities safe and on helping our young people.

I could say so much more, but I will conclude by saying that voting for the Scottish Government’s budget proposals today is about building a fairer and more progressive country. There is strong consensus across Scottish society for backing the budget in order to keep Scotland moving forward. As representatives of our constituents, we should all get behind those progressive and forward-thinking proposals.

16:34  



Liz Smith (Mid Scotland and Fife) (Con)

I will restrict my remarks to the Barclay review proposals, and specifically some of the likely consequences of policies that the Government has set out in the budget process. Before I do so, I again put it on record that the Scottish Conservatives are generally supportive of the majority of the Barclay recommendations. For example, we support the business growth accelerator, which will delay the rates increase for businesses that are expanding their properties; the 100 per cent relief for day nurseries; and the 60 per cent relief on hydro schemes. All of that is very good news, but there are other areas where we believe that the Scottish Government has not thought through its approach and certainly not thought through the consequences of its actions.

The first concern relates to the large business supplement, which is an additional tax that is levied on businesses with a rateable value of more than £51,000 and which will be set at 2.6 per cent in Scotland, whereas in England it is 1.3 per cent. The SNP’s review of business rates recommended scrapping the policy of doubling the large business supplement, so it was very little surprise when Liz Cameron of the Scottish Chambers of Commerce said that the decision puts many Scottish businesses at a “competitive disadvantage” with those south of the border. Despite the name, the supplement will affect many medium-sized businesses across Scotland and, as Liz Cameron pointed out, it means a very unwelcome addition to their fixed costs at the very time when the Scottish economy is underperforming that of the UK as a whole and is looking increasingly shaky from an international perspective.

The absence of a level playing field in that respect could be a distinct disadvantage, and the same would have been the case had the Cabinet Secretary for Finance and the Constitution pressed ahead with his tax on arm’s-length external organisations—something that he has acknowledged, although perhaps rather late in the day. That would have been deeply damaging to many local communities across Scotland that are doing their level best to ensure that people take advantage of facilities such as leisure centres and swimming pools. The cabinet secretary knows that it would have been the height of folly to press ahead with that.

Derek Mackay

It appears that the Conservatives quite like the elements where we spend money or give further relief, but they do not like it when we raise money. How do the Conservatives propose to resolve that difficulty of raising less and spending more?

Liz Smith

If Mr Mackay had listened to the reaction when his proposals about ALEOs were first made, he would know the answer to that question.

In relation to the policies to help people’s physical and mental wellbeing, at one stage, the Scottish Sports Association faced a cut of £70,000 to its funding, so I put on record my thanks to the minister, Aileen Campbell, for listening to the majority opinion in the Parliament and reversing that cut, which would have been severely at odds with SNP policy.

I want to raise another issue, but, before I speak about it, I draw attention to my registered interest as a governor of St Mary’s School in Melrose, as the issue relates to the Scottish Government’s approach to the independent school sector. I will not talk about the principle of the policy, which is a debate for another day, but I will mention some of the anomalies and inconsistencies in the approach as it affects nursery and special needs provision, which the cabinet secretary has said are very much a priority.

I am a bit surprised that the cabinet secretary has not picked up on some of those anomalies, because I know that he has had extensive briefings provided to him by the independent school sector. I ask him whether the Scottish Government can justify the illogicality of allowing private profit-making nurseries to enjoy 100 per cent tax relief when nurseries in independent schools, which provide exactly the same service but not on a profit-making basis—obviously, because they are charities—and that also assist local authorities with the provision of additional places when those authorities cannot provide them, will not be permitted the same tax break. We know from today’s newspapers about the pressure that is felt by the private profit-making nursery sector in Scotland, which claims that there is no level playing field, and the argument is exactly the same for the independent sector.

Likewise, how does the Scottish Government intend to separate out mainstream schools that cater for special needs and independent special schools that do so, given that all independent schools have exactly the same legal status?

How will the Scottish Government define “special needs” when very few pupils who receive additional support are receiving it for physical impairments? The substantial majority of pupils who are receiving that special help are getting it to assist with a range of behavioural, emotional and social needs that are not recognised as disabilities under the Equality Act 2010 and accompanying legislation.

Derek Mackay

I accept that Liz Smith has strong views on the matter. I have set out our policy intent and have given evidence at committee. There is some time to go before those recommendations are implemented and we are not going as far as Barclay recommends, but we will take the time to get it right and will engage with the sector to achieve the outcomes that Liz Smith has suggested. We are not rushing on those statutory instruments, to ensure that we can make that distinction in rates legislation.

Liz Smith

I hope that that is correct. The cabinet secretary listened carefully when there was a fuss about the proposal to punish ALEOs, so I hope that the same will be true in this instance, because the proposals as they stand have not been thought through. They do not have logical deduction behind them, and that is something that the Scottish Government must address.

I will address my closing remarks to another anomaly in the budget proposal, which is the fact that state schools are unable to take advantage of an equivalent financial benefit to the charitable relief that other educational institutions enjoy. If the Scottish Government deems education to be a public good, that is true for state schools too. The Scottish Government has stated many times that the core functions of universities, for example—including education and research and development—are worthy of charitable relief to reflect their key role in supporting economic growth through education of the workforce and supporting innovation, so why is that principle not also applied to independent schools and why are state schools not given an equivalent benefit? Again, I do not see the logic in that.

Part of the budget is about some of the difficult thinking that the cabinet secretary has been faced with but, more importantly, there are illogical steps in what he is proposing. He needs to sort that out, because it undermines the credibility of what the SNP is trying to do with our financial provisions, and it certainly undermines various aspects of our educational system.

16:42  



Ash Denham (Edinburgh Eastern) (SNP)

Around this time last year, members on the Tory benches were in a complete frenzy at the prospect of Scotland using its income tax powers to raise more money for our vital public services. Such action would ensure nothing short of a calamity, according to the Tories. Indeed, Murdo Fraser had the audacity to claim that, if such a budget passed, Scotland

“might as well put up a sign at the border saying ‘Scotland is closed for business’.”—[Official Report, 2 February 2017; c 64.]

It is sad to witness the fact that the second-largest party in the Parliament lacks so much faith in the country.

Maurice Golden (West Scotland) (Con)

Does the member think that the marginal propensity to consume will go up or down among those individuals hit with higher taxation?

Ash Denham

It is evident that the majority of people who will experience tax cuts are at the lower end of the income scale and, as we know that they are more likely to spend their disposable income, I think that there will be increased spending.

The budget has been set against the backdrop of tough public expenditure conditions, but it is a budget that makes Scotland the fairest-taxed part of the UK, with the best deal for taxpayers. It invests in our NHS, it protects our public services and it supports our economy.

Budgets, as we know, are about priorities and policy choices, and the jury has returned on the Tories’ priorities—another month, another report condemning Conservative policy. The latest, according to the IFS, is that 400,000 children will be forced into absolute poverty in the next six years because of Tory benefit cuts. That is roughly the population of Edinburgh. Conservative policies will create a city-sized failure; poverty and suffering for children—that is the reality of Conservative policies. Once again, the Scottish Tories come to this chamber to criticize a budget that exercises Scotland’s tax powers to build a better, fairer and more prosperous country.

Last year, the SNP Government met its target, four years early, to reduce youth unemployment by 40 per cent, and we now have one of the lowest rates for youth unemployment in the EU. The Government’s small business bonus scheme has exempted 100,000 properties from rates. Last year, business research and development spending grew by more than £1 billion for the first time. The number of registered businesses is at a record high, despite the Scottish Tories wanting to hang up the closed-for-business sign.

The budget that we debate today sets Scotland on an ambitious economic path for the coming year. Two hundred and seventy million pounds, which is an increase of 64 per cent, will be delivered to the economy, jobs and fair work portfolio, and that includes an increase of 70 per cent in business research and investment funding. A new growth accelerator will ensure that new or improved properties pay no rates for a year, and Scotland’s new bands and rates of income tax will ensure that the majority of Scottish taxpayers pay less than taxpayers elsewhere in the UK, which is the best deal by far.

Meanwhile, between 2010 and 2020, the Tory UK Government imposed a cut of 8 per cent to Scotland’s discretionary budget, which is now £2.6 billion lower in real terms. A decade of Westminster austerity has left families around Scotland worse off and has put an immense amount of pressure on our public services.

It is a hugely challenging time and our priorities are laid out in the budget for all to see and judge.

Jackson Carlaw (Eastwood) (Con)

We had elections in 2015, 2016 and 2017. Why did Ash Denham not have the courage of her convictions to say that the SNP would put up taxes when the electorate could make a judgment about it, rather than waiting until she could hide from the voters?

Ash Denham

I am sure that members have seen the recent polls that show that the majority of the Scottish public supports our tax plans.

The budget provides for a £400 million increase in health spending alone, which is well above inflation and is part of a total record spend of £13.1 billion. The budget delivers £756 million to fulfil the promise of 50,000 affordable homes by 2021, doubles free childcare and early learning, provides free personal care for those under the age of 65 who need it, and looks out for the most vulnerable, with its £50 million end homelessness together fund, £50 million child poverty fund and £100 million to mitigate the worst of Tory welfare cuts. It combines measures for a strong economy with policies that build a fairer society.

Yet, if the Tories had their way, fairness would be stripped away with the £300 million-worth of cuts under their tax plans. Programmes such as the baby box, which ensures that every child gets the best start in life regardless of income, would be eliminated, as they are branded as “vanity projects” by members of the Tory benches. The budget aims to provide basic human decency for all and to build a prosperous society. That is not vanity; true vanity is coming to this chamber, year after year, calling for tax cuts for the best off and ignoring the plight of the worst off.

I support this budget because I choose fairness, human decency and a sustainable economy for Scotland.

The Deputy Presiding Officer

Before moving to closing speeches—you just made it here in time, Mr Gray—I note that I am disappointed that Emma Harper is not here for them. It is an old sang that I am singing and I am tired of saying it: it is disrespectful to the chair and to colleagues, and I expect an explanation.

16:49  



Monica Lennon (Central Scotland) (Lab)

The cabinet secretary opened the debate by saying that compromise and consensus have characterised this budget. In its current form, the budget fails to protect the most vulnerable in our society. I do not think that the people of Scotland appreciate being compromised in this way. Building consensus around cuts to communities is nothing to celebrate.

The budget does not raise enough revenue and it fails every one of Scottish Labour’s five budget tests. It does not halt austerity. It does not stop the growth of poverty. It does not redistribute power or wealth, and it does not grow our economy in the interests of the many.

The alternative plan that Scottish Labour has proposed passes every one of those tests. It would raise almost £1 billion of extra stimulus for the Scottish economy. That investment would save lifeline local services, fund a pay rise for our public sector workers, put money back in the pockets of working families by topping up child benefit—

Derek Mackay

Will the member take an intervention on that point?

Monica Lennon

In a second. It would top up child benefit by £5 per week and deliver an extra £100 million of spending above what is in the budget for the national health service.

Derek Mackay

Can Monica Lennon answer the question that I asked earlier? Where should the 3 per cent pay rise threshold be pegged?

Monica Lennon

The cabinet secretary has not funded the public sector pay rise. He has not spelled that out.

It is the cabinet secretary’s job to answer those questions.

Derek Mackay

Oh, it is my job. Okay.

Monica Lennon

Perhaps the cabinet secretary should check his job description.

Our costed alternative is proof of our ambition for Scotland. We are demonstrating that, when the political will exists, there is no reason to be timid or to tinker around the edges. I am therefore sad to hear today several SNP politicians—either in their speeches or from a sedentary position, like the First Minister earlier—dip into the Tory playbook to say that our proposals are just a wish list.

I say to Ben Macpherson that there is nothing amateur about challenging austerity and costing radical alternatives. That is what the people of Scotland want. Our plans are ambitious and we make no apology for that.

The Cabinet Secretary for Economy, Jobs and Fair Work (Keith Brown)

Shambles.

Monica Lennon

I hear the cabinet secretary for the economy; he has not mentioned Wales, which makes a nice change.

On our tax plans, the important narrative is about ending the misery of austerity. Our alternative tax plans would ensure that the richest paid their fair share.

Kate Forbes

Will the member take an intervention?

Monica Lennon

I have taken an intervention already and I want to make progress.

Seven out of 10 taxpayers would not pay any more. Our plans, just like the SNP’s, would ensure that those who are earning up to £33,000 would not pay a penny more in tax than they do at the moment. However, unlike the SNP, we plan to ask the very richest in our society to pay their fair share. By dropping the threshold for the 45p rate to £60,000 and introducing a new 50p rate for those who are earning more than £100,000, we would raise vital money for public services by asking those who can afford it, including those who are on MSP salaries, to pay a bit more. For example, the SNP’s tax proposals mean that MSPs would pay only 29p extra in income tax every week. Under our plans, it would be almost £8 extra per week. We believe that it is only fair to ask those who can afford it to pay a bit more so that we can reinvest in the public services that we all use and depend on.

Kate Forbes

Will the member take an intervention?

Monica Lennon

I would like to make some progress.

Despite manifesto pledge after manifesto pledge from the SNP in support of a 50p tax rate, the Government has broken its promise to use the power to make the richest pay their fair share. That only seems to come up for the SNP when there is an election.

The bottom line is that the SNP’s tax plans are timid. Tinkering at the edges is simply not good enough when Scotland is blighted by widening inequality. James Kelly got no answer from the cabinet secretary when he asked specifically what the budget will do to reverse the growth in child poverty. Elaine Smith used her time in the debate to talk about the shameful growth in child poverty, with projections telling us that, by 2020, 100,000 more children will be in poverty. That is why Labour supports—

Fulton MacGregor

Will the member take an intervention?

Monica Lennon

We know that the SNP does not support it, but Labour supports the give me five campaign, which is also supported by charities, faith groups and trade unions across Scotland. We are listening to people in the community. That is why Mark Griffin has lodged amendments to the Social Security (Scotland) Bill that will lift 30,000 children out of poverty.

Bruce Crawford

Will the member take an intervention?

Monica Lennon

No, I will not.

We refuse to allow the SNP’s assertion that it has dealt local government a fair hand to go unchallenged. Since 2011, budget negotiations year after year have squeezed and short-changed local councils.

Patrick Harvie

Will the member take an intervention?

Monica Lennon

No, thank you.

COSLA has said that local authorities need £545 million to protect lifeline services, and that is what Labour’s funding package would deliver. In the real world, cuts to councils mean cuts to vital local services, which have a serious impact on people’s everyday lives and hit the most vulnerable the hardest.

Ash Denham

Will the member take an intervention?

Monica Lennon

No, thank you.

As the reality of the cuts begins to bite, that will mean library closures, bigger class sizes, more broken promises, redundancies, the closure of community centres and many more issues.

The Scottish Government claims that councils are getting a fair deal, but how does the cabinet secretary explain why nine out of 10 austerity job losses in Scotland have been in councils, with 28,000 local government posts cut in the past seven years? That does not seem fair to me. Meanwhile, hard-working staff have had their pay squeezed at the same time as demand and pressure are rising.

Speaking about his budget deal, Patrick Harvie said that the budget is still not ideal with regard to public sector pay. The Greens have voted for the SNP’s austerity budget when there is no extra money for pay, inflation-related issues or demand pressures in many areas.

Patrick Harvie

Will the member take an intervention?

The Deputy Presiding Officer

The member is in her closing seconds, Mr Harvie.

Monica Lennon

Do I have only a few more seconds, Presiding Officer?

The Deputy Presiding Officer

Yes.

Monica Lennon

In that case, I will have to skip past all the things that Greens have said in the previous love letters to local government.

Despite all the rhetoric, when this Government is given the opportunity to use the powers that it has, it is obvious that it is running scared, declining to introduce a 50p rate for higher earners despite pledging to do so at election after election and refusing to use the power to top up benefits—the £5 top-up to child benefit—that could reduce poverty in Scotland. I will say no more.

16:57  



Adam Tomkins (Glasgow) (Con)

Three themes have emerged from this afternoon’s gentle discussion about the budget. The first is that this is a high-tax budget: it is a budget that taxes success and aspiration. However, it is also a budget that, as we know, has been presented in a climate in which the Scottish Government’s overall budget is going up by £479 million in real terms, which means that there is no need for the tax rises that have been presented.

What do we get from the SNP-Green alliance? We get a situation in which a nurse earning £30,000 will pay more tax; a primary schoolteacher or a social worker earning £35,000 will pay more tax; a police officer or a secondary schoolteacher on £40,000 a year will pay more tax; and a general practitioner in our NHS will pay more tax. Those are people in ordinary hard-working families and public sector employees who are providing the front-line services on which we all rely and depend, and they will all pay more tax. It is bad for them, it is bad for their families, it is bad for the economy and it is bad for Scotland. The only good news is that it will also be bad for the SNP’s electoral prospects. In every Derek Mackay cloud there is, I suppose, a silver lining—one that he keeps down the back of his sofa for the day when Patrick Harvie comes to visit.

The plan to make Scotland the highest-taxed part of the United Kingdom has not gone down very well. Eight out of 10 business owners oppose tax hikes. Even the chief executive of Business for Scotland, Gordon MacIntyre Kemp—Murdo Fraser’s new best friend—has said that it is “not a positive move.”

The Scottish Chambers of Commerce has warned that it could “take years” to repair the economic damage of higher taxes. The Scottish Retail Consortium has said that income tax increases should be

“firmly knocked on the head”,

and CBI Scotland has said that higher taxes in Scotland will make it harder to attract investment.

Did the finance secretary, Derek Mackay, listen to any of those voices or to any of that advice? No. He listened only to the Greens, who urged him to do nothing but thrust his hands even deeper into the pockets of hard-working Scots and tax them and tax them again until the pips squeak.

That is the first theme to have emerged.

Patrick Harvie

Will the member give way?

Adam Tomkins

No.

The second theme is chronic low growth. The Scottish Fiscal Commission’s report that accompanied Derek Mackay’s draft budget last month makes incredibly depressing reading. Growth forecasts run at only half the UK rate. The Fraser of Allander institute has said that it is “deeply disappointing” that, for the duration of the SNP’s decade in power, Scotland has been stuck in a nationalist cycle of chronically weak growth.

The key figure in all the budget documentation that we have been presented with in this budget cycle is £16.5 billion. That is the cost to the Scottish economy of the SNP’s decade of mismanagement. Its failure since 2007 to keep pace with the performance of the UK economy as a whole will cut £16.5 billion from the value of the Scottish economy by the time of the next election. That is £100 million every single month. That is why we say that the first priority is to grow the economy. We cannot have the world-leading public services that we all rightly demand without a strong economy to pay for them.

The third theme is that this is a budget of betrayal. The SNP was elected on a manifesto commitment to freeze the basic rate of income tax throughout this parliamentary session. That promise has been abandoned. The SNP said that it would

“protect those on low and middle incomes.”

That vow has been ignored. Nicola Sturgeon said:

“it is not right to increase income tax for those who are on the basic rate.”—[Official Report, 3 May 2017; c 9.]

That commitment to the people of Scotland has been betrayed. She also said:

“the Government will not increase income tax”.—[Official Report, 2 February 2017; c 10.]

She said that the SNP will

“not increase the basic rate of income tax or increase the additional rate”.

Likewise, John Swinney said:

“the last thing that I am going to do is put up”

teachers’

“taxes.”—[Official Report, 3 February 2016; c 20.]

Promise after promise has been breached, broken and betrayed.

Labour’s answer is bewildering. Its answer is that the betrayal does not go far enough, that taxes should be hiked even more and that private finance initiative contracts should be bought out. That would be a cool £29 billion. Its answer is that the railway should be renationalised. The cost of that is unknown. The behavioural consequences of pushing up income tax are completely uncosted. It is the same old from old Labour: tax, spend, regulate, nationalise, repeat.

Our response is simple: it is to say to the people of Scotland that it does not have to be like this. We do not have to be locked into a dance between nationalists and socialists to see who can tax Scots more. There is an alternative; there is another way, which puts the economy first, prioritises growth and makes Scotland not the highest-taxed part of the UK, but the best place in the UK to do business in.

We need a budget for growth and for business that backs Scotland’s hard-working families, not one that rips ever more money out of their pockets. That is the opposite of what we have. Derek Mackay’s budget is a missed opportunity. It does not deserve our support, and it will not get it.

17:04  



Derek Mackay

We should reflect on Bruce Crawford’s speech, because it was quite a sober contribution on the technicalities of the budget, which are very significant in terms of the complexity of the system. It is important that we understand those and the work that has been done on transparency for the budget process review group. The fact that we have to work so closely with the SFC and the OBR is significant. I will come back to that when I refer to Labour’s proposition.

Patrick Harvie made a number of positive contributions throughout the budget process and it is in that context that, in the national interest, we have secured a deal for Scotland. As well as those meaningful proposals, he made a further proposal during the debate that I am particularly attracted to, which was that the Opposition should give evidence on its proposals to parliamentary committees—that has a certain appeal to it. Of course, I gave Opposition parties the opportunity to have their propositions independently modelled so that we could have a mature debate as we use that most significant tax lever of income tax. Some people chose to use it and some did not.

Kenny Gibson and Ivan McKee helpfully exposed the Tory party’s spending plans—the new left wing of the Scottish Tory party—and I am glad that someone is keeping a record of its asks, because we cannot raise less and spend more.

Johann Lamont (Glasgow) (Lab)

Will the cabinet secretary take an intervention?

Derek Mackay

Not right now. Dean Lockhart specifically spoke about the SFC forecast, apparently ignorant of the fact that the greatest danger to the Scottish economy is Brexit and the significant issues that it causes for the working-age population.

Dean Lockhart

One of the central targets of the SNP’s national performance framework is for the Scottish economy to match the UK economy’s growth levels. The failure to do that has cost £16.5 billion of lost GDP over the time that the SNP has been in power. Does the cabinet secretary recognise that it is time for a new direction in economic policy?

Derek Mackay

No, that is nonsense. The SFC is forecasting growth in income tax and growth that will help to support our spending plans. Of course we want to grow the economy more; that is why we are investing hundreds of millions of pounds to stimulate and grow the Scottish economy in the face of real-terms resource reductions from the Tory party and the Brexit madness that will harm the whole of the UK economy—but particularly Scotland’s economy—under every scenario.

The Tories will also have to answer to business as to why they are opposing the £100 million support for businesses in Scotland. We have delivered the number 1 ask of businesses, which was to move the rates poundage to the consumer prices index rather than the retail prices index.

Murdo Fraser was unaware of the amount that would have to be found if we followed Tory tax policies. It is no longer £501 million of cuts for the public sector but £556 million. Murdo Fraser asked why some road projects have come to an end. The answer is that we have built the roads and we have built the bridge. That is why that budget line has come to an end. He suggested that we would be reducing the resources for broadband when in fact we have embarked on a £600 million investment package for broadband, which will be way better than what is delivered in the rest of the UK.

The Tories have £556 million-worth of secret cuts, but I will leave it there and turn to the Labour Party, which, just a few weeks ago, moved a motion of no confidence in the budget. Now that it has found the confidence to present its own budget, it has shown itself to have no competence in delivering any form of coherent plan. James Kelly at the shadow cabinet had a cunning plan, apparently vetoed by Richard Leonard. Apparently, I have sprung the budget process on the Labour Party’s annual leadership contest—we have been 10 years in government and had 10 leaders of the Labour Party in Scotland.

I have an important point to make. I presented the move in the threshold for the 3 per cent pay uplift to over £36,000—that is more than the Labour Party is committing to for public sector pay. The really telling question is on its £1 billion budget plan. When asked about just one element—income tax and the effect on Labour’s tax plans of behavioural change—James Kelly said that he has worked with SPICe. SPICe told the Labour Party that its estimate was the static figure, so that wipes hundreds of millions of pounds off the Labour Party income tax policy alone. That is just income tax—and the Labour Party knows it. By law, we have to use the Scottish Fiscal Commission forecasts to deliver a budget. That is what allows us to draw down from the Treasury the resources to spend on public services. It is clear that the Labour Party is not fit for administration; it is not even fit for opposition.

Iain Gray

The cabinet secretary brought to Parliament a budget with a £50 million mistake in the middle of his tax plan, which he has had to correct today, and he made an £86 million arithmetical error in his local government provision. He is not on the strongest ground when it comes to fiscal competence.

Derek Mackay

That was more nonsense from former leader, Iain Gray—one of the 10. The financial settlement for local government is increasing in real terms, and it is opposed by the Labour Party. That is before we even come to raising council tax. No wonder that COSLA has, just now, welcomed the budget movement from the Government, in alliance with the Green Party, to deliver that above-inflation increase. COSLA’s resources spokesperson says:

“First and foremost I am pleased that both Mr Mackay and the Scottish Green Party have listened to what COSLA has told them and that they have taken our concerns on board ... That is why today, I give credit where it is due.”

