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

Overview

The Budget Bill is the final stage in the annual budget process. The Bill allows parliament to set public spending in Scotland for the financial year 2019-20.

The overall figure budgeted for is £37.8 billion. 

This figure includes spending on: 

  • Health and Sport – £14.4 billion
  • Communities and Local Government – £11.2 billion
  • Public Pensions – £4.5 billion
  • Education and Skills – £4 billion
  • Transport Infrastructure and Connectivity – £2.9 billion
  • Justice – £2.6 billion

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

For more information on public spending, see the Scottish Government document on the Scottish Government Budget 2019-20.

 

You can find out more in the Bill as introduced document that explains the Bill.

Why the Bill was created

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

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

You can find out more in the Scottish Government Budget 2019-20 that explains the Bill.

Becomes an Act

Budget (Scotland) (No.3) Bill passed by a vote of 66 for, 58 against and 0 abstentions. The Bill became an Act 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.

Video Thumbnail Preview PNG

Stage 1 debate on the Bill transcript

The Presiding Officer (Ken Macintosh)

The first item of business this afternoon is a debate on motion S5M-15625, in the name of Derek Mackay, on the Budget (Scotland) (No 3) Bill. I encourage all members who wish to speak in the debate to press their request-to-speak buttons as soon as possible.

14:30  



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

I am pleased to lead today’s debate on the principles of the budget bill, and to welcome the Finance and Constitution Committee’s report on the draft budget.

In the face of the chaos and turbulence from the United Kingdom Government, I urge the Scottish Parliament to deliver certainty and stability for Scotland by supporting the principles of the budget bill. This Scottish budget prepares our economy for the opportunities of the future, enables our transformation to a low-carbon economy and builds a more inclusive and just society.

I have listened carefully to the Opposition parties: to the Tories, who demand tax cuts for the highest earners, with their “Raise less, spend more” hypocrisy; to the Liberal Democrats, who would abandon new spending on education, colleges, mental health and childcare for their constitutional obsession; and to Labour members, of whom sources predicted that their party would deliver incompetence instead of an alternative budget—and that is what we got.

Mike Rumbles (North East Scotland) (LD)

Will the cabinet secretary take an intervention?

Derek Mackay

Voting against the budget at stage 1—[Interruption.] I thought that I would start on a consensual note.

Voting against the budget at stage 1 would imperil our ability to raise the necessary revenues to fund our public services. It would be reckless in the extreme. To do so at a time when we have a UK Government that is engaged in systematic damaging of our economy—austerity by choice, and Brexit by design—would be even more damaging. The UK Government cannot be trusted to act in Scotland’s interests: the Scottish Government will.

As previously stated, if we face a no-deal Brexit, I will have to revisit the Scottish budget.

Mike Rumbles

Will the cabinet secretary take an intervention?

Derek Mackay

However, I can confirm today that I have reached an agreement with the Scottish Green Party that will secure the passage of the budget at every stage. [Applause.]

I know that the ability to make more decisions locally is a key request of councils. This Government will therefore take steps to empower Scotland’s local authorities. [Interruption.] I hear the Conservatives groaning at the mention of empowering Scotland’s local authorities. Today, I will set out measures that will deliver the most significant empowerment of local authorities since devolution.

The Convention of Scottish Local Authorities has made the case for councils to have the power to apply a levy on transient visitors, which was a key issue for the Greens in the budget negotiations. The Scottish Government will now undertake a formal consultation on the principles of a locally determined visitor levy, before introducing legislation that will permit local authorities to adopt the policy.

Mike Rumbles

On that point, will the cabinet secretary take an intervention?

Derek Mackay

I will take an intervention, since Mike Rumbles is being so persistent.

Mike Rumbles

I thank the cabinet secretary for taking my intervention. On his agreement with the Greens, can he tell us when he plans to abolish the council tax?

Derek Mackay

Be patient—I am coming to that.

The national discussion on a locally determined visitor levy has illustrated a range of important issues to consider. Information from it will help us to get the structure right for the tourism industry, as well as for local authorities. This Government takes no view on whether councils should introduce the levy. However, our actions take a step towards providing local authorities with the power to do so.

There has also been on-going debate on providing local councils with the power to apply a levy on workplace car parking. That is a matter that is best managed at local level: it enables local authorities to manage congestion, air quality and local transport. Subject to the specific exclusion of our national health service and hospitals, the Scottish Government will agree with the Greens on an amendment to the Transport (Scotland) Bill that will enable local authorities that wish to have that power to exercise it.

The final transfer of power to local authorities will be devolution of empty-properties rates relief to local authorities, by the next revaluation.

In each of those cases, it will be for local authorities—having taken account of local circumstances, the views of business and the electorate—to decide whether to use the powers.

The Scottish Government recognises the importance of longer-term budget stability for local authorities. We will work with the Convention of Scottish Local Authorities to move towards three-year budget settlements from 2020-21, and to develop an agreed fiscal framework for introduction in the next parliamentary session.

