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Budget (Scotland) (No.3) Bill [Session 5]

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 Budget 2019-20 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

Budget (Scotland) (No.3) Bill passed by a vote of 66 for, 58 against and 0 abstentions. The Bill became law on 29 March 2019.

Introduced

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

Budget (Scotland) (No.3) 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.

Have your say

The deadline for sharing your views on this Bill has passed. Read the views that were given.

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.

Read the Stage 1 report by the Delegated Powers and Law Reform committee published on 9 January 2019.

Debate on the Bill

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

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Stage 1 debate on the Bill transcript

31 January 2019

Vote at Stage 1

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Vote at Stage 1 transcript

31 January 2019

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 6 February 2019:

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First meeting on amendments transcript

The Convener (Bruce Crawford)

Good morning and welcome to the fourth meeting of 2019 of the Finance and Constitution Committee. The first item on our agenda is stage 2 evidence on the Budget (Scotland) (No 3) Bill. This is the committee’s opportunity to put questions on the bill and the amendments to the cabinet secretary and his officials before we turn to formal proceedings.

We are joined by Derek Mackay, Cabinet Secretary for Finance, Economy and Fair Work, and his officials from the Scottish Government: John Nicholson, deputy director for public spending; Graham Owenson, head of local government finance; and Aidan Grisewood, head of tax division. I welcome our witnesses and invite the cabinet secretary to make an opening statement.

The Cabinet Secretary for Finance, Economy and Fair Work (Derek Mackay)

The stage 2 amendments that the committee is considering today give effect to the spending plans that I announced in Parliament during stage 1 of the budget process. As I have announced, I will be providing an uplift of £90 million to local government as part of the budget deal that has been agreed with the Greens. The amendments that I am proposing today allocate an additional £90 million to local government and an additional £4 million to the health portfolio in 2019-20. In addition, there are two further amendments that are necessary to increase the total size of the resources available in the Scottish budget and the cash authorisation level—both are being increased by £94 million to accommodate the changes that I have just mentioned.

Those increases are being funded from additional consequentials provided by Her Majesty’s Treasury as part of the United Kingdom supplementary estimate process. Early last week, the Scottish Government received confirmation of the quantum of those consequentials and the flexibility to carry them forward to 2019-20.

I hope that those comments are helpful to the committee.

The Convener

I draw your attention to the Finance and Constitution Committee’s budget report and what we said on the Scotland reserve in particular:

“the Parliament needs to give thoughtful consideration in relation to both this Budget and future Budgets about whether it may be prudent to begin building up the Scotland Reserve to deal with potential forecast error and where this money should come from. For example, whether building up the Scotland Reserve should be a priority in allocating any underspends.”

The committee’s budget adviser told us that you are planning to draw down more from the reserve than is currently in the reserve. Please can you explain how that is possible?

Derek Mackay

The underspend that will be achieved in the current financial year transfers into next year’s reserve, so I anticipate that there will be more available at the end of the process. That amount will be fully determined only after the closure of the current budget and will be presented to Parliament in the usual way. I anticipate generating an underspend that will go into the reserve.

The Convener

Can you put a number on that?

Derek Mackay

Not right now. The underspend is always fluid as we work our way through the financial year. However, the final number is presented to Parliament in the usual fashion.

Murdo Fraser (Mid Scotland and Fife) (Con)

I have a question about the additional £148 million in Barnett consequentials that you built into the budget when you announced it in Parliament last week. When you came to the committee on 16 January, you were very clear that all the funds at your disposal had been allocated. You then had budget discussions with other parties, including the Greens, and you were then able to find an additional £90 million for local government to secure your budget deal with the Greens. Have you phoned Philip Hammond to thank him for getting you out of a hole by giving you the extra money?

Derek Mackay

No, but I will see the Chief Secretary to the Treasury in February and I will raid; I mean raise a range—

Adam Tomkins (Glasgow) (Con)

Raid?

Derek Mackay

It is certainly true that I would like to raid the Treasury. However, I will raise a range of matters of interest to Scotland, including the general financial position, preparations for Brexit and a whole host of other issues.

Murdo Fraser

When did you learn that you had an extra £148 million?

Derek Mackay

On Burns day, as it happens—on Friday 25 January, I was first notified by officials that there was the prospect of extra Barnett consequentials. The following Monday, which was the week of stage 1 of the Budget (Scotland) (No 3) Bill, my officials sought clarification from the Treasury. We required the detail because it is important to know where the resources derive from, as that may have an impact on what they can be allocated to. I am sure that Murdo Fraser well appreciates that Friday 25 January was after I gave evidence to the committee saying that I had allocated every penny in the Scottish budget. Those resources were not anticipated.

Murdo Fraser

Why did you not tell Parliament that you had that extra money?

Derek Mackay

I told Parliament when I addressed the chamber during stage 1 of the budget.

Murdo Fraser

Why did you not tell Parliament when you heard that you had the extra money, given that there were on-going budget discussions with the Green Party and other parties? Why did you not inform other parties and Parliament as a whole that you had those extra resources at your disposal?

Derek Mackay

That is a ludicrous question, as Murdo Fraser well knows, because I update Parliament and meet all the expectations for transparency. Officials looked into the detail of the Barnett consequentials to ensure that we were in a sound place to allocate those resources in the fashion that I did. I engaged with all political parties in relation to the compromise that was needed to ensure that the £42.5 billion budget could be approved. As it happens, the Greens were the Opposition party that engaged most constructively with the Government. As soon as I was able to, I informed Parliament; that happened to be at stage 1 of the budget.

Murdo Fraser

You could, of course, have informed Parliament as soon as you became aware of the extra money. You could have inspired a written parliamentary question that you could have answered on Monday 28 January. That would have allowed all the other parties that were involved in budget discussions to be fully aware of the envelope of money that was available to you.

Mr Harvie may have thought that he got a very good deal as a result of his negotiation on behalf of the Greens, because he got an extra £90 million for local government, but it turns out that you had much more money than that and you may have short-changed Mr Harvie and the Greens. If he had negotiated harder, he could perhaps have got a bit more money. You did not tell the Opposition parties that you had that extra money available. How can we expect to have constructive and transparent negotiations on the budget when you conceal from Parliament and the Opposition parties the fact that you have additional resources at your disposal?

Derek Mackay

First, Patrick Harvie of the Greens managed to secure a deal that was better than any other Opposition party tried to secure, including the Conservative Party, which achieved zero, the Labour Party, which achieved meltdown, and the Liberal Democrats, who achieved zero. There has been a constructive outcome from the budget. The alternative is that the budget does not pass at all.

On the question of transparency about resources, I think that it is effective government that, when we hear about potential consequentials, officials probe the matter and then I present it to Parliament within days. If I had received a parliamentary question, I would have answered it honestly, but that process would have taken much longer than what happened, which was that I reported it to Parliament and explained how the budget concession was funded.

Incidentally, I saw some press coverage at the weekend that was factually incorrect. The health consequentials pass to health—that is a matter for the Scottish Government—but I have also earmarked resources for a teachers’ pay deal, if one is agreed, so it is not true to say that the resources will not be used.

In the parliamentary process for budget negotiations, it is up to Opposition parties what they bring to me. I contend that parties should drop their ideological obtuseness when they approach the budget. If other parties engage constructively, they can help to decide how we allocate resources. I think that Murdo Fraser is probably kicking himself for not engaging more constructively in the process on behalf of the Tories.

Murdo Fraser

I have one last question. Surely the Opposition parties would be more constructive on the budget if the cabinet secretary was not being essentially dishonest about the resources at his disposal, concealing the extent of the spending envelope that might be available from other parties and Parliament. As part of the budget review process, the committee has discussed many times the whole question of transparency. The Government is anything but transparent. It is concealing from Parliament and those who are trying to negotiate the budget in good faith the availability to the Government of funds that could be spent on things that matter to everybody. Surely you need to reflect on that, cabinet secretary.

The Convener

If we can watch our language when we are going about it, as well, that would be helpful.

Derek Mackay

I have clearly set out the timeline of when officials heard of the Barnett consequentials and how those have been deployed. How they are deployed is now a matter for Parliament. Equally, I could throw back the question of how long the Treasury knew about the consequentials that the Scottish Government was entitled to. That information was not forwarded to me as part of the supplementary estimate of Barnett consequentials, and I have no idea how long the Treasury knew about the consequentials. When I attended the committee, I was asked whether I had any resources at my disposal as part of the budget deal. I answered honestly. That position changed as consequentials came to light and they have been deployed in the fashion that I clearly set out to the committee this morning and to Parliament last week and in response to any inquiry. Many other parts of the budget deal are down to flexibility or policy concessions that have been made. I have been honest, transparent and clear throughout.

I will ensure that Scotland gets every penny that it is entitled to and that it is spent to ensure that this country has stability, stimulus and sustainability in our public services in the face of the chaos and the adversity that are coming from Westminster.

Neil Bibby (West Scotland) (Lab)

To follow up on the question from Murdo Fraser, I would like to make a formal request that, in future, when you are informed of Barnett consequentials from the Treasury to the Scottish Government, you immediately inform Parliament and the committee. Will you give that commitment?

Derek Mackay

Why would the committee be interested in only some aspects of the budget process? We carry out the autumn and spring budget revisions, medium-term financial strategy development and the full budget scrutiny process. Are members not reading those documents? It is in those that I cover the revenue that the Scottish Government receives and raises, and the expenditure. That information is all presented to Parliament. Maybe members should read the documents that I present to this committee.

Tom Arthur (Renfrewshire South) (SNP)

I understand from what you have said that the additional Barnett consequentials would represent 0.5 per cent of the total budget of £42.5 billion. Did you have any sense from the negotiations with other parties that what was stopping you from getting over the line with a deal was 0.5 per cent of the total spend?

Derek Mackay

I will not reveal the position of other parties because I do not think that it would be right to reveal what was said in private budget negotiations, but all the parties went public with their budget asks. The Conservative Party’s ask was to drop independence, as was the Liberal Democrats’, and the Labour Party put forward a proposition that changed depending on who I was speaking to. That is why I arrived at a deal with the Greens, who engaged constructively.

In the end, that change in the Barnett consequentials is a tiny part of the overall budget. Parliament has to bear in mind that we are being asked to approve £42.5 billion of overall expenditure in the budget process and then the necessary revenue-raising elements. Stage 2 of the Budget (Scotland) (No 3) Bill is essentially looking at the allocation of the additional £90 million to local government and £4 million to health. I will not get into the detail of the spending requests from the other Opposition parties, because they could not get past their constitutional obsession.

The Convener

We have one more supplementary question in this area from Willie Coffey before we move on to other matters.

Willie Coffey (Kilmarnock and Irvine Valley) (SNP)

We should not forget that Barnett consequentials are essentially Scottish taxpayers’ money coming back to Scotland. It is not some gift or largesse from the UK Tory Government. Cabinet secretary, has Mr Hammond ever phoned to thank you or to thank Scotland for the billions that the UK Government has raked in for decades through tax revenues and things such as whisky or oil and gas? Has it ever done that?

Derek Mackay

I have a pretty cordial relationship with Treasury ministers. Some are easier to deal with than others. I deal with Liz Truss, who is the Chief Secretary to the Treasury. We have something in common: we were both born in Paisley, which is of interest. Mel Stride is another financial minister in the Treasury. He is from Kilbarchan or Kilmacolm in west Renfrewshire, so you see the Renfrewshire link in both Treasury and Scottish finance. In seriousness, we—[Interruption.]

Derek Mackay

I missed Adam Tomkins’s commentary there.

The Convener

Sometimes that is wise.

Derek Mackay

I agree, convener.

We have a cordial relationship. We get on with business. I have asks and the UK Government has asks, but I have never had a phone call to thank Scotland for the largesse of its contribution to the Treasury. Equally, I do not see Barnett consequentials as a gift from a benevolent chancellor. The chancellor has wreaked austerity and impending economic self-harm on the UK and Scotland. We have nothing to thank him for.

10:15  



James Kelly (Glasgow) (Lab)

The £90 million deal that you announced still leaves councils with a cuts budget. The overall position for core funding is that council budgets will still be cut by £230 million—that is correct, is it not?

Derek Mackay

No, it is not correct.

James Kelly

The budget analysis that was produced by the Scottish Parliament information centre shows that it is correct.

Derek Mackay

Pick a council.

James Kelly

Are you saying that SPICe is wrong?

Derek Mackay

I am saying that I have my own statistics. I am allocating real-terms resource increases for Scottish local government. If you pick a council, we can look at the increased spending power for individual local authorities.

James Kelly

Are you saying that the SPICe figures are wrong?

Derek Mackay

As we have described before at the Local Government and Communities Committee and the Finance and Constitution Committee, it is only if you exclude cash and resources that are going to local government—for subjects of funding such as childcare, which I see as a core function of local government and in which we have invested £210 million—that you can possibly come to a figure that says that local government is getting less money. That is a fact: when the draft budget was published in December, SPICe said that local government was getting more money in resource and in capital. Council by council, I can go through the increase that each council will enjoy as a consequence of the budget. It is a fact that local authorities are receiving more money from the Scottish Government, that they are enjoying a real-terms increase and that they are getting a capital increase. I do not know how to say it in any other way.

James Kelly

Cabinet secretary, you are living in a fantasy. If you speak to any councillor—including Scottish National Party councillors—they will tell you that the reality is that, in setting budgets, they are looking at hard choices such as cutting jobs and services and closing leisure facilities. It is a fallacy to say that councils have more money.

Derek Mackay

What I said is true. Would Mr Kelly care to name a council and I will tell him how much extra money it is getting?

James Kelly

The reality is that this is a cuts budget.

Derek Mackay

Would anyone care to name any council?

James Kelly

That is what is happening.

Derek Mackay

Any council? Pick a council.

James Kelly

That is what is happening on the ground.

Derek Mackay

Alphabetically, if not your own council.

James Kelly

That is what is happening on the ground.

Derek Mackay

Any council?

James Kelly

I will move on, convener.

Derek Mackay

I bet you will move on.

James Kelly

Can you explain why you chose to take £54 million and stuff it down the ministerial sofa, as opposed to allocating it to councils to alleviate the cuts?

Derek Mackay

That is an incoherent question, but if Mr Kelly is asking whether any of the Barnett consequentials are being held in reserves for an unknown reason, the answer is that they are not. I have said that we are allocating resources for the teachers’ pay deal, which I expect to be a substantial amount. That pay deal is still to be agreed by the teaching trade unions.

James Kelly

You said earlier that you expect to have an underspend this year. We know that the underspend was £454 million last year, so you are expecting additional moneys to come into reserves on top of that £54 million.

Derek Mackay

The underspend in the previous financial year was allocated to local government in the current financial year. I have outlined in the draft budget document that I am fully allocating the resources from the underspend in the current financial year to expenditure in 2019-20. I anticipate that, partly as a consequence of the last-minute Barnett consequentials, there will be further underspend this year. That is why HM Treasury has agreed to relax the limits around the fiscal framework and what can be carried forward. I fully intend to allocate the resources.

Simultaneously, while being accused of having an underspend, I am being asked by this committee why I am not putting more resources into the reserve to prepare for any potential tax reconciliation. You must look at these figures once we publish them. However, I am mindful of what the committee has suggested to me in the budget scrutiny evidence. Of course, I will respond to the committee’s report before stage 3.

Patrick Harvie (Glasgow) (Green)

It is nice to have been talked about so much in the committee already this morning. Inevitably, the discussion at stage 2 involves a little bit of posturing and positioning. Some people want to say that the budget is terrible and the worst that it could possibly be, and maybe the cabinet secretary wants to say that it is perfect and the best that it could possibly be. The truth is probably somewhere in between. However, we have reached a situation with the process whereby, in the final days and even hours before the stage 1 debate, local government did not really know what position it was going to be in. Local government has welcomed the changes that were announced at stage 1, but it was left in a great deal of uncertainty in the run-up to that while councils were starting to prepare their draft budgets.

Cabinet secretary, you might wish that everyone agreed with your analysis that ring-fenced funds should all be counted as part of the same pot and that all other political parties engaged with constructive, costed proposals. However, what does the Scottish Government need to do differently in the future to ensure that the process is a bit better managed, gives a bit more clarity and does not go to the wire in a last-minute, breakneck process that is not good for local government?

Derek Mackay

There is some validity in that point. However, everyone who is familiar with the process knows that, following the announcement of the UK budget, we have to run figures and do the modelling while faced with many pressures. We therefore have to move at breakneck speed to be able to produce our own budget. That is a consequence of when the Chancellor of the Exchequer’s budget is announced, and that timing has been moving. There is therefore an issue about timing generally, which I have raised with the committee previously.

The budget process review group has given us a lot of recommendations and a helpful timetable for the budget process. However, we should not lose sight of the fact that, from the time of the chancellor’s budget to the production of the Scottish budget, a great deal of work is done. It is comprehensive work, because there are many moving parts to the budget in that process and the figures can change substantially. There are then the figures that we provide to the Scottish Fiscal Commission for it to give us the researched position regarding our potential tax policy, so there are many moving parts.

On where there is room for improvement, I have engaged with Opposition parties even earlier in the process than my predecessor did. Members will recall what happened previously: the draft budget would be published, then there would be negotiations. The negotiations carried on between stage 1 and stage 3, and sometimes—the convener will remember this very well from a previous capacity—under the previous minority Government, the budget deal was done at stage 3. However, for as long as I have been finance secretary, the budget deal has been done in advance of stage 1. That is the first difference.

Another difference is that I have engaged with political parties well in advance of stage 1. There is room for improvement in having a discussion about what parties are genuinely looking for and what their interests are. We have an improved committee process, whereby committees give recommendations and undertake year-round budget scrutiny. If the political parties wished to bring forward their positions, views and options earlier, that could improve the process. However, I am afraid that I have almost had to drag from politicians in Opposition parties what their position is post publication of the budget.

I think that we can engage earlier and I would welcome that engagement. That perhaps brings us back to the issue of what information could be shared at an earlier point. As I said, the process is very fast moving right up to the publication of the Scottish budget because of the timescales that I have described.

Patrick Harvie

I take your point about the UK timescales that you do not control, but you acknowledged that my question has some validity and that we need to look at what we can all do to improve the process. On the UK Government’s approach to these matters, perhaps Murdo Fraser is right and the chancellor lets all Opposition parties at Westminster know immediately when he knows of any change in the financial context. I suspect that he is not right about that. However, we can look at how we might do things better.

One of the changes that you agreed to in the stage 1 debate was about a move to multiyear funding for local government. Do you agree that that discussion with political parties and local government—and others who might have a view on it—needs to begin well ahead of the next budget? If we are trying to agree a three-year funding settlement next year in the same breakneck way that the last-minute budget discussions happened this year, that would be an intolerable situation for local government to be in.

Will you commit to beginning that discussion with local government and political parties as soon as the summer recess is over, so that the overall shape of the three-year settlement can begin to be negotiated well in advance of the publication of the budget?

Derek Mackay

I can go further than that. I think that the fiscal arrangements and multiyear budget setting that we have talked about are an important part of the Government’s current local governance review. In essence, we have a rules-based, principles-based approach, and I see no reason why we cannot begin the discussion as part of the local governance review.

Patrick Harvie

Thank you.

Willie Coffey

I want to bring us back to the SPICe paper, which James Kelly mentioned. I assume that we are reading from the same paper. It says, in black and white:

“finally, once all the above, and the capital budget is included, the total funding for local government now increases by 2.8% in real terms (+£298.9 million).”

That means the budget is up, not cut—that is my reading of it. Will you clarify that?

Derek Mackay

That line in the SPICe paper is absolutely correct. I have said before that we get to a cuts figure only if we reduce the actual cash going to local government. I have a table that shows the full spending power of each local authority and other elements. Yes, that line shows a real-terms increase to local government. Maybe you put it more eloquently than I did when I tried to explain it to Mr Kelly.

Willie Coffey

You invited James Kelly to name a council. Will you show us the figure for East Ayrshire Council?

Derek Mackay

East Ayrshire’s total spending power increases by 4.91 per cent, which is increased support of £12.1 million.