That spokesperson is a Tory councillor—no wonder the Tories are silent. Of course COSLA will welcome those extra resources to Scotland’s local government, as well as the resolution to the northern isles issue.

Brian Whittle (South Scotland) (Con)

I thank my comrade for taking an intervention. He says that the budget protects services, but is he aware that the SNP-Labour coalition in South Ayrshire is proposing to cut teacher numbers by one in six, to stop all outdoor learning, to remove school crossing patrols and to reduce the budget for learning disability services—for children with disabilities—and mental health services? How does he reconcile the necessity for a council to even consider such damaging cuts with the First Minister’s assertion that education is the SNP Government’s first priority?

Derek Mackay

As a consequence of our decisions and the local government order that will follow, that local authority will have an extra £9.4 million to spend, so it can look again at those decisions. [Derek Mackay has corrected this contribution. See end of report.] [Interruption.] The Tories will oppose that, as they are back to their attitude of raise less, spend more.

Miles Briggs asked about the City of Edinburgh Council. Using the same methodology, it will get an extra £12.4 million as a consequence of the deal that we arrived at today, which I am sure will be opposed by the Conservatives.

We are the lowest-taxed and fairest-taxed part of the UK. We will deliver a deal that ensures that free prescriptions continue, as well as free personal care and free higher education; that there are no rates for 100,000 properties; that we tackle the attainment gap; that we expand free childcare; that we build 50,000 new affordable homes; that we fund above-inflation investment in the police, universities and colleges, and local government; and that we protect our precious NHS.

The budget delivers stability, stimulus and sustainability for our public services in a fair way. It invests in today and our future. It invests in growth. There is divergence from the approach of the UK Government because we want to build a better country. I believe that our proposition commands the support of the Scottish people as well. Even on income tax, a poll by The Times—of all newspapers—showed that people backed our proposition by two to one. There is popular support for our tax plans and our investment plans for our public services. There is popular support for tackling inequality as well.

In a Parliament of minorities, we have reached out and found consensus. We have a deal that works for Scotland. We are building a better country in the face of Tory cuts. When we approve the budget, I believe that we speak for the majority of Scotland. That is why I am very proud to support and present the budget today.

Vote at Stage 1

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Vote at Stage 1 transcript

The Presiding Officer (Ken Macintosh)

The first question is, that amendment S5M-10183.1, in the name of Murdo Fraser, which seeks to amend motion S5M-10183, in the name of Derek Mackay, on stage 1 of the Budget (Scotland) (No 2) Bill, be agreed to. Are we agreed?

Members: No.

The Presiding Officer

There will be a division.

For

Whittle, Brian (South Scotland) (Con)
Wells, Annie (Glasgow) (Con)
Tomkins, Adam (Glasgow) (Con)
Stewart, Alexander (Mid Scotland and Fife) (Con)
Smith, Liz (Mid Scotland and Fife) (Con)
Simpson, Graham (Central Scotland) (Con)
Scott, John (Ayr) (Con)
Mundell, Oliver (Dumfriesshire) (Con)
Mountain, Edward (Highlands and Islands) (Con)
Mitchell, Margaret (Central Scotland) (Con)
Mason, Tom (North East Scotland) (Con)
Lockhart, Dean (Mid Scotland and Fife) (Con)
Lindhurst, Gordon (Lothian) (Con)
Kerr, Liam (North East Scotland) (Con)
Halcro Johnston, Jamie (Highlands and Islands) (Con)
Harris, Alison (Central Scotland) (Con)
Hamilton, Rachael (Ettrick, Roxburgh and Berwickshire) (Con)
Greene, Jamie (West Scotland) (Con)
Fraser, Murdo (Mid Scotland and Fife) (Con)
Davidson, Ruth (Edinburgh Central) (Con)
Corry, Maurice (West Scotland) (Con)
Chapman, Peter (North East Scotland) (Con)
Carson, Finlay (Galloway and West Dumfries) (Con)
Carlaw, Jackson (Eastwood) (Con)
Cameron, Donald (Highlands and Islands) (Con)
Burnett, Alexander (Aberdeenshire West) (Con)
Briggs, Miles (Lothian) (Con)
Bowman, Bill (North East Scotland) (Con)
Ballantyne, Michelle (South Scotland) (Con)
Balfour, Jeremy (Lothian) (Con)

Against

Yousaf, Humza (Glasgow Pollok) (SNP)
Wightman, Andy (Lothian) (Green)
White, Sandra (Glasgow Kelvin) (SNP)
Wheelhouse, Paul (South Scotland) (SNP)
Watt, Maureen (Aberdeen South and North Kincardine) (SNP)
Torrance, David (Kirkcaldy) (SNP)
Todd, Maree (Highlands and Islands) (SNP)
Swinney, John (Perthshire North) (SNP)
Sturgeon, Nicola (Glasgow Southside) (SNP)
Stewart, Kevin (Aberdeen Central) (SNP)
Stewart, David (Highlands and Islands) (Lab)
Stevenson, Stewart (Banffshire and Buchan Coast) (SNP)
Somerville, Shirley-Anne (Dunfermline) (SNP)
Smyth, Colin (South Scotland) (Lab)
Smith, Elaine (Central Scotland) (Lab)
Scott, Tavish (Shetland Islands) (LD)
Sarwar, Anas (Glasgow) (Lab)
Russell, Michael (Argyll and Bute) (SNP)
Ruskell, Mark (Mid Scotland and Fife) (Green)
Rumbles, Mike (North East Scotland) (LD)
Rowley, Alex (Mid Scotland and Fife) (Lab)
Ross, Gail (Caithness, Sutherland and Ross) (SNP)
Robison, Shona (Dundee City East) (SNP)
Rennie, Willie (North East Fife) (LD)
Paterson, Gil (Clydebank and Milngavie) (SNP)
Neil, Alex (Airdrie and Shotts) (SNP)
McNeill, Pauline (Glasgow) (Lab)
McMillan, Stuart (Greenock and Inverclyde) (SNP)
McKelvie, Christina (Hamilton, Larkhall and Stonehouse) (SNP)
McKee, Ivan (Glasgow Provan) (SNP)
McArthur, Liam (Orkney Islands) (LD)
McAlpine, Joan (South Scotland) (SNP)
Matheson, Michael (Falkirk West) (SNP)
Mason, John (Glasgow Shettleston) (SNP)
Martin, Gillian (Aberdeenshire East) (SNP)
Marra, Jenny (North East Scotland) (Lab)
Maguire, Ruth (Cunninghame South) (SNP)
Macpherson, Ben (Edinburgh Northern and Leith) (SNP)
Mackay, Rona (Strathkelvin and Bearsden) (SNP)
Mackay, Derek (Renfrewshire North and West) (SNP)
MacGregor, Fulton (Coatbridge and Chryston) (SNP)
Macdonald, Lewis (North East Scotland) (Lab)
MacDonald, Gordon (Edinburgh Pentlands) (SNP)
MacDonald, Angus (Falkirk East) (SNP)
Lyle, Richard (Uddingston and Bellshill) (SNP)
Lochhead, Richard (Moray) (SNP)
Leonard, Richard (Central Scotland) (Lab)
Lennon, Monica (Central Scotland) (Lab)
Lamont, Johann (Glasgow) (Lab)
Kidd, Bill (Glasgow Anniesland) (SNP)
Kelly, James (Glasgow) (Lab)
Johnstone, Alison (Lothian) (Green)
Johnson, Daniel (Edinburgh Southern) (Lab)
Hyslop, Fiona (Linlithgow) (SNP)
Hepburn, Jamie (Cumbernauld and Kilsyth) (SNP)
Haughey, Clare (Rutherglen) (SNP)
Harvie, Patrick (Glasgow) (Green)
Harper, Emma (South Scotland) (SNP)
Griffin, Mark (Central Scotland) (Lab)
Greer, Ross (West Scotland) (Green)
Gray, Iain (East Lothian) (Lab)
Grant, Rhoda (Highlands and Islands) (Lab)
Grahame, Christine (Midlothian South, Tweeddale and Lauderdale) (SNP)
Gilruth, Jenny (Mid Fife and Glenrothes) (SNP)
Gibson, Kenneth (Cunninghame North) (SNP)
Freeman, Jeane (Carrick, Cumnock and Doon Valley) (SNP)
Forbes, Kate (Skye, Lochaber and Badenoch) (SNP)
FitzPatrick, Joe (Dundee City West) (SNP)
Finnie, John (Highlands and Islands) (Green)
Findlay, Neil (Lothian) (Lab)
Fee, Mary (West Scotland) (Lab)
Fabiani, Linda (East Kilbride) (SNP)
Ewing, Fergus (Inverness and Nairn) (SNP)
Ewing, Annabelle (Cowdenbeath) (SNP)
Dugdale, Kezia (Lothian) (Lab)
Dornan, James (Glasgow Cathcart) (SNP)
Doris, Bob (Glasgow Maryhill and Springburn) (SNP)
Dey, Graeme (Angus South) (SNP)
Denham, Ash (Edinburgh Eastern) (SNP)
Cunningham, Roseanna (Perthshire South and Kinross-shire) (SNP)
Crawford, Bruce (Stirling) (SNP)
Constance, Angela (Almond Valley) (SNP)
Cole-Hamilton, Alex (Edinburgh Western) (LD)
Coffey, Willie (Kilmarnock and Irvine Valley) (SNP)
Campbell, Aileen (Clydesdale) (SNP)
Brown, Keith (Clackmannanshire and Dunblane) (SNP)
Bibby, Neil (West Scotland) (Lab)
Beattie, Colin (Midlothian North and Musselburgh) (SNP)
Beamish, Claudia (South Scotland) (Lab)
Baker, Claire (Mid Scotland and Fife) (Lab)
Baillie, Jackie (Dumbarton) (Lab)
Arthur, Tom (Renfrewshire South) (SNP)
Allan, Dr Alasdair (Na h-Eileanan an Iar) (SNP)
Adamson, Clare (Motherwell and Wishaw) (SNP)
Adam, George (Paisley) (SNP)

The Presiding Officer

The result of the division is: For 30, Against 95, Abstentions 0.

Amendment disagreed to.

The Presiding Officer

The next question is, that amendment S5M-10183.2, in the name of James Kelly, which seeks to amend S5M-10183, in the name of Derek Mackay, on the Budget (Scotland) (No 2) Bill, be agreed to. Are we agreed?

Members: No.

The Presiding Officer

There will be a division.

For

Stewart, David (Highlands and Islands) (Lab)
Smyth, Colin (South Scotland) (Lab)
Smith, Elaine (Central Scotland) (Lab)
Sarwar, Anas (Glasgow) (Lab)
Rowley, Alex (Mid Scotland and Fife) (Lab)
McNeill, Pauline (Glasgow) (Lab)
Marra, Jenny (North East Scotland) (Lab)
Macdonald, Lewis (North East Scotland) (Lab)
Leonard, Richard (Central Scotland) (Lab)
Lennon, Monica (Central Scotland) (Lab)
Lamont, Johann (Glasgow) (Lab)
Kelly, James (Glasgow) (Lab)
Johnson, Daniel (Edinburgh Southern) (Lab)
Griffin, Mark (Central Scotland) (Lab)
Gray, Iain (East Lothian) (Lab)
Grant, Rhoda (Highlands and Islands) (Lab)
Findlay, Neil (Lothian) (Lab)
Fee, Mary (West Scotland) (Lab)
Dugdale, Kezia (Lothian) (Lab)
Bibby, Neil (West Scotland) (Lab)
Beamish, Claudia (South Scotland) (Lab)
Baker, Claire (Mid Scotland and Fife) (Lab)
Baillie, Jackie (Dumbarton) (Lab)

Against

Yousaf, Humza (Glasgow Pollok) (SNP)
Wightman, Andy (Lothian) (Green)
Whittle, Brian (South Scotland) (Con)
White, Sandra (Glasgow Kelvin) (SNP)
Wheelhouse, Paul (South Scotland) (SNP)
Wells, Annie (Glasgow) (Con)
Watt, Maureen (Aberdeen South and North Kincardine) (SNP)
Torrance, David (Kirkcaldy) (SNP)
Tomkins, Adam (Glasgow) (Con)
Todd, Maree (Highlands and Islands) (SNP)
Swinney, John (Perthshire North) (SNP)
Sturgeon, Nicola (Glasgow Southside) (SNP)
Stewart, Kevin (Aberdeen Central) (SNP)
Stewart, Alexander (Mid Scotland and Fife) (Con)
Stevenson, Stewart (Banffshire and Buchan Coast) (SNP)
Somerville, Shirley-Anne (Dunfermline) (SNP)
Smith, Liz (Mid Scotland and Fife) (Con)
Simpson, Graham (Central Scotland) (Con)
Scott, Tavish (Shetland Islands) (LD)
Scott, John (Ayr) (Con)
Russell, Michael (Argyll and Bute) (SNP)
Ruskell, Mark (Mid Scotland and Fife) (Green)
Rumbles, Mike (North East Scotland) (LD)
Ross, Gail (Caithness, Sutherland and Ross) (SNP)
Robison, Shona (Dundee City East) (SNP)
Rennie, Willie (North East Fife) (LD)
Paterson, Gil (Clydebank and Milngavie) (SNP)
Neil, Alex (Airdrie and Shotts) (SNP)
Mundell, Oliver (Dumfriesshire) (Con)
Mountain, Edward (Highlands and Islands) (Con)
Mitchell, Margaret (Central Scotland) (Con)
McMillan, Stuart (Greenock and Inverclyde) (SNP)
McKelvie, Christina (Hamilton, Larkhall and Stonehouse) (SNP)
McKee, Ivan (Glasgow Provan) (SNP)
McArthur, Liam (Orkney Islands) (LD)
McAlpine, Joan (South Scotland) (SNP)
Matheson, Michael (Falkirk West) (SNP)
Mason, Tom (North East Scotland) (Con)
Mason, John (Glasgow Shettleston) (SNP)
Martin, Gillian (Aberdeenshire East) (SNP)
Maguire, Ruth (Cunninghame South) (SNP)
Macpherson, Ben (Edinburgh Northern and Leith) (SNP)
Mackay, Rona (Strathkelvin and Bearsden) (SNP)
Mackay, Derek (Renfrewshire North and West) (SNP)
MacGregor, Fulton (Coatbridge and Chryston) (SNP)
MacDonald, Gordon (Edinburgh Pentlands) (SNP)
MacDonald, Angus (Falkirk East) (SNP)
Lyle, Richard (Uddingston and Bellshill) (SNP)
Lockhart, Dean (Mid Scotland and Fife) (Con)
Lochhead, Richard (Moray) (SNP)
Lindhurst, Gordon (Lothian) (Con)
Kidd, Bill (Glasgow Anniesland) (SNP)
Kerr, Liam (North East Scotland) (Con)
Johnstone, Alison (Lothian) (Green)
Halcro Johnston, Jamie (Highlands and Islands) (Con)
Hyslop, Fiona (Linlithgow) (SNP)
Hepburn, Jamie (Cumbernauld and Kilsyth) (SNP)
Haughey, Clare (Rutherglen) (SNP)
Harvie, Patrick (Glasgow) (Green)
Harris, Alison (Central Scotland) (Con)
Harper, Emma (South Scotland) (SNP)
Hamilton, Rachael (Ettrick, Roxburgh and Berwickshire) (Con)
Greer, Ross (West Scotland) (Green)
Greene, Jamie (West Scotland) (Con)
Grahame, Christine (Midlothian South, Tweeddale and Lauderdale) (SNP)
Gilruth, Jenny (Mid Fife and Glenrothes) (SNP)
Gibson, Kenneth (Cunninghame North) (SNP)
Freeman, Jeane (Carrick, Cumnock and Doon Valley) (SNP)
Fraser, Murdo (Mid Scotland and Fife) (Con)
Forbes, Kate (Skye, Lochaber and Badenoch) (SNP)
FitzPatrick, Joe (Dundee City West) (SNP)
Finnie, John (Highlands and Islands) (Green)
Fabiani, Linda (East Kilbride) (SNP)
Ewing, Fergus (Inverness and Nairn) (SNP)
Ewing, Annabelle (Cowdenbeath) (SNP)
Dornan, James (Glasgow Cathcart) (SNP)
Doris, Bob (Glasgow Maryhill and Springburn) (SNP)
Dey, Graeme (Angus South) (SNP)
Denham, Ash (Edinburgh Eastern) (SNP)
Davidson, Ruth (Edinburgh Central) (Con)
Cunningham, Roseanna (Perthshire South and Kinross-shire) (SNP)
Crawford, Bruce (Stirling) (SNP)
Corry, Maurice (West Scotland) (Con)
Constance, Angela (Almond Valley) (SNP)
Cole-Hamilton, Alex (Edinburgh Western) (LD)
Coffey, Willie (Kilmarnock and Irvine Valley) (SNP)
Chapman, Peter (North East Scotland) (Con)
Carson, Finlay (Galloway and West Dumfries) (Con)
Carlaw, Jackson (Eastwood) (Con)
Campbell, Aileen (Clydesdale) (SNP)
Cameron, Donald (Highlands and Islands) (Con)
Burnett, Alexander (Aberdeenshire West) (Con)
Brown, Keith (Clackmannanshire and Dunblane) (SNP)
Briggs, Miles (Lothian) (Con)
Bowman, Bill (North East Scotland) (Con)
Beattie, Colin (Midlothian North and Musselburgh) (SNP)
Ballantyne, Michelle (South Scotland) (Con)
Balfour, Jeremy (Lothian) (Con)
Arthur, Tom (Renfrewshire South) (SNP)
Allan, Dr Alasdair (Na h-Eileanan an Iar) (SNP)
Adamson, Clare (Motherwell and Wishaw) (SNP)
Adam, George (Paisley) (SNP)

The Presiding Officer

The result of the division is: For 23, Against 102, Abstentions 0.

Amendment disagreed to.

The Presiding Officer

The next question is, that motion S5M-10183, in the name of Derek Mackay, on the Budget (Scotland) (No 2) Bill, be agreed to. Are we agreed?

Members: No.

The Presiding Officer

There will be a division.

For

Yousaf, Humza (Glasgow Pollok) (SNP)
Wightman, Andy (Lothian) (Green)
White, Sandra (Glasgow Kelvin) (SNP)
Wheelhouse, Paul (South Scotland) (SNP)
Watt, Maureen (Aberdeen South and North Kincardine) (SNP)
Torrance, David (Kirkcaldy) (SNP)
Todd, Maree (Highlands and Islands) (SNP)
Swinney, John (Perthshire North) (SNP)
Sturgeon, Nicola (Glasgow Southside) (SNP)
Stewart, Kevin (Aberdeen Central) (SNP)
Stevenson, Stewart (Banffshire and Buchan Coast) (SNP)
Somerville, Shirley-Anne (Dunfermline) (SNP)
Scott, Tavish (Shetland Islands) (LD)
Russell, Michael (Argyll and Bute) (SNP)
Ruskell, Mark (Mid Scotland and Fife) (Green)
Ross, Gail (Caithness, Sutherland and Ross) (SNP)
Robison, Shona (Dundee City East) (SNP)
Paterson, Gil (Clydebank and Milngavie) (SNP)
Neil, Alex (Airdrie and Shotts) (SNP)
McMillan, Stuart (Greenock and Inverclyde) (SNP)
McKelvie, Christina (Hamilton, Larkhall and Stonehouse) (SNP)
McKee, Ivan (Glasgow Provan) (SNP)
McArthur, Liam (Orkney Islands) (LD)
McAlpine, Joan (South Scotland) (SNP)
Matheson, Michael (Falkirk West) (SNP)
Mason, John (Glasgow Shettleston) (SNP)
Martin, Gillian (Aberdeenshire East) (SNP)
Maguire, Ruth (Cunninghame South) (SNP)
Macpherson, Ben (Edinburgh Northern and Leith) (SNP)
Mackay, Rona (Strathkelvin and Bearsden) (SNP)
Mackay, Derek (Renfrewshire North and West) (SNP)
MacGregor, Fulton (Coatbridge and Chryston) (SNP)
MacDonald, Gordon (Edinburgh Pentlands) (SNP)
MacDonald, Angus (Falkirk East) (SNP)
Lyle, Richard (Uddingston and Bellshill) (SNP)
Lochhead, Richard (Moray) (SNP)
Kidd, Bill (Glasgow Anniesland) (SNP)
Johnstone, Alison (Lothian) (Green)
Hyslop, Fiona (Linlithgow) (SNP)
Hepburn, Jamie (Cumbernauld and Kilsyth) (SNP)
Haughey, Clare (Rutherglen) (SNP)
Harvie, Patrick (Glasgow) (Green)
Harper, Emma (South Scotland) (SNP)
Greer, Ross (West Scotland) (Green)
Grahame, Christine (Midlothian South, Tweeddale and Lauderdale) (SNP)
Gilruth, Jenny (Mid Fife and Glenrothes) (SNP)
Gibson, Kenneth (Cunninghame North) (SNP)
Freeman, Jeane (Carrick, Cumnock and Doon Valley) (SNP)
Forbes, Kate (Skye, Lochaber and Badenoch) (SNP)
FitzPatrick, Joe (Dundee City West) (SNP)
Finnie, John (Highlands and Islands) (Green)
Fabiani, Linda (East Kilbride) (SNP)
Ewing, Fergus (Inverness and Nairn) (SNP)
Ewing, Annabelle (Cowdenbeath) (SNP)
Dornan, James (Glasgow Cathcart) (SNP)
Doris, Bob (Glasgow Maryhill and Springburn) (SNP)
Dey, Graeme (Angus South) (SNP)
Denham, Ash (Edinburgh Eastern) (SNP)
Cunningham, Roseanna (Perthshire South and Kinross-shire) (SNP)
Crawford, Bruce (Stirling) (SNP)
Constance, Angela (Almond Valley) (SNP)
Coffey, Willie (Kilmarnock and Irvine Valley) (SNP)
Campbell, Aileen (Clydesdale) (SNP)
Brown, Keith (Clackmannanshire and Dunblane) (SNP)
Beattie, Colin (Midlothian North and Musselburgh) (SNP)
Arthur, Tom (Renfrewshire South) (SNP)
Allan, Dr Alasdair (Na h-Eileanan an Iar) (SNP)
Adamson, Clare (Motherwell and Wishaw) (SNP)
Adam, George (Paisley) (SNP)

Against

Whittle, Brian (South Scotland) (Con)
Wells, Annie (Glasgow) (Con)
Tomkins, Adam (Glasgow) (Con)
Stewart, David (Highlands and Islands) (Lab)
Stewart, Alexander (Mid Scotland and Fife) (Con)
Smyth, Colin (South Scotland) (Lab)
Smith, Liz (Mid Scotland and Fife) (Con)
Smith, Elaine (Central Scotland) (Lab)
Simpson, Graham (Central Scotland) (Con)
Scott, John (Ayr) (Con)
Sarwar, Anas (Glasgow) (Lab)
Rumbles, Mike (North East Scotland) (LD)
Rowley, Alex (Mid Scotland and Fife) (Lab)
Rennie, Willie (North East Fife) (LD)
Mundell, Oliver (Dumfriesshire) (Con)
Mountain, Edward (Highlands and Islands) (Con)
Mitchell, Margaret (Central Scotland) (Con)
McNeill, Pauline (Glasgow) (Lab)
Mason, Tom (North East Scotland) (Con)
Marra, Jenny (North East Scotland) (Lab)
Macdonald, Lewis (North East Scotland) (Lab)
Lockhart, Dean (Mid Scotland and Fife) (Con)
Lindhurst, Gordon (Lothian) (Con)
Leonard, Richard (Central Scotland) (Lab)
Lennon, Monica (Central Scotland) (Lab)
Lamont, Johann (Glasgow) (Lab)
Kerr, Liam (North East Scotland) (Con)
Kelly, James (Glasgow) (Lab)
Halcro Johnston, Jamie (Highlands and Islands) (Con)
Johnson, Daniel (Edinburgh Southern) (Lab)
Harris, Alison (Central Scotland) (Con)
Hamilton, Rachael (Ettrick, Roxburgh and Berwickshire) (Con)
Griffin, Mark (Central Scotland) (Lab)
Greene, Jamie (West Scotland) (Con)
Gray, Iain (East Lothian) (Lab)
Grant, Rhoda (Highlands and Islands) (Lab)
Fraser, Murdo (Mid Scotland and Fife) (Con)
Findlay, Neil (Lothian) (Lab)
Fee, Mary (West Scotland) (Lab)
Dugdale, Kezia (Lothian) (Lab)
Davidson, Ruth (Edinburgh Central) (Con)
Corry, Maurice (West Scotland) (Con)
Cole-Hamilton, Alex (Edinburgh Western) (LD)
Chapman, Peter (North East Scotland) (Con)
Carson, Finlay (Galloway and West Dumfries) (Con)
Carlaw, Jackson (Eastwood) (Con)
Cameron, Donald (Highlands and Islands) (Con)
Burnett, Alexander (Aberdeenshire West) (Con)
Briggs, Miles (Lothian) (Con)
Bowman, Bill (North East Scotland) (Con)
Bibby, Neil (West Scotland) (Lab)
Beamish, Claudia (South Scotland) (Lab)
Ballantyne, Michelle (South Scotland) (Con)
Balfour, Jeremy (Lothian) (Con)
Baker, Claire (Mid Scotland and Fife) (Lab)
Baillie, Jackie (Dumbarton) (Lab)

The Presiding Officer

The result of the division is: For 69, Against 56, Abstentions 0.