The Green Party has also sought to return to the conclusion of the cross-party commission on local tax reform, which is that the current council tax system must end. The Government will convene cross-party talks to progress that. If agreement can be reached, legislation will be developed, although it would be for implementation in the next session of Parliament. There will be no change to the council tax system during this parliamentary session.

The draft budget increases funding for local government, providing total support of over £11 billion and an overall real-terms increase of about £210 million in the total local government settlement.

Kezia Dugdale (Lothian) (Lab)

If that is such a good deal for local government, can the cabinet secretary explain why my constituents are facing £41 million of cuts from their SNP-led council?

Derek Mackay

They will not be, by the time I finish my speech.

I have heard the arguments for more funding to be provided—I have just heard one again—through raising income tax or business rates, or through greater flexibility over council tax. I have been clear throughout the budget process that I will not change income tax rates and business rates: we have set the rates and we will stick to them. However, we have agreed an alternative package of support for Scotland’s local authorities.

As part of the agreement with the Greens, we will provide flexibility by capping council tax at 3 per cent in real terms, or 4.79 per cent. I encourage councils to take account of household incomes and to remain at a flat 3 per cent. However, that approach will give councils the ability to raise an additional £47 million on top of the £80 million that they could already generate, at the same time as keeping increases below the maximum that is permitted in England.

I have also agreed additional funding direct to the local government core grant. Members will recall that through the budget the Scottish Government would invest £55 million of additional funding for the NHS to make up for the shortfall in Barnett consequentials from what we had been promised. Where the Tories sold the NHS short, we filled the gap.

The UK Government has now confirmed that we can expect to receive for the NHS further unexpected funding in Barnett consequentials this year. As a result, and using additional flexibility in management of the Scottish budget, I am able to deliver an additional £90 million for local government as part of its core settlement, at the same time as keeping our promise that all Barnett consequentials for health will go to health. Our NHS budget will now be £4 million higher than was set out in December. As a result, using council tax, additional flexibility to offset spending and extra direct funding, local authorities will now have up to £187 million of additional spending power in their budget.

I can also confirm, as I have to the Greens, that the Scottish Government will transfer our share of the costs of the teachers’ pay offer—if it is agreed—to local government, which will amount to nearly £280 million over three years. I hope that, with those changes, the budget will win the support of the Parliament.

The budget will provide a real-terms increase in the education portfolio, and will support investment of almost £500 million to expand early learning and childcare. It will invest £600 million in Scotland’s colleges, more than £1 billion in Scotland’s universities and more than £214 million in apprenticeships and skills.

The budget will also allow us to continue our work to tackle poverty and to mitigate the worst impacts of the UK Government’s welfare cuts.

James Kelly (Glasgow) (Lab)

I draw Mr Mackay’s attention to the Fraser of Allander institute’s blog, which details how only £27 million in the Scottish Government’s budget is directly targeted at low-income families. Surely that shows that his words on poverty are hollow, indeed.

Derek Mackay

Parts of the Labour Party proposed deep cuts in social security to pay for other commitments, whereas the Scottish Government is spending more than the UK would spend on social security in Scotland.

It is important that the budget will make provision for financial redress for survivors of historical child abuse in care. It will provide £10 million for advance payments to people who might not live long enough to apply to the statutory redress scheme.

Our economic action plan, which the budget will fully fund, will improve the competitiveness of our business environment. We have committed £1.3 billion to support Scotland’s seven cities and their regions to maximise economic opportunity. As has been welcomed by business, we are limiting the increase in the business rates poundage to 2.1 per cent, which means that more than 90 per cent of business properties in Scotland will pay a lower poundage than they would pay in other parts of the UK.

Our infrastructure investment will total more than £5 billion over the coming year, including £1.7 billion for transport and connectivity, £175 million for nursery and childcare buildings and a record £826 million for housing, to help to deliver 50,000 affordable homes.

There will be £130 million to support the establishment of the Scottish national investment bank and precursor investments. We will also establish a £50 million capital fund to ensure that our town centres are thriving and sustainable places.

To ensure the safety of our communities, we will provide a real-terms increase in funding for Police Scotland and the investment that is needed to transform our Scottish Fire and Rescue Service.

As part of the environmental measures that the budget will support, and in agreement with the Greens, we will at the earliest opportunity take action to increase to at least 10p the minimum levy for single-use carrier bags. We have also agreed, in principle, to introduce charging for disposable drinks cups. We will take those forward, following the report of the expert panel later this year, which will include consideration of whether some revenue from both charges can be placed under local authorities’ control.

Our income tax system is fair, progressive and balanced to raise additional revenue from those who can afford to contribute most. Our budget will not increase any income tax rates, but will protect low-income and middle-income taxpayers by increasing the starter and basic rate bands by inflation. Fifty-five per cent of Scottish taxpayers will continue to pay less than they would if they lived elsewhere in the UK.