Angela Constance (Almond Valley) (SNP)

Like other members of the committee, I received a copy of your letter to Councillor Evison, the Convention of Scottish Local Authorities president, which is dated 31 January. It is a fairly lengthy and detailed letter, in which you set out a fair and balanced characterisation of the opportunities and the challenges that face local government. Let me read out one sentence that I think encapsulates that. You said:

“As a result of the continuing UK austerity cuts forced upon us I know local authorities, along with the rest of the public sector, are still facing some difficult financial challenges”.

You will be familiar with the phrase “divide and conquer”. What opportunities are there for the two spheres of government in Scotland—local government and the Scottish Government—to present a more united front, to oppose and overcome austerity? Where are the opportunities for the two spheres to work together on those longer-term priorities?

Derek Mackay

On political opposition, I think that we should speak with one voice in opposing the continuation of UK austerity—doing so is important and powerful. The committee is aware that, as I have said before, excluding the health consequentials, there has been a real-terms reduction in resource to the Scottish Government between 2018-19 and 2019-20, and that what has been given certainly does not undo the £2 billion reduction over the 10-year period. Therefore, speaking with one voice to oppose that on-going austerity is significant.

The major threat to our economy and our people right now is undoubtedly Brexit and we should work together to oppose Brexit and the worst-case Brexit scenario, which is no deal. We should work with local government to oppose all that.

Then, if we are continuing to mitigate the situation, we need to do two things. First, we absolutely must grow the economy, so that we can have economic growth while tackling inequality. We must work with our partners in local government so to do. Secondly, in relation to the provision of services in mitigation, we must continue to work together, in areas such as housing and welfare, on interventions that will make a difference at local level and to some of the most vulnerable people in our society, whether we are talking about the welfare fund, the expansion of early years childcare or other interventions.

We need to focus on the political charge against the UK Government while mitigating and managing the situation as best we can with the powers that we have. We must also have an empowering relationship, so that we can genuinely work together to achieve those outcomes.

10:30  



Angela Constance

Thank you. I will return to some of the longer-term—

The Convener

Do you want to deal with that just now?

Angela Constance

Yes. I am keen to hear about examples in this year’s budget of sound choices being made with an eye to the future, taking that longer-term view. The cabinet secretary mentioned childcare, and housing would be another example.

Could you say more about the long-term multiplier impacts of those choices, looking at the opportunities to work with local government and others with a view to the longer term? You have also touched on multi-annual funding.

Derek Mackay

We are making investments in partnership with local government. Housing is a good example, with an investment of £826 million. The statistics for my area are that 1,000 new homes will be built in Renfrewshire as a consequence of some of that investment. That is good news and a welcome investment.

Direct investment in infrastructure, with local government as our delivery partner and key stakeholder, is important. That is about housing and childcare and making sure that we have the necessary buildings, staffing and capacity to deliver on that commitment.

The investments that we are making today are about building for the future in relation to economic growth and a fairer society, giving children and young people the best possible start in life. Some of those resources are targeted through the pupil equity fund, which empowers not just local authorities—that other sphere of government—but headteachers directly. The empowerment agenda is about handing power not just to politicians but to people. Through the budget, we are investing in the capacity and sustainability of today’s services and in future opportunities.

A further example is the growth deals. Angela Constance is sitting next to Willie Coffey, in whose area the Ayrshire growth deal has been approved at long last, with £100 million from the UK Government and £100 million from the Scottish Government. It is about unlocking the economic potential but it is absolutely focused on the opportunities that that creates.

I want us to work more closely with local government on local economic development. I have watched the Economy, Energy and Fair Work Committee meetings and I have been a witness at the committee on business gateway, city deals and other areas. There should be further joint working with local government in areas such as economic development and I am happy to take that forward as economy secretary.

A range of other specific investments that are sometimes forgotten about are also part of the budget, such as the expansion of social security support in the next financial year and the provision of free sanitary products; there is also a continuation of the baby box scheme and other grants that are administered by local authorities and will make a real difference to people.

As I have said, there is a range of areas that can work together. It is fair to say that in welcoming the budget progress and the empowerment agenda, there are further opportunities to work with local government in some of this territory.

Angela Constance

You touched on mitigation; this morning, the Social Security Committee published a report that says that it is not realistic or feasible for the Scottish Government to continue to mitigate UK Government welfare policy. The United Nations special rapporteur on extreme poverty had something to say about that as well. How do the decisions that are made about the budget support lifting people out of poverty as opposed to mitigating the impact to keep people where they are now?

Derek Mackay

Social security is about entitlement and a safety net. It is about providing resources at people’s time of need. What drives me as finance and economy secretary is growing the economy, because if we create meaningful, purposeful, properly remunerated employment, that is the best social and economic policy. That is what I happen to believe—that economic growth is materially significant and is the antidote to that social exclusion.

I believe that the range of measures that we have put in place to support the economy and the sustainability of public services is absolutely about improving the life chances of our people. That is in addition to all our other programmes—which I support 100 per cent—on childcare, early intervention, family nurse partnerships, healthcare, health improvement and the preventative approach. Those are all wonderful but, for me, growing the economy in an inclusive manner is a fantastic way to address outcomes and champion equality.

In the budget there is £5 billion for infrastructure. As I have said, £826 million of that is for housing. There is more money to stimulate the economy, we are establishing the Scottish national investment bank, we have the most competitive package of rates relief anywhere in the United Kingdom and there is also investment in innovation, education and business growth. All that is to help to drive our economy to achieve the outcomes of empowering people, improving their life chances and providing the necessary safeguards and safety net that come along with a social security system.

Finally, our ability to protect Scotland from the ravages of a right-wing, Brexit-mad UK Government that continues to pursue austerity is at its limit.

Angela Constance

So investment decisions in Scotland are looked at through the lens of what will actually work to lift people out of poverty.

Derek Mackay

Absolutely. The national performance framework and the purpose of our country are about the life chances of our people.

Alexander Burnett (Aberdeenshire West) (Con)

Let us talk about the car park tax that you are bringing in. In the absence of any detail on it, and as both an employer and an employee and as someone with a car who uses off-site parking—

Derek Mackay

And as a Tory.

Alexander Burnett

—I should probably declare an interest.

I am sorry—I did not catch what you said.

Derek Mackay

I said, “And as a Tory.” I am sure that you will take the Conservative perspective.

The Convener

Can we avoid the asides and just get on with the questions, please?

Alexander Burnett

I am not sure whether other members have similar interests. I am sure that, with everything else that has been in the news, the cabinet secretary must be thrilled with how much attention that budget-related item is receiving. Certainly, from looking at the diverse range of messages in my inbox, I can see that it is of concern to many of my constituents, from rural teachers to students who attend college in Aberdeen.

The workplace parking levy is primarily a workplace tax, but I have a couple of business questions on which I would be grateful if the cabinet secretary could provide some clarity. If employers pay the levy on behalf of their employees, would that count as a benefit in kind, which would appear on a P11D form? If so, a record of parking spaces and their use would be required. Has the cabinet secretary given any thought to that and to who might have the dubious pleasure of maintaining a register of every parking place in Scotland? If a business property attracts a large parking levy, that will obviously affect its rateable value, so does the cabinet secretary anticipate another round of business rates appeals? Has he given any thought at all to the implications of what he has agreed with the Greens?

Derek Mackay

I refer members to the published correspondence with the Greens on what has actually been agreed. Of course, such a power exists south of the border, in Tory-run England. I do not hear the Conservatives arguing for the scrapping of local authorities’ ability to have the levy there.

Given that we are focusing on the issue, I can advise the committee only that the proposal for the levy is at an early stage. There is an agreement that an amendment to the Transport (Scotland) Bill will be lodged in relation to the levy and that it will be considered at that point. I understand that the Rural Economy and Connectivity Committee will take evidence on the proposal as well. I do not propose to offer up any more detail, because we are at an early stage. We have agreed, in principle, to accept an amendment that introduces the power for local authorities to adopt the levy. As I understand it, there will be consultation by the Rural Economy and Connectivity Committee and then the detail will be forthcoming. Michael Matheson, the Cabinet Secretary for Transport, Infrastructure and Connectivity, will lead on the issue.

As far as the budget is concerned, there is an agreement that we will accept the amendment from the Greens at stage 2 of the Transport (Scotland) Bill. I will happily share more information at that point. If Mr Burnett wishes to do so, perhaps he should advise his correspondents of that, rather than scaremongering about who may or may not pay the levy.

The Scottish Government had one proviso: that the national health service and hospitals would be exempt from the levy. That and other possible exemptions for local authorities will be considered in due course. Perhaps members should not scaremonger on the issue and instead work with Parliament constructively and collaboratively to ensure that we achieve a scheme that is right for the country, local authorities and local people.

Alexander Burnett

I know that the cabinet secretary likes to peek across the border every time that he is looking for a covering excuse. I am sure that he is aware that the levy down south was brought in nearly 20 years ago by a Labour Government. It has been implemented only once, by a Labour council, and I believe that that was in conjunction with a tram scheme that had been brought in. I am therefore not sure whether use of the levy down south is a useful comparison.

Is the truth not that, in Scotland, at a time when businesses need to be focusing on productivity, the cabinet secretary is bringing in an unworkable measure that even the majority of his colleagues do not support just to buy off the Greens? If he was really serious about the proposal, would he not have brought in something more than just an amendment to the Transport (Scotland) Bill?

Derek Mackay

There seems to be an absence of facts from many members of the committee this morning. The member will find that the budget deal that I have taken forward has the full support of the Scottish Government and members of my party.

I think that engagement and consultation will be helpful in taking the right policy forward. On business growth, it so happens that I met business representative organisations yesterday—I am sure that the member will welcome that—and we focused on a number of matters in relation to the budget and growing our economy.

It is true to say that, whatever people think about the workplace parking levy, it is as nothing compared with the financial catastrophe that is coming our way as a consequence of Brexit. Members can dismiss that, but it is a major threat to Scotland’s economy, and that is what businesses are talking about and want clarity on right now.

Neil Bibby

You have talked about the importance of growing the economy, which you said is your top priority. You also said that the policy is at an early stage. Can you confirm that you have not done any economic modelling or an economic impact assessment of the policy? You talked about the absence of facts. Would it not be beneficial for you to carry out economic modelling and an economic impact assessment of the policy, given that you have said that growing the economy is your number 1 priority?

Derek Mackay

I am very familiar with the fact that Opposition amendments can feature at stage 2 and even stage 3 of the parliamentary process. That is the purpose of legislation working its way through Parliament, and of course that precipitates consultation and engagement. That is the parliamentary process.

No—I have not undertaken any individual economic analysis. The Cabinet Secretary for Transport, Infrastructure and Connectivity, Michael Matheson, will take the matter forward, as that is appropriate for the power in question, and it will work its way through the parliamentary process.

The important point is that this is not about a Scottish Government scheme; it is about empowerment of local government. It was a necessary budget concession because, if there had been no agreement on the budget, the consequence would have been that a £42.5 billion budget for Scotland would have gone down. Ultimately, this is about empowering local authorities.

I wonder why some members who were previously—apparently—for local government empowerment and letting local councils make decisions in consultation with local people and businesses according to local circumstances, and who accused the Government of being a big, bad, centralising Government, are now against localism when it is supported by a majority in the Scottish Parliament.

Neil Bibby

I encourage you to carry out an economic assessment of the policy. You said that it will be for councils to decide whether they use it or not, but they may be forced to use it because of the poor budgets that they are receiving.

In addition to not carrying out economic modelling or an economic impact assessment, I take it that you have not made an estimate of how much money would be raised by local authorities if the Nottingham model was applied across Scotland.

Derek Mackay

Mr Bibby has no evidence to conclude that the scheme would be used by all 32 local authorities, or that the Nottingham model—

Neil Bibby

It could be.

Derek Mackay

We could model, scenario plan for and do economic analysis of a range of things that “could be”.

I agree with the need to consult and engage, and I certainly encourage both the Parliament and local authorities to do that before any power that may transpire is deployed. As I said, this is the beginning of the parliamentary process and there will be that necessary engagement.

Neil Bibby repeats the charge, as James Kelly has done, in relation to budget settlements. I simply argue that Renfrewshire Council’s spending power will increase by 4.59 per cent, which is an increase of £15.1 million to local government resources in that area.

10:45  



Neil Bibby

That would be encouraging to hear if we were not seeing the cuts on the ground. As you are aware, a whole series of cuts are being made in Renfrewshire as a result of your budget cuts.

What is your rationale for your support for a parking levy being contingent on there being exemptions for NHS workers but not for other workers? What is your response to the Educational Institute of Scotland’s call for schools to be exempt? What about the police, firefighters, apprentices or people on low incomes? What about workplaces with poor transport links? Workers at the leather works in Bridge of Weir, in your constituency, need to start their shift at 6 o’clock, which is long before the first bus arrives in the community. Is there not a case for looking at all those issues before pressing ahead with the amendment?

Derek Mackay

There is a case for further exemptions, and local authorities should look very closely at local circumstances when they apply the charge. That will be a matter for local authorities; that is the point of local empowerment. Neil Bibby is demanding that the Scottish Government empowers local authorities by passing powers to them, but the second after that is proposed, he and the Labour Party oppose it.

There are certainly good cases for local authorities to look at exemptions based on local circumstances, which should, of course, be taken into account. How the charge applies to teachers is a good example. Given that local authorities will make the decisions, surely the councils will think about schools.

We need to address the important point that the charge is not to individuals but, ultimately, to the employer. There is a question about which employers will pass it on, but we must not immediately conclude that individual staff members will pay the charge. The scheme should be about the employer or the property owner. The decision makers in local government will take local circumstances into account, and their decisions will be subject to the safeguards that we have insisted on.

Adam Tomkins

I wonder whether we can take a little bit of the unnecessary party-political heat out of the discussion and have a slightly more mature conversation.

This is the Finance and Constitution Committee, which is interested in trying to understand tax proposals and the relationship between tax proposals and extant taxes in Scotland. You have been asked at least two detailed and intelligent questions about the tax implications of the proposal for benefits in kind and income tax, and for business rates and rateable values. You have not answered either of those questions. You might not have answers to them today; if you do not, could you write to the committee in advance of stage 3 with answers to them? They are honest questions that seek to understand the tax implications of the proposal—which is, to all intents and purposes, a new tax in Scotland—for other taxes, which the committee has spent a long time looking at.

That is not a party-political question, so I do not want a party-political answer. It is a finance committee question, and I would like a cabinet secretary answer, if I may.

Derek Mackay

I have some sympathy with what Adam Tomkins has said but, if we are looking at the language that has been deployed this morning, I ask him to reflect on the opening commentary from his colleagues. He can check the record.

The Rural Economy and Connectivity Committee will take forward the proposal, as is appropriate. Lead committees take forward subjects that are relevant to them—that is how Parliament does its business. With the relevant cabinet secretary, that committee will take forward the levy because it relates to transport.

I will, of course, engage with the Finance and Constitution Committee on the tax outcomes. I have tried to express that the proposal is at the early stages of legislative development. A stage 2 amendment to the Transport (Scotland) Bill will be lodged after we have more detailed information to work with. I am happy to come back to the committee to answer questions, but some members do not seem to be listening to me when I say that the proposal is at an early stage. There will be consultation on the structure that is being taken forward, so that we can analyse what is being proposed—that is in contrast to the scaremongering that I have read in the press. I want to give Adam Tomkins the information that he seeks, but he will understand the parliamentary process that will take us to that point.

Adam Tomkins

I am grateful to the cabinet secretary for that answer and for his tone. Can we have the information before stage 3 of the budget bill, please?

Derek Mackay

That will depend on the amendment to the Transport (Scotland) Bill, but I will certainly endeavour to provide the information as quickly as possible.

Adam Tomkins

So it will be before stage 3.

Derek Mackay

If enough progress is made at the Rural Economy and Connectivity Committee to allow us to have the detail, it would be helpful for me to provide that information.

Adam Tomkins

Thank you.

Willie Coffey

Before we throw our hands up in horror at the workplace parking levy, can the cabinet secretary confirm that COSLA’s president, Councillor Evison, has said that she welcomes the commitment to introduce the levy and that

“it is right that Local Authorities across Scotland should be able to raise revenue locally to address local issues.”

I believe that Councillor Evison is a Labour member.

Derek Mackay

Even more interesting than that, Councillor Evison has welcomed the progress on the budget. I know that Mr Tomkins does not want me to be partisan, but I just want to demonstrate that it does not all come down to party colours. Gail Macgregor, who is the COSLA resources spokesperson, has also welcomed it, and she is a Tory. It just goes to show that it is not someone’s party affiliation that determines their view on the subject.

Patrick Harvie

I am glad that, rather than there being just a knee-jerk reaction, there are some substantive questions about how schemes might be designed at the local level. There will be the opportunity not just for consultation on how the schemes are designed, but for potential exemptions beyond the NHS, such as for blue badge holders or employers who invest in subsidised public transport or other facilities that encourage behaviour change. It is all about bringing about the necessary change in the way in which we move about and the incentives behind that.

The question for Parliament in considering whether to pass such legislation is very similar to the question in relation to the transient visitor levy. The question for Parliament is not whether one single model should be imposed across Scotland, which no one has suggested. The question is this: should local councils effectively be forbidden, as they are now, from even considering whether they can design a scheme that suits their own circumstances, or should they be given the flexibility to design such a scheme?

Derek Mackay

Yes, that is a fair analysis of the argument between the Parliament determining the framework and how much flexibility a local authority should have. The Scottish Government has set out our position in principle and, as I have said, we will work through whatever local authorities propose. That is an accurate summary of the dichotomy between parliamentary control and local discretion.

Emma Harper (South Scotland) (SNP)

I am interested in health and the health budget. I remind the committee that I am a nurse, although I am not currently practising.

Can the cabinet secretary provide information on what the budget means for health spending, and on the £55 million of additional funding, which was to be provided to make up for the shortfall in Barnett consequentials from what had previously been promised by the UK Government? In Parliament, the cabinet secretary said:

“The UK Government has now confirmed ... further unexpected funding in Barnett consequentials this year.”—[Official Report, 31 January 2019; c 44.]

How much is that funding and does it make up for the initial shortfall? How much is the increase in Scottish national health service funding over what was announced in December?

Derek Mackay

The Burns Barnett consequentials are £59 million. We pass every penny of resource consequentials on to the health service. That makes up for the £55 million shortfall that we identified in what had been committed to the NHS by the UK Government. That reinstates that amount and, based on my December budget, increases the health line by £4 million. That is what I am asking the committee to approve today in the stage 2 amendments.

On the overall NHS funding, there will be an increase in health resource funding of £729 million in 2019-20. That is £754 million more than inflation since 2016-17. Funding for front-line NHS boards will be increased by £430 million, which is 4.2 per cent. As I said, all resource consequentials will be passed on to the health service. The total resource spending on health and sport will now be £13.9 billion.

In addition, we are investing more than £700 million in health and social care integration, which is increasing investment in health and social care partnerships to more than £9 billion. There will be a direct increase to mental health services of a further £27 million, which will take overall funding for mental health to £1.1 billion. We will invest £0.25 billion to support mental health measures for children and young people.

Incidentally, the sportscotland budget will also increase by £1 million to £32.7 million.

Emma Harper

I was going to ask for detail, but you have answered my question.

Tom Arthur

The UK is set to leave the European Union in a little over 50 days. An important lesson of history over the past century has been how disasters and catastrophes can happen: we can be warned, but cosy consensus and the belief that a thing is impossible can prevail, so we sleepwalk into such events.

In recent days, it has been reported that UK Cabinet members believe that there should be daily warnings in the public media about the dangers of leaving with no deal. Evacuation plans for the Queen that were formulated during the cold war have been dusted off in case there is civil unrest in London.

You previously mentioned that the budget may have to be revisited in the event of there being no deal. Given that that is a growing danger that is moving from the realm of speculation to that of the possible, and perhaps even the probable, will you outline the consequences of there being no deal for the budget and fiscal position of Scotland?