Motion agreed to,

That the Parliament agrees to the general principles of the Budget (Scotland) (No.2) Bill.

The Presiding Officer

The next question is, that motions S5M-10210 to S5M-10213, in the name of Joe FitzPatrick, be agreed to.

Motions agreed to,

That the Parliament agrees that the Regulation of Investigatory Powers (Covert Human Intelligence Sources - Code of Practice) (Scotland) Order 2018 [draft] be approved.

That the Parliament agrees that the Regulation of Investigatory Powers (Covert Surveillance and Property Interference - Code of Practice) (Scotland) Order 2018 [draft] be approved.

That the Parliament agrees that the Regulation of Investigatory Powers (Equipment Interference – Code of Practice) (Scotland) Order 2018 [draft] be approved.

That the Parliament agrees that, subject to its agreement to the general principles of the Budget (Scotland) (No.2) Bill, for the purposes of consideration of the Bill at stage 2, in Rule 9.10.2 of Standing Orders—

• the word “third” be substituted for the word “fourth” in both places where it occurs,

• the words “except on a final lodging-day, when amendments may be lodged only until 12:00” be omitted.

MSPs agreed that this Bill could continue

Stage 2 - Changes to detail 

MSPs can propose changes to the Bill. The changes are considered and then voted on by the committee.

Changes to the Bill

MSPs can propose changes to a Bill  these are called 'amendments'. The changes are considered then voted on by the lead committee.

The lists of proposed changes are known as a 'marshalled list'. There's a separate list for each week that the committee is looking at proposed changes.

The 'groupings' document groups amendments together based on their subject matter. It shows the order in which the amendments will be debated by the committee and in the Chamber. This is to avoid repetition in the debates.

How is it decided whether the changes go into the Bill?

When MSPs want to make a change to a Bill, they propose an 'amendment'. This sets out the changes they want to make to a specific part of the Bill.

The group of MSPs that is examining the Bill (lead committee) votes on whether it thinks each amendment should be accepted or not.

Depending on the number of amendments, this can be done during one or more meetings.

First meeting on amendments

Documents with the amendments considered at this meeting held on 7 February 2018:

Video Thumbnail Preview PNG

First meeting on amendments transcript

The Convener

The second item on our agenda is to take evidence on the Budget (Scotland) (No 2) Bill at stage 2. This item is intended to allow the committee to put questions on the bill and the amendments to the cabinet secretary and officials before we turn to formal stage 2 proceedings. We are joined by Derek Mackay, the Cabinet Secretary for Finance and the Constitution. The cabinet secretary is accompanied by the Scottish Government officials John Nicholson, deputy director of financial scrutiny and outcomes, Graham Owenson, head of local government finance, and Jonathan Sewell, head of the income tax and tax strategy unit. I welcome our witnesses to the meeting and invite the cabinet secretary to make an opening statement.

The Cabinet Secretary for Finance and the Constitution (Derek Mackay)

I welcome the Finance and Constitution Committee’s report on the 2018-19 draft budget. As I informed Parliament last week, I will respond to the report in full in advance of the stage 3 debate on 21 February. Today’s committee session will focus on the content of the budget bill, as approved in principle by the Scottish Parliament. In addition, following the spending changes that I announced at the stage 1 debate last week, there are a number of amendments to the bill that the committee will need to consider.

I will begin by focusing on some of the presentational differences between the draft budget that I published in December and the budget bill that was introduced on 25 January and that we are considering today. To assist the committee, I will explain the main differences, with reference to table 1.2 on page 3 of the supporting document. Column H in table 1.2 sets out the draft budget spending plans, restated for budget bill purposes. Columns B to G provide details of the specific adjustments that have been made, including the necessary statutory adjustments, to meet the requirements of the parliamentary process. There is only one actual change to the spending plans outlined in the draft budget that I would wish to take the opportunity to highlight to the committee.

To ensure that budgets align with the latest available information, there is a decrease of £222.4 million to the annually managed expenditure budget provision for teachers and NHS pension schemes. This reflects Her Majesty’s Treasury update to the discount rate applied for post-employment benefits announced in December 2017. The rate changes announced in December are used in preparing budget estimates but will have no effect on the current contributions paid out of salaries by scheme members or on current payments made to retirees.

Other adjustments set out in table 1.2 include the exclusion of £165.6 million of non-departmental public body non-cash costs, which do not require parliamentary approval and which relate mainly to the depreciation and impairments for NDPBs; the exclusion of judicial salaries and Scottish Water loan repayments to the national loans fund and the Public Works Loan Board, which again do not require parliamentary approval; and the inclusion of £5.4 million of police loan charges that need to be approved as part of the budget bill.

There are adjustments to portfolio budgets to reflect the requirement for separate parliamentary approval for a number of direct-funded and external bodies. Those include the National Records of Scotland, the Forestry Commission, Food Standards Scotland, the Scottish Courts and Tribunals Service, the Office of the Scottish Charity Regulator, the Scottish Housing Regulator, Revenue Scotland and the teachers and NHS pension schemes.

The restatement of local authority specific grants included in the overall 2018-19 local government settlement is there to ensure that they are approved and under the control of the appropriate cabinet secretary with policy responsibility. Full details of all grants that are treated in this way are included in the table on page 43 of the supporting document.

Those are all the technical adjustments and do not change in any way the budget that has been scrutinised by this and other committees and approved in principle by the Parliament. I also remind members that, for the purposes of the budget bill, only spending which scores as capital in the Scottish Government’s or direct-funded bodies’ annual accounts is shown as capital. That means that capital grants are shown as operating expenditure in the budget bill supporting document. The full capital picture is shown in table 1.3 on page 4 of the supporting document.

The stage 2 amendments that the committee is considering today give effect to the changes to spending plans that I announced to Parliament in the stage 1 debate last week. They will be formally moved later in this meeting. As I announced to Parliament last week, I will be providing a total uplift of £170 million to local government as part of the deal agreed with the Scottish Greens.

The amendments that I am proposing today allocate £10.5 million to support interisland ferries for the Orkney and Shetland isles; an additional £125 million to local government in 2018-19, with the balance of £34.5 million being allocated in 2017-18; £2 million for fuel poverty; £200,000 to accelerate the delivery of our four marine protected areas; and £70,000 in funding for the Scottish Sports Association. I have also agreed to make available up to £2 million for a local rail development fund, but that is not covered in the amendments, as discussions on how that will be taken forward are still on-going.

Those commitments will be funded through a combination of around £62 million in expected additional income tax revenues and around £110 million from a combination of anticipated underspend in 2017-18 and drawdown from the Scotland reserve. As the committee has just heard, the SFC has forecast that an additional £55 million will arise from the change in the higher-rate threshold and that there will be a further £7 million of tax revenues due to the change in the pay policy threshold to £36,500. The final mix of underspend and reserve drawdown will be determined at the end of the financial year, once there is greater certainty on the year-end financial position.

I hope that those introductory remarks have provided the committee with a useful explanation of some of the key aspects of the budget bill. I am happy to take any questions from members.

The Convener

I want to pick up on one of the themes that I tried to explore during the stage 1 debate about some of the future challenges around the budget.

You will note from our report on the draft budget that we highlight a potential risk to public finances if there is any significant forecast error in future. You will also have seen that we are looking for further details from the SFC on why, despite the fact that it forecasts lower economic growth per capita relative to that in the UK, it forecasts that income tax revenues per capita in Scotland will grow at the same rate as those in the rest of the UK. Given that uncertainty and volatility, can you provide the committee with some understanding of how the Scottish Government intends to address this challenge and avoid as much as possible any unwelcome surprises when we eventually get the final outturn data for income tax revenues in September 2020? It would be helpful to know about your planning on that.

Derek Mackay

That is a good question, and one that we will all be focused on. Obviously, we want forecasts to be as robust as possible. I was watching the evidence earlier and I think that I heard Patrick Harvie say that no economist gets forecasts exactly right and to the penny, such is the nature of forecasts. Of course, we want SFC forecasts to be as robust as possible but, that said, there is a range of interventions that we can make.

First, there is the reserve to help with smoothing from one year to the next if that is required. The budget is substantial, at around £40 billion, so there is obviously flexibility to accommodate some of that but, if the forecast error was on such a substantial scale that it was beyond our financial means to resolve, there are the borrowing powers as part of the fiscal regime. So there is in-year budgeting, managing the issue from one year to the next, the reserve, the overall approach on tax take and, of course, the fiscal framework, through which the methodology that we have is tax to tax. In that regard, even though gross domestic product growth is not what we would want it to be, the analysis shows that wage growth is individually and specifically stronger. There is a range of actions, from in-year management, use of reserves and all the other tools that we have in the box but, if the scale of the error is substantial, there is provision to borrow in accordance with the fiscal framework.

The Convener

If the forecasts were so far out, would you require Treasury agreement to enter into that process of drawdown from borrowing powers to help to smooth it out?

Derek Mackay

Yes. We would have to meet the necessary criteria and we would require Treasury engagement.

The Convener

Adam Tomkins has questions on transparency.

Adam Tomkins (Glasgow) (Con)

Cabinet secretary, do you agree that it is essential for effective parliamentary scrutiny of the budget process that the Scottish Government is as transparent as possible about its budget proposals?

Derek Mackay

Yes.

Adam Tomkins

We have not had the pleasure yet of your response to our report on the draft budget, which was published a couple of weeks ago, but you will see when you look at that report that there are a number of specific recommendations about transparency. Have you had a chance to reflect on those recommendations yet?

Derek Mackay

Yes. I think that those should be taken into account as part of the overall work around the budget process review group as well. We will consider all of that in full in considering the process.

Adam Tomkins

Is it compatible with the principle of transparency, which you have said is essential to effective parliamentary scrutiny, or is it a breach of that principle for you to produce more than £160 million of additional spending between the publication of the draft budget and the actual budget?

Derek Mackay

I do not think that there is any breach at all. It is a substantial budget, and there is obviously flexibility. When I appeared before the committee previously, I was asked about what financial resources the Government has and I have repeatedly made the point that areas such as budget exchange and carryover can be determined as the process moves and we get to the year end. If you take—

Adam Tomkins

What kind of—

Derek Mackay

Let me make the point, if I may, because it relates to the budget. I have also presented information on the Scotland reserve to Parliament. On other matters, such as the non-domestic rates pool, I have been perfectly clear about what the Government’s plan is.

Adam Tomkins

Sorry, I thought that you had stopped.

Can you give us a bit of transparency on the Scotland reserve? What size is it? What size was it before you made the deal with the Scottish Green Party and what size is it now that you have made that deal?

Derek Mackay

As I have previously reported to Parliament, and as I am sure Adam Tomkins actually knows, there have been years when we contributed to the Scotland reserve. As a consequence of the fiscal framework, there are parameters around budget exchange from one year to the next. Where we have generated tax revenues that could go into the Scotland reserve, that is what I did, to the tune of £74 million, which has been reported to Parliament. That can be deployed now and in future years. I have described the decisions that we can take around budget exchange—that is year-end flexibility or, if you like, the carryover—and the Scotland reserve. There is also the tax change to fund the proposition that will secure the passing of the budget. At all stages, I have been forthcoming on the Government’s financial position. If we use the tax reserve for the balance, there will still be Scotland reserve resources available for next year.

Adam Tomkins

Perhaps the problem that we have is that we have different definitions of transparency because, with respect, I do not think that that was a very transparent answer. I asked you what size the Scotland reserve was before you did the deal with the Scottish Green Party and what size the Scotland reserve will be now that you have done the deal with the Scottish Green Party. You have not answered either of those questions.

Derek Mackay

I have tried to answer the question, but there are the issues that I set out in my opening statement. If you listen to what I am actually saying, the final determination on what is deployed will be based on what is available in budget exchange. If there is more available for carryover at the end of the year, we will use less of the reserve. As it stands right now, on current planning assumptions, we would use about £40 million of the £74 million in the Scotland reserve, but that may change as a consequence of what might be available in budget carryover. In the interests of transparency, that figure for the reserve is annually reported to Parliament and any underspend that may arise. That is normally provided with the June outturn figures, which is what I have done since becoming finance secretary, in a very open and transparent way.

James Kelly

The money that is being drawn from the underspend and the Scotland reserve is £110 million. A similar situation arose last year, when £120 million was drawn down from that. Is it not the case that, in effect, you have that block of money set aside almost as a slush fund for your negotiations as part of the parliamentary process?

Derek Mackay

I would not describe it as that, Mr Kelly, although you can use any term that you want. In previous years, any underspend at the end of the year might have been carried over and used through the course of the year. If we want to be fully transparent, it is not a bad thing to set out what the underspend might be and how the Government proposes to use it. In fact, if it is being used to agree parliamentary support, I think that that is a good thing, and I am sure that Mr Kelly would welcome that. It is far more credible than the plans that I have seen from the Opposition Labour Party on how to fund a budget. It is a very prudent, wise and transparent use of resource.

The only thing that is fluid at this stage, which is the point I was trying to make, is exactly how much will be available at the end of the financial year. Of course, we are getting to the end of the financial year, but there is finessing of that at the end of the year of a substantial multibillion pound budget.

11:00  



James Kelly

If you are really committed to transparency, as you have tried to reiterate in your answers to Mr Tomkins, would it not be better, when you publish the draft budget, to also publish the underspend figures and the Scotland reserve figure, so that we all know what you are taking into the negotiations?

Derek Mackay

I think that the Scotland reserve figure is in the documentation.

The Convener

The information is in table 1 of annex A.

Derek Mackay

So it is in the documentation.

Budget exchange is a moving figure, so whatever I put in the draft budget will be the figure at a point in time. As the committee considers its approach to the budget process and financial planning, it can make requests for updates, but it is a moving figure, in terms of any underspend that might exist in the organisation.

James Kelly

I accept that it is a moving figure, but in December you must have a forecast of what you think the underspend will be at the end of the year. If that figure was available for all involved, we would get an idea of how much you might be looking to introduce at a further stage in the budget.

Derek Mackay

I suppose that the point I am trying to make is that we can make a judgment at a point in time, and on 14 December the draft budget set out the potential use of budget exchange at that point.

Neil Bibby (West Scotland) (Lab)

What was it?

Derek Mackay

The figure of approximately £158 million was in the draft budget. It is in the same table. The point that I am making is that that figure will change before we get to the year end, because we cannot get spending exactly right.

Of course, the important point is to make sure that we can carry it over. There have been years when carryover was lost to Scotland, but we have been deploying it. The difference in the past couple of years has been that we have been able to use it as part of budget negotiations and deploy it. One could argue with the will of Parliament in advance as to how that is deployed, because, previously, it may have been deployed over the course of the next financial year.

The Convener

I would like some clarity, so that I am absolutely sure of what we are talking about here. There is a table 1 in the annex to the draft budget, which was published in December.

Derek Mackay

Yes.

The Convener

In that, the budget reserve figures are £203 million for 2017-18 and £158 million for 2018-19.

Derek Mackay

Yes.

The Convener

Were the amounts that you have been talking about that gave you the required flexibility to finance the arrangements with the Greens taken from those figures?

Derek Mackay

No, those figures were what were produced at that point in time, as part of the budget. That was the snapshot of where the budget underspend was expected to be at that point. That answers the question.

Incidentally, that improvement to the budget—putting in the table to further explain how elements were being funded beyond the use of tax-raising and revenue-raising devices—was made as a result of recommendations of previous years. It is an innovation.

The point that I am trying to stress is that that number changes because spending continues in the Scottish Government.

Murdo Fraser

I would like to get some clarity on the extra £110 million from underspend and reserves that you spoke about. You said to Adam Tomkins that you expect that about £40 million of that will come from reserves. Can we assume that £70 million is coming from underspend?

Derek Mackay

Approximately, yes.

Murdo Fraser

Thank you.

When you came to the committee on 15 January, when we met in Aberdeen, I asked you about the amount of money that was available in the budget in this area. In relation to the “Budget Exchange/Reserve” line, the figure for which is £158 million, you said:

“In the past, finance secretaries may have been able to hold on to that money for financial management reasons, for example. I have used the money up front for the purposes of budget negotiations. The figure is what it is because there is very tight financial management, and that is the figure that officials think is most appropriate.”—[Official Report, Finance and Constitution Committee, 15 January 2018; c 32.]

When you presented your budget to Parliament on 31 January, which was 12 working days later, that figure of £158 million had gone up by £110 million. That is a 70 per cent increase in 12 working days. Is that reasonable?

Derek Mackay

Yes. Some of the reason for that—if you want a deeper understanding as to why some of these issues emerge—is demand-led budgets, and some of it is factors outwith our control, such as Treasury issues or other elements of funding. Those figures can change, and it is not unreasonable for me to report to the committee, using the best information that I have been given at that time, and then take forward the budget. That figure will continue to be fluid until the end of the financial year.

Murdo Fraser

With respect, we are talking about a period of 12 working days from when you gave evidence to this committee, which is trying to conduct budget scrutiny, to when you presented your budget bill to Parliament. When you are not providing full information to this committee and the other committees in this Parliament that are trying to carry out budget scrutiny, is that not holding the committees in contempt?

Derek Mackay

Absolutely not. I am sure that the Tories are just using colourful language here. What I have done is present the information that I have—the official fiscal position of the Government—in a transparent and productive way. I am happy to provide some official engagement on why we arrived at the current underspend figure, if you wish.

The Convener

Well, I wish, so let us have it out with all the information just now.

John Nicholson (Scottish Government)

What Mr Mackay was explaining at the committee on 15 January was the rationale by which he arrived at the £158 million underspend figure that was printed in the draft budget. The period between that figure being fixed and what we are talking about now is not 12 working days, but a longer period than that.

Murdo Fraser

No, no—hold on. With respect, Mr Nicholson—

The Convener

We will let Mr Nicolson conclude what he is saying.

John Nicholson

The other point that Mr Mackay made was that in previous years, far less of the anticipated underspend has been allocated at the point of the draft budget, and more has then been secured as part of the final budget deal. This year, we have secured more of the underpinnings of the draft budget from our anticipated position on underspend, and the room for further movement since the draft budget was published has been more restricted.

As Mr Kelly pointed out, we have reached an end position that is broadly equivalent to last year’s position, in terms of the overall quantum that we are talking about, but the movement between the draft budget and the budget bill is far smaller than it has been in previous years because there has been less additional resource available to allocate.

Murdo Fraser

Thank you for that response, but, to be clear, Mr Nicholson, on 15 January I was not asking Mr Mackay about what was in the draft budget. I was asking quite specifically—as you will see from the Official Report—how much additional money might be available. I was asking about the position as at 15 January, so the appropriate period is 12 working days.

Derek Mackay

To be clear, that would have been an accurate answer at that time. It is as simple as that.

The Convener

We will move on to a different area. Ash Denham has some questions on health.

Ash Denham (Edinburgh Eastern) (SNP)

Obviously health is the largest portfolio, and within it is an ongoing process of—I do not really like this word, but I will say it—modernisation and change. In the budget there is a quite a big increase to the “Transformational Change Fund” line. Does the cabinet secretary think that that strikes the right balance in that portfolio, given the modernisation agenda? How will that money be allocated?

Derek Mackay

That is a good question, because funding of the national health service is significant and important. There has been a real-terms uplift, which has been welcomed. The Cabinet Secretary for Health and Sport is very clear. The agenda is about investment and, at the same time, reform or modernisation—if you do not like the word “transformation”—to support the kind of changes and interventions that will help to reduce demand. Some of that might be around better use of technology and specific interventions to improve performance.

That figure of £126 million is a mixture of transformational and reform funding amounts, and it will also support the regional delivery plans. It is a once-for-Scotland approach, through which those national improvements will be felt at a more local level. It is also about supporting more sustainable models of care—I have touched on digital capability.

The health secretary is very clear with me that, although there are increasing demands on the health service, investment has to go hand in hand with that transformation in relation to better delivery of services and the adaptation of services to be able to respond to those pressures.

In addition to that, there is more for mental health, which is good for preventative purposes, and more for social care, to support the infrastructure at community level. There has been good work around health and social care integration. Part of the package will support the territorial boards, so it is absolutely about delivering transformation and improved performance, at the same time as investing an amount that is well above inflation.

Ash Denham

I would also like to ask you about low-carbon infrastructure. As part of that, there is a £2 million rail development fund. Do you have any more details on what that might look like?

Derek Mackay

We are exploring that. Frankly, although there is a new stations fund, there are the on-going issues with the Treasury around the rail settlement to Scotland.

There is a need to support those who want to take forward feasibility studies to get a sense of how they could progress the prospect of rail enhancements or rail stations in a local area. There are people with particular expertise on that with whom we will engage to make sure that such a fund could be properly channelled. The purpose of the fund is not necessarily to raise expectations that a new station might be coming down the line immediately—although it might be—but to give people the necessary support to take forward bids and provide the potential for infrastructure developments to happen. It was identified through the course of the negotiations as something that should be explored. That is what we are doing, and I have made a commitment to fund that.

Ash Denham

Thank you.

The Convener

We will now look at local government issues.

Patrick Harvie

Good morning. In addition to low-carbon infrastructure investment and the significant and welcome shift of the Government’s position on public sector pay, local government was a significant focus of our discussions and, in the exchange of letters between us that is already in the public domain, it is very clear that we were focused on achieving the reversal of the cut that the Scottish Parliament information centre had identified in the Scottish Government’s funding to local government. We put significant options to you for how you could do that; it is the Scottish Government’s decision to fund that at least partly from reserves and underspend rather than from additional tax changes. Bearing in mind the earlier discussion about the importance of the reserve, are you satisfied that the tax changes and the other changes that are necessary are adequate to fund the complete reversal in the £157 million cut that SPICe identified in local government funding?

Derek Mackay

I do not agree with the terminology because, of course, we were giving more cash and there was a debate, which we have had at the committee, about what should be included in the figures. Anyway, I am absolutely confident that the extra £170 million will be provided for, so much so that, when we move the local government settlement order—the redetermination order—it gets the money. I am therefore absolutely confident of that investment.

Patrick Harvie

I was going to ask you about the local government finance order. In your opening statement, you drew attention to the fact that some of the overall £170 million package is coming from what would be an additional 2017-18 local government finance order. I would like to know when you expect that to be laid and when you expect it to be moved in Parliament. Also, just for the record, could you give us a clear confirmation that councils will be in a position to move that additional 2017-18 money into their budgets for 2018-19?

Derek Mackay

Yes, councils absolutely can carry forward the funding—there is no rigidity about it. Councils have welcomed it.

The redetermination order will be laid in Parliament on 20 February

11:15  



Patrick Harvie

So that will be laid before the stage 3 debate on the budget.

Derek Mackay

Yes.

Patrick Harvie

That is helpful.

You will also be aware that we have had correspondence from the Convention of Scottish Local Authorities, which welcomes the progress that has been made in supporting local government. It has also drawn attention to the question of whether that change will be in the baseline for the future. The change to the previous year’s budget happened ultimately, but local government needs to have some degree of certainty for the future. It has clearly said that it is important for councils in setting the budgets to know whether the funding is recurring, and it has asked the committee to raise that point with you. What is your response?

Derek Mackay

I will need to deal with that in the budget discussions in 2019-20. I have not set any portfolio budgets beyond this financial year. Yes, there is project funding. Yes, there are multi-year commitments for elements such as housing, and there will be commitments on childcare, city deals and so on. I am hoping to get the 2018-19 budget through Parliament successfully. I have not proposed to set out the baselines for 2019-20. I would not ordinarily do that. I am not proposing to do that, because that would all be subject to discussion, budget preparation and negotiation for the next year.