That is before we consider the benefits of Scotland’s social entitlements, such as state-funded university education, free prescriptions and concessionary travel, which we will continue to protect.

Those who are thinking of voting against the budget tonight would be voting against an increase in our direct investment in mental health services that will take the overall funding for mental health services to £1.1 billion, and they would be voting against a £730 million increase in the health portfolio resource budget. That funding will deliver a shift in the balance of spend further towards mental health and primary, community and social care.

The budget that we presented in December is good for Scotland. The proposals that I have set out today will deliver more powers, more funding and more flexibility to local government. The budget backs our economy and will fund our NHS. No Opposition politician can claim ownership of policies in the budget if they vote against the means to pay for them at decision time tonight.

It is clear that Westminster is failing Scotland, while the Scottish Government is set to deliver a budget that will safeguard Scotland as best we can. We are getting on with the day job and delivering for Scotland.

I commend the principles of the budget bill to the Parliament and I move,

That the Parliament agrees to the general principles of the Budget (Scotland) (No.3) Bill.

14:45  



Murdo Fraser (Mid Scotland and Fife) (Con)

It was bad enough that the draft budget that was published last month widened the income tax gap between Scotland and the rest of the United Kingdom. However, today, thanks to the deal that Mr Mackay has done with the Greens, we have even more taxes to come. Let us remember that this is a Scottish National Party Government that was elected on a manifesto commitment not to raise the rate of income tax for basic rate payers, on a promise to cap council tax increases at 3 per cent, and on a commitment not to introduce a tourism tax—all promises that it has broken. On top of that, today, we have the introduction of a new workplace levy.

That is a triple tax bombshell from the SNP Government, and it will do nothing for the competitiveness of the Scottish economy. Derek Mackay might think that he is Dr Who, with Patrick Harvie as his assistant, but, between them, they will exterminate the opportunity for Scotland to grow its economy and be a good place to live, work and build a business.

Did anyone seriously doubt that a deal would be struck between the SNP and the Greens, despite the annual charade that we see as the two partners dance around each other, trying to pretend that there is no deal? No deal was about as likely as Ross Greer winning politician of the year from the Churchill appreciation society, yet we were all strung along and made to think that the budget could fall.

In advance of the budget, the Greens were very firm: nothing less than abolition of the council tax and wholesale reform of local taxation would get them on board. Instead, they have been sold short. What do we have? Just a fudge—another promise of a round of cross-party talks. Mr Wightman has been let down.

Andy Wightman (Lothian) (Green)

Murdo Fraser is aware that it is not within the gift of the Scottish Greens or the SNP to abolish the council tax. That would require legislation, and no party in this Parliament has a majority. Therefore, given that there is a commitment to cross-party talks to agree a replacement and to draft the legislation, will Murdo Fraser take part in those talks and will he do so with good will and a determination to scrap the regressive council tax?

Murdo Fraser

I feel sorry for Andy Wightman. The Greens were so clear that they would not sign up to a budget that did not commit to the end of the council tax. They have let their voters down. Famously, Andy Wightman wrote a book called “Who Owns Scotland”. The question today is: who owns Andy Wightman? The answer to that is Derek Mackay. The context—[Interruption.]

The Presiding Officer

Order, please.

Murdo Fraser

The context of this budget was that, following the Chancellor’s announcements in October, the finance secretary found himself in a healthier position than he had expected, with Barnett consequentials of £950 million in the Scottish block grant. According to the Scottish Parliament information centre, that increase means that the finance secretary’s total budget is up in real terms compared with last year. Let us never forget that, contrary to all the spin that we hear from SNP members, since 2010, the Scottish Government’s total budget is up in real terms by £1 billion.

The background to all the Scottish Government’s financial choices is the Barnett formula, which at the latest estimate—according to the Scottish Government itself—delivers an additional £1,800 of additional spending for every man, woman and child in Scotland. That is a fiscal transfer to Scotland; it is a union dividend of more than £10 billion each year.

What is the SNP policy on the Barnett formula—that multibillion-pound bonus to Scotland? It wants to scrap the formula and create a black hole to the tune of £10 billion in Scotland’s public finances. That is why the greatest threat to our public services comes from independence and the continual threat of a second independence referendum.

Against the backdrop of more money from Westminster, the finance secretary’s choice was to extend the income tax gap between Scotland and the rest of the UK, which means that those who earn between £43,430 and £50,000 will face a marginal tax rate of 53 per cent. It means that public servants such as police sergeants, senior nurse managers and principal teachers will pay more tax than their counterparts south of the border—in some cases, they will pay more than £1,500 more. It means that anyone who earns more than £27,000 will pay more than their equivalents south of the border. That is before the other tax increases that Derek Mackay has just announced. Those people are not rich—we are talking about households that earn just £27,000. They will pay the price of having an SNP Government.