Derek Mackay

There is a great deal of information in that regard. To sum it up, in respect of the block-grant consequentials that come to Scotland and the tax decisions—the relative elements—the Chancellor of the Exchequer has set out that his budget was contingent on there being an orderly Brexit. Therefore, my budget is also contingent on an orderly Brexit.

We know that any form of Brexit will harm the economy, which means that there will, for a range of reasons, be lower living standards and smaller gross domestic product growth than we would otherwise have had. A no-deal Brexit would be pretty catastrophic; we know the short-term, medium-term and long-term economic and social impacts. It would have a detrimental impact on the UK and Scotland’s finances, economies and populations and would require us to revisit the Scottish budget. The £42.5 billion budget could not just continue in its current form because of the impact on our economy, the turbulence, the impact on society and the increasing demand on our services.

The Scottish Government’s resilience forum meets every week—it will meet again this week. It focuses our economy ministers on the actions that we will take to mitigate damage. I hope that a no-deal Brexit can be averted, but unfortunately it feels as if the likelihood of a no-deal Brexit is increasing as a consequence of the mishandling of the situation by the Prime Minister and her Cabinet. In that case, we would need to revisit the budget. I have to say that it would not be good news, but it would be necessary reprioritisation in order to manage the catastrophic economic and social consequences of that outcome.

Tom Arthur

Do you agree that a no-deal Brexit would disproportionately disadvantage the most vulnerable people in our communities?

Derek Mackay

Yes, it would. It will be all right for some of the elite at the top who have been driving the propaganda on Brexit. They have feathered their nests and are sorted.

The people who will be most exposed will be the most vulnerable people. The people who are on lower salaries or who are struggling to balance the books will be impacted, as well as many other citizens. A no-deal Brexit would have a profound impact. My concerns include the fiscal impact, employment, productivity and the general wealth and wellbeing of our economy. All would be impacted by a no-deal Brexit.

Parts of the public sector are pursuing additional resources because of the threat of Brexit; I refer to the example of the police, who are concerned about public disorder in the event of Brexit. We should not underestimate the serious impacts that are inevitably heading our way because of mishandling by the UK Government.

A no-deal Brexit will be catastrophic. We want to avert it, and there is still a way out of this mess, as has been explained by the First Minister and Michael Russell. We are looking at how we can best mitigate the situation. As I have said, I am very close to the matter, as finance and economy secretary.

11:00  



Adam Tomkins

In the chamber two weeks ago, we had a very useful—even worthy, perhaps—debate on the budget. As a result of one of the budget process review group’s recommendations, conveners talked about their committee’s priorities for the budget. That was a useful contribution to the budget process. Of course, the revised budget process is infused with the value of transparency. I have a few more questions to ask about transparency—in particular, in relation to this year’s budget process. I will ask them in the spirit in which I asked my earlier questions about transparency.

I do not know whether this is true, but it has been claimed in the press that £92 million has been made available to the Scottish Government to help with Brexit preparations, and that the money has not been spent on Brexit preparations but has instead been absorbed into the Scottish Government’s overall budget. A contrast has been drawn with how the money has been spent south of the border, where local authorities and the police have been handed money for such preparations. Apparently that has not happened in Scotland. In the interests of the principle of transparency in the budget process, can you shed any light on the matter?

Derek Mackay

The current position is that I have allocated Barnett consequentials as I have described in the budget; I have been quite clear about that. There are on-going workstreams on Brexit preparedness; Michael Russell leads on that work. I have not created and carved out a separate fund for the police or for local authorities. They engage in the resilience meetings that we convene.

As I said, if there is a no-deal Brexit, we will have to revisit the budget. Civil service resources have been allocated to deal with Brexit. In the spirit of full transparency, I make it clear that I have not made a separate fund, such that there is a pot for one service and another pot for local government. The resources are fully allocated by the budget that I am proposing. If members have a contrary view, they can certainly put it forward.

Adam Tomkins

Why are you taking a different approach with that funding from your approach to Barnett consequentials for health? You have clearly said again this morning that health consequentials will pass to health. Why are Brexit consequentials—if you like—not being passed on for use on Brexit?

Derek Mackay

It was a manifesto commitment that we would pass on all health consequentials to the health service. There is no such manifesto commitment for Brexit, because of the chronology of events. I do not hypothecate or ring fence and I do not generally photocopy the UK chancellor’s budget in terms of the allocations or Barnett consequentials that would come our way. We have the flexibility to allocate as we see fit.

We are working on our Brexit preparations right now. As I said, Michael Russell leads that work. It includes partnership with local authorities and the police, who are involved in our resilience meetings.

Adam Tomkins

On that same theme of transparency, as I understand it there was no deal that would pass the budget at stage 1 until the day of the stage 1 debate last Thursday, but you knew from the beginning of that week that the UK chancellor had made available to you £148 million of additional Barnett consequentials. Do you agree that it is not consistent with the principle of transparency that underpins the work of the budget process review for negotiations about the budget to proceed with you—or any cabinet secretary—knowing that you have £150 million of public money in your pocket that you have not disclosed to Parliament?

Derek Mackay

No, I disagree. The budget has many moving parts. That money is part of a £42.5 billion budget. The numbers change in many areas day by day. I report to Parliament more comprehensively than previous finance secretaries did because we have built in further elements of accountability. The medium-term financial strategy is but one of the new developments in the process.

If Opposition parties engage with me constructively, I can have dialogue with them about choices, available resources, funding and flexibility, and we can work on the art of the possible. I totally disagree that I have been anything other than transparent, up-front and constructive in trying to get the budget through. When the parliamentary opportunities come, I present the fiscal position to Parliament.

Adam Tomkins

Transparency is a value that can be trumped by expedience.

Derek Mackay

Not at all.

The Convener

That concludes that part of the process. We now turn to agenda item 2, which is the formal proceedings at stage 2 of the Budget (Scotland) (No 3) Bill.

Section 1 agreed to.

Schedule 1—The Scottish Administration

The Convener

Amendment 1 is grouped with amendments 2 to 4.

Amendment 1 moved—[Derek Mackay].

James Kelly

Clearly, the amendments will bring additional money into the budget, so I am not going to oppose them. I understand the process and that we cannot take a vote on the overall position of the budget at this stage.

However, I place it on the record that Scottish Labour continues to oppose the budget on four counts. First, as I said earlier, councils face cuts. If Mr Mackay looks at what is happening on the ground, he will see the reality of that and the choices that councils are having to make.

In terms of poverty, as the Fraser of Allander institute’s blog has pointed out, the budget allocates only £27 million directly to help low-income families, so it falls short on that.

On rail services, thousands of services have been cancelled over the past year—we saw that again yesterday—and the budget does nothing to address the fares increase that rail passengers got earlier in the month.

Finally, on fair taxation, Mr Mackay spoke earlier about

“the elite at the top”.

A proper progressive and fair taxation policy should be asking the elite at the top to contribute more to address the scale of the crisis that the country faces.

The Convener

This is a formal process, cabinet secretary. You will get the chance to wind up, but I will let other members in first.

Patrick Harvie

I will put a few comments on the record. Amendments 1 to 4, together with the additional flexibility that is being provided in local government spending, do not achieve perfection, but they are substantial changes that have been welcomed by local government. I have spoken to local government colleagues from a number of political parties: they are clear that as a result of the changes to the budget, they will be able to prevent the extremely damaging cuts that were being contemplated.

I wish that all political parties would focus on the actual amendments because of the changes that they can secure in the budget process. If all political parties did that, we would see a better outcome for Scotland and a Parliament that asserted its will more effectively.

Angela Constance

There is no magic bullet for addressing poverty or improving life chances. However, what I consider to be the biggest piece of the jigsaw in terms of lifting children out of poverty is the budget’s sustained investment in housing of £826 million. We are also seeing multi-annual funding of resource planning assumptions to local authorities of £1.75 billion. That investment in housing is hard and fast, and it can be demonstrated that it is good for our economy and that it will grow our economy, support employment and create warm and affordable homes for families. It is an all-round good thing.

The Convener

I invite the cabinet secretary to wind up.

Derek Mackay

I have just a few points to make. First, it is wrong to say that the budget is anything other than a real-terms growth budget for local government. With the inclusion of the amendments’ provisions, the total spending power for local government will be up by £620 million in the financial year 2019-20. That is an increase and, as I said, there is a real-terms increase in resource and capital.

On the important issue of poverty, reference was made to the budget lines that target poverty, but we have to look at how all interventions support increasing equality. The interventions include the Scottish welfare fund, fair start Scotland, the empowering communities fund, the fair food fund, digital skills training, the education maintenance allowance, affordable homes, childcare, the carers allowance, concessionary fares, the bus service operators grant, home energy efficiency programmes, the carers allowance supplement, the baby box and free sanitary products. Those are just some examples of what the budget provides to target poverty and inequality.

The stage 2 amendments will deliver a £94 million increase—£90 million to local government and £4 million to the NHS—on the figures that I announced in the December budget presentation. However, Parliament had a choice with regard to revenue raising. The Labour Party asked me to increase the higher rate and top rate of income tax, but it did not supply me with a costed proposition. With an increase in the top rate, we would have lost money, so we would have had to increase the higher rate by about 6 percentage points.

The Greens asked me to raise income tax and non-domestic rates. I have not done so; instead I have found an alternative way to meet the necessary budget requests of the Greens and have made concessions in that regard. The Conservative Party asked me to cut tax for the highest earners in society. I think that I have got the balance right with regard to revenue raising and spending commitments in order to stimulate our economy and provide stability and sustainability for our public services.

I think that, in the face of adversity, austerity and Brexit chaos, the budget is very strong and is good for Scotland, and the amendments will strengthen it further. Therefore, I ask the committee to support the amendments.

Amendment 1 agreed to.

Amendments 2 and 3 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 4 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 ends stage 2. I thank the witnesses for attending.

11:12 Meeting continued in private until 11:29.  



Budget (Scotland) (No.3) 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

Debate on the proposed amendments

MSPs get the chance to present their proposed amendments to the Chamber. They vote on whether each change should be added to the Bill.

Video Thumbnail Preview PNG

Debate on proposed amendments transcript

The Presiding Officer (Ken Macintosh)

The next item of business is a debate on motion S5M-15907, in the name of Derek Mackay, on the Budget (Scotland) (No 3) Bill.

Before the debate begins, I am required, under the standing orders, to state whether any provision in the bill relates to a protected subject matter—that is, whether it modifies the electoral system or franchise for Scottish parliamentary elections. In this case, the bill does no such thing and therefore does not require support from a supermajority of members to be passed. The cabinet secretary will be relieved to hear that.

I invite all members who wish to speak in the debate to press their request-to-speak buttons as soon as possible, and I call on the cabinet secretary, Derek Mackay, to open the debate.

The Cabinet Secretary for Finance, Economy and Fair Work (Derek Mackay)

A majority for the budget tonight would be super. [Laughter.]

I am delighted to lead this debate on the final stage of the Budget (Scotland) (No 3) Bill. The budget ensures that we provide the necessary certainty that the country deserves and expects.

I thank all the Parliament’s committees for their deliberations, especially considering the process changes that we made following the agreement of Parliament. I confirm that I have responded formally to the Finance and Constitution Committee’s report on the budget.

This budget safeguards Scotland as best we can, using all the powers and resources at our disposal, with a clear focus on our priorities as a nation: education, the economy, the national health service, the environment and support for our communities, to name just a few.

Education—a top priority for the Scottish Government—benefits from more than £180 million to raise attainment in schools. We will transform early learning and childcare with a record £500 million expansion. We will continue our investment in skills and talent by investing more than £600 million in Scotland’s colleges, £1 billion in universities and £214 million on apprenticeships and skills for young people.

On health, the budget will deliver on our commitment to pass on health consequentials in full, increasing the health resource budget by more than £730 million—an increase of around £500 million in real terms. That increases the investment in social care and integration to more than £700 million. It also provides an additional £27 million directly for mental health services, which takes the overall funding for mental health to £1.1 billion.

Under the circumstances, the 2019-20 budget delivers a fair financial settlement for local government by providing more than £11.2 billion, which is a real-terms increase of almost £300 million.

James Kelly (Glasgow) (Lab)

Does the cabinet secretary think that it is fair that, as a result of this budget, a chief executive who earns £120,000 a year will get a tax cut, but Dundee City Council will have to cut its education budget by £3 million?

Derek Mackay

As a matter of fact, the education budget in Dundee is going up. The education portfolio is increasing in real terms as well. Why is the shadow cabinet of the Labour Party adopting the Tory income tax plans, when the Scottish Government is rejecting them?

In total, overall spending power for local authorities next year will potentially be up to £620 million higher than it is currently. At the same time, we are protecting household budgets by continuing to protect a cap on council tax increases. Overall levels of council tax will continue to be significantly less than in Tory-run England.

On a cross-party basis, local government has lobbied for more discretionary taxes.

Graham Simpson (Central Scotland) (Con)

Why is it, then, that every council is having to make cuts?

Derek Mackay

As I have just expressed, the Scottish Government is giving councils more money—a real-terms increase—and improved spending power of more than £620 million. If I had followed Tory tax plans, £500 million would have had to come out of public services to fund them. What about the calamity of Brexit? Think of what that would do to our public services.

We have listened to local government on a cross-party basis—that even included Tories demanding a power that they now say should not be transferred to local government. What hypocrites there are in the Conservative Party.

I have reached a deal with the Greens to take forward our empowerment agenda. On local tax reform, we will see the empowerment of local authorities, supporting local democracies to develop local solutions. We will convene cross-party talks to replace the current council tax and publish legislation by the end of this parliamentary session to implement any agreement.

On the agreement to support new powers for local authorities, we will formally consult on the principles of a locally determined tourist tax and introduce legislation that would permit local authorities to introduce such a levy, if they consider it appropriate in their circumstances.

We will also support an agreed amendment to the Transport (Scotland) Bill that would enable councils wishing to use such a power to introduce a workplace parking levy. The use of such a power will be entirely an individual choice for each local authority and, as has already been noted in this chamber, in Tory-run England and in Wales, where councils already have the power, Nottingham is the only council to have used it. As I understand it, neither Glasgow City Council nor the City of Edinburgh Council—those councils perceived to be most likely to deploy the levy—are intending to promote it in the financial year 2019-20. How about this? Rather than focus on what is not happening in 2019-20, maybe the Conservatives should focus on what is happening in 2019-20.

This budget delivers a competitive package of business rates measures to help our businesses grow, prosper and be successful; it delivers the most generous business rates relief package anywhere in the United Kingdom, worth more than three quarters of a billion pounds, with capped poundage increases below inflation, ensuring that 90 per cent of properties in Scotland pay less than in other parts of the UK; and it continues the growth accelerator to provide a further competitive advantage for Scotland’s businesses.

Our economic action plan sets out the measures to build a strong, vibrant, diverse and dynamic economy, which includes an ambitious national infrastructure mission, the national investment bank and investment of more than £5 billion of capital funding in our infrastructure. We are investing £1.7 billion in transport and connectivity and £180 million towards city and regional growth deals; establishing an £18 million advanced manufacturing challenge fund; boosting town centres with a new £50 million capital fund; and investing a record £826 million in housing, delivering affordable homes in communities across Scotland.

This budget expands the use of our new devolved social security responsibility powers to create a system that is based on dignity and respect, with a total forecast expenditure of £435 million in 2019-20. It delivers real action to tackle poverty and support families on low incomes, investing more than £100 million to directly mitigate the worst impacts of UK Government welfare cuts, including mitigating the bedroom tax in full.

On the subject of tax, as approved by the rate resolution this week, the budget ensures that 55 per cent of Scottish taxpayers will continue to pay less than they would if they lived elsewhere in the UK, with Scotland continuing to be the lowest and the fairest taxed part of the UK.

Before I ask Parliament to approve the budget later this afternoon, I must draw attention to the work of the chief economist that was published today. The UK chancellor’s budget was constructed on the basis of an orderly Brexit, as was the Scottish budget. With just over a month to go before Scotland faces being dragged out of the European Union by the UK Tory Government, we face the real and increasingly likely possibility that the UK will crash out without a deal. The Scottish Government continues to believe that the best outcome for the UK and for Scotland is to remain in the EU. The choice is not just no deal or the Prime Minister’s deal—in fact, the Prime Minister’s deal would make Scotland poorer as well. The UK Government is systematically damaging our economy: austerity by choice, Brexit by design. Any form of Brexit damages our economy and our people.

Even though investment decisions have already been impacted, our economy has so far proven to be resilient, with gross domestic product growth and record low unemployment. That economic success is now at risk from the increasing Brexit uncertainty and, in particular, the no-deal scenario. Today, the chief economist in the Scottish Government has published a report, “No Deal Brexit—Economic Implications for Scotland”, and it is important that the people of Scotland know that it shows that a no-deal Brexit would lead

“to a major dislocation to the Scottish economy”

and that it

“would be expected to push the Scottish economy into recession during 2019.”

The report says that there is the potential for the economy

“to contract by between 2.5% - 7% by the end of 2019, depending on the way in which a No Deal Brexit outcome evolves.”

Such an economic slowdown would be expected to result in unemployment in Scotland rising from its current record low level and potentially soaring by 100,000 people. That would be an economic shock on the scale of the 2008 financial crisis. Scotland should not have to pay such a heavy price for the incompetence of the Conservative Government.

Murdo Fraser (Mid Scotland and Fife) (Con)

If the scenario of a no-deal Brexit is as appalling as the finance secretary sets out, is that not an argument for Scottish National Party MPs to back the deal that the Prime Minister has on the table?

Derek Mackay

Remember, outside number 10 Downing Street, the Prime Minister said that there was a choice: her deal, no deal or no Brexit. We will take no Brexit, thank you very much. The choice that Murdo Fraser offers is a false choice. The Tories are asking the people of Scotland how much damage they would like to come upon them. That is what the Tories, through their gamble and their recklessness, have taken us to. It is appalling and the economic credibility of the Tories is about to be shattered before our eyes. A no-deal Brexit is not just a hypothetical; it is impacting on our economy now and it must be avoided at all costs. That is what happens when we leave the economy of Scotland in the hands of the Conservatives.

Of course I am working on an economic response in the event of a no-deal Brexit, but we in this Parliament will have no choice but to revisit our spending proposals and priorities, to limit the economic harm that is being imposed on Scotland by Westminster. With the best will in the world, devolution and the current limited powers will not be enough to mitigate the economic catastrophe that is coming our way.

There are new converts to the notion that Westminster is broken, including some of its own members. I just wonder what took them so long to realise it. In sharp contrast, Scotland’s Parliament must show leadership, stability, consensus and compromise, and, importantly, it must deliver.

This Parliament is at its best when all parties engage constructively, and surely the nation’s finances and the decisions that we make on our public services deserve serious engagement. After all, decisions are indeed made by those who turn up. This year, unionist parties might have been in the room, but credible budget alternatives were absent, with the Liberal Democrats and the Tories putting their constitutional obsession before public services and those in the Labour Party too busy arguing among themselves. It was only the Greens who engaged constructively.

The passage of today’s budget provides £42.5 billion of investment in our public services and economy to the benefit of the people of Scotland. By approving this year’s budget, we make investments for the here and now while building for our future and safeguarding Scotland.

I hope that this will be a turning point for the Opposition, who would gain so much more for their constituents by working with us on the budget. Our Parliament in Scotland can offer the modern, progressive style of politics that is focused on the common good and the opportunities and challenges that we face together. That is why I have striven to deliver stability, sustainability and economic stimulus and why I am so proud to commend this budget to the chamber today.

I move,

That the Parliament agrees that the Budget (Scotland) (No.3) Bill be passed.

The Presiding Officer

Thank you, cabinet secretary. I call Murdo Fraser to open for the Conservative Party.

14:45  



Murdo Fraser (Mid Scotland and Fife) (Con)

Thank you, Presiding Officer.

Richard Lyle (Uddingston and Bellshill) (SNP)

It’s muddled Murdo!

Murdo Fraser

Oh, do not worry, Mr Lyle—I will come to you very soon.