I absolutely understand the point that local government wants as much certainty as possible and would like the funding to be in the baseline, but I have not set that degree of certainty for any portfolio in the Scottish Government or, as is the case with communities, part of a portfolio. That will be a matter for planning for the next budget year.

Patrick Harvie

Obviously, the purpose of Scottish Government funding local government at all is to ensure that vital services that people need in every community in Scotland can be delivered. The point of having debate and discussion on the level of that support is to ensure that those services can meet people’s needs. Even if you are not able to answer the question about the baseline before stage 3 of the budget, surely you would accept that local government will be in a far better position to protect those services for the long term if you are able to give clarity on this question earlier this year than you did last year. It was left until very late in the current process to confirm whether last year’s changes were baseline changes. Surely that needs to be done much earlier in the current process to give local government earlier clarity on the question.

Derek Mackay

It is a fair point, and I understand it, but it is the nature of the process and the timescales, which I know we have touched on as well. We can do all the scenario planning with all the assumptions we like, but there is then the impact of the UK budget and then, of course, our own process. I get the point, though, about giving local government as much certainty as possible. That would apply to every part of Government, in terms of delivering transformation.

The other unknown within that is the dynamic of what might change in the provision of local services. For example, if we make further progress on health and social care integration, we do not know exactly what that will mean for the financial formulas for either local government or health. I would just make the point that I understand the need for greater certainty.

I do not think local government minds that the extra £170 million has come a wee bit late in the day. I think that it welcomes the £170 million; certainly it has in the correspondence and council communications that I have seen. I understand the point, but it relates to the nature of the relationship that we still have in Scotland on fiscal policy, whereby a large chunk of the spending decisions that affect the country and therefore determine what we have are still made by the Treasury and the Chancellor of the Exchequer. That drives our timescales.

I throw to Opposition parties the offer that, if we were to have greater certainty at an earlier stage in the budget, I would welcome that more than anyone. That is certainly not a criticism of the Scottish Green Party, but if we had greater certainty from the other parties, maybe there could be earlier discussions on what the asks are and what the outcomes might look like. The only sense of delay now for the local government figure is that that was clearly a point of negotiation, and it improved to the benefit of local government.

Patrick Harvie

I have one brief final point. We have just heard a few minutes ago from the Scottish Fiscal Commission that if the wider public sector—in particular, local government—is able to achieve a similar pay policy to the Scottish Government’s pay policy, that will increase the extra income tax revenue beyond the £7 million that it has already projected. What will you use that for?

Derek Mackay

I was watching the Fiscal Commission earlier, and I can say that that is the cheeriest news I have heard all day.

Patrick Harvie

It was an “if”.

Derek Mackay

If it factors that in, it is up to the Fiscal Commission to justify its forecast and for local government to determine its pay policy. I must not—

Patrick Harvie

It would be reasonable if local government manages to achieve a more generous pay policy, and the extra income tax generated from that would benefit local government as well.

Derek Mackay

That is not a proposition that I am making. I think that local government has benefited very well out of the Government’s tax policies and budget.

The Convener

Neil Bibby had some questions in this area.

Neil Bibby

After the revised funding for councils that was agreed with the Scottish Greens, many councils still believe they will have to make significant cuts. With the revised funding and with a 3 per cent rise in council tax across the board, do you believe that councils have enough funds to avoid making further cuts over the next year?

Derek Mackay

Broadly, I think that that will leave councils very well resourced indeed. There is an above-inflation increase in the resources coming from the Scottish Government and, in addition, councils can raise the council tax. I think that that puts local government in a very strong position, which is why COSLA and a number of reasonable council leaders have welcomed it. Again, this is in the fiscal context of a reducing resource budget coming to Scotland and reducing front-line resources. We have been able to overturn that by using our tax powers to invest in services, whether that is the NHS or education or the uplift in the economy brief, and now local government has an above-inflation increase in its settlement from the Scottish Government, as well as all the other schemes that we are working in partnership with local government on.

Councils will be looking at expanding elements of service, such as childcare, and there is the city deals investment and investment in housing. That is hundreds of millions of pounds of extra investment to support local economies and local services. Local authorities are also able to raise their council tax, so I believe that it puts them in a very strong financial position.

I know that some councils will have been consulting on what might have been seen as radical options. They do it every year; they did it when I was in local government. Sometimes it is officer inspired; the elected members are never going to choose those options, but they are presented. It is good in the sense that it gives transparency and there is then dialogue and engagement and an understanding is reached. Invariably every year most of those decisions are made and are not followed through, and I would argue that the settlement to local government should address a number of the concerns that Mr Bibby may have had.

Neil Bibby

I will just restate that many councils are still saying they are going to have to make significant cuts over the coming year. Over recent months, as you have said, we have had councils all across Scotland publish plans for cuts, but you have said that that was before the revised budget settlement. As you know, in Renfrewshire, for example, we have seen the prospect of day centre closures and proposals to reduce grey bin collections, introduce parking charges and cut funding for family support services. Is it your position that there is now no financial necessity to make such cuts?

Derek Mackay

That would be me determining what Renfrewshire Council should do with the extra resources that it will have.

Neil Bibby

I am not asking you to determine what it should do. I am asking you whether there is a financial—

Derek Mackay

I think that, if you check the Official Report, you will see that that is exactly what you asked me to do.

Neil Bibby

I am asking whether there is a financial necessity to make such cuts.

Derek Mackay

I think that the enhancement to the settlement should allow councils to revisit the necessity, perceived or otherwise, for some of the reductions that might have been consulted on. Let us just see how some of those proposals work out, but it is not for me to make those decisions. I am no longer leader of Renfrewshire Council, and Neil Bibby is no longer a member of that council sparring with me there either.

The Convener

Ivan McKee will raise issues to do with pay.

Ivan McKee

Welcome to the committee, cabinet secretary. I want to talk about the changes that you have made to the public sector pay increase. You have increased the level at which a 3 per cent increase would apply from £30,000 to £36,500. How many people are affected by that and what kinds of job roles are we talking about?

Derek Mackay

Obviously, that figure helps with the whole spectrum from the lower paid up to those on £36,500. My understanding is it would cover more teachers and nurses, although I recognise that teaching is very specific and is a matter for tripartite negotiations.

The increase will benefit a majority of the public sector workforce—well, those under our control. We have touched on how it is a benchmark. It is a benchmark in health and I have already said, on 14 December, that I would match anything that may come from the UK-wide NHS review anyway, for the avoidance of doubt. Local government in its discussions expressed the view that it would feel pressure to match Government policy, or that there would be an expectation that it would do so. It is entirely a matter for local government.

Of course, much of the local government workforce is learning less than £36,500. It covers a great deal of public sector workers. Obviously, the increase has benefits to the Government in terms of tax take, but the way we have done it, by capping the increase at £80,000 and setting the threshold at £36,500, also helps to tackle inequality.

I know that there was some discussion earlier as to what Government pay policy covers. It might be helpful if I supply the policy papers that were announced on 14 December—I know that the numbers have changed—to the committee if that is helpful, so that you know exactly who it covers. I saw some debate on that in your earlier evidence session with the SFC.

James Kelly

How much of the funding that you announced last week has specifically been allocated to cover the pay policy?

Derek Mackay

That is a fair enough question. I do not separate out pay as a specific part of the Scottish budget. It is part of portfolio spending and part of the settlement to organisations. It is deemed that organisations should follow the pay policy—that sets the parameters—but the funding is within the settlement. We should bear in mind that every portfolio—I think apart from the rural economy and connectivity portfolio—has a real-terms increase in its portfolio line. REC is quite different because it is not necessarily about resource spending. Some of that is switched to capital as well, so there is satisfactory funding within the overall budget because we have used our tax powers and because we have made the investments to fund the pay policy.

James Kelly

Following publication of the draft budget report, SPICe analysis established that there was a £200 million shortfall between what was in the budget and what was needed to cover the full extent of the pay policy. You then announced an extension to that policy last week to cover those who are paid up to £36,500. I put it to you that the policy is not fully funded in the budget.

Derek Mackay

I would simply reply that it is in terms of the overall settlements to portfolios. As I say, all portfolios bar REC have had a real-terms increase in their budget lines and there is the provision there to deliver that. Certainly, the Cabinet is clear that the pay policy should be delivered, so I would argue that the resource is there and a deal should be honoured.

James Kelly

Finally, what is the additional cost of the extension of the policy that was announced last week and how is it budgeted for?

Derek Mackay

The extra cost for that specific element is £25 million.

James Kelly

How is it budgeted for out of the £170 million?

Derek Mackay

It is all part of the overall budget, as I have expressed. I do not separate out lines. It is all part of the overall settlement to portfolios, which have to live within the settlement and deliver the pay policy as outlined.

James Kelly

It sounds to me as if you have announced an additional £25 million commitment but not provided the funding for stakeholders and budget holders to be able to cover that.

Derek Mackay

I am simply trying to state that it is already within the settlements to portfolios, and if cabinet secretaries who lead departments and services felt that they could not deliver it, they would say so to me and they have not. It is an agreed position: they will deliver the pay policy and it is in their resources that have been set out. That is in the context, of course, of growing resources as a consequence of the decisions that the Government has taken.

The Convener

Willie, forgive me if I missed you out earlier, but I think that you still have a question.

Willie Coffey

I have a supplementary question on local government. You have said that it is an above-inflation increase of course and, from the figures that have been provided to us, I can see that my authority, East Ayrshire Council, is due to gain another £3.6 million from your amendments to the budget, which is very welcome in that part of Ayrshire.

11:30  



Do you have any indication as to whether other authorities are going to exercise their power to raise council tax by 3 per cent? We know last year that some, despite asking you to give them more money, refused to raise any more money locally themselves. I think, if memory serves me correctly, that they were all Labour councils. Do you have any indication on whether all the councils will use their discretion this year or whether they are hedging their bets?

Derek Mackay

That is a very good question. Mr Coffey’s recollection of those councils that did not use their ability to raise council tax last year is correct. I do not know whether it aligns with electoral cycles—maybe; I cannot give a Government view. I can tell you only that the intelligence that I have is that most councils appear to be planning to use their ability to raise council tax by 3 per cent. It is entirely a matter for them whether they do that, of course. We will see how their budget cycles pan out in light of the extra resources that have been allocated to local government, which give them a real-terms increase in resource and a substantial increase in capital.

Willie Coffey

You said that COSLA has written and welcomed the proposals.

Derek Mackay

COSLA issued a press release during the stage 1 budget debate. Do not get me wrong—local government will always ask for more money. I certainly did when I was a council leader. COSLA has given

“credit where it is due”—

its words not mine—and recognised the extra resources that have been given, and it is engaged in partnership on areas of joint priorities and so on, which is important to us all. Certainly, it has welcomed the extra resources of course.

The Convener

Neil Bibby has a question on child poverty.

Neil Bibby

Given the concerns that have been raised about child poverty during the budget debate, is it still the case that the children and families budget is facing a reduction?

Derek Mackay

I do not have that budget line in front of me. I can speak about the overall approach, as I have done in the committee on a range of interventions in equalities, welfare, social security, housing, the child poverty fund, and the ending homelessness together fund, for example. The child poverty action plan will be coming out this year and we will have the new mechanisms for social security as well.

The Convener

That completes the evidence session on the budget at stage 2.

Item 3 is the formal proceedings at stage 2 of the Budget (Scotland) (No 2) Bill. Everyone should have a copy of the bill as introduced, the marshalled list of amendments that was published on Monday and the groupings list of amendments, which sets out the amendments in the order in which they will be debated. We will begin that process.

Section 1 agreed to.

Schedule 1—The Scottish Administration

The Convener

Amendment 1, in the name of the cabinet secretary, is grouped with amendments 2 to 6.

Derek Mackay

Amendments 1 to 6 relate to the authorisation to use resources that are provided for in schedule 1 and will adjust individual portfolio allocations within the budget to reflect the spending announcements that were made at stage 1.

Amendment 1 adds £70,000 to the health and sport portfolio for the Scottish Sports Association.

Amendment 2 allocates an additional £200,000 to accelerate delivery of the four marine protected areas in the environment, climate change and land reform portfolio.

Amendment 3 allocates an additional £10.5 million for funding of the inter-island ferries for the Orkney and Shetland islands—allocated as a specific grant to local government—to the rural economy and connectivity portfolio.

Amendment 4 allocates an additional £127 million to the communities and social security portfolio—£125 million for local government and £2 million for fuel poverty.

Amendment 5 increases the total allocation of resources for the Scottish Administration by the net uplift of £137.77 million.

Amendment 6 increases the overall cash funding authorisation for the Scottish Administration under section 4(2) of the bill by £137.77 million, in line with the additional spending that was announced at stage 1.

I move amendment 1.

James Kelly

I indicate my support for the amendments that have been lodged on the basis that they introduce additional moneys into the budget, which is welcome. However, I believe that the overall budget package is still not fit for purpose.

The discussion that we had about local government and pay under the previous agenda item illustrates that local government is still underfunded, particularly given the £1.5 billion of accumulated cuts that there have been since 2011. I do not think that the pay intent announced by the cabinet secretary is transparent or fully funded, and I believe that other areas of the budget, including those relating to the NHS and action to tackle child poverty, do not go far enough.

Therefore, although Scottish Labour will support the amendments, we do not support the overall approach to the budget and will continue to oppose it.

Patrick Harvie

I put on record my support for the amendments. It is very positive that we have, for the second year in a row, managed to prevent additional cuts to core funding for local government. Nevertheless, James Kelly makes a fair point in saying that local government has suffered significant cuts in previous years and we have not yet repaired the past damage. I sincerely hope that this is the last time that the Scottish Government’s budget process ends up as a rearguard action against local government cuts. We must ensure that, in the future, local government is in a far stronger position to make its own financial decisions. I hope that the Scottish Government engages in that discussion positively over the months ahead.

The Convener

As members have no other comments to make, do you want to wind up, cabinet secretary?

Derek Mackay

The amendments reflect the announcements that were made at stage 1, and I appreciate the engagement of the committee. As it has been raised, I reiterate that the local government settlement represents a real-terms increase for local government, even before it has the option of deploying its council tax powers. The settlement has been very well received, and the other amendments reflect the constructive deal that has been done with the Scottish Green Party. I would encourage all political parties, including the Labour Party, to engage more constructively in the future if they want to help to shape future budgets.

Amendment 1 agreed to.

Amendments 2 to 5 moved—[Derek Mackay]—and agreed to.

Schedule 1, as amended, agreed to.

Section 2 agreed to.

Schedule 2 agreed to.

Section 3 agreed to.

Schedule 3 agreed to.

Section 4—Overall cash authorisations

Amendment 6 moved—[Derek Mackay]—and agreed to.

Section 4, as amended, agreed to.

Sections 5 to 11 agreed to.

Long title agreed to.

The Convener

That concludes stage 2 of the Budget (Scotland) Bill. I suspend the meeting for five minutes to allow a changeover of witnesses.

11:38 Meeting suspended.  



11:42 On resuming—  



Budget (Scotland) (No.2) Bill with Stage 2 amendments

Stage 3 - Final amendments and vote

MSPs can propose further amendments to the Bill and then vote on each of these. Finally, they vote on whether the Bill should become law

Final debate on the Bill

Once they've debated the amendments, the MSPs discuss the final version of the Bill.

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Final debate transcript

The Presiding Officer (Ken Macintosh)

The next item of business is a debate on motion S5M-10518, in the name of Derek Mackay, on stage 3 of the Budget (Scotland) (No 2) Bill.

As members are aware, at this stage of the proceedings I am required to give a determination on whether any provision in the bill relates to a protected subject matter—in other words, whether it modifies the electoral system and franchise for Scottish parliamentary elections. In the case of this bill, it is my view that no provision of the budget relates to a protected subject matter and therefore the bill does not require a super-majority in order to be passed at stage 3.

We turn to the budget. I call the Cabinet Secretary for Finance and the Constitution, Derek Mackay, to speak to and move the motion in his name.

14:54  



The Cabinet Secretary for Finance and the Constitution (Derek Mackay)

That is a great relief to me, as I am sure it is to the rest of the chamber. I am delighted to lead this debate on the Budget (Scotland) (No 2) Bill for 2018-19.

First, I would like to confirm that I have responded formally to the Finance and Constitution Committee report on the budget. I thank the Finance and Constitution Committee and the subject committees for their constructive approach, particularly in light of the scrutiny period, and I look forward to continuing to work with Parliament to ensure that our future processes are fit for our new powers.

The bill is of huge importance to Scotland. The decisions that we make today will support our commitment to inclusive growth and provide support to our public services, to those that deliver those services, and to communities and individuals across Scotland. The bill that is before us today seeks Parliament’s approval for more than £1.2 billion of additional expenditure to build a fairer, more prosperous country and to put the progressive values of this Government into action. It is a bill that reflects our status as a Parliament of minorities.

James Kelly (Glasgow) (Lab)

Does the cabinet secretary think that it is progressive that, as a result of the budget, members of the Scottish Parliament will pay only an additional 29p a week in tax?

Derek Mackay

James Kelly is simply wrong. The budget proposes to raise taxation in a fair and proportionate way that will deliver hundreds of millions of pounds more for Scotland’s public services. During the next financial year, the tax decisions that we have taken over the past two years and the post-block grant adjustments that have been made amount to more than £400 million of additional resources for Scotland’s public services. Surely the Labour Party, at this 11th hour, can welcome that investment in Scotland’s public services.

I have had to reach out to find consensus on the bill in Parliament, and to compromise as well. That was necessary to reach agreement on a package of measures and support for our public services. We have worked hard to secure the passage of the bill in order to deliver on our commitments, which protect Scotland’s much-valued social contract. I once again thank those who have engaged constructively in those discussions.

The most successful economies in Europe are built upon the firm foundation of strong public services and inclusive societies. Equally, those foundations require a strong economy to generate the necessary resources to fund them.

Monica Lennon (Central Scotland) (Lab)

On the basis of requiring strong foundations, can the cabinet secretary explain why 28,000 jobs have been taken out of local government in the past few years under his Government?

Derek Mackay

The scaremongering of the Labour Party as it relates to local government continues. This budget proposes to give a real-terms increase to local government in the next financial year, and local authorities will also have the ability to raise the council tax. The difficulty for members of the Labour Party is that in voting—as I suspect they will—with the Tories tonight, they will vote against that extra money for local government and against the extra £1.2 billion for Scotland’s public services. That is the reality of what the Labour Party will do this evening.

Monica Lennon

Will the minister give way on that point?

Derek Mackay

I would like to make more progress.

The Scottish Fiscal Commission has highlighted some economic challenges around Brexit uncertainty and the declining working-age population. However, it is important to recognise that Scotland’s economic performance has remained resilient. It is encouraging that the latest Bank of Scotland Purchasing Managers’ Index reported that business optimism in Scotland is at a three-year high, but we will not be complacent and we will build on those strong fundamentals through the measures in the bill to stimulate economic activity and improve productivity.

Dean Lockhart (Mid Scotland and Fife) (Con)

The cabinet secretary talks about the resilience of the Scottish economy. Does he agree with the Fraser of Allander institute’s analysis that Scotland’s economy is facing the longest period of weak economic growth for 60 years?

Derek Mackay

The Tories really cannot abdicate their responsibility for macroeconomic policy in Scotland.

In the budget, this Government will invest almost £2.4 billion in enterprise and skills through higher and further education and our enterprise agencies. There will be a 64 per cent increase in the economy, jobs and fair work portfolio. We will allocate £18 million for the new national manufacturing institute and £10 million for the new south of Scotland development agency. We will double to £122 million the funding allocated to the city region deals. This Government is investing in economic growth in the teeth of Tory cuts and Tory opposition.

On business rates, we will offer the most attractive package of non-domestic rates relief anywhere in the United Kingdom, amounting to more than £720 million. Of course, we will also provide the UK’s first nursery relief to support our childcare policies.

Our growth accelerator will encourage businesses to invest in their premises to drive improvements in productivity. We have delivered on the business community’s number 1 ask, which was to cap an annual uplift in business rates at the consumer prices index rather than the retail prices index.

Today’s bill invests £1.2 billion in our transport system, turning the A9 into an electric highway and delivering new railway investments such as the electric trains between Edinburgh and Glasgow.

Willie Rennie (North East Fife) (LD)

Before the minister gets too carried away about the state of the Scottish economy, will he comment on the rise in unemployment by 14,000 people, which was announced today? Is he complacent about that?

Derek Mackay

The figure is lower than it was last year—and all the more reason to support this budget to invest in the economy, skills, productivity, research and development and innovation.

I can confirm that Transport Scotland has now developed specific proposals on how the pre-pipeline fund for new rail projects will work and be governed. It will publish full details over the coming weeks.

As I confirmed at stage 1, between 2017-18 and 2018-19 the proportion of the Scottish Government capital budget that is spent on low carbon has increased from 21 to 29 per cent. The proportion of our capital budget that is spent on low-carbon projects will continue to increase in future years.

To further support our transition to a low-carbon economy, the budget invests £146 million in energy efficiency and heat decarbonisation, including real-terms protection for the home energy efficiency programme. It also allocates £60 million for a low-carbon innovation fund and £20 million to support the transition to electric vehicles and to support more green buses, and it doubles investment in active and sustainable travel.

The budget today delivers £756 million of investment in affordable housing and £10 million in an ending homelessness together fund as part of our commitment to eradicate rough sleeping and transform the use of temporary accommodation.

Those investments will help to ensure that our future growth will be both inclusive and sustainable. Investment now in infrastructure and support for business needs to be complemented by investment in our people, services and communities.

Education is this Government’s number 1 priority. That is backed by above-inflation investment in our universities, colleges and local government. There is £243 million to support the expansion of publicly funded early learning and childcare entitlement; £120 million is allocated directly to headteachers through the pupil equity fund; and a further £59 million provides targeted support to children and young people in the greatest need. We are also providing the first investment of a new £50 million tackling child poverty fund, which will help address the underlying social and economic causes of poverty.

Yesterday I laid the local government finance order, which includes the additional £170 million that was announced following the constructive discussions with the Scottish Green Party at stage 1. That delivers an above-inflation investment in local government for local revenue services and adds to the real-terms increase in capital support. That has been welcomed by the Convention of Scottish Local Authorities and I note that, so far, 11 councils have exercised the flexibility that they have to increase their council tax levels by up to 3 per cent. If the remaining councils follow suit, that will be worth around a further £77 million to support local services next year.

I also had the opportunity yesterday to see a prime example of support for our national health service when I went to Leith surgery. I saw at first hand how the additional funding provided by the budget delivers for our core public services.

The bill will see a £400 million increase in health resource funding and take our total front-line investment in the NHS to more than £13 billion in the coming year. We will invest £110 million in reform of primary care, which will support our general practitioners and health centres to meet the changing needs of our people. We will increase our direct investment in mental health services—child and adolescent mental health services in particular—by a further £17 million. That is the third annual increase in a row, which will help to deliver an additional 800 mental health workers over this session of Parliament.

Jenny Marra (North East Scotland) (Lab)

If the cabinet secretary is committed to improving children’s health, is he minded to drop from his budget the regressive sports tax—his cash grab that condemns communities to crumbling sports facilities for generations to come?

Derek Mackay

I will certainly not follow Labour’s chaotic and damaging tax plans, which would result in less resource than it claims. On non-domestic rates, I have not followed the Barclay recommendations and have supported the Dundee regional performance centre for sport. Surely Jenny Marra welcomes that decision.

In supporting the NHS, the Government continues to support free personal care and the roll-out of Frank’s law by April 2019.

The budget is about investing in a fairer Scotland. Yes, there is divergence from the UK. Our investments mean that students do not pay tuition fees, people who are ill do not pay prescription charges and our citizens are not vulnerable to the bedroom tax. I am proud to represent the only Government in the UK to lift the pay cap and offer a real pay rise to our public sector staff. We will also offer the most attractive system of business rates, invest in social rented housing—delivering at more than double the rate in England—and provide above-inflation investment in local government, the police and the NHS. That is the best deal anywhere in the UK and that is why a recent YouGov poll showed that the Scottish public support our proportionate approach.

When it comes to decision time, I invite members to support a budget that means that Scotland will be not only the fairest-taxed part of the UK but, for the majority of taxpayers, the lowest-taxed part of the UK. The budget reverses the real-terms cut that Westminster has imposed on our resource budget and delivers £1.2 billion of additional investment in public services and the economy. It protects our students, our elderly in need of care, our council services and our police services and it invests in the national health service. It delivers the best deal for taxpayers in the whole UK. It protects all that we hold dear while investing in our nation’s future and makes use of the Parliament’s powers to put the Government’s progressive values into action. I commend it to the chamber.