What we wanted to see in the budget was a focus on growing the economy, the need for which was made apparent in the report that the Scottish Fiscal Commission published in December. For each of the next four years, the SFC forecasts that the Scottish economy will grow at a slower rate than the economy of the UK as a whole and that earnings here will grow more slowly. That has consequences for the public finances, because a slower-growing economy and slower-rising earnings mean that the tax take will be lower and there will be less money to spend on public services.

Derek Mackay

True or false, Mr Fraser: did the Scottish Fiscal Commission attribute those subdued figures to Brexit?

Murdo Fraser

It was to the lack of productivity that the SFC attributed them. That is the challenge that the Scottish Government is failing to address. Brexit applies across the whole of the United Kingdom; it is the performance of the Scottish economy relative to that of the rest of the UK that ought to concern us.

The SFC’s forecasts for income tax for the coming year perfectly illustrate the problem. In the period between May and December last year, it revised those forecasts downwards by a staggering £661 million. That is a cool two thirds of a billion pounds that we are potentially missing out on.

I appreciate that income tax is just one of the devolved taxes and that we must also look at the block grant adjustment, but we see the complete picture when we look at the Finance and Constitution Committee’s report on the draft budget, paragraph 70 of which confirms:

“The 2019/20 budget now has a forecast net tax position of £257m in real terms compared to a forecast net tax position of £592m in December 2017.”

That is money that we are losing.

The figures that we are talking about are only estimates but, in due course, all those figures will have an impact on spending. Table 8 in the SFC’s report shows the income tax reconciliations. For last year, the forecast reconciliation is minus £145 million, which will have to be met in the financial year 2020-21. Even more serious is the forecast outturn for this year, which is down £472 million. That will have to be met out of the budget for 2021-22. That is another £500 million black hole in the Government’s forward budget plans. How the finance secretary must hope that those forecasts turn out to be wrong; otherwise, he will be the one writing a note to his successor to say, “I’m sorry—there’s no money left.”

In the course of the debate, my colleagues will assess the Scottish Government’s spending plans in more detail, but I want to highlight one example of spending in the draft budget. International relations is a reserved matter, yet the Scottish Government is increasing the spending on international relations by a staggering 52 per cent over two years, from £15.7 million to £23.9 million. It tells us that there is no money to spend, yet here we are, funding Scottish ministers’ grandstanding around the globe at our expense. If ever there were an area of spending that could be trimmed, surely that is it.

Given Scotland’s relative economic underperformance compared with the rest of the UK, we should have had a budget that focused on improving our economy and maximising the tax take from a growing economy, instead of one that focuses on widening the tax gap and penalising those earners who live here. Every 20 new additional rate taxpayers we attracted to Scotland would generate an extra £1 million in tax revenue. An extra 2,000 additional rate taxpayers would give us a minimum of £100 million annually. According to figures that I heard quoted recently, an increase of just 1 per cent in Scottish productivity would deliver £2.3 billion extra in gross domestic product and £400 million extra in tax revenues. Rising wages deliver much higher revenues than increases in the tax rate.

There was a time when people on the SNP front bench understood those simple laws of economics, but sadly they are now long gone.

We made an offer to the SNP in advance of the budget. We asked it to ditch its plans for an unwanted second referendum and take action to narrow the tax gap rather than widen it—and then we could sit down and have a serious conversation about plans to grow the Scottish economy and how to support our public services. However, instead of talking to us, the SNP would rather talk to the anti-growth, anti-business Greens. Instead of reducing the tax burden, the SNP will put it up.

The consequence will be that the Scottish economy will continue to underperform and we will have yet more taxes on hard-working families. That is not a direction that we can support. For that reason, we will vote against the budget at decision time tonight.

I move amendment S5M-15625.1, to insert at end:

“, but, in so doing, regrets that the income tax gap between Scotland and the rest of the UK will widen as a result.”

The Presiding Officer

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

14:55  



Bruce Crawford (Stirling) (SNP)

I thank the committee clerking team, led by James Johnston, who have provided the committee with fantastic support. I also thank my colleagues on the committee for the constructive and consensual manner in which they approached our scrutiny of the 2019-20 budget. It is a great credit to them all that we have been able to agree a unanimous budget report.

In the current, polarised climate, we cannot underestimate the power of politicians working together and laying aside their differences in agreeing a way forward. There is no doubt in my mind that the country is crying out for such an approach in respect of the current Brexit stalemate.

As colleagues across the chamber are aware, this budget scrutiny function has become increasingly complex and challenging as a result of additional tax power having been devolved. I am in danger of wearing out the word “complex” as I seek to describe the challenges that we face. Moreover, I am at risk of being seen as some kind of nutty professor from the university of the fiscal framework. On a serious point, though, the committee is indebted to our adviser, David Eiser, who has a great knack of unravelling the intricacies of the new model for devolution.

I hope that members will bear with me for a few moments, because it is worth reiterating some of those intricacies, which are important. Although it is challenging, it is incumbent on all of us in the chamber to have an understanding of how the Government budget is funded—not least because the Parliament now raises 40 per cent of the budget in tax revenues.