When the finance secretary introduced his budget to Parliament at stage 1, just three weeks ago, I described it as a pay more, get less budget. That description still holds, but it does not do justice to what has turned into an omnishambles budget. For the past three weeks, this budget deal has faced criticism: criticism for a lack of transparency; criticism because of the tax hikes that are being introduced, which will hit the poorest families the hardest; and criticism because of the cuts in local government services that are being handed down, which will mean that families across Scotland will be paying more in tax at the same time as the services that they depend on are being reduced.

Let me start with transparency. Both the finance secretary and the First Minister told Opposition parties throughout the budget process that every penny in the budget had been accounted for. However, we now know that there were additional Barnett consequentials amounting to £148 million from the UK Government that the finance secretary was given notice of on Friday 25 January, some six days prior to the stage 1 debate in this Parliament.

No doubt, when Patrick Harvie and the Green Party negotiated an extra £90 million for local government, they thought that they were getting a good deal. Little did they know, I suspect, that Mr Mackay was holding back another £54 million to put into the Scotland reserve. It does not say much for the Green Party’s negotiating skills, but it says even less about the transparency of the Scottish Government’s budget process when it gets an extra £148 million thanks to the UK Conservative Government and it keeps that information to itself.

Patrick Harvie (Glasgow) (Green)

Will the member give way?

Murdo Fraser

Mr Harvie will now tell us whether he knew about the extra £54 million.

Patrick Harvie

Murdo Fraser is well aware—as am I—that the money is not simply being put into the reserve but is being used to move things from one financial year to the next, to ensure that a much-needed teacher pay settlement will be funded nationally. Is Murdo Fraser saying that that teacher pay settlement should not be funded?

Murdo Fraser

Mr Harvie could not answer my very simple question: did he know about the extra money or not?

The lack of transparency in the budget has also been criticised by one of the Scottish National Party’s own economic advisors. The economist Richard Marsh, who is a member of the expert group that is advising the Scottish Government on economic modelling and statistics and a researcher for the SNP’s sustainable growth commission, has gone so far as to report the Scottish Government to the UK statistics watchdog, saying that the budget presented confusing data that buried key facts. He also said that strict clarity guidelines had been breached for political reasons and that figures in the budget were misleading. The numbers in the Scottish budget report were, he said,

“arranged in a way to persuade the reader of the merits of the Scottish Government’s narrative around the budget”.

It is time for the finance secretary to reflect on how his budget information is presented to Parliament when even his own Government’s advisers are criticising the way in which it is being put forward. If he really wants the Opposition parties to engage seriously with future budgets, he needs to stop the practice of getting extra money and not telling Parliament about it, as he should.

It is not just on grounds of transparency that the budget has been criticised. The growing income tax gap between Scotland and the rest of the UK, which breaks an SNP manifesto pledge, has been attacked by business organisations. The Confederation of British Industry Scotland has warned that the divergence in income tax will be a major issue for companies that are keen to attract the best talent. The Scottish Chambers of Commerce has warned that it could take years to repair the damage caused by higher taxes. The Federation of Small Businesses in Scotland states that the tax changes in the budget

“will erode the small business community’s trust”.

The greatest criticism of the budget relates to the ludicrous plans for a new car park tax. It is a tax on which we have been given virtually no detail, despite being asked to vote on the budget package in a couple of hours’ time; a tax that could cost workers £500 a year; a tax that will be regressive and hit the poorest hardest; and a tax on which, by the finance secretary’s own admission, no economic analysis has been done.

The Scottish Government has claimed that the tax is a localist policy, but it has already taken the decision centrally to exempt NHS buildings, despite the fact that not all NHS workers are actually employed in NHS buildings. As we have pointed out, general practitioners’ practices employ large numbers of staff but are not classed as NHS properties. When asked about the policy in the chamber yesterday, the Cabinet Secretary for Health and Sport did not even seem to know what it was: she said that NHS workers would be exempt, which directly contradicts the finance secretary’s position. In this shambolic Government, the left hand does not know what the right hand is doing. I will give way to any member of the SNP front bench who can tell me whether GP buildings are exempt.

There is no answer. SNP front benchers do not have a clue about their own policy.

John Mason (Glasgow Shettleston) (SNP) rose—

Murdo Fraser

We are elevating Mr Mason to the Government’s front bench—not before time.

John Mason

I thank the member for his compliment. The answer is that we have not yet started the process. The Rural Economy and Connectivity Committee will be doing a consultation, and it will be this Parliament, not the Government, that makes the decision.

Murdo Fraser

I am not sure that Mr Mason will get promoted quickly on the basis of that intervention, but I applaud his valiant attempt to step in when his party’s front bench failed to do so. I am not sure whether Jeane Freeman is in the chamber, but she told us yesterday that GP practices would be exempt from the policy, whereas Mr Mason is now telling us that SNP members do not know. They need to make up their minds.

If NHS buildings are to be exempt, why not exempt local government workers? Why not exempt teachers, social workers, police officers and emergency service workers? For that matter, why not exempt those in the private sector who may well be on lower pay than their public sector equivalents? At the weekend, the First Minister suggested that councils could rule out the car park tax and protect their local residents, but that completely misses the point that tens of thousands of workers commute every day by car from one council area to another.

Today, every Conservative council group leader in Scotland has pledged not to introduce the car park tax. It is time that the SNP did the same, but SNP-led councils such as City of Edinburgh Council and Glasgow City Council are already talking about introducing the charge. Adam McVey, the leader of City of Edinburgh Council, has suggested that the charge should be paid not by employers but by employees. Does Mr Mackay agree?

Derek Mackay

An intervention is supposed to mean my asking a question and Mr Fraser answering. This is my question: are the Conservatives who are against the workplace parking levy the same Conservatives who come to me demanding power over local discretionary taxes so that those in local government can make decisions for themselves?

Murdo Fraser

I do not blame local councils that have had their budgets slashed by the finance secretary for knocking on his door to complain about it.

Even SNP members have complained about the regressive tax. John Swinney once warned that a workplace parking levy would lead to people simply parking their cars in nearby residential areas—he was right. Bruce Crawford and Fergus Ewing are on record as having opposed such plans in the past. Nor should we forget that, much more recently, Richard Lyle told a committee of this Parliament:

“I am not for your parking charge levy, and I speak on behalf of thousands of motorists who have been taxed enough.”—[Official Report, Environment, Climate Change and Land Reform Committee, 13 November 2018; c 59.]

There speaks the voice of reason on the SNP back benches—it is time that Government ministers listened to him.

In reality, there was no need for those tax increases, because, for this year’s budget, the Scottish Government has had more money from Westminster, with the block grant increasing in real terms by some £520 million as against last year according to the Scottish Parliament information centre. In addition, according to SPICe, the Scottish Government’s overall budget is up in real terms compared with when the Conservatives first came to power in 2010—not that anyone would think so if they listened to the Scottish National Party. Nevertheless, this budget delivers not just tax hikes but a slashing of the core grant to local government that, according to SPICe, amounts to some £230 million in real terms.

We have seen it in our local newspapers every day this week: as councils across Scotland set their budgets, they are having to reduce teacher numbers, cut the length of the school week, lay off school crossing patrollers and close libraries and leisure centres. They are making cuts in the real services that people across Scotland depend on. The finance secretary may be in denial about such things happening, but they are happening on his watch and he must take responsibility for them.

Derek Mackay

Will the member give way?

Murdo Fraser

I would give way, but I cannot because I am in the last minute of my speech.

We should have had a budget that focused on growing the economy, which increases our tax revenues. Every 20 new additional rate tax payers we attract to Scotland generate at least £1 million in extra tax revenue. An extra 2,000 additional rate tax payers would give us a minimum of £100 million annually extra to spend on public services. A 1 per cent increase in Scottish productivity would deliver £2.3 billion extra in GDP and £400 million in tax revenue. That is how we get more money for public services—with an expanding economy and rising wages.

What a pity that, instead of going in that direction, we have an SNP Government that would rather hike up taxes for working families, penalise the poorest with a regressive car park tax and, at the same time, slash our public services. At decision time tonight, the Parliament should reject the omnishambles budget.

14:56  



James Kelly (Glasgow) (Lab)

Scottish Labour will oppose the budget. The SNP has ignored the calls for a fair budget, has awarded tax cuts to high earners and has imposed cuts on councils. That will reduce jobs, close services and hit vulnerable people hardest.

The debate on council funding has been central to the budget process. The cabinet secretary and SNP members of the Scottish Parliament are kidding themselves on if they think that there are not going to be any cuts to council services. The reality is that there will be £230 million in cuts across the country. We can trade figures back and forward, but the real test is the decisions that councils on the ground are considering.

Let us take Dundee City Council. There, there will be a £3 million cut to education services, which will include a reduction of 26 teaching posts. What does that say about education supposedly being the number 1 priority of the Government? In Clackmannanshire, the cut in funding to Clackmannanshire Citizens Advice Bureau Ltd means that it faces closure, and support for food banks there is also being reduced. Vulnerable people living in that area are the ones who will be hit. In Moray, services including library services will be slashed, and there is a proposal to close swimming pools.

The reality of the budget is cuts, cuts and cuts. That is what is happening all over the country.

Keith Brown (Clackmannanshire and Dunblane) (SNP)

Will the member take an intervention?

James Kelly

No, thank you.

Child poverty is a scandal that stains modern Scotland.

Derek Mackay

At this point, will James Kelly explain how he would fund the many commitments that I am sure he is about to list, and what the headline tax rates in a devolved Scotland would be under a Labour Government?

James Kelly

Under your—[Interruption.]

Members should just listen to me. Under Mr Mackay’s proposals, a lawyer on £90,000, a chartered accountant on £100,000 and a chief executive on £120,000 will all pay less tax. That is why workers who fear loss of their jobs have been demonstrating on the streets of Dundee.

Labour proposes a top rate of tax of 50p, which the SNP previously supported but then stepped back from. We would also extend tax being raised in the higher band, which would raise a significant amount and would mitigate the crisis that we see in the country and address issues including child poverty.

It should shame every MSP in the chamber that in this country some kids leave for school in the morning having not had a proper breakfast. That is an absolute scandal and it is why Labour proposed raising child benefit by £5. That proposal was supported by charities and churches. It was even given some support by Kevin Pringle in The Sunday Times, and he is someone who carries some weight with SNP MSPs.

The Government has also failed to mitigate the two-child cap. That is a horrendous Tory policy that is being imposed from Westminster. We had an opportunity to do things differently in this Parliament, but we have failed.

On rail services, passengers continue to suffer delayed and cancelled trains. We have seen today that the performance figures for ScotRail have plummeted to their lowest-ever level. That is why Scottish Labour demanded a fares freeze, but that is another demand that was ignored by the Scottish Government. It is time that the Government started listening to the concerns of rail passengers. The Government should strip Abellio ScotRail of the contract and give us a fares freeze and a publicly owned railway.

One of the changes from the first stage of the budget was the introduction of the proposal for the workplace parking levy. It is clearly a flawed proposal.

John Finnie (Highlands and Islands) (Green)

Was the workplace parking levy a flawed policy when James Kelly’s colleagues promoted it in their Glasgow and Edinburgh local authority election manifestos?

James Kelly

As the Unite and GMB trade unions have pointed out in recent days, any proposal that imposes a tax on workers as they take their car to work is an unfair tax and it will be opposed—

The First Minister (Nicola Sturgeon)

Will the member take an intervention?

James Kelly

No thank you—[Interruption.] Okay.

The First Minister

James Kelly did not answer John Finnie’s question. I wonder whether he will do so now. If the workplace parking levy is such a bad policy, why did Labour propose it in its council election manifestos in Edinburgh and Glasgow? It is a simple question. Let us have an answer.

James Kelly

As the First Minister will be aware, her Government has carried out no economic assessment of the workplace parking levy policy. The Government is proposing to introduce it at stage 2 of the Transport (Scotland) Bill and, therefore, to limit proper scrutiny of it. It is a flawed policy and it will be rejected by workers across Scotland.

What Parliament needed was a budget that would have used fair taxation to stop the cuts and to tackle poverty and inequality. What we have is a budget that will cause a crisis in Scotland’s communities. The budget lets people down. We will oppose it at 5pm.

15:04  



Patrick Harvie (Glasgow) (Green)

Just a few weeks ago, I took part in a public meeting at Whitehill secondary school in Dennistoun, in which people from the Labour Party, the SNP and the Conservative Party, and a great many local people, debated the impact on that community of the proposed closure of their pool, at a time when community and leisure centres across the city were all threatened. We all know the scale of what was under consideration before the budget agreement, which has secured not only new money but new flexibility for local councils.

This afternoon, as Glasgow City Council debates its budget, my colleagues on the council are able to put forward a balanced budget proposal that will save all the libraries, sports facilities and community centres and will protect budgets for schools, including for additional support for the children who need it most.

Neil Findlay (Lothian) (Lab)

Will Patrick Harvie take an intervention?

Patrick Harvie

I will give way in just a moment.

The Glasgow City Council budget proposal also includes new measures including a climate emergency fund to save money through energy saving and cutting waste, and it proposes investing in renewable energy, Glasgow crossrail and active travel. That would not be possible were it not for the agreement that we have reached.

I have time for one intervention: I give way to Mr Findlay.

Neil Findlay

Is the cabinet secretary telling the truth when he says that there will be no cuts to any council’s budget because of the deal that the Greens and the SNP have struck? If there are to be no cuts, why are councils around the country, from Shetland to Dumfries, debating lists of cuts that are as thick as you could find?

Patrick Harvie

I am certainly not accountable for the words of the cabinet secretary, but I say to Mr Findlay, as I have said before—[Interruption.]

If Mr Findlay is willing to listen, I say to him that I have not pretended that the process has resulted in a perfect budget. We know that councils face rising demands for services, inflation costs and, in the case of Glasgow, the cost of historical decades-long failure by the previous administration to meet the equal pay bill.

My colleagues on the City of Edinburgh Council are proposing a budget that would boost care for older people by an extra £9 million, proposes an £80 million programme for new high schools, and suggests a measure that my Glasgow council colleagues suggested—a climate emergency fund.

Councils around Scotland are in a far stronger position to meet the challenges that they face as a result of the work that has been done. I do not pretend that the budget will solve every problem, but it is a vast improvement. I say again to all political parties that the process would have been better if every political party in Parliament had engaged positively and had put forward proper constructive and costed proposals, as the Greens tried to do.

The reaction to the workplace parking levy would be funny if it were not so dismal. It is a proposal that has in the past been legislated for down south by a Labour Government, used by a Labour council, proposed by Scottish Labour councillors, supported by Lib Dem MSPs and councillors, and voted for by Tory councillors. Their having all decided that it is an intolerable policy when the Greens propose it, but not when they have proposed it, is a mark of shameless political opportunism. It comes in the week after young people in Scotland and around the world took radical action to demand urgent responses on air pollution and climate change. Some people appear to be losing the plot over as trivial a thing as the workplace parking levy policy. It is not even in the budget; it will never be in a Scottish budget, because it is about giving power to councils so that they—the local decision makers—can decide whether it is in the local interest.

I finish with an appeal across the political spectrum. We now have the opportunity to do something radical to decentralise fiscal power in this country, which the Scottish Parliament should have done much earlier in its 20-year history. We have the opportunity to start devolving non-domestic rate reliefs, to give new tax powers and environmental levy powers to councils and—if all political parties take the opportunity—finally to scrap the broken and unfair council tax that creates so much injustice in our society.

I only hope that all politicians will step up and take that opportunity to ensure that we get better improvements, year on year, as a result of the changes that we have negotiated this year.

15:09  



Willie Rennie (North East Fife) (LD)

This is shaping up to be the worst of Scottish budgets. We can tell that the SNP agrees, because its MSPs have spent so much of the past fortnight talking about which bits of the budget they do not support. In the stage 1 debate, I said that Patrick Harvie had sold out local government for the vice-convenership of the car park working group, but I may have spoken too soon. The entire SNP has run a mile from the proposal, so it looks like Patrick Harvie is going to be doing it all by himself.

The SNP has lost any pretence of financial competence. I have yet to see any evidence that the tax change that was implemented last year has driven people out of the country, but the tax burden has to be managed with care, as we do not want to see falling revenues as a result of adverse behavioural change. However, I think that the SNP has lost its senses as its record is now five new taxes, none of which was in the SNP manifesto, and two broken tax promises in just one year. If people think that taxes will rise at every budget and over a range of areas, this country will get a reputation for being high tax and we might see the result in falling tax revenues.

The Greens have been bought very cheaply. It turns out that the extra money for councils was already available. There was £123 million of October consequentials and £148 million of January consequentials. There was hundreds of millions of pounds of underspend this year, plus the hundreds of millions of pounds of underspend next year that the Government’s track record all but guarantees. There are also the increased tax receipts from the public sector pay increases and the £54 million put into reserves. The Greens did not get all the money that was available, but they said to councils, “We have closed your £237 million funding gap with £90 million cash and permission to cut adult social care by £50 million.” That was quite astonishing. Then the Greens said that they do not expect councils to cut their social care but that they had still closed the gap. It never added up and is a clear trick.

In addition, local government finance reform has been delayed until the next session of Parliament, meaning yet more talks on top of all the other talks that we have had that have amounted to nothing.

Andy Wightman (Lothian) (Green)

Will the member take an intervention?

Willie Rennie

Not just now.

The Greens used to say that council tax was unfair; it is so unfair that they want it to go up this year and become even more unfair. The inventor of the plan for the parking levy, John Finnie, tweeted the wrong information about the Nottingham scheme; he said that you pay only for the 11th car parking space, but that is not true—you pay for all 11. The budget has a list of policies that they do not understand, cuts that they cannot hide and taxes that they are putting up when they promised that they would go down. What a budget this is turning out to be!

It could have been different. We offered to work with the SNP. We have done it before in previous years when we voted for the budget—SNP members remember. Despite the SNP’s opposition, we secured extra support for early education and childcare, for colleges and for school meals. We have been prepared to work with the SNP.

However, with the First Minister travelling the world to tell all about her plans to break up the United Kingdom in the wake of the break-up of the European Union, it is no surprise that we might be just a little bit concerned. There is no way we could support the budget of a Government that is determined to drive forward yet another divisive independence referendum. We asked for a cessation so that we could work together on this budget, but the SNP could not even agree to a short cessation, such is its obsession.

We have successfully harried the Government to invest in mental health services, but the Government is now playing catch-up and we remain unconvinced that the funds that have been announced will feed through to real change quickly enough.

Last year, we said that mental health spend should rise to a total of £1.2 billion but, a year later, the figure is still £100 million short. That £100 million could fund schools, the police and new health professionals in the NHS. We need a budget that puts teachers at the centre of our developing economy in the years to come, and a proper and fair deal for local government is also important.

This year, we could have worked together on the needs of local government, on the funding of mental health and on support for teachers, but Derek Mackay declined. This weekend, I am sure that the finance secretary will be taking down his Catalan flag from his flagpole in Renfrew. It turns out that the Catalan pro-independence parties have insisted on a dialogue on independence as the price for supporting the Spanish Government’s budget. Who says that we are not allowed to put independence and the constitution at the heart of the budget debate?

We will not support a Scottish Government that will use the budget as a stepping stone to independence and the economic damage that that would bring. The budget could have been very different if it was not for the one-track mind of the SNP and its sidekicks in the Greens.

15:16  



Angela Constance (Almond Valley) (SNP)

After the stage 1 debate a few weeks ago, I had hoped that members would be in a more mature and reflective mood today and that they would be prepared to discuss and debate the big budget issues of the day on how best to grow our economy and make Scotland fairer. I for one will not be quoting poetry at Mr Mackay, because he is the only man I know who takes it as a compliment when a woman quotes “Tam o’ Shanter” at him.

Instead, over the past few weeks, we have heard a heavy dose of hysteria—hysteria about 32 local authorities in Scotland getting the same power on workplace parking that 326 local authorities in England have. Despite English local authorities having had that power since 2000, and despite local government in England having suffered a 17 per cent real-terms reduction in its budget in the past four years, only Nottingham City Council has used the local power.

Of course, the Tories and others will not let the facts get in the way of some good old-fashioned scaremongering. Their campaign is about reducing the debate about a £42 billion budget to the lowest common denominator. Their tactics are about diminishing debates in our Parliament to those of a parish council in an episode of “The Vicar of Dibley”. We should be debating where power lies, what other decisions should be made at a local level and how we improve local democracy and accountability.