I move,

That the Parliament agrees that the Budget (Scotland) (No 2) Bill be passed.

15:08  



Murdo Fraser (Mid Scotland and Fife) (Con)

Another day, another budget debate. Sadly, the narrative from the Scottish National Party Government remains exactly what it was yesterday and for weeks before that. It is a pay-more, get-less budget. It has been prepared against a backdrop of the UK block grant to Scotland increasing from this year to the next, a fact that was confirmed by the Scottish Parliament information centre and the Fraser of Allander institute and accepted by the Cabinet Secretary for Finance and the Constitution himself.

As we heard yesterday, the budget breaks a promise that the SNP made in its manifesto in 2016 not to increase the basic rate of income tax. As a consequence of that broken promise, more than 1 million Scots will pay more tax than equivalent workers south of the border, which sends a message that Scotland is the highest-taxed part of the United Kingdom.

While taxes are going up, services are being cut. Across Scotland this week, local authorities are meeting to set their budgets. The warnings from the Convention of Scottish Local Authorities are clear: despite the additional money that has been found by the Scottish Government as a result of its deal with the Greens, councils still have to make savings. Whether it is reducing the number of teachers, cutting classroom assistants, scrapping school crossing patrollers or closing recycling centres and libraries, people’s experience all across the country is that they are getting poorer-quality public services while, at the same time, they are being asked to pay more in taxation.

The budget delivers pay increases for public sector workers. Those employed by the Scottish Government and its agencies and those in the NHS will all benefit. However, there is nothing in the budget that will deliver higher salaries for local authority workers, who no doubt will have a similar expectation to those elsewhere in the public sector. Yet, if those sorts of settlements are to be made, they can be made only by local authorities cutting services elsewhere. Even if a local authority is maximising its council tax increase at 3 per cent, it will not raise enough money to pay the level of increases to staff that are being applied elsewhere in the public sector.

That point was made by Councillor Gail Macgregor, COSLA’s resources spokeswoman. I know that the finance secretary knows Councillor Macgregor as he was pictured all over Twitter last night cavorting with her at a glitzy Scotland Excel event. On Tuesday—I am sure that she would have repeated this to him when they were together last night—she said:

“Because quite simply with no money in the settlement from Scottish Government for pay, any pay rises for council workers can only come from cuts to services or council tax rises.”

I would be interested to hear from SNP speakers in this debate. [Interruption.] If Mr FitzPatrick would like to intervene on me, I am very happy to allow him to do so instead of just heckling from a sedentary position.

The Minister for Parliamentary Business (Joe FitzPatrick)

The Tories’ tax plans would take £500 million out of the budget, plus they want to find extra money for local government. What will they cut?

Murdo Fraser

The figure that Mr FitzPatrick needs to keep in his head is £16.5 billion. That is the cost to the Scottish economy of SNP failure. For the past 15 years, the SNP has failed to grow our economy at the same rate as that of the UK. If the SNP grew the economy, it would have more money to spend.

The cabinet secretary seems able to find money when he needs to. To do his deal with the Greens—to provide Patrick’s pocket money—he found an extra £110 million from underspend and reserves. Of that, £40 million comes from reserves and £70 million comes from underspends. That is curious because, when the finance secretary came to the Finance and Constitution Committee on 15 January, I quizzed him about how much money was available in that area of the budget. The figure in the draft budget for “Budget Exchange/Reserve” was stated as £158 million. In response to me, the cabinet secretary said:

“In the past, finance secretaries may have been able to hold on to that money for financial management reasons, for example. I have used the money up front for the purposes of budget negotiations. The figure is what it is because there is very tight financial management, and that is the figure that officials think is most appropriate”.—[Official Report, Finance and Constitution Committee, 15 January 2018; c 32.]

Yet, when the budget bill was presented to Parliament on 31 January—12 working days later—that figure of £158 million had gone up by £110 million. That is a 70 per cent increase in 12 working days. It is perfectly clear that the cabinet secretary had that squirrelled away to do a deal with the Greens, but he did not tell Parliament or its committees about it.

There is a serious point about our ability as a Parliament to conduct budget scrutiny. In the 12 working days between giving evidence to the Finance and Constitution Committee and presenting his budget bill, the finance secretary found an additional £110 million. It is not unreasonable to suggest that he knew perfectly well about that money when he came to the Finance and Constitution Committee. Had members of that committee, or indeed members of the subject committees that were conducting budget scrutiny, been made aware of those additional resources, much more meaningful discussions could have taken place about how the budget might have been improved. However, the finance secretary chose not to disclose that.

There is a serious point. We need a new approach in the future. The Parliament and its committees need to be much clearer about exactly how much money is in the budget, and as we look at implementing the recommendations of the budget review group, I hope that that question can be addressed.

I return to the key messages in the budget. What the budget does not do is address the woeful situation that we now have in the Scottish economy. Today, we learned that Scottish employment is now lower than the UK average and that economic inactivity and unemployment are higher than the UK average.

The Scottish Fiscal Commission has given us its prediction that the SNP-run economy in Scotland will fail to match UK growth in each of the next five years. In 2018, it will grow at half the rate of the economy of the UK as a whole, and it is projected to have the lowest growth of any major economy in the next three years—the lowest in the EU, the lowest in the G20 and the lowest among Organisation for Economic Co-operation and Development countries.

John Mason (Glasgow Shettleston) (SNP)

Does Mr Fraser accept that the economy of London and the south-east is somewhat different from that of the rest of the UK and that, in fact, Scotland is very comparable with other English regions?

Murdo Fraser

That is not what the Fiscal Commission has been telling us or what its figures disclose. The productivity figures for Scotland suggest that Scotland is among the poorest-performing parts of the UK. Like too many SNP back benchers, Mr Mason wants to absolve the Scottish Government of any responsibility for the performance of the Scottish economy. The SNP needs to start taking responsibility for what is happening in Scotland.

We are talking about a budget that should have put growing the economy first. It should have been a budget for growth. Instead, it is a budget for cuts in public services and higher taxes. As Sir Tom Hunter, one of Scotland’s leading business figures, put it,

“The perception, if you are a talented person sitting in London, Manchester or Birmingham and Scotland wants to attract you, is that you may think Scotland is a high-tax economy.”

We should be listening to Tom Hunter, to Liz Cameron of Scottish Chambers of Commerce and to the voices of organisations such as the Confederation of British Industry, the Federation of Small Businesses, Scottish Engineering and the Scottish Retail Consortium, all of which have warned about the damage that having higher income tax rates could do.

I am no fan of his politics or of his music, but even Morrissey got it right when he said of the First Minister,

“Those hands will be in anybody’s pockets.”

The SNP Government has chosen to ignore all those voices and has delivered a budget that is bad for Scotland. That is why we should vote against it at decision time tonight.

15:17  



James Kelly (Glasgow) (Lab)

The budget is one for chief executives in Morningside, not one for communities who are facing savage SNP cuts. It is a budget that fails the needs of Scotland’s communities. Parents in Clackmannanshire will be dismayed by the fact that the budget will result in cuts in the number of teachers in their children’s schools.

Parents of children who are living in poverty who are struggling to pay energy bills will not understand why MSPs’ tax bills will barely increase. Pensioners who today have been unable to get an appointment with their general practitioner until next week will not understand why SNP MSPs cheer Derek Mackay’s budget. It fails on so many levels that it should be voted down by Parliament tonight.

One of the key areas in which investment is required is support for public services. Even after the changes that were announced following the grubby deal between Derek Mackay and the Greens, there remains a £386 million black hole in local government funding. It is not just the numbers that are affecting councils; it is the decisions that they are having to take. Moray Council is having to reduce the number of library assistants and close library services. How does the reduction in the number of teaching and learning assistant posts in Clackmannanshire help to educate our children or to build skills in the economy?

South Lanarkshire Council is proposing increased charges for school meals and care services at a time when the cabinet secretary has announced a pay policy for which he is not providing adequate funding. At the start of the process, there was a £200 million shortfall in the amount of money required to fund the pay policy and, as we have gone through the process, no new money has been announced. The reality of that, particularly for local councils, is that they face a decision. If they really want to fund fair pay, they will need to cut services and, potentially, jobs, as we see in Clackmannanshire.

There is also the modern-day scandal of child poverty in Scotland, where 260,000 children are living in poverty. Recently, during questions on finance, there was a question relating to Ayrshire and it emerged that, in Irvine West alone, 35 per cent of children are living in poverty. That is totally unacceptable, yet the SNP has rejected Labour’s proposals for an increase in child benefit to alleviate child poverty in wards such as Irvine West and throughout the country.

Yesterday, we saw again the drastic performance figures for accident and emergency departments as the NHS continues to struggle through the winter.

This budget has failed in many respects and is not fit for purpose, partly for the reason that came up in the debate on tax that we had yesterday afternoon. Ultimately, if we want a budget that addresses all the issues across public services, that funds fair pay and that tackles child poverty, we need a tax regime that raises adequate amounts of money.

Kate Forbes (Skye, Lochaber and Badenoch) (SNP)

Labour’s budget plans were based on revenue being raised from various different sources, including a tourist tax and a land value tax. How much would either of those taxes raise next year?

James Kelly

They would raise £145 million in total, as we detailed in our tax plan.

The reality is that SNP members do not have the political will to make the changes that are required. Communities across the country are facing savage cuts, the closure of facilities and the prospect of job losses, yet the meagre tax plans introduced by Derek Mackay will raise only £83 million net. That shows the poverty of ambition among cabinet secretary Mackay and his colleagues.

Let us look at the facts. SNP MSPs will pay only 29p more tax a week, and chief executives on £150,000 a year will pay only £17 more a week. That is a complete failure to take on the grave issues that we face. Time and again, during an election campaign, the SNP postures and declares that it supports a 50p top rate of income tax, but when it comes to delivering in Parliament and putting its money where its mouth is, it has voted eight times against a 50p top rate of income tax. It runs away from taking the decisions that are required to meet the challenges that Scotland’s communities face.

We need bold and radical action to address the issues that we face in this country. If we really want to grow the economy, we will not do that by cutting public services, taking teachers and teaching posts out of schools and undermining college budgets.

John Finnie (Highlands and Islands) (Green)

Will the member take an intervention?

James Kelly

No, thank you.

We need investment if we are to see kids graduate in science, technology, engineering and mathematics and contribute those skills to the economy. Without that, we will fail to do the joined-up thinking that is required.

The same is true in relation to child benefit, which is not just about trying to lift kids out of poverty. If there were fewer children in poverty, that would help to improve the education system and it would help in terms of the budgets for housing and the NHS. It would save money across the Scottish budgets.

We have had a number of debates on the budget, now, and it is like groundhog day. The Government’s answer is to continue to be weak on tax powers. People will suffer. This budget is more interested in protecting the pockets of chief executives than in putting teachers in schools. This budget fails to address the scandal of child poverty and the cuts to public services. This budget lets Scotland down and should be rejected by the Parliament tonight.

15:25  



Patrick Harvie (Glasgow) (Green)

As, I think, Murdo Fraser said,

“Another day, another budget debate.”

It is certainly another day and another opportunity for the Conservative Party to conveniently forget that, during the first minority Government session of Parliament, it voted through budget after budget after budget. Every year, in fact, the Conservative Party voted for the SNP’s budget. It negotiated and tried to get policy changes. However, during those years, it never quite managed a policy change on anything like the scale of that which the Greens have achieved over the past two years. I have to admit that I am glad that the Conservative Party has decided to stop negotiating properly. We might well be seeing much worse budgets if the Conservative Party was still negotiating and trying to get policy change out of the Scottish Government, as it used to.

Nevertheless, I remain disappointed that the progressive political parties across the chamber are not attempting to get change in the Scottish budget. It might well reduce my negotiating hand if other parties engaged constructively in that process, but I suspect that the outcome as a whole would be better. To those who made proposals at the very last minute—too late even for the Scottish Fiscal Commission to examine them—I say that the process needs to be better in the future.

As a result of the negotiating process that we engaged in with the Scottish Government, we have significant change—and not only in relation to the smaller-scale measures. There is the additional fund that the finance secretary mentioned that will enable communities to make their own proposals on rail improvements, which I am glad to see will happen sooner than expected. There is the extra money to accelerate the designation of marine protected areas to protect our marine environment. There is the long-term shift away from high-carbon investment to low-carbon investment, and there is an improvement in the public sector pay settlement. There is also the substantial reversal in the cuts to local government funding.

Is the situation for local government perfect? Of course not. Does this budget relieve local government of every pressure that it faces? Of course not. However, there is a real-terms increase in Scottish Government funding for local government, and that is an important step forward.

I see that Monica Lennon is looking to intervene.

Monica Lennon

Does Patrick Harvie agree with Mike Kirby of Unison Scotland, who says that the budget

“falls far short of maintaining vital levels of services”

for our local authorities?

Patrick Harvie

I agree that local government faces significant pressures. Some of them relate to rising costs and some relate to our expectation of a fair pay settlement. However, those pressures cannot be related to cuts to the core funding through the Scottish Government’s local government finance order, because we have ensured that that funding is going up, not down.

When it comes to the longer-term picture, we need to unite. Whatever we disagree on about this budget, we need to unite in saying that the Scottish budget process must not become an annual rearguard action against local government cuts because the fundamental situation that local government remains in is one of utter dependence on Scottish Government revenue. Local government in Scotland has such limited financial powers that, in many other European countries, what we call local government would not be recognised as such.

Local government ought to have a far greater ability to make its own decisions on local taxation and other fiscal issues. Those are issues on which there should be agreement across the political parties. I welcome some of Labour’s proposals on what it has called—although it is not—a land value tax. I would like to see a levy on vacant derelict land and a real land value tax, but we know that it would take time to legislate for those and to implement them. I want to see progress on that.

I also want to see progress on the recommendations that were agreed across the political parties by the commission on local tax reform, which the Scottish Government and COSLA created and which recommended, centrally, that the current system of council tax must end. All of us, with the exception of the Conservatives, entered into that review, and all of us who took part in the process entered into it in good faith, as did local government. The review’s recommendations cannot be allowed to gather dust on a shelf. Therefore, today, I have written an open letter to the First Minister, setting out a range of proposals that must be adopted if we are not to be in a situation, year after year, in which Scottish budget debates become debates about how much pressure to push down the chain to local government.

We should set a target for the percentage of local government finance that is raised locally. We should introduce a new fiscal framework between the Scottish Government and local government that is underpinned by the incorporation into domestic law of the European Charter of Local Self-Government. We should secure a commitment to multi-year—indicative, at least—funding settlements from the Scottish Government, baselining the additional funds that have been won this year so that they can be relied on in the future. We should commit to legislating during the current parliamentary session to replace council tax with a fairer system. Again, the consultation, legislation and implementation will take time, but the initial steps must be taken if we are to make progress.

The Scottish Government promised us a fundamental review and reform of non-domestic rates. Instead, the Barclay review was incredibly limited and narrow, so the wider question remains. As well as a vacant and derelict land levy, new fiscal powers need to be created in order that we can have local government that is truly worthy of the name and a system in which it is not entirely dependent on centralised decisions being made by the Scottish Government.

If there is progress on that local tax reform agenda over the coming months and during the course of this year, the Greens will again be able to enter budget negotiations—but that, I am afraid, will be a precondition.

15:32  



Willie Rennie (North East Fife) (LD)

The budget is built on a broken promise. Nicola Sturgeon, who is in her seat on the front bench today, will remember that she stood beside me in debates during the 2016 election campaign and promised basic-rate taxpayers that their tax would not go up. What we see in the budget is that it has gone up. The SNP led people to believe that their tax would not go up, which is important in terms of the integrity of a Government and its belief in how it conducts itself on tax. If people are expected to pay more tax, they should be told that before an election campaign—just as the Liberal Democrats told them. We were very clear, open and up front about it. The SNP was not, which breaks trust with the voters. That is incredibly important.

John Mason

Will the member confirm that he believes in proportional representation and that one minority party should not be able to force through its manifesto?

Willie Rennie

That very argument has been made before, when we were in coalition, and Mr Mason dismissed it. Now he wants to resurrect it to patch up the SNP’s pathetic campaign to justify this tax rise. It is important that people are honest, open and up front before election campaigns, but the SNP has not been. We believe that tax rises should be for a specific purpose—to make sure that we invest to make a change so that people see the outcome at the end of the process. That builds confidence in any tax rises, and progressives like me believe it to be important that we make that case.

Today, figures have been announced that show that unemployment in Scotland has gone up by 14,000. That should be a warning signal for the Scottish Government. To be fair, I will say that the UK figure has gone up as well, but the Scottish figure is above the UK average. We should have a budget today that reflects and meets that big challenge.

A second challenge that is coming down the track is Brexit, which I am sure the cabinet secretary will agree is a big threat. That is the one thing that the Scottish and UK Governments agree on. In all the models that have been put forward, the predictions show that there will be a hit to the Scottish and UK economies of between 2 per cent and 9 per cent as a result of Brexit. Based on whatever model we choose, there is going to be a hit. We should have a budget that matches and meets the potential challenge that is coming. We should have a budget for the long term that is bold and meets those challenges but—yet again—this budget is a missed opportunity.

The SNP is often behind the curve on the big issues that come forward. On the pupil premium, it took five whole years before the Scottish Government admitted that that UK Government plan was working and was closing the attainment gap by five percentage points. We are therefore five years behind the curve, and a generation has missed out.

Thanks to the SNP, colleges were starved of funds for a good five years and 150,000 places were cut. The SNP has finally admitted that the policy was wrong and is opening the doors for part-time and mature students and women to take up opportunities, but it was behind the curve for a good five years.

On nursery education, I am sure that I bored everybody in Parliament when I went on—[Interruption.] Members agree. I went on and on about nursery education because it really matters, but it took years for the SNP to accept that there was a case for two-year-olds getting nursery education. Two-year-olds are now skipping through the doors of nursery schools, thanks to our advocacy. Yet again, the SNP was behind the curve.

The SNP’s approach on mental health has been the worst of all. Thanks to the SNP, the mental health strategy was delayed for more than a year and the suicide prevention strategy was delayed. As a result, investment in mental health was delayed.

Graeme Dey (Angus South) (SNP)

Will the member take an intervention on that point?

Willie Rennie

No.

That is another missed opportunity to get people who are suffering from mental health problems back into the job market by giving them the opportunities that everyone else in society enjoys. Again, the SNP is behind the curve.

Graeme Dey

Will Willie Rennie give way?

Willie Rennie

No—I will not, just now.

The Government should be bold and should meet the challenges of Brexit. It should not miss opportunities and be behind the curve.

One bright spot in the budget is because of the advocacy of my colleagues Liam McArthur and Tavish Scott on ferries. They saved the internal ferry services of the northern isles from collapse. If not for my colleagues, those lifeline services would be struggling.

The Minister for Childcare and Early Years (Maree Todd)

Will the member take an intervention?

Willie Rennie

No.

The SNP Government would have overseen the collapse of those services. I commend the advocacy of my colleagues Liam McArthur and Tavish Scott.

The Government should be investing for transformational change on mental health, to take the budget up to £1.2 billion, which is where it should be in order to tackle the problems.

The budget should include investment of £500 million in education—in nurseries, schools and colleges—not just for the sake of education but for the sake of our economy. By investing in the skills and talents of our people, we can grow the economy for the future and in the face of the challenge of the Brexit that the Conservatives are pursuing, and we can meet today’s challenge of there being 14,000 more people unemployed under this Government. Those are the things that we should be doing and the opportunities that the Government is missing.

15:39  



Bruce Crawford (Stirling) (SNP)

I am pleased to speak in the stage 3 debate on the Budget (Scotland) (No 2) Bill, because I sincerely believe that this is perhaps the most important budget-setting day since the advent of devolution almost 19 years ago.

I am very pleased that the SNP Government has submitted to Parliament a budget that sets the tone for the type of nation that we want to be, and which clearly outlines the values of the progressive politicians who back it. The budget has the potential to be transformative through the improvements that it can deliver for the citizens of Scotland. It is a budget that, at its heart and within the limited powers that are available to Parliament, will deliver a stronger economy and a fairer Scotland.

If one spending commitment signals how we can build that stronger economy and fairer country and begin to transform Scotland, it is the investment of £600 million to deliver superfast broadband to 100 per cent of properties. That is a commitment that says loud and clear to all of Scotland that no matter where people live, whether it is in one of our great cities or in the remotest parts of our fantastic land, no part of our country will be left behind.

It is a commitment that is matched nowhere else on these islands and which clearly sets the tone for the type of nation that we want to be—a nation that will give people the potential to succeed in the coming digital age, no matter where they choose to make their home or to live and work.

As technology advances, so too must our country. Geography can no longer be a barrier to being connected to the digital world and all the advantages that that can bring, economically and socially.

In contrast, the UK Government is doing its level best to create new barriers to economic success through the madness of a possible hard Brexit and its inevitable impacts—in particular, on the availability of labour. In Scotland, therefore, we must continue to do all that we can to enable as many people as possible to enter the workforce of the future. That objective is not just about economic necessity; it is about building a more resilient, fairer and more equal society. Again, it is about setting out the type of nation and country that we want to be.

That is why funding of early learning and childcare, through capital and revenue spending of £243 million in the next financial year alone, is so necessary to support infrastructure and workforce capacity. That funding will help to drive transformational change in the availability of early learning and childcare by doubling funded provision from 600 to 1,140 hours by 2020.

It is not possible to overemphasise just how important high-quality early learning and childcare can be in ensuring that our children and their parents can achieve their full potential. Every child in Scotland deserves the best start in life, regardless of their background. The expansion of free early learning and childcare will help to do just that. As well as transforming the choices and chances of children, the policy will save families thousands of pounds in fees every year, and will further benefit the wider economy through the creation of thousands of new jobs.

Despite the backdrop of a UK Government cut of £211 million to our day-to-day spending, Murdo MacLeod—[Laughter.] I mean Murdo Fraser, but bring back Murdo MacLeod: he was much better at playing the ball than Murdo Fraser is. [Laughter.]

The budget commits increased funding of £400 million to Scotland’s NHS. It will increase investment in mental health services by £17 million and deliver an additional 800 mental health workers.

From doubling of the active travel budget to an additional £15 million investment in research and development, and from real-terms increases in college and higher education budgets to an additional £170 million for local government, the budget delivers for all of Scotland.

Of course, to be in a position to support such a budget, we require revenue-raising proposals that are sensitive to the needs of individuals and organisations, and which are, crucially, capable of garnering support from across a wide spectrum of stakeholders and society. Like most members, I aspire to live in a prosperous, progressive and fair Scotland, which is why I am so very proud to support a Government whose tax proposals also set the tone for the type of nation that we want to be, and will protect people on the lowest incomes and make the system more progressive.

Members who oppose the Government’s budget will need to look to themselves and ask why they cannot support plans that will undoubtedly make Scotland the fairest-taxed part of the UK, while protecting our country against the worst excesses of the Tory Government, investing in our national health services, protecting our services and growing our economy.

I am very sure of one thing today: the people who support the budget in our Parliament will be in tune with the values of the vast majority of the people of Scotland.

15:45  



Dean Lockhart (Mid Scotland and Fife) (Con)

Time and again during the budget debate, we have heard the SNP’s standard line on the economy, which is that the fundamentals of the Scottish economy are strong. However, when we look beyond the SNP spin, we see the reality. Recent data that was published by the Scottish Government highlights the unprecedented weakness that the Scottish economy faces. Scottish economic growth is the lowest in the developed world, the value of Scottish trade has declined by 5 per cent, business investment is down by 15 per cent and, just last week, productivity figures showed that productivity in Scotland is at its lowest level in a decade.

The Cabinet Secretary for Economy, Jobs and Fair Work (Keith Brown)

Dean Lockhart will know about the relationship between capital allowances and business investment, which is a matter that is controlled by the UK Government. Unlike his colleague Murdo Fraser, does he think that the UK Government has any involvement in the economy in Scotland?

Dean Lockhart

For someone who is obsessed with the constitution, Keith Brown does not seem to understand that the UK Government is responsible for monetary policy and interest rates, which are at a record low. The Scottish Government is responsible for enterprise policy and economic growth, which is also at a record low. If the UK Government is responsible for weak economic growth in Scotland, why is the economy of the rest of the UK growing three times faster than Scotland’s economy?