As those tax revenues have been devolved, the size of the block grant has simultaneously been reduced. However, those are not one-off reductions. If that were the case, the impact of the size of the reduction would decrease over time due to inflation. The initial reduction is indexed through an annual adjustment to the block grant, and that adjustment is based on the growth of devolved tax revenues relative to the equivalent taxes in the rest of the UK, adjusted for population growth.

The real challenge is that those adjustments are based on forecasts, which then have to be reconciled with outturn figures. That means that the forecasts for income tax revenues, which form part of the budget for 2019-20, will not be reconciled with the actual tax receipts until outturn figures are published in July 2021. Any difference between the forecast and outturn will not be addressed until the Scottish budget in 2022-23—a full three financial years after the initial forecasts.

That is the process, but what does it mean in practice for the Scottish Government and the Scottish Parliament? As members know, 2017-18 was the first year when this Parliament set our own rates and bands for income tax. When the outturn figures for 2017-18 are published by Her Majesty’s Revenue and Customs in July this year, we will have an initial indication of the actual impact of this new process in relation to income tax.

As I said during the pre-budget debate last week, that will be an important moment and will prove a reality check for the actual income tax receipts raised in Scotland. As we explain in our budget report, there is a risk there for the Scottish Government. If, in July, we find out that those outturn figures result in a shortfall for 2017-18, that will require addressing in next year’s budget. Alternatively, July’s outturn figures might be higher than expected, resulting in a pleasant windfall for the cabinet secretary.

However, according to the latest forecast for income tax raised in 2017-18, the Scottish Government is facing a potential shortfall of £145 million. I remind colleagues that these are forecasts, which, by their very nature, invariably differ from the actual outturn. Nevertheless, they provide an illustration of the risks involved and the increasingly difficult challenge that ministers will face now and in the future in managing them.

Moreover, as the committee has pointed out in its report, there is also a challenge for the Parliament in deciding our priorities for managing such risk. In particular, there will be political choices to make about, for instance, whether we address it by increasing the size of the Scotland reserve. If this direction were chosen, where would the money come from? Would colleagues be content if money that had been used to support spending on important public services in the short term were instead saved to meet potential shortfalls in the medium term?

Mike Rumbles

Given that the finance secretary has just announced extra spending, does the member feel that his committee should examine that spending and find out exactly where it is coming from?

Bruce Crawford

As Mike Rumbles knows, that will be a decision for the committee to make in due course. One might also ask the Liberals to describe where the money for making a payment to the Scotland reserve would come from, if that is what the member is considering.

Alternatively, should the priority be to use the borrowing powers within the fiscal framework, if needed, which would then allow ministers to borrow up to £300 million a year to deal with forecast error? The Parliament will need to engage and grapple with these new and challenging choices, and they are choices that need to be more widely understood.

The committee also heard concerns from witnesses that, in Scotland, 2 million adults do not pay income tax, and concerns were also expressed about the gender balance of the income tax base and the fact that

“there are 300,000 fewer women taxpayers”

and that

“higher-rate taxpayers comprise 91,000 women and 275,000 men”.—[Official Report, Finance and Constitution Committee, 19 December 2018; c 19-20.]

Another important focus of our report is Brexit. In its most recent “Economic and fiscal outlook”, the Office for Budget Responsibility states that

“the referendum vote to leave the EU appears to have weakened the economy”

while

“uncertainty regarding the Brexit negotiations appears to have dampened business investment (by more than earlier data suggested).”

It also takes account of the

“significant fall in the exchange rate that accompanied the referendum and its outcome”,

and points out:

“The average quarterly growth rate has slowed from 0.6 per cent between 2013 and 2015 to 0.4 per cent since the beginning of 2016, taking the UK from near the top of the G7 growth league table to near the bottom.”

The OBR also told us:

“we 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. In the first forecast that we produced after the referendum, we reduced the figure to about 3 per cent. The latest outturn data suggests that growth has been about 3.2 per cent.”—[Official Report, Finance and Constitution Committee, 9 January 2019; c 38.]

Those forecasts are not great, but they also assume an orderly Brexit at the end of the negotiations. The OBR believes that a disorderly Brexit

“could have severe short-term implications for the economy, the exchange rate, asset prices and the public finances.”

In its view,

“UK asset prices could fall sharply which, together with heightened uncertainty, would cause households and businesses to rein in their spending. A fall in the pound would also raise domestic prices, squeezing households’ real incomes and spending.”

I make these points by way of background, because the committee was strongly of the view that a no-deal Brexit would be damaging to the Scottish economy and public finances, and it therefore is clearly not in the national interest.

The committee has previously emphasised the increasing volatility and uncertainty as well as the upside and downside risks arising from the way in which the fiscal framework works and, in particular, the reliance on forecasts for the annual budget.