With 36 days until Brexit, we have heard all the faux outrage about the First Minister daring to put a foot outside Scotland to represent our future economic interests, when we run the risk of our GDP falling by 7 percentage points. At best, that is playground politics; at worst, it represents a poverty of aspiration.

I have listened carefully to what the Tories and others have said about taxation. What interests me is that we never hear the Conservatives bemoan the fact that Scottish taxpayers pay twice to insulate the most vulnerable in our society from the harshest of Tory welfare austerity. Our citizens pay for the Scottish and UK social security systems, and they have the right to expect fairness, dignity and respect from both Governments.

Neil Findlay

The member has mentioned harsh Tory welfare policies. The harshest policy is the two-child cap, so is it not regrettable that we are not taking action through the budget to eradicate it?

Angela Constance

There is a serious point about the role of mitigation, and I want to address the point that Mr Findlay has raised, although it is regrettable that the Labour Party has not produced a costed alternative budget on how best we could use our resources and powers in this Parliament.

As we have heard, the Labour Party advocates a £5 increase in the near-universal child benefit, but I would rather give an extra £10 to £20 to the children who are most in need. According to the Institute for Public Policy Research, that would lift 40,000 children out of poverty, as opposed to the 10,000 to 15,000 children whom Labour’s proposal would affect. The challenge for Labour and for folk such as me, as well as the Government, concerns where we would get the £250 million for the annual cost of such a measure.

Can we please start to lift the level of the debate about how we get weans out of poverty, as opposed to confining our horizons to mitigation? Mitigation prevents a step backwards, but it does not enable a step forwards. We in the Parliament need to recognise that mitigation comes at a cost. The United Nations rapporteur on extreme poverty—not a man to mince his words—said:

“mitigation comes at a price and is not sustainable.”

To be frank, it is outrageous that one Government has to use its resources to protect its citizens from another Government’s actions.

I will therefore always argue for more powers for this Parliament. I say to Mr Rennie that I will always campaign for independence. However, I will never demur from the debate about how best to use the powers and resources that are currently available and I will never shirk from the hard work of building consensus about the best ways to grow our economy and make Scotland fairer.

The questions of the day are not about car parking charges but about how we reform our public services, given that resources are never infinite but needs always are; about how we ensure that young people in the current generation are not the first to be worse off than their parents; about how we welcome new Scots from the EU and beyond; about how we pay for the social democracy that we want; about how we end poverty; and about how, for our economy’s sake, we step out of the short-term political cycle and have the courage and guts to plan and invest for the long term.

That is what a budget debate in the Parliament should be about. The budget process is for grown-ups; in these difficult times, it is about finding the basis of agreement to provide stability. That is what we are all elected to do and it is rightly what the country expects us to do.

15:22  



Dean Lockhart (Mid Scotland and Fife) (Con)

In the rate resolution debate earlier this week, the SNP declared that its tax proposals were based on the key principles of being progressive and protecting low-paid workers, raising additional Government revenue and supporting the economy.

However, once we look beyond the SNP spin, it becomes clear that the budget delivers on none of those so-called principles. The reality is that the budget is regressive and will serve only to penalise low-paid workers. Everyone in Scotland who earns £27,000 or more will have lower take-home pay than their friends and colleagues in the rest of the UK. That means that ordinary, hard-working people such as nurses, police officers and teachers have to pay for the SNP’s high-tax, low-growth agenda.

The budget delivers higher council tax bills for low-income households across Scotland. Many families will face an increase of more than £500 a year.

Worst of all, the budget introduces a new tax—the car park tax—which could cost low-paid workers an extra £500 a year. Organisations across Scotland have—rightly—warned that that tax will be deeply unpopular and regressive. It is not based on the ability to pay and it will hit the lowest-paid workers most.

John Mason

Will the member give way?

Dean Lockhart

I will do so in a second. I highlight to John Mason that, yesterday, Unite the union warned the SNP that the tax will penalise workers

“just for turning up to work”.

The Scottish Food and Drink Federation has warned that

“full-time workers on lower-level wages would fall below the National Living Wage if they have to pay this ... Car-Park Tax”.

John Mason

Does Mr Lockhart at least accept that the parking levy is not in the budget? The proposal still has to go through the parliamentary process, when we will examine all the details.

Dean Lockhart

Mr Mason should know that, as part of the budget negotiation process, his party agreed with the Greens to introduce that unfair tax.

If SNP members think that increasing the tax burden on low and middle earners, increasing council tax bills and imposing a tax on workers who park their cars at work is fair and progressive and will protect low-paid workers, they are clearly out of touch with the hard-working people of Scotland.

The SNP has also declared that the budget will raise additional Government revenues to support public services. It is true that increasing the tax gap with the rest of the UK will in itself raise £68 million in revenue for the next financial year, but that has to be seen in the context of total forecast income tax revenues for next year being revised downwards by £660 million by the Scottish Fiscal Commission. Now that Scottish income tax is under the control of the SNP, we are seeing the real negative budgetary consequences of Scotland’s economy growing at just half the rate of the rest of the UK.

The Fraser of Allander institute has made it clear that

“the new Fiscal Framework puts an explicit burden on the Scottish Government to secure growth rates at least equal to the rest of the UK.”

It goes on to say that if Scottish income tax revenues grow just one third of a per cent slower than UK levels, the Scottish budget will be short by £250 million. However, that is exactly what is being forecast by the SFC and the Office for Budget Responsibility—slower income tax revenue growth in Scotland compared with the rest of the UK, which will significantly reduce the budget available for public spending in Scotland.

The Minister for Public Finance and Digital Economy (Kate Forbes)

The member will welcome, then, the fact that the Scottish economy grew faster than the UK economy as a whole last year. What is his opinion on whether Brexit will help us to grow the economy or hinder it?

Dean Lockhart

For nine of the 11 years that the SNP has been in power, the Scottish economy has grown more slowly than that of the rest of the UK and the SFC is forecasting five more years of stagnation under the SNP. I think that that is the answer to the minister’s question.

By increasing the tax gap with the rest of the UK, the budget will only make that worse. The Chartered Institute of Taxation has warned that

“Taxpayers will now take steps to relocate away from Scotland”

or incorporate their business and take themselves out of Scotland’s tax base. The finance secretary must recognise that, under the fiscal framework, the priority must be to increase Scotland’s tax revenues relative to the rest of the UK. This budget does precisely the opposite and will create a vicious cycle of ever higher taxes having to be imposed on a declining tax base in Scotland.

The SNP has also claimed that its tax policy will support Scotland’s economy. Every leading business organisation in Scotland disagrees. The CBI has warned that Scottish businesses will be unable to compete with rivals across the UK in the event of a further divergence of tax rates. The Scottish Chambers of Commerce has told the SNP that

“The sooner politicians realise that supporting economic growth rather than hiking up taxes is the route towards increasing revenues, the quicker Scotland will prosper”

and the Federation of Small Businesses has told the SNP that its latest tax increases will erode the trust of the small business community. We have a straight choice here. We can either believe the SNP saying that higher taxes will grow the economy, or we can believe every leading business organisation in Scotland saying that higher taxes will damage economic growth. It is clear which side of the argument is correct.

After 11 years of SNP Government, we are already seeing the longest period of low growth in Scotland for 60 years. This budget will only cause further damage to Scotland’s economy, as forecast by the SFC.

Derek Mackay

Will the member take an intervention?

The Deputy Presiding Officer (Christine Grahame)

The member is in his last minute.

Dean Lockhart

By introducing the deeply regressive car park tax, the budget also shows the people of Scotland that this is a tired Government—a Government out of ideas, out of touch and fast running out of time. That is why we will vote against the budget at decision time.

15:28  



Tom Arthur (Renfrewshire South) (SNP)

It is an honour to contribute to the debate. I am delighted about the £180 million for the attainment challenge fund, and I highlight the budget line for the £120 million that will go directly to headteachers.

I am sure that the chamber will join me in congratulating teachers, staff, pupils and parents in Renfrewshire, and Renfrewshire Council officials, on their outstanding work and their achievement, announced this week, of significant year-on-year improvements in listening, talking, reading, writing and numeracy, with the attainment gap closing across all measures. In Renfrewshire, there are incredibly challenging circumstances for some of our young people, so we should be incredibly proud of teachers, pupils and staff in Renfrewshire for that achievement. I hope that the Parliament will show its appreciation. [Applause.]

The debate has been characterised by a great deal of heat but not a great deal of light. Many speakers have noted that we are marking the 20th anniversary of devolution, which promised a new kind of politics and a new kind of Parliament—a Parliament where the architects of our electoral system envisaged that all parties would have to work together. Nowhere is that more necessary than in setting a budget.

Unfortunately, many of the debating points do not seem to stand up when confronted with reality. In the previous speech, Dean Lockhart spoke about the different rates of growth between Scotland and the rest of the UK. He quoted SFC figures and he is perfectly entitled to do so, but we need to drill down a bit further.

For example, if we look at the GDP per person differential between Scotland and the rest of the UK, it narrows. If we look at the per capita working age GDP in Scotland and the rest of the UK, the difference in the forecast of the SFC disappears completely. Why is that the case? It is a demographic issue. We have an older population and we face a significant challenge in growing our population so that we can fund our public services. That will be made incredibly difficult by Brexit.

There are challenges for the Scottish Government and there are challenges for us in this Parliament in continuing to make Scotland an attractive place to live. However, when we have a Prime Minister who, as Home Secretary, was the architect of the “hostile environment”—a Prime Minister whose former Cabinet colleague stated on national television last night that she believes the Prime Minister to have an immigration problem—that is deeply concerning. Indeed, as Angela Constance mentioned, mitigation may be able to stop us taking a step back, but we will never be able to take a step forward when powers over immigration are held in London and are exercised by someone with the views and values of the Prime Minister.

Another key area with regard to growing our economy is productivity, a challenge that has received much commentary within the Parliament and from many thinkers outwith the Parliament. With the Presiding Officer’s permission, I wish to quote from a recent article in the respected Society Now, the Economic and Social Research Council’s journal. It is an interview with Philip McCann, who is Professor of Urban and Regional Economics at the University of Sheffield. He makes some interesting remarks regarding productivity in the UK. The interviewer writes:

“The first and most striking difference between the UK and other nations, says McCann, is the massive variation in economic productivity between its regions and nations. These different levels of productivity in turn drive levels of affluence and influence social conditions, and are regarded as a key determinant of economic success.

McCann’s message is that amongst the industrialised economies, the UK has ‘some of the world’s biggest inter-regional differences in productivity.’ He has examples to make the point. ‘On some measures the UK has bigger productivity variations than the whole of the Eurozone. It has regions that are less productive than many parts of the Czech Republic, Slovakia, the Baltic states and the former East Germany. And almost half of the UK population today lives in areas that are poorer than West Virginia or Mississippi in the US, where British TV companies go to make documentaries about poverty.’”

To suggest that the challenge around productivity is exclusively an issue for Scotland and for the Scottish Government does not stack up. We have to be a bit more mature in how we discuss productivity and a range of other measures.

There is much else to add but something that is worth while bearing in mind is what McCann articulates regarding these variations within the UK:

“The higher productivity areas, he says, include London and a wide swathe of the South East, the East and parts of the South West of England, as well as Scotland.”

McCann then goes on to praise the work of the Scottish Parliament and how it has enabled a more “data-driven” approach. He highlights how smaller territorial units with a population of about 4 million to 5 million are able to address issues of productivity far more effectively.

Those are some of the things that we have to take on board. We can come into the chamber—and I am as guilty of this as the next person—and engage in cheap politics and exchange blows and get progressively more irascible as a debate progresses, but ultimately, that will not make a difference for the people we are sent here to represent.

What makes a difference for the people we are sent here to represent is the money in the attainment challenge fund: money that will go into schools in my constituency and that is enabling headteachers such as Jacqui McBurnie at St Anthony’s primary in Johnstone to deliver such outstanding results that it has become the first Scottish school to receive a UK literacy school award.

I hope that around next year’s budget—and in the conversations about next year’s budget that will start imminently—we can take a more mature and constructive approach—

The Deputy Presiding Officer

You must conclude.

Tom Arthur

—and live up to the aspirations that the architects of devolution had for this place.

15:35  



Pauline McNeill (Glasgow) (Lab)

There are some things in the budget that I agree with—the introduction of a new best start grant for low-income families, the wider eligibility criteria for funeral expenses and the carer’s allowance supplement, but it could be better still. On the whole, the budget does not meet the challenge that Scotland faces to protect public services.

Scottish Labour members will oppose the budget as it stands, because we believe that it will further entrench austerity in our communities and mean much deeper cuts to our public services. The pressure on local authorities and services has never been greater or so acute.

I do not remember a time when local authorities were more hard pressed for funds or when communities faced such cuts to basic services, with headteachers writing to parents about unprecedented cuts. Life is hard for many people who are struggling to make ends meet and who have been utterly shafted by a decade of wage stagnation, rising prices and job insecurity.

One in four children in Scotland lives in poverty, yet the Government has repeatedly rejected the calls of the Labour Party and a broad range of the third sector—including the Child Poverty Action Group—to top up child benefit to lift children out of poverty. Meanwhile, we remain in the dark about what the proposed income supplement will look like. Analysis by the Fraser of Allander institute shows that 0.1 per cent of the Scottish budget is targeted at low-income families with children.

The effects of child poverty have been discussed in this Parliament on many occasions and should not be underestimated. CPAG states:

“Children from higher income families significantly outperform those from low income households at ages 3 and 5. By age 5 there is a gap of ten months in problem solving development and of 13 months in vocabulary.”

It continues:

“Three year olds in households with incomes below £10,000 are two and a half times more likely to suffer chronic illness”

than children in other households.

“As well as being harmful to children and families child poverty has a wider cost for society. A 2013 study estimated that the high levels of child poverty in the UK are currently costing the country at least £29 billion a year. This includes the cost of policy interventions, long term losses to the economy, lower educational attainment and poorer mental and physical health.”

Labour analysis shows that a top-up to child benefit of £5 a week could benefit a total of more than 270,000 families across the country, who would see their household income topped up by at least £520 per year. It is wrong to say that income does not matter to low-income families. Hard cash makes a difference. If you want evidence for that, look at the Labour Government’s introduction of working tax credits in 2010, which has lifted tens of thousands of people out of poverty. Do not tell me that hard cash does not matter—it does.

I will say a few words about the tax on work. In a moment of complete madness—in my opinion—the cabinet secretary for finance offered the Green Party the prospect of devolving to councils the power to introduce a workplace levy on car parking without any consideration of the detail, of who it would affect or, indeed, of its objectives.

Derek Mackay

Will the member take an intervention?

Pauline McNeill

I will be happy to take an intervention if the cabinet secretary lets me make a few more points.

Part of the deal is to legislate for the levy. However, so far, I have not heard one word in defence of the substantive case for the levy—all that I have heard is who said what to who. Frankly, I am not interested in that. The Labour group in this Parliament is opposed to the devolution to councils of the power to introduce a workplace parking tax, and I am personally immovable on the issue.

Derek Mackay

Will the member take an intervention?

Pauline McNeill

I will in a minute.

There is zero understanding if you think that the levy is a realistic prospect for working families and the 44 per cent of adults who do not pay income tax because they earn less than £12,500 per year. Cabinet secretary, it is far from scaremongering to ask why you would risk introducing a policy that will tax people to go to work. I will take your intervention now.

The Deputy Presiding Officer

Before that happens, I remind members not to use the term “you”. You must speak through the chair.

Derek Mackay

My intervention relates to something that Pauline McNeill said some moments ago. However, the point is that Pauline McNeill says that the Labour group in the Parliament opposes the workplace parking levy, but the Labour Party in local government is campaigning for such discretionary taxes.

I sought to intervene on a point of detail. In relation to the commitments that Pauline McNeill is asking for, can she tell me how the Labour Party intends that they would be funded?

Pauline McNeill

Rather, cabinet secretary, it is for you to tell us why you support the policy of a workplace parking levy, which you seemed reluctant to do.

Let us take the argument a little bit further. There is already talk of exemptions from the proposed levy, but so far there has been no talk of exemptions for low-paid people, who in Scotland’s largest city, Glasgow, can still not get a reliable bus or train to work. It beggars belief that three pages of the budget are devoted to public transport but there is to be no revolution in the bus industry. In fact, the Government cannot even make the trains run on time.

Patrick Harvie

Will the member give way?

Pauline McNeill

No.

A child could see that investment ought to be put into public transport before such a levy is even considered. That indicates that the policy has not been thought through. You have already lost the argument. I challenge the SNP and the Greens: will you conduct a public consultation?

Andy Wightman

Yes.

Pauline McNeill

Let us find out what the public think about such a tax on work. I am confident that the public will tell the SNP and the Greens where to go.

Like Unite and Unison, I ask the Glasgow MSPs in the chamber whether they will back the proposed tax on work. I invite all the Glasgow MSPs who will back the workplace parking levy to put their hands up.

Patrick Harvie rose—

Pauline McNeill

Patrick Harvie is the only one who is defending it.

The SNP Government is a centralising Government that suddenly believes in devolving to councils the power to impose the proposed tax. It should abandon that proposal now and stand up for working people—that is what it was elected to do.

The Deputy Presiding Officer

That is it. Your passion does you credit, Ms McNeill, but you kept using the term “you”, and I am determined to stop that. I call Keith Brown, to be followed by Miles Briggs.

15:41  



Keith Brown (Clackmannanshire and Dunblane) (SNP)

Thank you, Presiding Officer. [Laughter.]

It is a pleasure to have the opportunity to speak in favour of the budget proposals of the Scottish Government, which I believe show that the Government is pursuing a progressive agenda despite the financially difficult background. That background has been caused by two things: the failed austerity agenda of the Conservatives and the complete economic failure of the previous Labour Government. The legacy of that Labour Government was, “There is no money left.”

We know that it must be a difficult budget if we look at the actions of the three Opposition parties. The Tories do not want to play a serious part in the process because they know that their proposition of a £0.5 billion tax cut and more spending for everything does not add up. That is why they have not come up with a budget proposal. Labour is simply incapable of coming up with a budget proposal. I was approached by a Labour councillor, who asked me whether I would lodge an amendment to the budget bill. I presume that he did so because he felt that he could not get an amendment past the Labour group in the first place.

I turn to the lonely figure of Willie Rennie, who wants everyone else to give up on what they believe in before he will even have a discussion about the budget. Even his former colleague Margaret Smith described that position as bizarre and stupid. That is why the Liberal Democrats have had no input into the budget.

When I spoke in the stage 1 debate on the budget bill, I made the point that the national context is extremely difficult, given the austerity squeeze, which has resulted in the slashing of the Scottish budget by the Tory Government by more than £2 billion over the past decade. I also mentioned the financial consequences of Labour’s disastrous private finance initiative projects. That led to the usual outcry from the Labour Party, which is desperate to avoid any responsibility for the size of the challenge that local authorities face. Last year, the Labour debt legacy that local government inherited was £434 million nationally. Thanks to contracts that were signed under the Labour Executive, those debts will continue to have to be paid for decades to come.

In Clackmannanshire, which has been mentioned by Richard Leonard and James Kelly, three high schools were built because the Labour Party chose to go for PFI. That decision saddled Clackmannanshire Council with debts of around £8.5 million this year, which is 17 per cent of its education budget. Those debts must be met before it can spend a penny on schools. Neither the citizens advice bureau nor the schools that were mentioned earlier will close if the SNP has anything to do with it; of course, I cannot speak for the Labour Party. The situation in Stirling Council, whose area I also represent, is little better. Last year, its debt repayments totalled £11.7 million, or 14 per cent of its education budget.

The reality of that legacy has to be faced by councils as they try to set their budgets. That process is also taking place against the background of the Tories’ failed austerity agenda and their pernicious welfare and benefit reforms.