The fundamentals of the economy are not strong. As the Fraser of Allander institute said, we are facing the longest period of weak growth in 60 years. With the Scottish Fiscal Commission forecasting further weak growth for the next four years, the budget should have been a programme for growth. It should have been about stimulating the economy, increasing productivity and reversing the decline in business investment. It should have been about closing the gap between Scotland and the rest of the UK, which will cost us £16.5 billion in lost gross domestic product between 2007 and 2021.

However, the budget does none of the above. Instead, the SNP has once again prioritised politics over the needs of the economy and joined forces with its Green Party branch office to deliver a budget that will damage the economy, depress productivity and discourage business investment. The budget will be damaging for the economy for the simple reason that increasing tax for a million workers will reduce disposable incomes in Scotland by a total of £220 million a year. That is £220 million a year that will go out of the economy, which will reduce consumption and spending. The Scottish Retail Consortium gave the following example:

“A 1p rise in tax equates to approximately 2 per cent of Scottish retail sales. If that money is going into government coffers, it’s likely to lead to further reductions in sales.”

The SRC continued:

“With a quarter of a million ... retail jobs, any further fall in sales has serious implications for the economy.”

We agree that increasing tax in the budget will damage the economy.

John Mason

Does Dean Lockhart accept that when that money is recirculated, for example by the employment of more teachers and nurses who will spend the money, that will keep the economy going?

Dean Lockhart

Based on the SNP’s mismanagement over the past 10 years, I have absolutely no confidence that even a fraction of that money will find its way to the front line of services. There have been countless overruns on information technology systems alone, which have amounted to hundreds of millions of pounds, so I do not share John Mason’s view.

Last week, we saw that productivity in Scotland declined in each of the eight most recent quarters. As a result, Scotland is at the bottom of the second quartile of OECD countries, which is more than 21 per cent below the SNP’s target to be in the top quartile. In contrast, numbers that were released today show that productivity for the UK economy as a whole has increased in the past two quarters at the fastest rate in 10 years.

We need to address the challenge of productivity in Scotland. It is vital that we keep existing skilled workers and attract even more, but this budget will make attracting skilled workers more difficult. For more than a million skilled workers, it will mean a reduction in their net salary and a lower take-home wage than that of their colleagues elsewhere in the UK.

Kate Forbes

Will the member take an intervention?

Dean Lockhart

I need to make progress.

Scottish Chambers of Commerce has warned that this budget will make

“Scotland a less attractive part of the UK for skilled employees”

and

“for businesses to recruit”.

By increasing tax on skilled workers, this budget will only exacerbate the low growth, the low productivity and the low-income economy that the SNP has created over the past decade.

On business investment, the budget imposes further costs on the struggling business sector in Scotland. By virtue of the increase in the poundage rate and the large business supplement alone, business will have to pay an extra £150 million a year.

It should come as no surprise that we have seen a 15 per cent decline in business investment in the past year. Businesses in Scotland were promised £500 million of investment support under the Scottish growth scheme, which the First Minister described as

“a half-billion pound vote of confidence”

in the Scottish economy to support business. We now know that, 18 months later, only £25 million of assistance has been given to Scottish business—that is 5 per cent of the investment support promised by the First Minister to business in Scotland.

With economic policies such as that, it is no wonder that the Scottish economy faces the longest period of weak growth in 60 years.

This budget is not fit for purpose; it breaches a central SNP manifesto pledge and does not come close to addressing the fundamental challenges that the Scottish economy faces. After 10 years of SNP mismanagement, we are seeing the weakest growth for 60 years. The budget will only further damage the economy, so it is time for a change of economic policy in Scotland.

15:51  



Kate Forbes (Skye, Lochaber and Badenoch) (SNP)

I remind the chamber that I am still the parliamentary liaison officer to the Cabinet Secretary for Finance and the Constitution.

There is strong consensus across Scottish society in favour of investing in our common good. Members on all sides of this chamber regularly make demands to invest more in our NHS, to build more housing and to strengthen broadband. Although there is definitely disagreement about how we fund those demands, there is agreement about the need to maintain or to increase funding in the building blocks of healthcare, education and connectivity.

Despite the challenging economic backdrop, this budget targets investment to meet the challenges of today and to seize the opportunities of tomorrow. It is a budget for the farmer in Staffin, the engineer in Drumnadrochit and the doctor in Dingwall.

People in the Highlands want reliable connectivity. This budget has a commitment to invest £600 million to support the R100 programme to deliver superfast broadband to 100 per cent of residential and businesses properties.

We want a well-resourced NHS Highland with more healthcare professionals. This budget not only increases spending on health by more than £400 million, but lifts the 1 per cent public sector pay cap and provides a pay rise for NHS staff—making Scotland the only place in the UK to do so.

People in the Highlands want more homes, and more affordable homes, to be built. In this budget, we are investing heavily in the provision of affordable housing by contributing £756 million towards the investment of £3 billion to build 50,000 affordable homes over this parliamentary session. The budget also specifically maintains funding for rural and islands housing funds.

We want improved roads and rail links. This budget has £1.2 billion of investment in key road and rail projects, including continuing the A9 dualling and upgrading the Highland main line between Perth and Inverness. It will also continue to progress design and development work on improvements to the A82 between Tarbet and Inverarnan.

We want well-resourced education for our children and accessible further and higher education for young people. This budget is committed not only to providing free education across Scotland, but to providing £120 million directly to headteachers to reduce the impact of poverty on a child’s educational attainment, and it invests nearly £2.4 billion in our colleges, universities and enterprise and skills bodies.

We want to see economic growth, too. With doubled funding for city region deals, support on business rates and a boost to businesses’ research and development funding, the budget is trying to mitigate the deeply unsettling times that are fast approaching our economy as the UK Government reduces our access to the talent pool and makes it harder for businesses to trade across borders.

That is our budget. That is the budget that every member of the Scottish Parliament will vote on, one way or another, at decision time today. The list of investments that I have set out is not like Labour’s unfunded, uncosted wish list and it has not been magicked up like the Tories’ incoherent plan to ask for more spending while reducing investment in public services by more than £500 million.

There has been much talk about behavioural change and how people will respond to changes to tax. That is a fair question. I strongly suspect that the stronger public services and more inclusive society that our budget will build will have a behavioural impact, because they will attract people to live, work and do business in Scotland.

Last October, in the report, “Tackling Inequality”, the International Monetary Fund made it clear that excessive inequality erodes social cohesion, leads to political polarisation and ultimately leads to lower economic growth.

This budget delivers three results. First, it makes our taxation fairer by cutting taxes for the 70 per cent of taxpayers who earn less than £33,000. Secondly, it raises additional revenue by asking those with the broadest shoulders to pay a little more. Thirdly, and critically, it targets funding to reduce inequality and grow our economy.

Finlay Carson (Galloway and West Dumfries) (Con)

Will the member confirm that in this 2018-19 budget, the broadband budget has dropped?

Kate Forbes

The budget commits £600 million towards procurement of the R100 programme, which will deliver superfast broadband across Scotland. It does not commit to the shoddy 10 megabits per second that the UK Government is proposing.

There is no question that we face challenges today. By 2019-20, our discretionary budget allocation will have decreased by £2.6 billion since 2010-11, and the worst of the UK Government’s cuts are exacerbating inequality in Scotland. We will face economic challenges in the future, too. There is widespread concern about recruiting workers when immigration controls are tighter and about accessing markets on a tariff-free basis.

It is in that context that this budget protects the NHS and public services and supports low earners. It will unlock Scotland’s economic potential.

The Deputy Presiding Officer (Linda Fabiani)

I have a wee bit of time in hand, so I can allow some time for interventions.

15:58  



Colin Smyth (South Scotland) (Lab)

The inconvenient truth for every SNP and Green MSP is that the budget that they will rubber-stamp later today will mean that, in the days and weeks ahead, throughout Scotland, hundreds of councillors of all political persuasions and none will have to decide which services in their communities will be cut and which of their neighbours’ jobs will be axed. The debate that is taking place in council chambers right now, right across Scotland, is not about which services to trim but about which services to scrap.

I listened carefully to Patrick Harvie’s speech to find out why the Greens are so desperate to be the SNP’s cheerleaders in these attacks on our councils, but all I heard was complete denial and an appalling attempt to blame other parties for his decision to sell out.

Patrick Harvie

Our approach to the budget has secured a reversal of £170 million of local cuts. How much change has the member’s party’s approach made to the Scottish budget this year or last?

Colin Smyth

Let me tell members about the reality of Patrick Harvie’s negotiations. He stands up and says that, as a result of a local government settlement that is rising by just 1.5 per cent, there will be no cuts. It is an undeniable fact that, if burdens on councils are increased but they are not given extra funds to meet those demands, they will need to cut existing services. So far, Patrick Harvie has failed to acknowledge that.

Let me explain to Patrick Harvie what it means in simple terms. If I gave my four-year-old daughter £5 to spend on sweeties last year and told her this year that I will give her £5 again, but she will have to spend £2.50 on lemonade, she would say to me that she would have to cut what she spends on sweeties. If my four-year-old daughter can get that basic fact, why cannot Patrick Harvie?

The budget fails to provide extra funding for local government, but it adds additional burdens in relation to childcare, social care and pay. There is no additional funding to meet those extra burdens, so councils will have to cut existing spending on services. Frankly, it is dishonest of the SNP and the Greens to pretend otherwise.

The problem for councils is that it is not sweeties that they are being forced to cut; they are being forced to cut the school crossing patrols that keep our children safe. [Interruption.] I see that some SNP members seem to find that amusing. Councils are being forced to cut the carers who look after our loved ones as if they were their own and—I say this to the Green Party—the energy efficiency programmes to tackle the scandal of fuel poverty, which are not protected because they are funded by councils that face cuts. Learning support assistants are being axed from our classrooms because they are not part of the Government’s arbitrary teacher number targets.

Bruce Crawford

Yesterday, Labour’s finance spokesman conceded that emergency legislation would have to be brought in to introduce its tourism tax and its land tax. Has any emergency legislation been drafted by the Labour Party? Has it produced any costings for essential new information technology systems or for new recruits, identified what the collection agency would be, or produced any necessary guidance on procedures? In fact, has Labour done anything at all?

Colin Smyth

The reason why a tourism tax has not been introduced is that the Government does not have the political will to make the changes that would fund public services properly.

There has been a failure to face up to the fact that adding extra burdens without extra cash is an underhand way to increase central Government ring fencing of local government. We have had ring fencing before, but at least when previous Governments brought in new initiatives, they came at a time of growing budgets with extra resources over and above the core local government grant. What is so perverse about the ring fencing that is supported by the SNP and the Greens in the budget is that it does not come with any new money to fund it. The Government is simply raiding the local government settlement and stealing cash from other council services.

From commitments on teacher numbers to the Carers (Scotland) Act 2016 responsibilities, hundreds of millions of pounds is being sucked from existing services because the finance secretary does not have the guts to raise the additional tax that is needed to deliver his unfunded commitments. After five years of attacks and £1.5 billion of cuts to lifeline council services, the utter contempt with which the Government views local government continues.

I could never quite work out just why the SNP has such disdain for local government and councillors that it is determined to attack the very services that the most vulnerable rely on most. I can only put it down to the obsessively centralist and dictatorial way in which it wants to run Scotland, whereby more and more decisions are made in Holyrood—or rather Bute house—and fewer and fewer are made in our councils. The Government sees local government not as a partner but as the enemy. When it comes to funding, there are no meaningful negotiations; there is just imposition. If local government dares to call for better funding, the finance secretary waves in its face the threat of removing funding further.

That is all being done by the SNP with the full support of the Greens. It is clear that keeping the yes coalition together is far more important to the Greens than keeping council services and jobs.

We know that it does not have to be like that. We know that all the cuts that the SNP and the Greens support—not just some of them—can be avoided. The Parliament now has the power to make different choices, to be genuinely progressive, to truly redistribute wealth, and to say to the people of Scotland that, if we want decent public services, we need to properly fund them.

The budget could have been an opportunity for progressive politics, for public services and for the fight against the scandal of poverty in Scotland. It could have been an opportunity to free 30,000 children who live in poverty out of the misery of austerity by increasing child benefit by just £5 a week, and a chance to stop all the cuts to our council services and invest £500 million more in our overstretched and underresourced NHS. The SNP and the Greens are good when it comes to the rhetoric of ending austerity, of progressive taxation, of wealth redistribution and of reducing poverty, but the budget shows that they are found wanting when it comes to putting that rhetoric into practice.

The modest tinkering on income tax by Derek Mackay raises a meagre £83 million more when the cuts to business rates are taken off. That is just £83 million more going into our public services, in a budget of £32 billion.

The Deputy Presiding Officer

You will have to come to a close, please, Mr Smyth.

Colin Smyth

Earlier Derek Mackay claimed that anybody who votes against this budget is somehow voting against all Government spending. The reality is that today we could have had a very different budget—

The Deputy Presiding Officer

You will have to come to a close, please, Mr Smyth.

Colin Smyth

—a budget that stopped austerity cuts and stopped the SNP in its tracks.

16:05  



Kenneth Gibson (Cunninghame North) (SNP)

Today I hope and believe that Parliament will approve spending plans to build a fairer, more prosperous Scotland by investing in our public services, our workers and our economy. Today we take another step towards delivering the bold and progressive agenda that was set out in the programme for government.

MSP colleagues who will vote with the Government demonstrate their commitment to developing stronger public services and a more inclusive society. Unfortunately, the same cannot be said for the Tories, their Labour brothers-in-arms and Willie Rennie’s gang of three.

First I turn to that divided grouplet: the Orkney and Shetland party, who are elected as active constituency members with traditional party support, and their erstwhile mainland colleagues, the tactical voters—the “vote for us not because you believe in us but to stop somebody else” party.

Legend has it that when Howard Carter prised open Tutankhamun’s tomb back in 1922, he was mesmerised by treasures moulded in gold and carved in ivory—trumpets, weapons, clothing and all manner of wonders. An aged papyrus scroll caught his eye. Tentatively unfurling it, he carefully deciphered the ancient hieroglyphics. One simple phrase emerged: “a penny for education”. Through millennia of war, revolution, reformation, pestilence and plague, fire and flood, that shekel/denarius/groat-for-education policy has remained sacred to a small, much despised and marginalised sect that was known to the ancients as “Lib Dems”. Heretics say that it has been policy only since 1983 and much devalued by inflation since then.

Yet even though its architects have seen the policy ignored for decades and many of its early adherents have moved to that big ballot box in the sky, its current high priest, St Willie of Rennie, who is here in his ghostly if not actual presence, remains an avid devotee. Without making any effort to explain how, this wizened sage mystically claims that its implementation would release £500 million for education, although the precise mechanism of how much would be allocated to each part of the system remains known only to the truest of cult members. Certainly, that lazy thinking has not been explained to Parliament or the people of Scotland. If only this tiny group of latter-day magi spent as much time examining the budget as they do following the letter—if not the spirit—of the law in relation to election expenses in their target seats.

I must admit that I was a little bewildered by the Tory party-political broadcast that aired earlier this month. Apart from Annie Wells, there was little sign of the familiar Tory faces that we know and love here at Holyrood. Instead it was a showcase of Ruth’s warm, couthy, more proletarian Tories. It is frankly insulting that the Tories believe that the electorate do not need to hear about their policy ideas, tax proposals or, indeed, the failure of the 13 members of Parliament from Scotland to represent Scottish interests at Westminster. Do the Tories really believe that people will be convinced that they have changed simply because Annie Wells used to work at Marks & Spencer or because Bill Grant MP’s late father was a miner?

I think that in the next broadcast we need to hear the authentic voice of Toryism in Scotland. We should hear Donald Cameron, 27th Lochiel, discussing the trials and tribulations of being a clan chief in 21st century Scotland or debating with Alexander Burnett who has the most aristocratic heritage and whether Harrow’s polo team was better than Eton’s. We could hear Sir Edward Mountain bewailing the difficulties of finding a good butler these days, or Peter Chapman wistfully reminiscing about the four farms he jointly owned prior to becoming an MSP. In the next Tory broadcast, their voters need to be reassured that it is still the same old party of vested interests, landed wealth and privilege that it has always been.

If we must have Bill Grant, rather than polishing road signs, he could explain not only why he refuses to support the 4,750 WASPI women in his constituency and sign the women against state pension inequality pledge, but why he fell asleep on the green benches during Westminster’s debate on the matter back in December.

In any case, I hope that retired firefighter Bill Grant will join me in welcoming this budget, which will protect police and fire services, and work to ensure that those services retain in full the savings that will be created from being able to reclaim VAT as well as ensure that the £140 million that has already been taken from those services by the UK Tory Government is returned.

Ruth Davidson (Edinburgh Central) (Con)

Will the member take an intervention?

Kenneth Gibson

I yield to the leader of the Scottish Conservative and Unionist Party, who is the reason why Nicholas Soames has been wandering up and down Westminster declaring, “Ruth Davidson is not getting my Mid Sussex seat!”

Ruth Davidson

I would like to ask the member whether such a long diatribe against individual members of my party shows more the reason why he has never graced the front benches of his own party or more the reason why he has nothing to say about his own party’s budget?

Kenneth Gibson

I am experiencing a wee bit of déjà vu, because that is not the first time that Ruth Davidson has used that line. She needs to think up some new ones. I am talking about the budget, but my point is about the false face that her party is presenting to the people of Scotland, which I find most irksome.

Meanwhile, Labour has again been too preoccupied with in-fighting and political manoeuvring to make any meaningful contribution to the budget process. Perhaps Jackie Baillie will not take Murdo Fraser up on his Valentine offer to join the Conservative Party but, given the way in which Labour MSPs vote with the Tories against the SNP Government, one might be forgiven for getting the pair confused.

Jeremy Corbyn MP ventured up to north Britain last week to meet a select group of acolytes, while having a wee pop at the SNP and austerity. Perhaps someone should gently remind him that, in fact, Labour introduced austerity—

John Scott (Ayr) (Con)

On a point of order, Presiding Officer. I wonder what relevance any of Mr Gibson’s speech has to the budget debate. As Ruth Davidson has said, it has been a diatribe against named individuals, dealing them low blows, and it has absolutely nothing to do with the motion under consideration today.

The Deputy Presiding Officer

I am sure, Mr Scott, that Mr Gibson is about to enlighten us on that, but your point was not actually a point of order.

Kenneth Gibson

I thank my Ayrshire colleague for his observation. I am sorry that I have not mentioned him in any of my speeches this year, but perhaps I will do so in later debates.

Labour introduced austerity while still in government at Westminster and has consistently failed to oppose Tory welfare cuts since then. In fact, what was interesting about James Kelly’s opening speech was that he did not criticise the Tory Government’s cut to this Parliament’s budget once. Other members can call it what they want—“cognitive dissonance” or “collective amnesia”—but I prefer “outright hypocrisy”.

Today Labour and the Tories will vote against investing in childcare. They will vote against improving our schools and hospitals. They will vote against protecting our public services and they will vote against a fairer society for all. It is important to bear in mind that 70 per cent of Scots will actually pay less tax in the coming year than they do now. That might be difficult for Opposition members to spin away when they explain to their constituents why they voted against today’s budget, but it is a fact nonetheless. By diverging from the UK on tax, we can better protect public services that are free at the point of use, including free prescriptions, free personal care and indeed free higher education, which the children of many MSPs of other parties benefit from.

Our investment will help to reduce the attainment gap, double free childcare, and deliver 50,000 additional homes and £600 million in broadband. I urge members to support the budget today to deliver first, last and always for the people of Scotland.

The Deputy Presiding Officer

I must apologise to Mr Scott, because that was, in fact, a point of order. I think that Mr Scott will be pleased that relevance did come eventually.

16:13  



Miles Briggs (Lothian) (Con)

I think that that is debatable, Presiding Officer. If there is anything to be learned from what we have just heard, I think that it is that the member will not be in the SNP’s next party-political broadcast with Nicola Sturgeon.

I want to focus my comments on what the budget means for our NHS in Scotland. The finance secretary and the SNP Government have been boasting about record health spending, but for some reason they never want to refer to the fact that a significant part of that extra health spending is directly linked to the Barnett consequential funding that the Scottish Government receives. Since the UK Conservative Government took the decision to protect health spending, that has amounted to some £2.154 billion extra that the Scottish Government has had since 2011 to spend on our health service.

Ben Macpherson (Edinburgh Northern and Leith) (SNP)

Will the member take an intervention?

Miles Briggs

No, I have just started my speech. I may allow interventions later.

How is overall spending on our NHS across the UK nations performing? Official statistics show that, in recent years, because of the decisions that have been taken by SNP ministers, health spending in Scotland has been rising at roughly half the rate of spending on the NHS in England. Although health spending in England increased by around 10 per cent between 2012 and 2016, it has increased by only 5 per cent in Scotland. Perhaps Ben Macpherson would like to explain that to me.

Ben Macpherson

Miles Briggs is speaking positively, I think, in favour of spending on the NHS, so perhaps he can explain why he is likely to vote against £400 million extra spending for the NHS and why the Scottish Conservatives’ tax proposals to take £501 million out of the Scottish revenue budget would cut 12,000 nurses from the Scottish NHS. Can Miles Briggs explain his rationale?

The Deputy Presiding Officer (Christine Grahame)

Mr Briggs, do not stand up while another member is still intervening—please wait until you are called.

Miles Briggs

I refer to what I have already said. Given the £2.154 billion that has come to Scotland from the UK Conservative Government, what SNP members are saying would not be put into our health service is a bit of a drop in the ocean, even for them. We have invested across the United Kingdom in our health service; we are proud of that record. The question is whether the SNP will take that forward.

If SNP members will not listen to me, it would be worth their listening to Professor Jim Gallagher, whose authoritative report, “Public Spending in Scotland: Relativities and Priorities”, which was published last September, concluded and emphasised:

“In 2006 Scotland had a health lead of 16% over England but by 2016 this lead had reduced to 7.5%.”

That was caused not by an overall squeeze on the Scottish budget but by the choices of SNP ministers who have given less of a priority to spending on the health service than to the budget as a whole.

How will that impact on our NHS? In this SNP-Green budget for the NHS next year there is a big cut to NHS capital spending of almost £67 million. That is despite the well-documented backlog of maintenance repairs across NHS Scotland’s estate, the cost of which is estimated to stand at more than £900 million, and the fact that the proportion of the significant and high-risk maintenance backlog has increased.

Derek Mackay

How would the NHS cope if I had to see through the £211 million reduction in resource next year from the UK Government and, on top of that, the further £556 million reduction for Scotland’s public services that I would need to find if I followed the Tory tax plans?

Miles Briggs

SNP members are completely forgetting what I have said already. More than £2 billion in additional money has come to our health service. How this Government decides to prioritise that is its decision.

I welcome the cabinet secretary’s comments on Frank’s law. I welcome the fact that the Scottish Government is finally working with stakeholders to prepare for the implementation of that change. I therefore would like to hear more when the cabinet secretary sums up about how much is being provided to prepare for the implementation. For more than 9,000 Scots across our country, Frank’s law is needed today—indeed, it was needed yesterday—so I hope that it will be delivered as soon as possible. As my party leader, Ruth Davidson, said, Derek Mackay and the SNP will have our support in doing that as soon as possible.

We need to take action specifically because of that. We all know the demographic challenges that our country faces. In Edinburgh alone, the number of people aged over 85 is expected to double by 2032 to more than 19,000. The number who require intensive levels of support will increase by 60 per cent and the number of people living with dementia is projected to increase by 25 per cent over the next 10 years to more than 10,000.

The SNP budget does not offer any long-term thinking on how we address the ever-increasing demands on our social care system, which cannot cope with the current levels of demand. Overriding all that is the fact that probably the biggest threat to future investment in our NHS and social care system is the pitiful economic growth that we are seeing in Scotland.

SNP ministers seem to be in denial about the fact that the low growth rates are not increasing the tax take in Scotland. SNP ministers will be responsible for that in future budgets and the people of Scotland will judge them on that. Instead of boosting our Scottish economy and making Scotland a more attractive and competitive place to work, live and invest, this budget hikes taxes and sends out the wrong message that Scotland is a high-tax country. Indeed, SNP income tax rises, even without the council tax rise, which most Scots will experience, are the highest income tax rises on Scots for more than 40 years.

The Labour Party in this chamber and Jeremy Corbyn might be preaching the failed economics of the 1970s, but that is what is being delivered by the SNP Government in Holyrood today.

This budget will go down as another staging post in the journey of the Scottish public losing faith in this SNP Government, given its mismanagement of our public services and its seeming indifference to creating and growing a positive economy in Scotland.