The evidence that we have considered in relation to the budget for 2019-20 reinforces that view. The risks are exacerbated by the continuing uncertainty around Brexit, which both the SFC and OBR have highlighted as having a negative impact on business investment and economic growth.

These are challenging times indeed, and we must rise to the challenges on behalf the Scottish people, who rightly expect us to do just that.

15:05  



James Kelly (Glasgow) (Lab)

Scottish Labour will oppose this dreadful budget, which is a weak response to the crisis that public services are facing. It is a cuts budget that threatens the jobs of council workers and fails to tackle the rising levels of poverty, while handing tax cuts to high earners.

This budget needed to address the issue of local government funding, produce a fair funding settlement and stop the cuts. To address rising poverty levels, we needed a £5 rise in child benefit and an end to the two-child cap. Labour also demanded the reversing of the increase in rail fares, to give some much-needed relief to the passengers who are too often left stranded on the platform on the commute to their jobs in the morning.

There are cuts to local government of £319 million in the budget that was published by Mr Mackay on 12 December. The announcement that he has made today goes nowhere near closing the gap. I say to the Greens that this is the third year in a row that Mr Mackay has introduced a budget that penalises local government and produces cuts. Yet again, the deal that has been worked out with the Greens does not close the funding gap in this budget year, just as it did not close it in previous years.

Patrick Harvie (Glasgow) (Green)

I am grateful to Mr Kelly for giving way. Could he explain precisely what scale of impact the Labour approach to budget engagement has achieved during those three years? How many changes have there been, how many cuts have been prevented and how many local services have been saved?

James Kelly

Let me—[Interruption.]

The Presiding Officer

Order, please.

James Kelly

Let me make it absolutely clear: Labour will never sign up to a budget that makes cuts to local council services.

Derek Mackay rose—

James Kelly

Let me make some progress, Mr Mackay.

I say to the Green Party that I sit in the chamber week after week and I hear Green Party MSPs, including Mr Harvie, make noble speeches about stopping and reversing the cuts to council services, about tackling poverty and about fair taxation. This budget fails on all three counts. The Green Party is letting down its members and its supporters by signing up to the budget today.

It is an absolute scandal that, in modern Scotland, we have 230,000 children living in poverty. Each month, in his Renfrewshire North and West constituency, Derek Mackay holds a constituency surgery in Gallowhill, where 29 per cent of children are living in poverty. What does that actually mean?

Derek Mackay

I would like to know why the Labour Party would rather leave those children at the mercy of the Conservatives than take decisions in this Parliament to protect them. [Interruption.]

The Presiding Officer

Order, please.

Derek Mackay

By what percentage increase would the Labour Party raise the higher rate to pay for its budget demands? If it has not done the costings, I have.

James Kelly

I say to all the cabinet secretaries sitting on the SNP front bench that when they vote for the budget, they are awarding themselves a tax cut. [Interruption.] What an absolute scandal.

The Poverty and Inequality Commission report that was published this morning shows that the Government is meeting only four of the 15 targets. That shows how remiss Mr Mackay’s budget is in addressing those issues. [Interruption.]

The Presiding Officer

Order, please. Order. If members wish to intervene, I ask them to please stand up and ask Mr Kelly, not just speak.

Derek Mackay rose—

James Kelly

I do not want to take an intervention from Mr Mackay; I want to point out that this is an unfair budget based on unfair taxation. It allots tax cuts to everyone earning up to £124,000, so if someone is a chief executive, a managing director or a cabinet secretary, they will be cheering this budget on tonight because it will give them a tax cut. However, a passenger who is waiting on a platform for a delayed or cancelled train, unable to get to work or a hospital appointment, will not be cheering it on.

When they come to vote tonight, the question that SNP members have to answer is whether they can look people in the eye—I think of the council workers who potentially face getting a P45 as a result of the budget, or the families whose kids do not go out to school in the morning properly fed or properly clothed because they are living in poverty and will not be helped by the budget. Will SNP members apologise to the rail passengers who will not get a rail fare freeze as a result of this budget? It is time for a different approach. It is time to take the budget back to the drawing board and rewrite it. It is an unfair budget—a cuts budget—and Labour will vote against it at 5 o’clock tonight.

15:13  



Patrick Harvie (Glasgow) (Green)

Over the past two years, the Scottish Greens have been determined to take the budget process seriously and to achieve meaningful change for the people we all represent.

We have achieved a transformation—a restructuring—of Scotland’s income tax policy, which the Conservatives certainly do not like because they only care about tax cuts for the wealthy.

We have achieved protection for local services year after year after year, but last year, we made it clear that local tax reform was urgent and would become increasingly so. Scotland has a centralised, constrained and underpowered system of local government, and that needs to change. The package of local tax reform measures that has been announced today shows real progress. We have, for the first time, a clear, definitive timescale for publishing legislation to abolish and replace council tax during this parliamentary session.