Patrick Harvie mentioned the increasing demand on councils and public services. That is certainly not helping matters in my constituency. Unfortunately, this Parliament does not yet have the powers to implement—right across the board—fairer policies that have dignity and respect at their core. However, it can and it does mitigate some of the worst excesses of the unfair Tory welfare policies in order to provide relief from at least some of their appalling consequences.

The Tory MSPs might want to listen to this part of my speech. I am happy to give way to any Conservative member who is willing to say that they are committed to the mitigation of the bedroom tax. The Tories have today clarified their position on the bedroom tax by saying that it does not exist, but if they want to come forward and say that they support the mitigation of up to £650 on average per year for 70,000 families—that they support it now and beyond 2020-21—I am more than happy to hear from them.

The silence that we are hearing from them will be greeted with real concern by people across Scotland, because it means that they are willing to take away that mitigation of the bedroom tax and impose that Tory tax, which was supported by the Liberal Democrats when Willie Rennie’s party was in office but which apparently does not exist, on the people of Scotland. We heard some absolute bunkum from Dean Lockhart when he expressed concern for hard-working, poor families in relation to the tax proposals. That mitigation is a huge benefit of £13 million a year for 70,000 families.

In addition to that, there are benefits for carers. Pauline McNeill mentioned the best start grant. If the Tories get the chance, will that go as well? These are the real things that affect people in Scotland.

Angela Constance was right to say that we do not have all the powers to deal with the situation and that a sensible argument must be had about how we can properly address child poverty and rising poverty levels with a Government at Westminster that is willing to play its part. That is not happening just now.

The bedroom tax is appalling. It was first considered by the Labour Party, under Andrew Adonis, but it has been taken to new levels and it is a real bind for the people who have to pay it. It is perhaps not the most obvious tax, because it has been mitigated, as the First Minister said earlier. People are sometimes unaware of that, but they will certainly be aware of the fact that, as we have seen today, the Tory party wants to take away the mitigation and impose that burden fully on families in Scotland.

Will the Tories support the people in Scotland or will they continue to support their London masters? This week, we have seen the destruction and dissolution of Westminster, with previously Labour and Tory MPs sitting down and shaking hands on the same benches. Not one of the Tory MSPs has said what they think about the view of those Tory MPs who have left that the Tory party is in the grip of the European research group and the Democratic Unionist Party and has abandoned every principle that it had. Those Tory MPs are willing to speak up about it, but not one Tory MSP will speak up about the biggest threat to the welfare of families in Scotland, which is a hard Brexit—or any Brexit at all. When will they find a spine and speak up for the people of Scotland? When will they find a spine and propose a proper, responsible amendment to the budget?

Oliver Mundell (Dumfriesshire) (Con)

Will the member give way?

The Deputy Presiding Officer

The member is just closing.

Keith Brown

I would have taken an intervention from the member, but I am not allowed to.

The Deputy Presiding Officer

I am afraid that you must conclude.

Keith Brown

I am grateful for the opportunity to contribute to the debate, and I support the Scottish Government’s proposals.

15:48  



Miles Briggs (Lothian) (Con)

In my time as an MSP, I have not seen such a negative reaction from members of the public to any budget proposal such as the reaction that we have seen to the SNP car park tax. The First Minister has not had the opportunity to speak to many Scots recently, but it is important that, in the coming weeks, SNP members and ministers start to listen to the growing concerns over the impact that the SNP car park tax will have on businesses, workers and the economic attractiveness of our country.

Kate Forbes

Will the member give way?

Miles Briggs

Let me make some progress.

The Cabinet Secretary for Finance, Economy and Fair Work has already admitted to Parliament that there has been no consultation on the proposed new tax. That is not great for councils when they look to take the tax forward.

As each day passes, SNP ministers seem to dig themselves into ever deeper holes—deeper than some of the worst potholes on our roads. Nicola Sturgeon claimed that people who did not live in areas where the tax is to be imposed—which now seems to be Scotland’s major cities—would not be affected. That is just not true.

Derek Mackay

Miles Briggs welcomed many elements of the draft budget when it was published, including the extension of free personal care. Does he have any shame in voting against making the resources available to deliver the extension of free personal care?

Miles Briggs

As Pauline McNeill outlined, parts of the budget are welcome, but this is not the budget that will deliver anything for Scotland. I will take credit for the things that we forced the Government to do, but this is not the budget that will help our country move forward.

It is interesting that the cabinet secretary did not want to talk about his car park tax, for which it is hard-working families across my Lothian region who will pay the price. Many of my constituents who live in West, Mid and East Lothian drive to their work in the capital and will be the very people affected. Last year, car journeys to Edinburgh were undertaken by 12,381 commuters from West Lothian, 10,316 commuters from Midlothian and more than 10,000 commuters from East Lothian.

Many people who live in West, Mid and East Lothian but who work in Edinburgh have looked to take advantage of cheaper house prices—

Patrick Harvie

Mr Briggs may be very happy to see that vast volume of traffic flooding into Edinburgh city centre every day, but does the Conservative Party have any proposals for actually tackling the pollution and climate change crisis that the current short-sighted and unsustainable approach to transport policy is causing?

Miles Briggs

Patrick Harvie said that the policy is “trivial”. It is not a trivial policy; it will impact on everyone in Scotland, including businesses, general practitioners and care homes. Patrick Harvie has not explained that impact. Maybe he did not think through the policy; maybe it was not his policy—maybe it was suggested by the cabinet secretary for votes. We do not know.

I am proud to represent Edinburgh and the Lothians. Our capital remains a vibrant and successful city, but SNP ministers are increasingly risking that. Edinburgh and the south-east have outperformed the rest of the Scottish economy. Last year, the region was the only part of our economy still growing. I know from speaking to businesses across my region that they increasingly feel that the finance secretary and the Government are taking the economy of Edinburgh and the Lothians for granted.

The budget demonstrates the increasing deficit and debt levels that Government spending is building up. Last year, the deficit was more than £13.4 billion, which is equivalent to 7.9 per cent of our gross domestic product, while the UK rate was 1.9 per cent. Scottish Government debt has hit £1.5 billion this year as SNP ministers borrow the very maximum on the nation’s credit card.

It used to be said that, as night follows day, a fundamental truth of any Labour Government was that it eventually ran out of other people’s money. It now seems that SNP finance ministers have joined the same club.

Stuart McMillan (Greenock and Inverclyde) (SNP)

Will the member take an intervention?

Miles Briggs

No, I have only two minutes left. I have dealt with three interventions from SNP members—and one from Patrick Harvie, which is maybe the same thing.

The fundamental fact is that the SNP-Green budget will hit small-town Scotland and hard-working Scots who play by the rules and who are trying to get on and build a better life and future for themselves and their families.

Last year, Murdo Fraser famously lamented the budget deal struck by the finance secretary and the Greens when he somewhat cruelly said that Derek Mackay had done a deal with the “lentil-munching, sandal-wearing watermelons”. Looking at the 2019-20 budget in the round, it is clear from what we have seen over the past few weeks in the latest SNP-Green budget that the lentils have fermented, the sandals have snapped and the watermelon is truly rotten.

We had an opportunity to deliver a budget for jobs and growth for our country and constituents; all that we have got from SNP and Green members is a tax on small-town Scotland. I think that they will pay the price in 2021 for all their new taxes.

15:53  



Kenneth Gibson (Cunninghame North) (SNP)

More than half of councils plan on dipping into their reserves this coming year and three quarters will increase council tax by the maximum amount in 2019-20. Children’s services and education is the number 1 financial pressure for the second year running, ahead of adult social care, which is still under severe demand pressures. Cuts are increasingly visible, with half of authorities feeling that cuts are now “negatively affecting relationships” with local communities. Eight in 10 councils say that they are not confident in the sustainability of local government finance. Indeed, one in 20 councils are concerned that cuts are so deep that they will struggle to deliver the legal minimum level of services, and 80 per cent have no confidence in the current funding model.

Presiding Officer,

“Now more than ever we need a thriving, resilient local government sector to weather the storm of national uncertainty, but years of chronic under-funding has left local government on life support.”

No, those comments are not about Scotland. They refer to English local authorities and were made only last week in Public Sector Executive by Local Government Information Unit chief executive Jonathan Carr-West.

Richard Watts, chair of the Local Government Association’s resources board, said that the “State of Local Government Finance Survey 2019” illustrates the “severity of the challenges” after a 40 per cent cut in UK Government funding for English councils, emphasising that the upcoming spending review will be make or break for vital council services.

Speaking for the Convention of Scottish Local Authorities, Tory councillor Gail Macgregor told the Local Government and Communities Committee that, due to funding cuts, local government is

“collapsing in England and Wales.”—[Official Report, Local Government and Communities Committee, 9 January 2019; c 15.]

While asking for more resources and fundraising powers, Councillor Macgregor failed to say how much additional funding COSLA sought, or where it would come from. Neither did any Opposition MSP. Today, we have Tory MSPs bleating about alleged cuts in Scotland, while a UK Government, to which they display dog-like devotion, eviscerates local authorities south of the border. The hypocrisy is simply breathtaking.

Meanwhile, Labour MSPs will be disappointed that the budget does not include Labour’s manifesto commitment to introduce workplace parking charges. However, it allows for an amendment to the Transport (Scotland) Bill, which would give local authorities the choice of whether to introduce a parking levy—a power that Labour, Liberal Democrat and Tory councillors asked for, but which their parties now criticise.

Johann Lamont (Glasgow) (Lab)

Could the member clarify whether he is saying that the job losses, the public service cuts and the closures across Scotland are all alleged, rather than a reality that far too many communities are going to have to experience?

Kenneth Gibson

Labour’s absence of memory is unbelievable. I was a Glasgow councillor when Labour cut 9 per cent from the city budget and 3,500 jobs in one year. This budget increases local government funding but, as we know, Labour is in truly dire straits. Once, Labour councillors covered the plains like the buffalo. When I was re-elected to Glasgow City Council in 1995, they numbered 77, and I was the sole SNP councillor. These days, sightings of Labour members are becoming increasing rare, with 4,674 of them in Scotland chucking the party last year, which is an 18.2 per cent fall. The impact of Richard Leonard’s leadership is similar to that of the black death on a medieval town. With eight of Labour’s MPs resigning this week so far—it is only Thursday—project Corbyn has hit the rocks. What to do? Having a credible alternative—any alternative—to the budget would be a good start. However, as they go the way of the dodo, in order to prevent extinction, Jackie Baillie, Neil Findlay, Johann Lamont and James Kelly could perhaps form part of a captive breeding programme. Who will be the silverback though, one wonders? Members of the public could pay to gawp at, but not feed, them.

Jenny Marra (North East Scotland) (Lab)

Will the member give way?

Kenneth Gibson

I can hear their mating calls now, Presiding Officer.

A decade ago, Labour set out its conditions for supporting the SNP’s budget of the day. John Swinney met those demands in full, only to be told by—

Jenny Marra rose—

The Deputy Presiding Officer

Ms Marra, sit down, please.

Kenneth Gibson

—Labour’s then finance spokesperson, Andy Kerr, that he could not carry his own group. Ultimately, Labour did, at the second attempt—for fear of an election—back that budget. However, that showed that even negotiating an agreement with Labour is no guarantee that it will deliver. No doubt that is why Labour does not even bother to engage and moans about whatever the SNP proposes, but rarely about a UK Tory Government that has imposed austerity. That has made Labour increasingly marginalised—

Jenny Marra

Will the member give way?

Members: Give way!

Kenneth Gibson

I have taken an intervention; one is enough.

The Deputy Presiding Officer

The member said that he is not taking another intervention. Sit down, please.

Kenneth Gibson

I urge Labour to back this budget and come to the table with an open mind and some positive suggestions next year, although I will not hold my breath. It is funny how Labour members are always deaf to the 28,000 local government jobs that have gone in Wales under Labour’s administration. Mr Corbyn says that that is because of UK Government cuts, but ignores the UK Government cuts to this Parliament.

What about the Lib Dems? One is always suspicious of any party or country with the word “democrat” in its title, such as Vladimir Zhirinovsky’s Liberal Democrats in Russia, the People’s Democratic Republic of North Korea or Democratic Kampuchea. The famous five, who are led by a leader who is incapable of taking interventions, tell the SNP, which has 62 MSPs—

The Deputy Presiding Officer

Sit down a minute, Mr Gibson. I cannot hear.

Kenneth Gibson

—to take independence off the table. It is a cop out.

The Deputy Presiding Officer

He cannot hear me now. Sit down please, Mr Gibson. I cannot hear what people are saying, but I want to hear what they are saying. [Interruption.] I have told you.

Kenneth Gibson

Thank you, Presiding Officer.

Willie Rennie and co need to participate. I know that they fear losing unionist votes to the Tories and Labour, but I am sure that their tactical voters will forgive them.

The budget strengthens Scotland’s stability in the face of Brexit uncertainty and takes our economy forward. It fully funds our economic action plan, improves the competitiveness of our business environment and will bolster growth. My constituents will benefit from the 3.6 per cent increase in NHS Ayrshire and Arran’s budget, to £720 million. Resource and capital that are available to North Ayrshire Council increase by £26.66 million, from £279.842 million to £306.502 million, which is a 9.5 per cent uplift.

We will introduce Frank’s law, which, shockingly, Miles Briggs—who campaigned for it—will now vote against. We continue to support young people to develop a workforce that has a skills base that is fit for the future by investing £600 million in Scotland’s colleges, more than £1 billion in our universities and £214 million in apprenticeships and skills.

There are some, of course, who do not want Scotland to have an outward-looking economy and society and who would rather our First Minister stayed at home instead of discussing trade and future relations in France, addressing the Assemblée Nationale to set out Scotland’s vision for supporting EU nationals post-Brexit, or promoting Scottish business in North America. In this budget, this Government rejects an insular and indecisive Scotland that is reluctant to embrace the future for one that is open to talent from around the world, new opportunities and prosperity for all.

16:00  



Colin Smyth (South Scotland) (Lab)

When we look back on this parliamentary session and the budgets that were agreed, we will remember them for their shameful attack on local council services. When SNP and Green MSPs rubber stamp the budget today, it will mean that across Scotland, in the days and weeks ahead, councillors of all political persuasions and none will once again have to wrestle with painful choices. Which of their communities’ services will they cut, and which of their neighbours’ jobs will they axe?

The debates that are taking place just now in council chambers up and down Scotland are not about which services to trim, but about which services to scrap. The undeniable fact about the budget is that local councils face a £230 million real-terms cut this year alone. That is not my figure—it comes from the independent Scottish Parliament information centre. Extra burdens have been landed on councils without the full funding to meet them and to fund existing services. That will mean cuts.

Let us end the myth that the cuts to councils have nothing to do with the Government’s decisions, and that it is somehow all someone else’s fault. The Scottish Parliament information centre has made it clear that between 2013 and 2018, the Scottish Government cut council revenue budgets by 7.1 per cent, while its own budget fell by 1.3 per cent. Just as austerity was the political choice of the UK Tories, attacking local council services has been the political choice of this SNP Scottish Government.

John Mason

Colin Smyth would like to give more to local government. Would he get it by reducing the money that is going to the NHS?

Colin Smyth

I would start by not going ahead with the tax cut that the SNP is proposing in the budget. The fact that people who earn £124,000 a year will be paying less tax this year than they paid last year is something of which anyone who is interested in progressive taxation should be ashamed.

For SNP members to pretend today that there are no cuts to councils is for them to close their eyes to what is happening in their own communities and to turn their backs on their own constituents. I would have far more respect for the SNP and the Government if they had the guts to stand up and admit that the choices that they have made will mean that local government will have to make cuts to many existing services. Anyone who denies that the cuts are being made is just not being honest with the people of Scotland.

I asked each council in my South Scotland region to tell me what the budget means for it. When I asked whether there would be cuts, every one of them said yes. SNP and Labour-run Dumfries and Galloway Council told me that it will have to make cuts and raise taxes to fill a funding gap of more than £15 million, and in SNP-run East Ayrshire Council, the gap is £8 million. In South Ayrshire Council it is £10 million, in the Scottish Borders Council it is £9 million, in Midlothian Council it is more than £7 million, in East Lothian Council it is more than £10 million, and South Lanarkshire Council still needs to find £11 million. I have looked behind those figures to see what the cuts will mean for people.

Patrick Harvie

In all seriousness, I understand and respect Mr Smyth’s anger and wish that the budget was better—or, even, that it had achieved perfection. However, does he understand my frustration that a group of six of us have worked hard and knocked our pans in for months to find costed proposals to make improvements, while dozens of Labour MSPs have offered nothing in the way of constructive and realistic proposals for change?

Colin Smyth

When Patrick Harvie can be bought off with £90 million out of a £42 billion budget, it is no wonder that the SNP does deals with the Greens. I know that the SNP has no intention of doing a deal with anyone else, because keeping the independence coalition together is more important than keeping council services.

The Minister for Local Government, Housing and Planning (Kevin Stewart)

Will the member give way?

Colin Smyth

No. I have given way already, and I will probably not have enough time to give way again.

I have looked behind some of the cuts, and here is the reality. They mean redundancies in council jobs, including cuts to teaching and learning support posts at a time when a third of Scottish children are leaving primary school without the expected literacy and numeracy attainment levels. They mean the axing of leisure facilities, when a third of Scotland's schoolchildren are obese, and they mean the ending of lifeline taxi-card schemes for older people, when we have an ageing population. I could list more and more from the pages and pages of cuts that are set out in the reports that are sitting on the desks of councillors as we speak.

It is heartbreaking and it should shame every single one of us, but it is even more shameful that the SNP is demeaning its own councillors by pretending that the cuts do not exist. Enough is enough: it is time to stop the cuts and be honest enough to say that if we want high-quality public services, we have to use this Parliament’s progressive tax powers properly, instead of cutting taxes for the rich, as the budget proposes.

Patrick Harvie

The UK budget did that—and you voted for it.

Colin Smyth

Patrick Harvie says that this budget does not cut taxes, but the UK budget does. The Government could reverse its decisions. It has the power to do it.

At a time when the SNP is savaging local services, it is indefensible that a person who earns £124,000 will pay less income tax this year than they paid last year. Most higher-rate taxpayers, including people who earn more than £100,000, will get a tax cut of £140, while our schools and our care services for the elderly face cuts to their services, which are the very fabric of our communities.

Astonishingly, between the draft budget and the final budget that is before us today, a deal was done and the choice made not to increase progressive taxation measures such as the top rate of income tax, but instead to increase regressive taxes on the poor. Councils face raising council tax by nearly 5 per cent and, of course, there are now plans for a new car parking tax on workers. I accept that fiscal measures have a role to play in protecting our environment, but the car parking levy will be a regressive measure under which the company boss will pay the same as the company cleaner. The exemptions that the Government proposes mean that a chief executive or health board member who is on a salary of £100,000 will not have to pay the levy, but a carer who works for a charity and is paid the minimum wage will. No wonder Unison states:

“This seems to devalue the contribution council workers make, as they too, like their health service colleagues, deliver vital services”.

No wonder GMB calls the tax

“an attack on the take home pay of our members”,

while Unite calls it

“a desperate attempt to absolve the government from the funding crisis they have presided over.”

The budget could have been an opportunity for progressive politics and a chance to stop the cuts to council services. The SNP and the Green Party are good at the rhetoric about ending austerity, but the budget shows that they are all talk—and ordinary workers and services are paying the price.

The Deputy Presiding Officer (Linda Fabiani)

We are tight for time. Could members be mindful of that, please?

16:06  



Stuart McMillan (Greenock and Inverclyde) (SNP)

I will vote for the budget today. I urge members of all parties to do so and to put an end to their oppositionist and ill-thought-out reasoning for voting against it. Every budget is challenging: as Patrick Harvie said, no budget is perfect, whether it is in Parliament or in a local authority. How could it be, when every politician wants more money to spend on a variety of items, but the pot of money is not bottomless?

Given that this is once again a Parliament of minorities, as it was apparently intended to be, it is surely incumbent on all the parties to put forward genuine proposals, to enter genuine dialogue and to try to get some of the wins that they want. Unfortunately, the hapless Tories and the hopeless Labour Party have once again proved themselves to be failures at improving the budget. And then, there are the Lib Dems.