In the coming years, increasing numbers will find that they are paying more and receiving less. This SNP Government has no new ideas for growing our economy; it is making Scottish taxpayers pay the price for its failure to stimulate and grow our Scottish economy, and our public services will bear the brunt of that slow growth in the future.

Presiding Officer—

The Deputy Presiding Officer

Yes. You must conclude.

Miles Briggs

I will, Presiding Officer. Scotland deserves better than this, and it is time for a Scottish Government that understands that economic success is fundamental to sustainable public services.

16:20  



Ruth Maguire (Cunninghame South) (SNP)

This budget is bold and progressive, and it delivers for families and communities across Scotland. It is a clear example of the fact that where we have the powers here in Scotland, we are making different choices from those that are pursued by the callous Tory Government at Westminster. The Scottish Tories would happily follow that Government’s lead, cutting tax for the highest earners and creating a £500 million black hole in our public finances.

Fortunately for the people of Scotland, although we cannot control what the Tories do at Westminster, we in power in Scotland can make, and are making, different choices. Scotland will be the fairest-taxed part of the UK with the best deal for taxpayers, allowing us to mitigate Tory cuts, invest in our NHS, protect our public services and grow the economy. Under the progressive tax reforms, 70 per cent of taxpayers will pay less than last year, while higher earners will face a modest increase. Those tax changes will allow the Scottish Government to increase health spending by £400 million to £13.6 billion, lift the public sector pay cap and provide a substantial package of investment in the economy and in tackling poverty and social inequalities.

That is good news for people across Scotland, and in particular my Cunninghame South constituency, one of the areas that is suffering most under Tory austerity.

Monica Lennon

Will the member give way?

Ruth Maguire

No.

The North Ayrshire Council area has amongst the highest rates of poverty in Scotland, alongside Glasgow and Dundee. In Irvine west, one third of children are living in poverty. The statistic should shock and shame us as policy makers, but the fact is that Irvine west is more than that statistic, demanding only admiration for the resilience of the communities who live and work there.

Monica Lennon

Will the member give way?

Ruth Maguire

No.

We all know that Tory-imposed austerity is one of the main reasons behind rising child poverty. Indeed, the introduction to Ayrshire and Arran NHS Board’s 2017 report “The State of Child Health: Spotlight on Child Poverty and Welfare Reform” says:

“Child poverty is predicted to increase significantly in Scotland during the life time of the current UK Parliament, largely due to Welfare Reform.”

The Scottish Tories’ budget plans would exacerbate that dire situation by taking a further £500 million out of the public purse.

In stark contrast to the Tories’ plans to slash tax for the highest earners while cutting support for the poorest, the SNP budget will mitigate austerity and tackle inequalities. Moreover, in stark contrast to Labour’s rhetoric of doom and gloom, which criticises everything while offering few solutions for anything, we will take concrete action to improve people’s lives.

Monica Lennon

Will the member give way on that point?

The Deputy Presiding Officer

Please sit down, Ms Lennon. It is apparent that the member is not giving way.

Ruth Maguire

Negative rhetoric alone does not help anyone, and it does a disservice to those folk living in our communities who are facing the greatest challenges.

What will help my constituents is the £100 million that this Government will spend on mitigating UK Government welfare cuts next year, including £50 million to mitigate the callous bedroom tax.

What will help my constituents is a tackling child poverty fund worth £50 million over the period of the child poverty delivery plan.

What will help my constituents is £1.5 million of investment in a family financial health check guarantee to help families with children get all the money that they are entitled to and access the best deals on financial products, services and energy bills.

What will help my constituents is a £1.5 million fair food fund, which will see the Scottish Government working with national and local partners to ensure that everyone can access healthy, nutritious food in dignified ways; the expansion of free early years childcare; the new best start grant providing financial support to low-income families; and the baby box, which gives practical support to new parents and ensures that every baby in Scotland has the essentials.

I could go on, but the point is clear. Within the limited confines of its political and economic powers, this SNP Scottish Government is getting on with the job of taking concrete steps to significantly improve the lives of people in Scotland.

As well as its bold central Government initiatives, this Government has ensured that local government will receive an above-inflation increase in resource funding. For North Ayrshire, that means a budget boost of an extra £4 million to spend on local services to improve the lives of my constituents in Cunninghame South. It means more money to spend on things such as employability hubs, school clothing grants and free school meal provision during the holidays as well as during term time.

It also means more money to pursue projects such as the poverty challenge fund, which focuses specifically on preventative measures to support those most likely to experience poverty. It means more money to establish community food programmes, which explore how more sustainable models of local and dignified food provision can be developed. More funding will develop North Ayrshire’s fair for all strategy, which seeks to reduce inequalities.

Increased health spending will allow NHS Ayrshire and Arran to continue to build on excellent initiatives such as the integrated working that takes place between midwives and income-maximisation specialists within NHS Ayrshire and Arran, which increases the income of pregnant women and their families.

Voting against the Scottish budget is a vote against the investment in childcare, our schools, our hospitals and our other vital public services, which gives them the funds that they need to deliver better services for all of Scotland. Voting for this budget is a vote for a different path and a better future for the people of Scotland than the one that is being imposed on them by the Tories at Westminster. I know which side I am on.

16:25  



Jenny Marra (North East Scotland) (Lab)

Let me start where Ruth Maguire finished. I am sure that she will agree that, far too often in this chamber, we talk about the symptoms of poverty rather than the causes. The cabinet secretary will not be surprised that I want to spend my time today talking about the sports tax that he has put on local communities right across the country. I link that to Ruth Maguire’s comments because I spoke to a sports expert yesterday who told me that the sports tax that Derek Mackay is putting on our communities makes the delivery of the prevention agenda in the Christie commission’s recommendations very difficult.

The Barclay review’s proposal to end rates relief for local authorities’ arm’s-length organisations is of real concern. Those organisations run a huge range of sports, leisure and cultural services, and they qualify for rates relief. The cabinet secretary knows that arm’s-length external organisations were initially set up for tax purposes, so that councils would have a bit more cash to provide much-needed sports and leisure facilities. However, Derek Mackay’s budget will give us a sports tax that will make it far more difficult for councils to build new sports halls and libraries.

It is astonishing that part of the rationale behind the Barclay review’s proposals was that ALEOs have an unfair competitive advantage over private leisure providers. The Barclay review says that ALEOs

“create unfair competition between the public and private sectors ... On the grounds of fairness, we believe there should be a ‘level playing field’ and council ALEOs should no longer be able to abuse the system.”

Frankly, that admission is surprising. Does Derek Mackay accept the argument that there is unfair competition? If he does, he is accepting right-wing ideology in his public policy for local authorities.

Derek Mackay

Let me say, for absolute clarity, that I am not implementing the Barclay review’s recommendation on ALEOs, as the chamber knows fine well. As a committee convener and a Labour MSP who supports the Labour budget, can Jenny Marra explain why she has written to me, demanding to know how I will address the deficit in the non-domestic rates pool, when I have sustained that deficit in the NDR pool? She cannot have it both ways.

Jenny Marra

Mr Mackay knows Labour’s tax proposals very well. We would not have to make that cut. He knows perfectly well what he is doing with the sports tax—he is top-slicing the grant that local authorities get. He says that there is unfair competition between private providers and ALEOs, but I can guarantee that there have been no planning applications from private gym providers in inner-city Dundee. As he well knows, the money is not there to make such facilities work.

Labour’s philosophy is that the Government should step in to provide public amenities not just in the communities that most need them but across the board, so that equal and high-quality sporting and cultural opportunities are provided.

Patrick Harvie

Will the member give way?

Jenny Marra

No. I will take Patrick Harvie’s intervention in a minute, but I want to make some progress.

The SNP would have us believe that it shares that philosophy. That has happened many times in the chamber, but we need only to look at what the SNP is doing to see the reality.

I will spell out the effects of Mr Mackay’s sports tax, in case anyone is in any doubt. Late last week, Mr Mackay found a fix for the regional performance centre in Dundee. He had to. His decision to take tax relief away from ALEOs would have more than doubled the operating costs of the planned centre. Indeed, his £800,000 tax grab on the centre left a question mark over its viability. Even if it had remained viable, those costs would have been passed on to the people who used the centre. The fact that he fixed that problem in Dundee is very welcome, but his policy still stands for the rest of the country and for other projects in Dundee.

Who knows what will happen to the new tennis centre in Inverclyde or to the new community centre and library in Menzieshill, in Dundee? The councils concerned will have to find thousands of pounds of extra money to fund those facilities, as the cabinet secretary knows. [Interruption.] I would be happy to take an intervention from Mr FitzPatrick.

In passing their budgets this week, councils are having to pare their services back to the bone. Where will they find the cash for such new facilities? I doubt that they will be able to.

Patrick Harvie

Will the member give way?

The Deputy Presiding Officer

The member is in her final minute, so both the question and the answer must be brief.

Patrick Harvie

The Labour Party has welcomed the fact that the Barclay recommendation in question will not be fully implemented, but does it acknowledge that there remains an issue with accountability and that we should be creating incentives to bring services back into democratically accountable control rather than allowing more and more assets to be transferred to ALEOs?

Jenny Marra

I believe that there is an issue with accountability, but Mr Mackay’s proposal means that councils will have to find more money to build sports halls and libraries. It is completely unacceptable.

The councils in the poorest areas in Scotland created ALEOs because they needed the relief to build community facilities. That need has not gone away—it remains and is greater than ever—and I really hope that Mr Mackay will look again at his regressive tax.

16:32  



Tom Arthur (Renfrewshire South) (SNP)

I am delighted to have the opportunity to speak in the final debate before the Parliament votes on the Scottish Government’s budget, which will benefit all those who live in the Renfrewshire South constituency that I am honoured to represent.

When I vote for the budget, I will be voting for more than £1.8 million of pupil equity funds to go directly to schools across Renfrewshire South. Carlibar primary school will receive £121,000 and St Mark’s primary school will receive £109,000. Both of those schools are in my home town of Barrhead. Johnstone high school, which is in the town where my constituency office is based, will receive £104,000, Woodlands primary school will receive £141,000 and the Riverbrae special school will receive £190,000. Those schools are in Linwood, a town that was cast on the scrap heap by a previous Tory Government but that is now 10 years into a regeneration process that was begun by an SNP-led Renfrewshire Council under my colleague Derek Mackay.

Schools the length and breadth of my constituency and across Scotland have benefited from and will continue to benefit from attainment funds. I have had the privilege of meeting staff and pupils from across my constituency and have seen at first hand the benefits that PEF money brings through a range of interventions such as specialised staff and additional activities that enrich and enhance the learning environment.

I also put on record my support for the Government’s continued investment in the NHS. The budget includes an additional £400 million for the NHS, which takes total health spending to some £13.1 billion. As the son of a nurse and an NHS estates officer, both of whom are retired, I am delighted by the Government’s commitment to lifting the public sector pay cap.

One further point that I wish to make on health spending is about how the money is spent and the fundamental importance of how spending decisions are made in health. One of the SNP Government’s finest achievements was the delivery of the publicly owned Queen Elizabeth university hospital. In particular, I highlight the £40 million of investment that has been put into the institute of neurological sciences on the Queen Elizabeth campus over recent years. I have direct knowledge of the fact that it is a worldwide centre of excellence that practises cutting-edge medicine.

In May of last year, my brother collapsed at his home in Barrhead. He was rushed by ambulance to the Royal Alexandra hospital, where he received exemplary treatment from the accident and emergency care team and the on-call consultant, who suspected a brain haemorrhage. My brother was then quickly transferred by ambulance to the institute of neurological sciences at the Queen Elizabeth campus, where a subarachnoid haemorrhage was diagnosed. Within a matter of hours, he was in surgery.

Having lost a close friend to a subarachnoid haemorrhage a few years ago, I and my family feared the worst. However, three weeks later my brother was back in college and passing exams with flying colours. His remarkable recovery was made possible by the incredible NHS staff who treated him. Those staff, in turn, benefited from a Government that invests money in our health service and, crucially, listens to the advice of clinicians on how that money should be invested.

Before concluding, I reiterate my backing for this budget’s support for our creative sector, particularly given the reductions in funding from the national lottery. I also commend the decisions to increase the economy portfolio budget significantly and to continue the support for small business, which demonstrate that this Government is determined to support economic growth.

All of that has been achieved against the negative actions of the UK Government, which is cutting the Scottish Government’s resource budget by some £500 million over the next two years. That, as everyone but the Tories seems to understand, is the budget that pays for the day-to-day running of our public services, which includes paying the salaries of public sector employees such as nurses, firefighters and police officers.

That £500 million budget reduction should also be understood in the broader context of almost a decade of austerity implemented by the UK Government. It is a challenge not only to the Scottish Government but to all of us in this place, which is, after all, a Parliament of minorities. I commend the Greens for their pragmatism and for rising to the challenge. It is disappointing but unsurprising that Labour chose not to engage constructively in the process.

As for the Tories, they have failed to produce a fiscally and politically coherent proposition. Of course, Tories reflexively wish to slash taxes for high earners and shrink the state. I fundamentally disagree with that approach, but it does at least represent a school of thought that can be subjected to scrutiny and debate. However, the current Tory proposition, which calls simultaneously for tax cuts and increased public spending, warrants not debate but ridicule.

In the end, politics comes down to values and choices, and nowhere is that more apparent than in the setting of a budget. The Tories will not admit what they would cut, and Labour does not have a set of proposals that would meet the rigorous standards of the Scottish Fiscal Commission. In contrast, the budget that has been introduced by Derek Mackay shows that the Government puts progressive values into action, is committed to protecting and strengthening public services, supports business and economic growth and is committed to ensuring that every child has the opportunity to succeed. It is a budget that works for my constituents in Renfrewshire South and for all of Scotland, and I look forward to supporting it this evening.

16:37  



Liz Smith (Mid Scotland and Fife) (Con)

This stage 3 budget debate should, perhaps, be put in the context of the divergence between comments that have been made by the finance secretary and those that have been made by economic commentators. Since the stage 1 vote on 31 January there have been wildly different interpretations of what is happening on the ground.

In summing up yesterday’s rate resolution debate, the finance secretary trumpeted the underlying strength of the Scottish economy. Specifically, he mentioned improving productivity levels, rising output, gross value added, improving median weekly earnings and foreign direct investment. However, if we look in more detail at Mr Mackay’s budget—as many economic commentators have done—there is another part of the story, relating to the overall direction of travel. It is set against the most recent analysis that has been undertaken by the OECD, which clearly exposed the extent of the economic issues that are facing Scotland as a result of the projected poor rates of economic growth. Despite all the spin that Mr Mackay can muster, the overall tax burden from the budget will rise, which is why commentators have a rather different perspective from Mr Mackay’s.

The other context for the debate is how well we spend our money. It is not just about tax revenues and how much we collect from hard-pressed taxpayers; it is a debate about the general wellbeing of business and industry as they plan their investment, jobs and trading operations. It is not just about our taxpayers and the demand side of the economy. It is also about the supply side, so let us take a look at each in turn.

On the demand side, the Scottish Retail Consortium has made it plain that the overall increases in tax on working people will make it much harder to persuade the public to spend more of their money in shops and local businesses. Many of us—perhaps all of us—represent constituencies with small towns whose high streets are already struggling, with empty premises, threatened closures and shops that are struggling to make ends meet. Many of those towns also include businesses that have a rateable value of over £51,000 and which in Scotland face the large business supplement of 2.6 per cent, whereas the supplement is 1.3 per cent for their counterparts in England. Those businesses need all the help that they can get from the public, but they are having a hard time of it because of the SNP’s tax plans.

Derek Mackay

Will Liz Smith explain, in that case, why tonight she will oppose the support package of about £720 million for non-domestic rates relief?

Liz Smith

I will do that because we have been very clear that the budget does not do nearly enough to ensure that business is competitive, and it will not properly invest in the things that we need in Scotland to ensure that we can sustain economic growth.

What is it, exactly, that business leaders have been saying in their warnings? They make the point that the SNP’s commitment to a higher-tax Scotland makes it much harder to attract the necessary talent and investment at a time when Scotland’s economy is already growing at a lower rate than that of the rest of the UK. The OECD and Scottish Fiscal Commission analyses do not make for good reading; the latter makes it very clear that it is expected that between 2018 and 2022 the Scottish economy will grow by not more than 1 per cent.

For business leaders, the introduction of the new tax band at 21 per cent on incomes between £24,000 and £43,430 is unwelcome because it means that despite all the rhetoric from Mr Mackay, the burden of tax in Scotland will be greater than it is in the rest of the UK. That widening of the tax gap is a serious issue to them—quite rightly. Perception matters, as well as reality.

We know from the Barclay review about the end to rates relief for ALEOs proposal. We also know that the cabinet secretary was going to go ahead with that proposal until he felt the full force of public reaction and realised that it was not going to be acceptable. Jenny Marra, who is not in the chamber just now, made a very good point about what future there is for some of the new ALEOs. If, at any stage, we put in jeopardy any of those new projects, we need to have a serious look at the implications in relation to that investment and building for our future—especially for young people, in this year of young people, which is very important.

While I am on the Barclay review, I repeat my plea to the cabinet secretary to think carefully about the implications for nursery provision of his tax plans—in particular, in the light of what we read last week in an Accounts Commission report and heard yesterday from the fair funding for our kids campaign, which is talking a lot about accessibility of nursery places. It is not just about provision of more places; it is also about whether they can be accessed. The Scottish Government seems to think that it is sensible to pursue plans that will allow private profit-making nurseries to enjoy 100 per cent rates relief but will not allow that for nurseries that are charities and not for profit, and which help local authorities to deliver greater flexibility in nursery places. That does not make any sense. I think that it does not make any sense to members, and it certainly does not make any sense to parents.

The long and the short of it is that the SNP will be unable to sustain the budget because the budget does not have the necessary economic growth behind it. That is a message that the SNP has been told time and again—not just by the Conservatives, but by businesses.

It is no use the finance secretary saying that Brexit is to blame for all this. It is not, because Brexit is happening to the rest of the UK, too. The debate is about the SNP’s stewardship of the economy. Just about every economic forecaster is telling Mr Mackay that he is making huge errors of judgment and—worse still—that he is harming Scotland's ability to be the most competitive and most successful part of the UK. That is exactly why the Scottish Conservatives will not support the budget.

16:44  



Ivan McKee (Glasgow Provan) (SNP)

As the series of debates on this year’s Scottish budget draws to a close—after what seems like an eternity—it is perhaps time to take stock of where we are.

We have heard much today, in yesterday’s deliberations on the rates resolution, and in earlier budget debates about the details of the Government’s spend and tax proposals—how much extra is being spent on the various portfolios, how much is being raised, and where from. We have heard alternative proposals being advanced, and we have heard different economic theories and varying perspectives on the impacts of tax and spend. It has to be said that some are more grounded in reality than others.

The Laffer curve, in all its manifestations, has had a good airing and is about to be put safely back in its box for a period of rest and recuperation in preparation for next year’s budget cycle. We have seen “tax income elasticities” and ‘“differential marginal propensity to consume” emerge on the scene as new contenders for the economic jargon of choice award.

Interest groups and respected independent bodies have been quoted endlessly. The full alphabet soup of trade bodies, third sector organisations and think tanks has been deployed to support arguments by all sides. The Fraser of Allander institute, in particular, it must be said, has seen its stock rise yet again, having been quoted against itself—from opposite sides of the chamber at the same time—on more than one occasion. The intense heat that has been generated by the debate has even managed to generate enough free energy to split the most compact political entity of them all: the Scottish Liberal Democrats.

Perhaps it is time to reflect on the wider politics of all that. What is the perspective of people outside the bubble—the payers of tax and consumers of services? What do the woman and man in the street take away from our deliberations over recent weeks? Taxpayers at different levels of income may or may not notice a shift in their take-home pay. In most cases it will go up; in some cases, it will go down. People will understand that the income tax system in Scotland is now different from that down south. They will also understand better that other taxes are different. The gap between council tax levels north and south of the border continues to widen, in their favour.

Miles Briggs

I thank Ivan McKee for taking my intervention. When he next sees the man and woman in the street in his constituency, will he tell them that he broke his pledge not to increase tax?

Ivan McKee

I will tell them that the vast majority of people in my constituency will have a tax reduction as a consequence of the budget.

The tax changes in the budget have been carefully tailored to minimise the chances of anyone altering their tax affairs or moving house in order to save an extra penny in the pound—especially when the higher council tax on a new house down south would wipe out any income tax gain. Future analysis by the Scottish Fiscal Commission will attempt to quantify the value of tax that is lost due to behaviour change, but I expect that it will be minimal.

Public sector workers will see different approaches to how the pay cap is handled by the different Governments across the UK. The narrative that says that business investors will be driven away by a penny in the pound rise has been overplayed. From experience, I know that the factors that determine business investment decisions are wide and varied, but that levels of personal income tax come low down on that list, and are far behind infrastructure, skills availability, business taxes and Government support.

The debate has, perhaps, also caused taxpayers to reflect on what they get for their money. Services that are free north of the border but cost money down south have been highlighted once more, and the quality of those public services has been contrasted with that of provision across the rest of the UK.

The people who use our health services, and those who work in them, increasingly hear of the problems that are besetting services in England and Wales, and understand that services in Scotland are different. The concept of “You get what you pay for”—or, in more technical terms, “negative price elasticity of demand”—is possibly the most common refrain in the public debate over past days. People feel instinctively comfortable with that concept, and most are willing to pay more to get more. Of course, the challenge for our public services is to ensure that that trust is not mistreated and that perceived value is delivered for the extra spend, that we continue to shift the focus to preventative spend and that we focus increasingly on outcomes and not just inputs, in line with the principles of the Christie commission.

I suggest that we will, when the dust settles, see a stronger Scottish Parliament—a Parliament that is taking, as the Scottish Council for Development and Industry put it,

“a progressive, mature and significant”

approach to deploying its new tax powers. I expect that the people of Scotland will see that, and will understand that a major step has been taken in the direction of making Parliament yet more relevant to their daily lives. The perception that Parliament now matters more—not just in service-delivery portfolios but in relation to take-home pay—has been reinforced. The understanding that Scotland is different—that we are able to take a distinctively Scottish approach to how we fund our public services, and how we raise the money to pay for them—has also been reinforced.

In conclusion, I say that although last year’s budget was historic, with new powers being available for the first time, this year’s budget is even more significant, because it shows Parliament starting to use those powers. Even more important is that it is yet another significant step on the road to creating a Parliament that has all the powers that are needed to run all aspects of our country and our economy.

The Deputy Presiding Officer

We move to the closing speeches.

16:50  



Monica Lennon (Central Scotland) (Lab)

The cabinet secretary opened by saying that the budget is putting “progressive values ... into action”. If only that were true. Despite all the back-slapping during the debate, the budget fails to protect the most vulnerable people in our society. It does not raise enough revenue and it fails every one of Scottish Labour’s five budget tests: it will not halt austerity, it will not stop the growth of poverty, it will not redistribute power or wealth and it will not grow our economy in the interests of the many, rather than the few.

Scottish Labour’s alternative plan passes every one of those tests. I am sorry that Patrick Harvie feels that he did not have enough time to consider it, because he would have seen that it would raise almost £1 billion of extra stimulus for the Scottish economy. Bruce Crawford asked members to consider the type of nation that we want to be: Labour has a prospectus that would save lifeline local services, fund a pay rise for public sector workers, put money in the pockets of working families by topping up child benefit by £5 per week, and deliver extra spending for the national health service.

Our costed alternative is proof of what a difference Parliament could make if only the SNP had the political will to make the choices for real progressive change, rather than continuing to tinker around at the edges. Ruth Maguire made important points about the scandalous levels of child poverty: it is a pity that she did not take an intervention that would have allowed her to agree with the trade unions and charities in her constituency and across Scotland that the top-up to child benefit that we propose would lift 30,000 children out of poverty immediately.

Our alternative tax plans would raise more than £540 million more than the proposals in the budget, while ensuring that the richest would pay their fair share and that 70 per cent of taxpayers would not pay a penny more. Our plans, just like the SNP’s, would ensure that people who earn up to £33,000 would not pay a penny more in tax than they do now. The difference is that, unlike the SNP, we would ask the very richest people in our society to pay their fair share. By dropping the threshold for the 45p rate to £60,000 and introducing a new 50p rate for those who earn more than £100,000, our proposals would raise vital money for public services.

Miles Briggs

It is now widely accepted that Labour’s proposal for a 50p tax rate would actually lose money. Will Monica Lennon confirm that she and her party support a policy that would lose money from Scottish taxes?