Neil Findlay (Lothian) (Lab)

Late last year, the Greens said that they would not vote for a budget that cut local government funding. Will local government funding be cut this year?

Patrick Harvie

I will come to the 2019-20 impact in a moment.

The package of local tax reform measures includes that timescale for legislation to abolish council tax, and I hope that all political parties will engage with that. It includes a commitment to legislation on a tourism tax, on workplace parking levies and on increases to environmental charges such as those on plastic bags and cups. Those measures are an additional opportunity to raise revenue for local councils in the future.

Mike Rumbles (North East Scotland) (LD)

Will the member take an intervention?

Patrick Harvie

I have taken an intervention already. I need to make some progress.

There will be future devolution of control of non-domestic rate reliefs, and we will continue to make the case for going even further than the Government has announced on that. The return to three-year—multiyear—funding settlements for Scotland’s local councils, with a fiscal framework developed on a rules-based approach to ensure that we know, and they know, that councils can plan for the future, is long overdue and I hope that all political parties will be able to support it. The development of that multiyear package must begin early, well ahead of the next budget process.

As for the impact in the 2019-20 financial year, particularly on local government, as in previous years, I will not claim that this budget is perfection, and I do not think that the Scottish Government should claim that it is perfection. Even if the budget as published had treated local services fairly, we would have wanted further changes. The shift away from high-carbon infrastructure, won as a commitment last year, is still being achieved, but only just. SPICe research shows that that shift is in danger in the next few years. We will need to see further progress on it.

As published, the budget offered the prospect of a crisis in local services. Even Derek Mackay’s own party colleagues in SNP-led councils were making that clear to him. The overall package that has been announced today, including new money, new flexibility and new and existing local revenue-raising powers, adds up to a package that is worth more than the COSLA figure of a £237 million cut to local services. [Interruption.] The Labour members who are shouting are well aware of that, because, like all of us, they received COSLA’s briefing ahead of the budget, setting out that £237 million cut. The package that we have achieved today more than fills that gap.

Daniel Johnson (Edinburgh Southern) (Lab)

Will the member take an intervention?

Patrick Harvie

I will take one more intervention.

Daniel Johnson

Is Patrick Harvie saying that the new levies that the Greens have been promised are going to be ready for the coming financial year? If they are not, I fail to see how the statements that he makes are correct.

Patrick Harvie

I have not said that at all. I have made a clear distinction between a long-term package of local tax reform measures and short-term measures to improve the financial position of councils across Scotland, which will close the £237 million gap for the 2019-20 financial year. I am sure that Mr Johnson will read more about the detail of that when he is able to.

Neil Findlay

Will the member give way?

Patrick Harvie

I have given way already. I have only a minute and a half left in which to finish.

The budget process that we have at the moment is not what it should be. We have a down-to-the-wire approach from the Scottish Government and a refusal to engage from most of the other political parties. The Conservatives want a proposal that no other party will support. Labour produces an uncosted wish list and no meaningful ideas about how to fund it. Just because the budget is published in December does not mean that the process is about writing letters to Santa.

Of the people whom I have met in recent weeks to discuss the budget, I can honestly say that some of those expressing the greatest frustration have been Labour councillors and colleagues in the trade union movement, who wish to goodness that the Labour Party in Parliament was making some effort to make improvements to the budget. I wish that it was as well. Our whole Parliament would be stronger and the outcome would be better for Scotland if all political parties took their responsibilities in the process seriously. I can respect anyone who busts a gut to try to achieve a change, is unable to and then votes against the budget—but not even to try?

Only the Greens appear to be engaging positively in the process. Others seem to think that engineering a crisis would be the best outcome, instead of achieving changes that work for the country. It is as though some people look at the shutdown in the United States Government or the shambolic incompetence at Westminster and think that they should do the same here.

Chaos for the sake of chaos is not what Scotland needs. As a result of the Green Party’s work on the budget, not only will councils have resources to put into their local services but every party in the Parliament will have the chance to shape the future of Scottish local government finance. I hope that all parties will take the opportunity to engage in that process more constructively than they have engaged with this year’s budget.

15:19  



Willie Rennie (North East Fife) (LD)

We heard Derek Mackay compared to Dr Who and Patrick Harvie to the Doctor’s assistant, who takes the story forward by rescuing him. I bet that Patrick Harvie wishes he could get into the TARDIS and go back to the time when he said that he would never vote for a budget that did not include the abolition of the council tax. Just like they did last year, the Greens have ridden to the rescue of the SNP: nationalists together once more.

The Greens have been bought cheaply. The extra money for councils was already available. Local government finance reform has been delayed until the next parliamentary session, being bogged down once again in another commission. Patrick Harvie has settled for the vice-convenership of the car parking working group—oh no! He does not seem to have got that either.