Here are just some of the reasons why I will vote in favour of the budget tonight. Some 55 per cent of income tax payers here will pay less than they would in the rest of the UK, while 99 per cent will pay the same as or less than they paid last year. The budget will deliver a whopping £729 million extra for health and care services. It will provide £180 million for improving attainment, including £120 million to headteachers to close the attainment gap, in respect of which Tom Arthur spoke about the successes of Renfrewshire Council.

The budget will also provide more than £5 billion of capital investment, including more new homes for my constituency of Greenock and Inverclyde, like those in Slaemuir in Port Glasgow, which the Minister for Local Government, Housing and Planning visited only a couple of months ago, or the 200 new homes at the site of the former St Stephen’s high school in Port Glasgow that passed through Inverclyde Council’s planning process last week.

All those measures, and many others, come in the context of the continuing Tory obsession with austerity, which has caused Scotland's resource block grant to be slashed by £2 billion in real terms since 2010.

Johann Lamont

Can you explain how you justify a disproportionate cut to local government that will mean losses of jobs and public services across Scotland, including, as far as I am aware, in your constituency? How on earth can you describe that as a fair budget that you will be happy to vote for at 5 o’clock?

The Deputy Presiding Officer

Order. Will members remember to speak through the chair, please?

Stuart McMillan

First of all, what Johann Lamont said is not true. Secondly, I will come on to local government in a wee minute.

The fact that the SNP Scottish Government is still managing to introduce the measures speaks volumes for the excellent way in which Derek Mackay is doing his job as finance secretary. Instead of greetin and girnin from the sidelines, the Opposition parties should be thanking Derek Mackay for a budget that will deliver for our country. They should also be asking what more they can do to stop their head offices in London from working against Scotland and our budget.

The Scottish Government will continue to spend almost £100 million mitigating Tory welfare cuts, including the bedroom tax, which, to her shame, Michelle Ballantyne claims does not exist. Murdo Fraser touched on that £100 million in his comments. I say to him that the £100 million that Mr Mackay is putting into mitigation could be put into something more progressive for the nation, but it is needed to mitigate the worst of the Tories’ obsession with cuts. I give Michelle Ballantyne the opportunity now to stand up and apologise to the 80,000 Scots who are affected by that callous policy.

Michelle Ballantyne (South Scotland) (Con)

People who were in the room know that I said clearly that it is not a bedroom tax, but the removal of a spare-room subsidy. It is not a tax.

Stuart McMillan

Right. Okay—so, it is removal of a subsidy and not a tax. Yet again the Tories prove that they do not understand what is going on in the real world, on our streets and in our communities in Scotland.

The £100 million is additional to the investment in food banks, which has increased from £1.5 million to £3.5 million. Food banks are another consequence of a brutalist Tory regime that has no heart, no compassion and absolutely no clue about the real world. Just think: if the Scottish Government had extra money to spend it could invest it in many ways, rather than having to spend it solely on mitigating Tory cuts.

Only last week, the UK Secretary of State for Work and Pensions, Amber Rudd, admitted for the first time that universal credit has driven people to food banks. If the Tory UK Government can finally admit that its policies are leading people to destitution and food banks, why cannot the Tories in Scotland admit it? I give the Tories another opportunity to apologise to the people of Scotland for their obscene policies and to say whether they agree with Amber Rudd.

The silence says it all.

Time and again, Parliament hears requests and demands that the Scottish Government spend more money on a wide range of issues. Miles Briggs has regularly done so: he has campaigned for Frank’s law and increasing the carers allowance. The budget delivers on those requests. Will Miles Briggs vote against that at five o’clock tonight?

In October, the Tories demanded that the Scottish Government ensure that all Barnett consequentials that result from increased health spending go direct to the NHS and social care. The budget delivers that, and even exceeds it. Are the Tories seriously going to vote against another one of their own demands?

Miles Briggs

Will the member take an intervention?

The Deputy Presiding Officer

Mr McMillan is just closing his speech.

Stuart McMillan

In October, Monica Lennon claimed credit for Labour when the First Minister announced that there would be access to school counselling services. The budget delivers that. Are Labour members seriously going to vote against one of their own demands?

On Monday 4 February 2002, Labour-led Inverclyde Council and the Labour and Liberal Democrat Scottish Executive cut £4 million from the budget.

The Deputy Presiding Officer

You must close, Mr McMillan.

Stuart McMillan

At that time, Inverclyde Council’s leader said:

“This is standard procedure and I am confident that officers will come up with recommendations to address this: we are dealing with it, as we do every year.”

16:13  



Liz Smith (Mid Scotland and Fife) (Con)

When the budget process began in the Parliament on 31 January, my colleague Murdo Fraser set out why the context of the debate was so crucial, particularly in terms of the prognosis for economic growth and employment in Scotland, the gap in income tax rates between Scotland and the rest of the UK, and the responses of business and investors. Since stage 1 of the budget, those issues have been hotly debated in the Parliament, which is only right. However, it is also important to listen to what people outside the Parliament are saying—I will come to that in a minute.

First, let me start with what we heard earlier, which is that one of the Scottish Government’s own economic advisers complained that the budget data was presented in a confusing format. He also said that the narrative around it was designed to sway opinion in favour of the Scottish Government’s interpretation of the data, rather than the data being presented on a wholly objective basis. That makes the scrutiny of the budget difficult.

That criticism of the presentation of the budget came hard on the heels of the Cabinet Secretary for Finance, Economy and Fair Work saying, in evidence to the Finance and Constitution Committee, that he had not undertaken any individual analysis of the proposed car parking tax, just as Pauline McNeill pointed out earlier. He suggested that it was something to do with the deal with the Greens.

Andy Wightman

Will the member take an intervention?

Liz Smith

I will not, if Mr Wightman does not mind.

The cabinet secretary will come to regret that, because neither of those signs points to a Scottish Government that is intent on providing the Scottish people with maximum transparency about the implications of major policy announcements.

Derek Mackay

Liz Smith said that she would turn to what the outside world thinks about the Scottish budget. How would she respond to those in the business community who have said, according to media reports, that it is important that the budget passes in order to give Scotland the necessary resources to get on with the job? They did not want to be in a position where the budget could not pass, which would have been the case if I had been left to negotiate only with the Conservatives.

Liz Smith

The cabinet secretary has succeeded in uniting the business community, industry, at least half the public of Scotland and many SNP members against the car parking tax, so I will not take any lectures on that.

We have been accused of being hysterical, and all kinds of other things, about this car parking tax, but, unfortunately for the Scottish Government, this policy is not about the real devolution of powers to local authorities in the way that it thinks it is. The policy is unravelling before the Government’s eyes. The tax is a Scottish Government policy. The brokerage of the deal with the Greens, the implementation and the exemption for workers using NHS buildings were decided by the Scottish Government, not by local authorities. Mr Mackay says, “Never mind,” because it would be up to local authorities to consider further exemptions. However, it turns out that there are a whole lot of complexities and complications about those other possible exemptions, which have been explained very well by some members this afternoon—complications that have been caused by central Government. I say to Derek Mackay, please do not tell the Scottish Conservatives that we are being inconsistent; it is the SNP that is being wholly inconsistent over the policy, and I think that most of Scotland agrees with me about that.

It is not just in relation to the budget that we see this issue. In education, we have had the same dilemma about whether policies are taken at central Government level or whether they are devolved to local authorities. We were told in 2017 and in 2018 that the school governance bill was a flagship bill to devolve power to headteachers because they are

“best placed to take decisions”—[Official Report, 3 October 2017; c 25.]

in their own schools.

I could not agree more with that, but suddenly the bill was scrapped, and the status quo endures.

We were told that the new regional improvement collaboratives were to be a further devolution of power, yet many of the people involved in them are complaining constantly that they are at the behest of central Government and the education agencies telling them what to do.

When it comes to pupil equity funding—a very good initiative, as Mr Arthur rightly pointed out—it seems that a headteacher is not quite as free to spend the money as he or she originally thought, because his or her ideas have to be considered by a local authority first.

Kate Forbes

I have a genuine question about localism. Does Liz Smith agree with Tory councillors in Edinburgh who believe that local car parking decisions should be made by local authorities?

Liz Smith

I personally do not agree with the tax at all, because of the basis on which the SNP has set it out. I take huge exception to the fact that the SNP is pretending that this policy measure has been devolved to local authorities when no such thing has happened. It is the Scottish Government, at central level, that has been setting the parameters of the policy, and that is what people do not like.

I will finish on two points. I still cannot get into my head why the cabinet secretary believes that he is able to refute the evidence from the chancellor’s announcements in October last year that he has an extra £950 million in the Scottish block grant. He tries to tell us that he has less money. I do not understand that, and I do not think that many other members in the chamber do, either. He has not explained why he thinks that increasing the tax burden in Scotland will deliver the economic growth and investment and all the jobs that we need to have to ensure that Scotland can flourish in the future. On that basis, I will be voting against the budget.

16:19  



John Mason (Glasgow Shettleston) (SNP)

I speak in support of the budget. It is a very reasonable budget, given the circumstances. The uncertainty of Brexit is damaging both for businesses and for individuals. Confidence in Scotland and throughout the UK is at a low ebb. The UK is not in a good place economically and we have to do the best we can with what we have.

On Tuesday, we focused on income tax. I am comfortable that we are being more progressive, while trying not to provoke serious behaviour change, such as rich taxpayers leaving the country. I am also comfortable that we are aiming to free up local authorities to introduce more local taxes that might suit them, such as the tourist tax and the parking levy. Longer term, I support a replacement for the council tax, which would be a challenge for us all to agree on but which is achievable.

On the expenditure side, we are trying to be fair to various sectors, but none of us in here or out in the real world can get all the money that we would like. If we give more to local government, that means less for health; if we spend more on preventative healthcare, that means less for hospitals and reactive drugs; and if we spend more on primary schools, that means less for secondary schools. I am disappointed that Conservatives and members of other parties do not seem to understand that simple arithmetic.

A few issues have been mentioned during the debate so far, and certain themes and points have come up a number of times. One of those is the parking levy, and we need to get a few facts about that into the public domain.

Murdo Fraser was the first member to mention it, and he knows, as we all do, that there is a legislative process. The Government will have to consult, the committee—in this case, the Rural Economy and Connectivity Committee—has said that it will definitely consult, the amendment will have to be examined and debated, and we will have stages 1, 2 and 3. We have a long way to go on the issue. The Government and the Greens have put forward a plan, which will be consulted on at committee, but it will be the Parliament that decides the way ahead for it. It is nonsense for members to suggest a lot of details about the levy when it has not even been consulted on.

Jamie Greene (West Scotland) (Con)

Will John Mason take an intervention?

John Mason

Let me finish this part of my speech and I will come back to Jamie Greene, if he wants.

It has been suggested that the parking levy is automatically unfair—although we have not even discussed the details—but we must remember that many workplace parking places are for directors and top-paid people in city centres. In Glasgow city centre, for example, it is not the council’s cleaners who have parking places; it is the councillors, directors or such people. In the Scottish Parliament, for example, the car park downstairs, as I understand it, is generally used not by the cleaners or the security people but by MSPs and, potentially, top-paid workers.

I agree that we need to consult and that there can be exceptions but, on the whole, the parking levy will hit the highest-paid workers.

Miles Briggs

Will John Mason take an intervention?

John Mason

I said that I will take an intervention when I have finished my point on parking levies.

To Dean Lockhart, I say that the parking levy is not in the budget. Yes, the Government has made an agreement with the Greens, but the Transport (Scotland) Bill will have to be amended and there is no certainty that that will happen.

Liz Smith made the point that the parking levy has not yet been studied in detail, and we are all agreed and open about that. She complained about the way in which the budget facts have been presented in a number of areas. However, would she also complain about some of her colleagues spreading conjecture as fact, for example by using a figure of £500 that has no basis in reality?

Jamie Greene

The committee has not come to any public arrangement as to how it will process the amendment, and it is not public information for the benefit of members in the chamber. If the amendment falls in committee at stage 2 or in Parliament at stage 3, and the deal that has been done between the SNP and the Greens is reneged on because of parliamentary processes, what effect will that have on next year’s budget discussions?

John Mason

I will certainly not speculate on what will happen in next year’s budget, and the Greens are more than able to speak for themselves. However, as I understand it, they have asked for the Government’s agreement to introduce an amendment, and that is as far as it goes. As Mr Greene knows, the REC Committee is a fairly independent committee that will look at things logically and objectively. Both he and I will do that as part of the process and we will see where it takes us.

I fear that I will run out of time to look at the issues. I will mention another issue, which was raised in the debate by Labour.

The only clarity that we have had from Labour members is that they want to raise the 46p rate to 50p. They are taking a big risk in making a 4p jump, which would create a 5p difference between Scotland and the rest of the UK. We know that there can be behavioural change. I suggest that, if we are going to change the figure, we go 1p at a time and do not have a very large jump.

I will say something about manifestos. They give a direction of travel, but they are dependent on a party becoming the majority Government so that it can impose its decisions and directions. Minority Governments cannot impose their manifesto and need to compromise and get agreement with other parties—and that applies to all parties.

Overall, I am more than happy to support the budget.

16:25  



Mark McDonald (Aberdeen Donside) (Ind)

Much as I accept the mathematical irrelevance of my position, I state at the outset that I will be backing the budget at 5 o’clock this evening. I will, however, offer a few thoughts in the hope that they might be well received—or, at least, received—for consideration in future years.

First, on taxation, I have long held the view that the step from £43,430 to £150,000 is too great, which is a point that I noted James Kelly making in the chamber on Tuesday. I asked SPICe to run some potential scenarios and it concluded that the introduction of a 44p rate at £75,000 and a 48p rate at £150,000 would realise an additional £120 million, which could be spent on priorities. Although that might not seem a huge sum in the global budget, I believe that it would address principles of tax fairness and open up potential revenue streams that could be utilised for various priorities, some of which members have highlighted in the chamber this evening.

I feel that we need to get away from the nonsense narrative that taxation somehow equals theft. Taxation is a means by which the state invests in services and support for communities, from which everyone benefits, regardless of their income. In fact, people who are on generally high incomes have tended to benefit disproportionately as a result of, for example, investment in education services and infrastructure services that support businesses. There is also investment in the workforce, who are educated and supported through taxation.

I recognise that the Tories support the concept of a small state, which is a valid philosophical position, albeit one with which I passionately disagree. However, I think that the Tories spend a bit too much time talking about how taxes should be reduced and not enough time talking about where they would disinvest in order to realise that vision of a smaller state. Perhaps they would benefit from sharing that vision more openly in the chamber, so that we could have a proper discussion about it.

We need to think seriously about how we encourage and promote greater collaboration and co-operation across the public sector and between the public, third and private sectors. There remain too many silo approaches and too many services where owning the spend equals owning the saving, so we should look at how benefits can be achieved across sectors. This Parliament had to legislate to ensure that health and social care integration took place, but legislation should not be needed to encourage greater collaboration. One means to address that could be to look at funding less on a sectoral basis and more on a geographical one and to use, for example, community planning partnerships as a means to encourage local budget setting and planning for priorities. I accept that that would require a radical shift in how we do budgets in Scotland that would involve much earlier starts for the process. However, if we truly want to encourage localism, it would be a good step to consider, not necessarily for next year but for future budget years.

We also need to consider how we best involve the people in our budget process. A number of years ago, I visited Malmö in Sweden as part of a Local Government and Regeneration Committee visit. The local authority there spoke highly of its citizen jury model, in which a selection of citizens chosen through the electoral roll and balanced for representation by gender and ethnicity are consulted on proposals and feed into the budget process. I believe that there is merit in exploring such an approach in Scotland, which could ensure that we hear voices beyond the perennially engaged. As we consider what the priorities of the Parliament should be, we could be informed of the priorities of the people through that process.

I do not necessarily expect those thoughts to go very far, but I hope that by putting them on the record, they might achieve at least some consideration by ministers in future years.

The Deputy Presiding Officer

The last of the open debate contributions is from Emma Harper.

16:28  



Emma Harper (South Scotland) (SNP)

I am pleased to be able to speak in this important debate as a member of the Parliament’s Finance and Constitution Committee. I will focus my comments on a few key areas: the investment that this Government has made in our NHS, the protection afforded to workers through the rate resolution, and the uncertainty that Brexit has caused and, indeed, is continuing to cause for businesses and our economy.

I welcome that the budget delivers almost three quarters of a billion pounds—£729 million—extra for health and care services in Scotland, with a particular focus on mental health. That investment has allowed the Scottish Government to increase mental health funding to £1.1 billion and to increase mental health funding for young people by £12 million. The £12 million will provide about 350 school counsellors in Scotland’s secondary schools, which will provide young people throughout my South Scotland region with the opportunity to speak openly about their mental health with qualified professionals who can provide targeted and faster support for any problems that present themselves. I am also pleased that our higher education institutions will benefit from the provision of 80 additional counsellors over the next four years, and that an additional 250 school nurses will be in place by 2020.

I am pleased that the rate resolution that was agreed by Parliament on Tuesday will protect our middle earners. I spoke in the debate and focused on nurses, allied healthcare professionals, teachers and social workers, whose income tax will remain fair, proportionate and at the lowest levels in the UK.

Colin Smyth

Does Emma Harper accept—

The Deputy Presiding Officer

Your microphone is not on, Mr Smyth. Oh, I see that it is now on—you have lit up as you stand there.

Colin Smyth

Not for the first time, Presiding Officer.

Emma Harper mentioned teachers, but does she accept that the budget means that when the council sets its budget next week, dozens of teachers will be axed in Dumfries and Galloway because of the £16 million-worth of cuts to council services?

Emma Harper

Because of time, I will give a one-word answer: nuh.

When speaking in the rate resolution debate, I pointed out that nurses on a band 5 salary—that is 68 per cent of all nurses—will have their salary protected. They will be on the basic or intermediate rates of income tax, paying 20 or 21 per cent, which is the equivalent of about £4,425.50 per year—the lowest amount that will be paid in the UK.

On Tuesday, I highlighted the Scottish Government’s efforts to ensure that Scotland remains an attractive place for business, families and people. In the budget, the cabinet secretary has committed to freezing the higher-rate tax thresholds for higher earners—such as consultants, radiologists and surgeons—at £43,000 and at £150,000 for top-rate earners. Such professionals are absolutely needed in Scotland. Many of them are our EU citizens, who are welcome in Scotland but are being met with nothing but chaos, hostility and sheer disrespect from an out-of-touch UK Government.

It would be remiss of me not to mention the uncertainty that Brexit has caused for businesses and the Scottish economy. At the Finance and Constitution Committee’s meetings, we have taken evidence from numerous experts who have warned of the real risks of Brexit to businesses and our economy. One such example came from the OBR, which told the committee that it

“had a forecast prior to the referendum, assuming that there would be a vote to remain in the EU, that the economy would grow by roughly 4.5 per cent between the time of the referendum and now.”—[Official Report, Finance and Constitution Committee, 9 January 2019; c 38.]

I always remember that figure, because it shows the extent of the damage that the Tories’ infighting on Brexit—this bourach of a Brexit—has had on the country and on our economy. However, I am pleased that we have a Government in Scotland that is working to mitigate the consequences, and I ask the Scottish Government to continue to do all that it can to protect Scotland from the UK Government’s Brexit chaos.

I am conscious of time, but I will briefly touch on other steps that the Scottish Government has taken in the budget that will benefit people across Dumfries and Galloway in my South Scotland region. The budget will deliver more than £435 million of direct assistance through social security interventions. Investment of £3.5 million in the fair food transformation fund will assist national projects such as FareShare, which provides communities across Scotland with unused food from the big supermarkets, including Asda, Tesco and Morrisons. The Cabinet Secretary for Communities and Local Government, Aileen Campbell, spoke about such work at portfolio questions earlier today.

The investment will help the staff and volunteers at Summerhill community centre in Dumfries, which I visited last week. Summerhill receives a weekly delivery from FareShare that is distributed to families and people across north-west Dumfries, from Lochside and Lincluden to Sandside, as well as to the Aberlour charity and the Summerhill community. The investment is an important support for the people in my area.