Monica Lennon

I do not accept that; there is no evidence for it. There is a perception that is shared by the SNP front bench and Tory back benches. Put simply, the issue is about progressive taxation. We are not embarrassed to ask people who can afford to pay a bit more to do so—which the SNP used to believe in. We had manifesto promise after manifesto promise from the SNP that there would be a 50p rate of tax, but the Government is now sheepish when it comes to explaining why it has binned that promise. Our 50p tax rate would mean that a person on 150 grand would pay £142 more per week in income tax. The SNP is asking them to pay just £17 more.

The bottom line is that the SNP’s tax plans are timid and will not solve austerity. Central to our additional stimulus package is the extra funding for local government, which has been unfairly squeezed in year after year of budget negotiations since 2011. COSLA has stated that local authorities need £545 million to protect lifeline services. That is what our funding package is all about. Cuts to local councils mean cuts to vital local services, which has an impact on people’s everyday lives. Colin Smyth spoke about the dilemma facing local councils that are under the control of various political parties, and Jenny Marra raised the importance of preventative spending. I know that a lot of members agree with that, but look the other way when the issue is raised.

The Scottish Government has claimed time and again that councils are getting a fair deal, but the cabinet secretary has failed to take responsibility and explain why nine out of 10 austerity job losses have been in local councils. That is not scaremongering: it is a fact that 28,000 local government posts have been cut in the past seven years. That is a disgrace.

Derek Mackay

Will the member take an intervention?

The Deputy Presiding Officer

It will have to be brief.

Derek Mackay

Why will Monica Lennon oppose the real-terms increase that will go to local government as a consequence of the budget?

Monica Lennon

I thought that the cabinet secretary was going to correct his earlier misleading of Parliament when he said that 28,000 cuts to local jobs was “scaremongering”. Labour is about putting money into public services—not taking it out.

Presiding Officer, I have taken a couple of interventions and am not sure how much time I have left.

Derek Mackay does not easily take our word for it. I wonder whether he has paid attention to the recent Unison and Jimmy Reid Foundation report on local government. It states:

“If local government continues to face the same level of grant reduction, there are extremely difficult choices ahead.”

Derek Mackay is shaking his head, but that is what the report says. It continues:

“As it stands the level and speed of cuts is not sustainable in the long term. Whilst the demand for services will continue to grow the fall in budget is placing increasing pressure on local government and its staff. Those hit hardest by the cuts are the poorest groups in local communities, who are, and will continue to be, unable to cope with service reduction or the complete withdrawal of ... services. Local authorities are facing the risk where they will be unable to meet their statutory duties and unable to deliver critical services to their poorest and most vulnerable citizens.”

We simply cannot afford to go on like this, so we can and must make different choices. We have the powers to do so, but despite the rhetoric, when the opportunity to use those powers is in front of it, the Government is running scared. It has declined to introduce a 50p rate for the highest earners, despite promising that in election after election, and it has refused to use the powers that it argued for to top up benefits including child benefit, which would lift 30,000 children out of poverty.

Our plans show that there are costed alternatives that can be used and which would make a real difference to working class families across the country. The budget does not raise enough revenue to stop austerity or to fund our public services. That is why our plan to provide a near £1 billion stimulus package for the economy would deliver, by contrast, the real change that is needed. Our plans would produce a budget that works in the interests of the many, not the interests of the privileged few.

16:57  



Adam Tomkins (Glasgow) (Con)

Pay more, get less; that is the message of today’s budget. It is a budget that puts up taxes, despite the fact that the Scottish Government’s block grant will go up this year. It is a budget that increases our rates of income tax, despite the SNP promising more than 50 times in the past two years not to do that. It is a budget that will do nothing for consumers and that will damage Scottish business—damage that could take years to repair, according to the Scottish Chambers of Commerce.

Perhaps most seriously of all, this is a budget that does nothing to address the fundamental problem with the Scottish economy: growth that is chronically low, relative to growth in the rest of the UK. That is the legacy of the SNP’s decade-long mismanagement of the Scottish economy. Time after time this afternoon, we have heard SNP speeches that have failed even to mention economic growth, which shows just how unfit to govern the SNP has become. Growth is not an economic buzzword or a piece of jargon that we can choose to take or leave as we like. Growth is central; it goes to the core of how we fund our public services—the world-class public services that we all rightly demand. Grow the economy and we increase economic activity; increase economic activity and we grow the tax revenues that accrue to the Government; boost tax revenues and there is more public money to invest in front-line services. It is not complicated, but it seems to be beyond this cabinet secretary.

This budget does not do any of that. It does the opposite. It takes money out of the hands and pockets of families, workers and consumers. It makes doing business more expensive in Scotland by making Scotland the highest-taxed part of the United Kingdom, and a place where everyone earning more than £26,000 a year will pay more tax. By doing that, the cabinet secretary is inhibiting growth, not enabling it. He is saying to hardworking families, “Don’t strive for your family—put your feet up,” because, if someone aspires to succeed, he will tax their aspiration and, when he is done with that, he will tax their success.

He is saying to Scottish businesses, “Don’t invest here”. If business confidence is low, he will keep it low. If their taxes are too high, that is too bad. Here are the facts: under the SNP, Scotland has the highest business rates in Europe; business confidence is 20 points lower than it is elsewhere in the UK, which is a near record low; Scotland’s rate of business growth is slower than the rate anywhere else in the United Kingdom; and business investment in Scotland is down. Pay more, get less—that is Nicola Sturgeon’s dismal economic legacy.

I want to say something about the budget process, which was mentioned in a couple of the opening speeches this afternoon, including those of Patrick Harvie and Murdo Fraser. There cannot be effective parliamentary scrutiny of the Government’s budget proposals unless those proposals are presented in as open and transparent a manner as possible, but, yet again, that did not happen this year. Between the publication of the draft budget, which was presented to Parliament in December, and stage 1 of the Budget (Scotland) (No 2) Bill, which took place a fortnight ago, Derek Mackay found an additional £160 million of public spending, which is this year’s price for the Green Party’s support. The annual dance between Mr Mackay and Mr Harvie, in which the cabinet secretary routinely manages to find a nine-figure sum that he somehow failed to account for in his draft budget, is one of the most unedifying spectacles in the parliamentary calendar.

The Deputy First Minister and Cabinet Secretary for Education and Skills (John Swinney)

What is the difference between the process that Mr Mackay has gone through with the Greens in finding money to afford the final stage of a budget and the process that I went through with the Conservatives in the past to do exactly the same?

Adam Tomkins

The difference is that when the Conservatives were working with the SNP, we got results. When the Greens are working with the SNP, all that happens is that taxes are pushed up even higher, which suppresses the growth that we need for the Scottish economy.

The process that I have just described is not conducive to good—[Interruption.]

The Deputy Presiding Officer

Just a minute, Mr Tomkins. Members should settle down now. I want to hear what everybody says.

Adam Tomkins

The process that I have just described is not conducive to good government, is not in the public interest, bypasses effective parliamentary scrutiny and does nothing to diminish the SNP’s growing reputation for preferring secrecy to open government, and murky back-room deals to transparent policy making. This Parliament deserves better than that and, as we move next year to a new process of budget scrutiny, I hope that Government and Parliament will learn the lessons from, and not repeat the mistakes of, the B-grade and substandard process that we have had to endure again this year.

The third theme that has emerged from this afternoon’s debate is that this budget is one of betrayal. It is a clear and unambiguous breach of trust. Why? In 2016, two thirds of Scots voted for parties that promised not to raise taxes in this parliamentary session. Nicola Sturgeon, the First Minister, said:

“it is not right to increase income tax for those who are on the basic rate.”—[Official Report, 3 May 2017; c 9.]

She also said:

“I have been very clear that the Government will not increase income tax”.—[Official Report, 2 February 2017; c 10.]

John Swinney said the same, as did Derek Mackay. In the past two years, the SNP promised 53 times to not raise the basic rate—53 broken promises.

Today, the news is grim not only for those who were once fooled by the credibility of the SNP’s false election promises, but for Scottish workers. Today’s figures show that the Scottish employment rate is down and that it is lower than that of the UK as a whole.

Today, the news is also grim for the unemployed—unemployment is up in Scotland and the rate here is higher than it is in the UK as a whole. That is the SNP’s lousy record, and its budget today will do nothing to turn it around.

Pay more, get less—that is the message from this budget, and Parliament should vote it down.

17:05  



Derek Mackay

This is, of course, a significant debate, but for politicians in the chamber the highlight must have been watching Mr Swinney burst Adam Tomkins’s bubble when he showed the latter’s rhetoric to be empty and his numbers to be a fiscal fantasy of the Conservatives.

When asked who I would choose—

Neil Findlay (Lothian) (Lab)

Will the minister take an intervention?

Derek Mackay

No, thank you. I am not going to lower the level of debate to Neil Findlay’s level. Sorry, but I have too much to get through; I have too many important things to say. When asked who would be more—

The Deputy Presiding Officer

Cabinet secretary, I caution against making personal remarks.

Derek Mackay

Then I will talk about political parties that I would rather align myself with, Presiding Officer.

When it comes to budget deals, I am closer to the Scottish Green Party than I am to the Democratic Unionist Party, so I have no problem in finding a consensus around progressive and positive politics. At one point, the Labour Party may have considered itself to be a progressive party, but now it is reduced simply to being an anti-SNP party in this chamber.

I return to the consensus on some elements of the programme for government, including things such as abolishing care charges for more people, expanding access to free sanitary products, targeting resources to post-industrial Scotland, introducing a graduate entrepreneurial challenge, investing in oil and gas decommissioning, electrifying road transport, expanding our trade envoy network, supporting breastfeeding funding, creating more air quality zones and low-emission zones and establishing a national investment bank.

This budget will fund those PFG commitments—and much more. Those areas have not been widely debated this afternoon, but they are the kind of measures that Opposition members across the chamber have been asking this Government to take. Investment in those areas—in addition to all the other investment—is part of the £1.2 billion of additional resources in the Scottish Government’s budget, which will be opposed by the Labour Party and the Conservative Party this evening. They are happy to spend resources, but neither has a clue about how to fairly and competently raise the necessary resources to make those investments.

Patrick Harvie

Is it not reasonable that, over the coming months and years—and before we get to this process next year—we strike a balance between how local councils not only spend but raise the money that they need? Should we not be setting a clear expectation that councils have the ability to raise a significant proportion of the revenues that they will need for future years to provide their local services?

Derek Mackay

As I have said before, I am always open to discussion, but the reality is that this budget will give a real-terms increase to the resources of local government before they even consider using their power to raise council tax.

I will comment briefly on the economic model of the United Kingdom as a whole. It is clear—the evidence tells us this—that the UK Government’s economic model is centred on London and the south-east of England. It is no surprise that other parts of the UK, including Scotland, are at a disadvantaged position because of that model. A UK Government cannot walk away from its responsibilities in macroeconomic policy; neither can the Tories abdicate their responsibility to have proper fiscal policies, because we cannot raise less and spend more.

When challenged on how to make savings, the Conservatives can point only to measures such as stopping the baby box scheme. That is their answer to how they would find half a billion pounds to fund tax cuts for the richest businesses, people and home owners in society.

It is no good for Murdo Fraser to say that, if only he was in charge, he would have a Scottish Fiscal Commission report that says he would have £16 billion more to invest in Scotland’s economy; it is no good for Murdo Fraser simply to cry wolf when I find extra resources for the Scottish budget. I have set out a clear and transparent process. If only the other Opposition parties could engage constructively in that process.

On listening to business, many business organisations have welcomed much of the budget. The Federation of Small Businesses welcomed the small business bonus—of course—and went on to say:

“Further, the introduction of a new business accelerator relief is a clever move that deserves plaudits.”

The Chartered Institute of Public Finance and Accountancy, which takes a considered opinion of public funding, said:

“it is welcome news that Scottish public services will receive more funding. As, without extra resources, the financial resilience of many services would inevitably be put into question.”

Liz Cameron, from the Scottish Chambers of Commerce, said of the budget:

“We welcome much of the substance of Mr Mackay’s announcement ... In particular we appreciate his willingness to listen to the voice of business”.

I could quote many more organisations that have welcomed the investments in this Government’s budget. Even the Scottish Retail Consortium, which is much quoted by the Tory party, said:

“the decision on income tax to protect workers on low and modest earnings is exactly right.”

The Scottish Council for Development and Industry said:

“This is a progressive, mature and significant use of Scotland’s income tax powers.”

There is much support for the budget, including from the public, who back our tax plans by two to one.

James Kelly has presented an alternative that is, frankly, neither competent nor coherent. The effect of his tax proposals would be cut in half, given the behavioural impacts. Other elements of his budget would require legislation. The Labour Party was asked when it would present its alternative budget, and it transpires that the detail will come after stage 3. That is a preposterous position from the Labour Party, and it shows that Labour has no credibility whatever.

Working with the Green Party, we have produced a budget that is able to find consensus on investing in our public services and lifting the public sector pay cap in Scotland.

Of course, when James Kelly did the arithmetic on the income tax plans, he said that an MSP’s tax would increase by only 26p. I advise members not to seek advice from James Kelly on their tax returns, because he was wrong to the tune of 1,300 per cent. That is how inaccurate he was, just on the proposition on MSPs’ income tax. Why would we trust the Labour Party on the overall budget?

This is a very serious budget, which uses Scotland’s devolved powers responsibly and fairly. It protects the students of Scotland from tuition fees. It expands childcare, which is good for children and good for the economy. It protects universal support around poverty and inequality, delivering free school meals for children in primary 1 to primary 3. It ensures that the ill do not have to pay prescription charges and it supports the continuation of free eye examinations. The NHS—a precious service—is the largest beneficiary of the budget, and the budget protects the entitlements that give us the best deal anywhere in the UK.

The budget will help to build 50,000 new affordable homes. It will help to expand digital, with investment of more than £600 million. There will be new interventions on homelessness and child poverty. There will be real-terms increases for the NHS, higher education, further education, and police and fire transformation. I know that those commitments command the support of the Scottish people.

Bruce Crawford was right when he said that the budget puts in place resources that speak to the vision of what we want this country to be. The budget delivers on the commitments that the First Minister made in the programme for government. It prevents the negatives that come from Westminster austerity and turns real-terms reduction in resource into growth. It will create a more equal society, tackling inequality and growing our economy.

As we approach the completion of stage 3 and the legal stages of the Scottish budget—of course, we still have the non-domestic rates element and the local government finance order to deal with, so it is not quite over yet—we have an opportunity to deliver divergence and make Scotland, for the majority, the lowest-taxed part of the UK and, crucially, the fairest-taxed part of the UK.

Brexit is a huge challenge to the UK’s economy and to Scotland’s economy. Businesses have said to me that it is a much greater concern than even the perceptions around tax as propagated by the Tories. Therefore, we are delivering stimulus, sustainability and a stronger society, respecting the powers that we have and using them wisely with an evidence base to restructure tax in order to build a better and fairer country.

I ask members to consider all of that and the £40 billion that is allocated in the spending plans in the budget.

I might not be a Morrissey fan, but the old band is back together: better together is back together. I am more of a Proclaimers kind of a guy, which is why I visited Leith yesterday. There was indeed sunshine on Leith at the GP surgery there. The NHS is the biggest beneficiary of the budget.

I commend the budget to the people of Scotland because I know that it commands the support of the Scottish people. I hope that it will command the support of members this evening.

Final vote on the Bill

After the final discussion of the Bill, MSPs vote on whether they think it should become law.

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Final vote transcript

The Presiding Officer (Ken Macintosh)

The first question this evening is, that motion S5M-10518, in the name of Derek Mackay, on the Budget (Scotland) (No 2) Bill, be agreed to. As this is a stage 3 vote, we will move straight to a division.

For

Yousaf, Humza (Glasgow Pollok) (SNP)
Wightman, Andy (Lothian) (Green)
White, Sandra (Glasgow Kelvin) (SNP)
Wheelhouse, Paul (South Scotland) (SNP)
Watt, Maureen (Aberdeen South and North Kincardine) (SNP)
Torrance, David (Kirkcaldy) (SNP)
Todd, Maree (Highlands and Islands) (SNP)
Swinney, John (Perthshire North) (SNP)
Sturgeon, Nicola (Glasgow Southside) (SNP)
Stewart, Kevin (Aberdeen Central) (SNP)
Stevenson, Stewart (Banffshire and Buchan Coast) (SNP)
Somerville, Shirley-Anne (Dunfermline) (SNP)
Scott, Tavish (Shetland Islands) (LD)
Russell, Michael (Argyll and Bute) (SNP)
Ruskell, Mark (Mid Scotland and Fife) (Green)
Ross, Gail (Caithness, Sutherland and Ross) (SNP)
Robison, Shona (Dundee City East) (SNP)
Paterson, Gil (Clydebank and Milngavie) (SNP)
Neil, Alex (Airdrie and Shotts) (SNP)
McMillan, Stuart (Greenock and Inverclyde) (SNP)
McKelvie, Christina (Hamilton, Larkhall and Stonehouse) (SNP)
McKee, Ivan (Glasgow Provan) (SNP)
McArthur, Liam (Orkney Islands) (LD)
McAlpine, Joan (South Scotland) (SNP)
Matheson, Michael (Falkirk West) (SNP)
Mason, John (Glasgow Shettleston) (SNP)
Martin, Gillian (Aberdeenshire East) (SNP)
Maguire, Ruth (Cunninghame South) (SNP)
Macpherson, Ben (Edinburgh Northern and Leith) (SNP)
Mackay, Rona (Strathkelvin and Bearsden) (SNP)
Mackay, Derek (Renfrewshire North and West) (SNP)
MacGregor, Fulton (Coatbridge and Chryston) (SNP)
MacDonald, Gordon (Edinburgh Pentlands) (SNP)
MacDonald, Angus (Falkirk East) (SNP)
Lyle, Richard (Uddingston and Bellshill) (SNP)
Lochhead, Richard (Moray) (SNP)
Kidd, Bill (Glasgow Anniesland) (SNP)
Johnstone, Alison (Lothian) (Green)
Hyslop, Fiona (Linlithgow) (SNP)
Hepburn, Jamie (Cumbernauld and Kilsyth) (SNP)
Haughey, Clare (Rutherglen) (SNP)
Harvie, Patrick (Glasgow) (Green)
Harper, Emma (South Scotland) (SNP)
Greer, Ross (West Scotland) (Green)
Grahame, Christine (Midlothian South, Tweeddale and Lauderdale) (SNP)
Gougeon, Mairi (Angus North and Mearns) (SNP)
Gilruth, Jenny (Mid Fife and Glenrothes) (SNP)
Gibson, Kenneth (Cunninghame North) (SNP)
Freeman, Jeane (Carrick, Cumnock and Doon Valley) (SNP)
Forbes, Kate (Skye, Lochaber and Badenoch) (SNP)
FitzPatrick, Joe (Dundee City West) (SNP)
Finnie, John (Highlands and Islands) (Green)
Fabiani, Linda (East Kilbride) (SNP)
Ewing, Fergus (Inverness and Nairn) (SNP)
Ewing, Annabelle (Cowdenbeath) (SNP)
Dornan, James (Glasgow Cathcart) (SNP)
Doris, Bob (Glasgow Maryhill and Springburn) (SNP)
Dey, Graeme (Angus South) (SNP)
Denham, Ash (Edinburgh Eastern) (SNP)
Cunningham, Roseanna (Perthshire South and Kinross-shire) (SNP)
Crawford, Bruce (Stirling) (SNP)
Constance, Angela (Almond Valley) (SNP)
Coffey, Willie (Kilmarnock and Irvine Valley) (SNP)
Campbell, Aileen (Clydesdale) (SNP)
Brown, Keith (Clackmannanshire and Dunblane) (SNP)
Beattie, Colin (Midlothian North and Musselburgh) (SNP)
Arthur, Tom (Renfrewshire South) (SNP)
Allan, Dr Alasdair (Na h-Eileanan an Iar) (SNP)
Adamson, Clare (Motherwell and Wishaw) (SNP)
Adam, George (Paisley) (SNP)

Against

Whittle, Brian (South Scotland) (Con)
Wells, Annie (Glasgow) (Con)
Tomkins, Adam (Glasgow) (Con)
Stewart, David (Highlands and Islands) (Lab)
Stewart, Alexander (Mid Scotland and Fife) (Con)
Smyth, Colin (South Scotland) (Lab)
Smith, Liz (Mid Scotland and Fife) (Con)
Smith, Elaine (Central Scotland) (Lab)
Simpson, Graham (Central Scotland) (Con)
Scott, John (Ayr) (Con)
Sarwar, Anas (Glasgow) (Lab)
Rumbles, Mike (North East Scotland) (LD)
Rowley, Alex (Mid Scotland and Fife) (Lab)
Rennie, Willie (North East Fife) (LD)
Mundell, Oliver (Dumfriesshire) (Con)
Mountain, Edward (Highlands and Islands) (Con)
Mitchell, Margaret (Central Scotland) (Con)
McNeill, Pauline (Glasgow) (Lab)
Marra, Jenny (North East Scotland) (Lab)
Macdonald, Lewis (North East Scotland) (Lab)
Lockhart, Dean (Mid Scotland and Fife) (Con)
Lindhurst, Gordon (Lothian) (Con)
Leonard, Richard (Central Scotland) (Lab)
Lennon, Monica (Central Scotland) (Lab)
Lamont, Johann (Glasgow) (Lab)
Kerr, Liam (North East Scotland) (Con)
Kelly, James (Glasgow) (Lab)
Halcro Johnston, Jamie (Highlands and Islands) (Con)
Johnson, Daniel (Edinburgh Southern) (Lab)
Harris, Alison (Central Scotland) (Con)
Hamilton, Rachael (Ettrick, Roxburgh and Berwickshire) (Con)
Griffin, Mark (Central Scotland) (Lab)
Greene, Jamie (West Scotland) (Con)
Gray, Iain (East Lothian) (Lab)
Grant, Rhoda (Highlands and Islands) (Lab)
Golden, Maurice (West Scotland) (Con)
Fraser, Murdo (Mid Scotland and Fife) (Con)
Findlay, Neil (Lothian) (Lab)
Fee, Mary (West Scotland) (Lab)
Dugdale, Kezia (Lothian) (Lab)
Davidson, Ruth (Edinburgh Central) (Con)
Corry, Maurice (West Scotland) (Con)
Cole-Hamilton, Alex (Edinburgh Western) (LD)
Chapman, Peter (North East Scotland) (Con)
Carson, Finlay (Galloway and West Dumfries) (Con)
Carlaw, Jackson (Eastwood) (Con)
Cameron, Donald (Highlands and Islands) (Con)
Burnett, Alexander (Aberdeenshire West) (Con)
Briggs, Miles (Lothian) (Con)
Bowman, Bill (North East Scotland) (Con)
Bibby, Neil (West Scotland) (Lab)
Beamish, Claudia (South Scotland) (Lab)
Ballantyne, Michelle (South Scotland) (Con)
Balfour, Jeremy (Lothian) (Con)
Baker, Claire (Mid Scotland and Fife) (Lab)
Baillie, Jackie (Dumbarton) (Lab)

The Presiding Officer

The result of the division is: For 70, Against 56, Abstentions 0.

Motion agreed to,

That the Parliament agrees that the Budget (Scotland) (No 2) Bill be passed.

The Presiding Officer

The Budget (Scotland) (No 2) Bill is passed. [Applause.]

I propose to put a single question on motions S5M-10565 to S5M-10567.

As no member objects, the question is, that motions S5M-10565 to S5M-10567, in the name of Joe FitzPatrick, be agreed to.

Motions agreed to,

That the Parliament agrees that the Delegated Powers and Law Reform Committee be designated as the lead committee in consideration of the Prescription (Scotland) Bill at stage 1.

That the Parliament agrees that the Representation of the People (Scotland) (Amendment) Regulations 2018 [draft] be approved.

That the Parliament agrees that the Human Trafficking and Exploitation (Scotland) Act 2015 (Support for Victims) Regulations 2018 [draft] be approved.

Scottish rate resolution

Before considering the Bill at Stage 3, the Parliament debated and agreed to a motion about income tax.

It was agreed to charge income tax on some non-savings and non-dividend income of a Scottish taxpayer in tax year 2018/19. 

Budget (Scotland) (No.2) Bill [Session 5] as passed 

An 'as passed' version of the Bill was not produced because no amendments were made at Stage 3.

This Bill was passed on 21 February 2018 and became an Act on 28 March 2018. 
Find the Act on legislation.gov.uk

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