The budget provides record investment in our NHS, our schools, our social security system, our public services and our people and families. Fifty-five per cent of people will pay less in income tax than they would if they lived in other parts of the UK. Most importantly, in a time of Brexit chaos, the budget allows Scotland to remain an attractive place for people and families to come to live, work and study. I urge members across the chamber to vote for the budget at decision time.

The Deputy Presiding Officer

We move to closing speeches. We are really pressed for time.

16:35  



Andy Wightman (Lothian) (Green)

Greens are pleased with what we have achieved in the budget. We have long argued that local government finance, powers and autonomy need to be substantially reformed and enhanced. We hope that securing a deal that begins the overdue process of strengthening local government’s fiscal powers will be seen in the future as an important turning point.

A fiscal framework, a three-year funding deal, the clearest commitment to date to scrapping the regressive council tax, new fiscal powers over tourism and workplace parking, and a budget that provides greater resource and flexibility for councils are achievements that we are proud of.

In a Parliament in which no party has a majority, a coalition must be built to secure support. Parliament has instigated a new approach to budget scrutiny, but how the budget is developed and negotiated is a quite separate matter that is substantially in the gift of ministers. As we have seen this year, there has been no shortage of outrage and opposition and no lack of colourful rhetoric about rescue deals, capitulation and betrayal—all accompanied by a distinct lack of serious engagement in budget negotiations.

In the future, I hope that we will do things better, and I will make a proposal to achieve that. In September 2019, the finance secretary should convene round-table talks to discuss specific proposals from his party and Government and from other parties. Such talks should be followed by further detailed discussion and negotiation after the UK budget.

Such efforts—they would be only efforts—could inform the draft budget that will be published in November or December. To build on whatever progress and trust had been established, detailed negotiations could then take place in Parliament about the budget bill. That might even involve parties publishing their proposals and submitting them to scrutiny by the Finance and Constitution Committee.

Such a process could ease tensions, build trust, allow red lines and aspirations to be properly assessed and tested and ultimately—although there is no guarantee, and parties would be free to rule themselves out of the process—increase the chances of having a budget for Scotland that was built on a shared collaborative endeavour.

The Deputy Presiding Officer

I call Monica Lennon, who has no more than six minutes.

16:37  



Monica Lennon (Central Scotland) (Lab)

Our communities deserve better than the budget. Scottish Labour cannot support an austerity budget that will inflict cuts on public services while delivering tax cuts to the wealthiest in our society. Instead, Scottish Labour wants a budget that will help to lift people out of poverty and build stronger communities with well-resourced public services.

We asked the Scottish Government to include our anti-poverty policies in the budget, but it declined to do so. The result is a budget that is a total disappointment from a Government that claims to be progressive and ambitious for Scotland.

Derek Mackay

As is fair for a finance secretary, I asked the Labour Party how it would pay for its proposals. I got no answers. Will Monica Lennon tell us here and now what any rate of tax other than the top rate would be under a Labour Government to fund the policies that she refers to? She has a last chance to explain Labour’s position.

Monica Lennon

The cabinet secretary is on his last chance, because what has been said is not true. James Kelly and Scottish Labour colleagues entered discussions in good faith but got nothing out of the cabinet secretary. What the cabinet secretary failed to talk about—[Interruption]—I will tell him if he cares to listen. He failed to talk at all about child poverty. When we went into discussions, at the front of our minds were the one in four children in Scotland who live in poverty—[Interruption.] Front benchers might think that that is funny, but one in four children in Scotland live in poverty—[Interruption.]

The Deputy Presiding Officer

Ms Campbell, would you please stop shouting?

Monica Lennon

Perhaps the Cabinet Secretary for Communities and Local Government agrees with Scottish Labour. We asked for a £5 child benefit top-up—there is clear evidence that that would lift 30,000 children out of poverty, and the policy has wide support in Scotland from charities and trade unions alike.

The Cabinet Secretary for Communities and Local Government (Aileen Campbell) rose—

Monica Lennon

I will make progress.

Derek Mackay said no to that. Maybe Aileen Campbell already knows the answer. That proposal could have been part of the budget. Even the SNP’s highly respected former special adviser, Kevin Pringle, described it as “a missed opportunity”.

Scottish Labour is sick of seeing our public services and workers struggle. We ask for more funding for public services because when they are properly resourced, all our communities are stronger for it. Instead, shamefully, this SNP budget will cut council budgets in real terms by £230 million, taking total cuts—

Derek Mackay

That is wrong.

Monica Lennon

It is not wrong, cabinet secretary. That will take total cuts since 2011 to £1.5 billion. Derek Mackay spins those cuts as efficiencies, but let us make no mistake—they are devastating cuts that put lifeline services at risk. Every MSP in this chamber knows that to be true.

As James Kelly outlined, Scotland’s tax bands require progressive and fair brackets. Labour would make the richest pay their fair share, but the SNP tax plans are weak, rewarding higher earners with tax cuts.

On rail, as Colin Smyth said, we propose a fare freeze, because we are listening to the people of Scotland, who have made their voices heard about poor rail services, overcrowded trains and the unaffordable hike in fares. However, again the Scottish Government is not listening. Rail fares have increased, while ScotRail’s performance has plummeted. That is another missed opportunity to do something about the cost of living.

If we look at the big picture, and the big challenges that Scotland faces, Audit Scotland warns that the future of our national health service is not sustainable. We are not seeing the transformational change that is needed to reform and integrate health and social care. The Government needs to be transparent about the funding that our NHS actually needs. Chronic underfunding has pushed health boards to crisis. The Cabinet Secretary for Health and Sport’s local board, NHS Ayrshire and Arran, has been underfunded for years and faces cuts of more than £40 million next year. Surely the health secretary believes that her constituents deserve better than that.

Derek Mackay

Why, then, will Monica Lennon be voting tonight against an increase in the NHS budget of more than £700 million? If she wants even more money for public services, by how much would tax have to be increased to pay for Labour’s demands?

Monica Lennon

The budget is weak and does not tackle the underlying challenges. It is not simply about more money for the NHS. Let us look at the facts. The rise in life expectancy has stalled. The death rate has begun to rise for people who live in our poorest communities. Health inequalities in Scotland are worsening.

Gillian Martin (Aberdeenshire East) (SNP)

Will the member take an intervention?

The Deputy Presiding Officer

Ms Lennon is just closing.

Monica Lennon

Cuts to council services are shutting doors on the most vulnerable people in our community. That is not helping, cabinet secretary. The cabinet secretary has dismissed Labour’s progressive policies from the outset. Again, perhaps he should have listened to former adviser Kevin Pringle, who was right when he said:

“Poor people die younger, but the poverty that kills them lives on.”

The levels of poverty in Scotland are unacceptable. Our poverty-proofed proposals for the budget would have saved lives. When we have policies that tackle poverty, we tackle the causes of ill health. That is the issue that matters in this budget, or should have mattered to this Government.

16:43  



Adam Tomkins (Glasgow) (Con)

There is record employment in the United Kingdom. There are more jobs in the British economy now than at any point in our history. Across Britain, the employment rate is up and the unemployment rate is down. At the same time, wages are rising. Youth unemployment is down and more disabled people in Britain are in work than ever before. The OBR forecasts that all of that is set to continue, with 800,000 more jobs across Britain expected to be created by 2023. That is what Conservative Government delivers.

Derek Mackay rose—

Adam Tomkins

Let me make some progress.

Meanwhile, in the SNP’s Scotland, we have slower growth, higher taxes and worse public services. That is Derek Mackay’s achievement and Nicola Sturgeon’s legacy. What Scotland needs is a budget for growth; a budget that attracts jobs to the Scottish economy; and a budget that brings taxpayers to Scotland, not one that drives them away. [Interruption.]

The Deputy Presiding Officer

Mr Yousaf—please do not interrupt.

Adam Tomkins

What Scotland needs is a budget for business; a budget for the high street; and a budget that boosts the Scottish economy, not one that punishes it. [Interruption.] Let me make some progress.

However, what we are getting from the SNP-Green alliance is the very opposite of what Scotland needs. We are getting higher taxes on workers; higher taxes on families; new taxes on jobs; and tax hikes that the SNP promised in the election campaign that it would not inflict on hard-working Scots. However, nationalist campaign pledges are not worth the paper that they are printed on.

These are not tax rises for the rich; everyone in Scotland who earns more than £27,000 will pay more tax than they would in England. In effect, it is a tax rise for teachers, senior nurses, police officers and firefighters. It is a tax rise for middle-income earners—a tax rise for ordinary, hard-working families. If someone earns £49,000, they will be paying a whopping £1,300 more every year in income tax in the SNP’s Scotland than they would be if they lived south of the border.

Is it any wonder that the FSB has said that the SNP’s latest tax rises will “erode the trust” of the small business community? Is it any wonder that the life sciences sector has warned that income tax differences between Scotland and England will hurt its ability to recruit the skilled workers that the Scottish economy so badly needs? Is it any wonder that the CBI has warned that

“income tax could become a major issue for companies keen to attract the best talent”?

Derek Mackay

Will the member give way?

Adam Tomkins

I will give way to the cabinet secretary in a minute.

Is it any wonder that the Scottish Chambers of Commerce has warned that it

“could take years to repair”

the damage of Derek Mackay’s higher taxes? If he wants to respond to any of those points, I will happily give way to him.

Derek Mackay

I would like Mr Tomkins to say exactly where in Scotland’s public sector the £0.5 billion cut should come from to pay for the Tory tax cuts that they want us to implement to mirror the chancellor’s Tory tax cuts for the highest earners in this country.

Adam Tomkins

The tragedy is that none of these tax rises is necessary, because the Scottish Government’s budget is already increasing by £0.5 billion in real terms this year.

None of those warnings is remotely surprising. However, what is shameful is that Nicola Sturgeon’s SNP is deaf to all of them. It does not care about growing the Scottish economy. All it cares about is pandering to the hard-left tax policies of Patrick Harvie’s Green Party. It is not that the Greens do not believe in growth—they are positively opposed to it. They are so vehemently anti-car that they probably think the invention of the wheel was a retrograde step and yet this small collective of unpopular politicians is the group that Derek Mackay chooses to do his budget business with. Where has this ill-fated alliance of nationalists and Greens led him? To the genius idea of the car park tax—so genius that it has been in several Labour Party manifestos.

John Swinney, Bruce Crawford and Fergus Ewing have all spoken against the proposal in the past. SNP member Richard Lyle recently said this—

Neil Findlay rose—

The Deputy Presiding Officer

Please sit down, Mr Findlay.

Adam Tomkins

Richard Lyle said:

“I am not for your parking charge levy, and I speak on behalf of thousands of motorists who have been taxed enough.”—[Official Report, Environment, Climate Change and Land Reform Committee, 13 November 2018; c 59.]

Well, quite—yet each of those great heavyweights of the SNP will be voting for that tax tonight. John Swinney, Bruce Crawford and Fergus Ewing will all be voting for something that they do not believe in and which they know is wrong. Why? Because appeasing the Greens is more important to them than sound public policy.

It has been claimed that this is not really a tax rise, but some sort of welcome empowerment of local authorities. However, this is not about localism at all. The Parliament’s devolved tax powers mean that we can vote to either raise or lower tax rates. If the SNP was serious about localism, it would grant the same powers—the same freedom of choice—to local authorities. However, the only power that is being given to councils under this proposal is a power to impose new taxes. We can choose to put taxes up or down, but under this proposal, councils can choose only to put up the tax. That is not localism.

To quote Unite the union’s Scottish secretary, Pat Rafferty, the car park tax is

“a desperate attempt to absolve the government from the funding crisis they have presided over.”

He goes on to say that

“if implemented, we would have the ludicrous situation where we would have local authorities taxing workers for turning up to work.”

However, we should not worry, because Mr Harvie thinks that an additional £500 per year in tax on low-paid workers is “trivial”—that is the word that he used this afternoon.

In a few moments, we will have the unbridled joy of listening to another budget speech from the cabinet secretary. Since he announced his hare-brained car park tax, a number of questions have emerged about it. We know that he did precisely no economic modelling of the tax before announcing it. We know that there was no impact assessment. We know that he did not think it through.

However, in the three weeks since the cabinet secretary announced the tax, he has had time to address the concerns that have been brought to his attention. So, will he answer any of the following questions about the tax in his summing-up speech? First, where employers pay the tax on behalf of their employees, will that count as a benefit in kind for the purposes of income tax? Secondly, does he agree that it is a regressive tax that will hit lowest-paid workers hardest? Thirdly, if NHS properties are to be exempt from the new tax—a decision that was taken centrally, by the way, which reinforces the point that this has nothing to do with localism—will GP surgeries also be exempt and, if not, why not? Fourthly, will teachers be expected to pay the tax for driving to work? Fifthly, if the tax is passed on to employees, will it be subject to VAT, further putting up the costs for workers?

Keith Brown

Will the member take an intervention?

The Deputy Presiding Officer

Mr Tomkins is just closing.

Adam Tomkins

Sixthly, and finally, if firms do not comply with this unwanted and ill-conceived tax, will they be fined, landing businesses in Scotland with even more costs, even more bureaucracy and even more expense? Those are six unanswered questions about just one aspect of Derek Mackay’s shambles of a budget.

The Deputy Presiding Officer

Close, please.

Adam Tomkins

Let us see whether he can answer any of them.

16:52  



Derek Mackay

That contribution from Adam Tomkins did a disservice to both Adam Tomkins and to the Parliament. The reason why I say that is that as parliamentarians we are being asked to vote on a budget of £42.5 billion for our public services, our economy and our people. That speech was about the workplace parking levy; it was a diversion from the reality that we are facing right now. This is the budget that we are being asked to approve, and that is where people should have focused their minds.

Among his references to economic indicators in the UK, it was remarkable that Adam Tomkins did not tell us that unemployment in Scotland is right now at a record low of 3.5 per cent, outperforming the rest of the UK. If the SNP Government is responsible, we will take responsibility for record low unemployment in Scotland right now. Our economic credentials are strong.

The fiscal commission that informs the budget and the debate was not mentioned by the Opposition at all. That commission told us what the real threat to Scotland’s economy is. It told us the reason for the subdued nature of economic performance, after the economy having outperformed last year. It told us that the greatest threat to Scotland’s economy is not the workplace parking levy but Brexit, which was not mentioned by Conservative members in their contributions today.

That brings me to the second paper that I want to speak about. I have to say that I am disappointed in the Labour Party, too. The chief economist has published a report that says that if there is a no-deal Brexit—which most of us agree is increasingly likely because of the actions of the Prime Minister and her red lines—the Conservatives will be taking this country towards a recession with their eyes wide open. What does a recession mean for people? It means 100,000 people unemployed, a contracting economy, business failure and that those who are most vulnerable will be hardest hit. That is what the Conservatives are taking us towards and they should be ashamed of themselves for that catastrophe.

Oliver Mundell

Despite the cabinet secretary’s amateur dramatics, does he not think that the best thing that the SNP could do to protect the Scottish economy would be to get behind the deal that the Prime Minister is trying to secure for the whole of the United Kingdom?

Derek Mackay

I might appear dramatic; that is because I believe every word that I am saying. I am not that sure that the Conservatives feel the same way.

The alternative to a no-deal Brexit is no Brexit. We have set out compromises, but the UK Government has steadfastly refused to listen. It is willing destruction and negative impact on the Scottish economy. Even the Prime Minister’s deal would damage the economy.

If there is tax divergence coming, it is coming partly as a result of the actions of a right-wing, extremist Tory Government, which chooses, as an act of fiscal irresponsibility, to give—at this time, when our public services need support—tax cuts to the richest in society. We all know who the Tories really want to tax—they want new taxes for the poor. They want taxes on ill health in the form of prescription charges and on education in the form of tuition fees. People should not dare to be poor and to have more than two children in Tory-run Britain. What a disgrace the Tory party has become! If I followed the Tory tax plans, we would cut £0.5 billion from our public services instead of growing them, which is what our budget supports.

Kezia Dugdale (Lothian) (Lab)

I am grateful to the cabinet secretary for bringing us back to reality. I say to him that

“care provision in Edinburgh is not good enough.”

Those are not my words; they are the words of Jeane Freeman in a letter that I received this morning. Before 5 o’clock, can Derek Mackay tell me how cutting £14 million from Edinburgh’s health and social care budget and £9 million from NHS Lothian will help my constituents who are desperately waiting for a care package?

Derek Mackay

The budget offers a substantial increase to social care, a record amount in health spending and a substantial real-terms increase in resource to local government. By opposing the budget, the Labour Party is opposing additional expenditure for those services in Scotland. That is what we are voting on tonight.

I want briefly to return to the Conservatives, whose many positions we have heard about. They want to raise less and spend more. I am finding out about council tax decisions at this point in time. Despite everything that we have heard from the Conservatives about council tax and other taxes, I understand that Tory-led Perth and Kinross Council is to increase council tax by 4 per cent. That is not what the Tories promised the electorate, and we have increased local government budgets. That just goes to show that, on so many matters, members of the Conservative Party can take as many positions as they like. There is no need for Conservative members to defect—they can take any position they like and stay in the party.

In all seriousness, I say to the Labour Party that it knows that it brought no credible budget alternative to my office. When he was asked to name councils whose budgets were going down, James Kelly ran away from his own question. It is no wonder that he did so. Let us take the example of Glasgow City Council. It is getting more resources from the Scottish Government. Of course, we are clearing up the mess that was left by the Labour Party when it denied justice to women regarding equal pay. Rather than taking the women to court, the Scottish Government and the SNP administration in Glasgow took them to justice, and those payments will be made.

I turn to Willie Rennie. The only thing that I am left with from his contribution on the budget is that he wants me to show him my flagpole. I do not have a flagpole; I have a patio. I will show him the patio, because it is on that that I stand: the budget is about firm foundations.

Mike Rumbles (North East Scotland) (LD)

Will the cabinet secretary take an intervention?

Derek Mackay

No, I will not take an intervention from Mr Rumbles. [Interruption.]

I might reflect on the language that I used in relation to Willie Rennie. It is a very interesting offer.

When it comes to the budget, we are proposing a £733 million increase in NHS resources—[Interruption.] I am winding up.

That will increase the total spending in the NHS to £13.9 billion. There will be a real-terms increase for local government of £300 million. There will be £2.4 billion for education, enterprise and skills, and enhancing social security; and £5 billion on capital investment, supporting our infrastructure for now and the future. We are expanding the childcare of our country; providing real-terms protection for police resource budgets; and investing in the economy through the national investment bank. We are proposing a national infrastructure mission for Scotland; the most competitive package of non-domestic rates relief; more support for and investment in transport; a record investment in housing; and a £50 million fund for the town centres of Scotland.

Murdo Fraser spoke about a parliamentary shambles and he speaks from authority when he talks about the shambles that is the Westminster Government. However, tonight in Scotland, we have an opportunity. Scotland expects us to deliver. This budget delivers for Scotland, and I encourage all members of the Scottish Parliament to deliver tonight and vote for the Scottish budget.

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)

There is one question to be put as a result of today’s business. The question is, that motion S5M-15907, in the name of Derek Mackay, on the Budget (Scotland) (No 3) Bill, be agreed to. Because this is stage 3 of the bill, we will move straight to a division. Members may cast their votes now.

For

Yousaf, Humza (Glasgow Pollok) (SNP)
Wightman, Andy (Lothian) (Green)
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)
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)
McDonald, Mark (Aberdeen Donside) (Ind)
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)
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, Tavish (Shetland Islands) (LD)
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)
McArthur, Liam (Orkney Islands) (LD)
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)
Johnson, Daniel (Edinburgh Southern) (Lab)
Harris, Alison (Central Scotland) (Con)
Hamilton, Rachael (Ettrick, Roxburgh and Berwickshire) (Con)
Halcro Johnston, Jamie (Highlands and Islands) (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)
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 66, Against 58, Abstentions 0.

Motion agreed to,

That the Parliament agrees that the Budget (Scotland) (No.3) Bill be passed.

Meeting closed at 17:02.  



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 2019/20.

Budget (Scotland) (No.3) 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 2019 and became an Act on 29 March 2019
Find the Act on legislation.gov.uk

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