I agree with the finance secretary that Brexit is the biggest threat to our economy. It could cost £2 billion in Scottish tax revenues by 2034, and that will directly affect our Scottish budget. The cost is high, and it will affect the most vulnerable the most. There will be years of pain, turmoil and turbulence. Some people in this chamber agree with me about the economic damage and pain, but they have given up on the fight. However, I feel a responsibility to do everything that I can to prevent it.

In the same way, I feel a responsibility to prevent independence. There are striking parallels between the claims of the Brexiteers and the claims of those who argue for independence. The Brexiteers predicted that Brexit would be easy, the opportunity would be great and the negotiations would be the easiest in history. The nationalists predict exactly the same about Scottish independence, but we know that, just like Brexit, the cost of breaking up the UK would be great. In fact, it would be even greater, which is why I make absolutely no apologies for putting independence at the centre of our budget negotiations this year.

It is not some distant threat from many years hence—the First Minister is already ramping up the rhetoric of her usual obsession. We made a generous offer to the finance secretary and asked him to end the Government’s preparations for independence for the rest of this parliamentary session. We asked for a short cessation. We did not demand that the SNP should stop believing. We said that, if it put independence to one side, we could work together on the needs of local government, the funding of mental health services, and support for teachers. He declined, preferring to put independence first, just like the SNP always does. We will not support a Scottish Government that will use this budget as a stepping stone to independence and the economic damage that it would certainly bring.

That does not prevent me from giving the Scottish Government what I hope is some helpful advice. The relationship between the Scottish Government and local government is not good and it must change. The Scottish Government should not treat councils in the manner in which it says the UK Government treats it. It plays fast and loose with the budgets and demands that local government do more while failing to provide the funds that are necessary to cover those new responsibilities as well as their existing ones.

Education is supposed to be the Government’s guiding mission but, right now, schools in my North East Fife constituency are facing £500,000 of cuts because this Government has hammered local government budgets.

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

Will the member give way?

Willie Rennie

No.

We successfully harried the Scottish Government so that it would invest in mental health services, but it is now playing catch-up and we are not convinced that the funds that were announced will feed through to real change quickly enough. Last year, we said that mental health spend should rise to £1.2 billion. A year later, it is still £100 million short. That is £100 million that could go to the health professionals in the NHS, to schools and to the police.

We need a budget that puts teachers at the very centre of our developing economy in the years to come. Liberal Democrats were the first to advocate the use of the new income tax powers gained by the Scottish Parliament. We said that a modest rise could secure a significant financial investment in education without resulting in adverse behavioural change. We were never in favour of ramping up tax at every budget; it was about the balance. Everyone knows that the SNP broke its 2016 election manifesto commitment on income tax but, thankfully, its manifesto was wrong, and the progressive change that was implemented has not driven taxpayers out of the country.

However, it is a delicate balance, and I have a warning for the Scottish Government: be careful with that balance—do not play with the trust of the taxpayers again. If they believe that tax rises will come with every budget, we may see adverse behavioural change. We must win the argument that modest progressive tax changes can work. I want to give confidence that progressive modest change is possible and is good for public services.

All of that could have been possible if the Scottish Government had put independence to one side—just for now—but, for the SNP, independence is more important than teachers’ pay, council funding and mental health. We say absolutely no to that.

15:26  



Angela Constance (Almond Valley) (SNP)

I hope to use my time to reflect wisely and calmly on some of the challenges that we collectively face in our pursuit of a fairer and more prosperous Scotland. I believe that we all have a role to play in that and a responsibility.

Like the finance secretary, I am focused on the day job, so I will start by raising a few specific points, although I hope that this does not sound like my shopping list. Not all of the items are solely for the finance secretary to purchase, but the first one certainly is. At every opportunity in the budget process, I have raised with Mr Mackay and other ministers the benefits of enabling credit unions to access a small proportion of the financial transactions money in the budget, to enable investment to increase capacity. The Welsh Government has done that and, as we know, the financial transactions money can sometimes be difficult to fully utilise. I am an admirer of Mr Mackay. To aid his consideration, I thought that I would quote to him some Burns, who wrote:

Nursing her wrath to keep it warm.”
Gathering her brows like gathering storm,
“Whare sits our sulky sullen dame,

This sulky sullen dame is very much looking forward to the cabinet secretary’s response.

I have the pleasure of serving on the Finance and Constitution Committee, which is ably chaired by my friend and colleague Bruce Crawford. As he said, the committee’s stage 1 report was published with unanimous support from committee members, despite the fact that one of those members is Murdo Fraser, who, in his opening remarks, sounded, I have to say, somewhat like a comedian at the Central Pier in Blackpool. However, despite the complexity of the fiscal framework and forecasting and the many different political views on Brexit, income tax policy, the constitution, the kitchen sink and everything else under the sun, the committee still came to an agreement, which demonstrates that, if politicians are prepared to talk and roll up their sleeves, a baseline agreement can always be achieved.

Today, however, the two biggest Opposition parties and the Liberal Democrats are determined to obstruct an agreement at every avenue.

Elaine Smith (Central Scotland) (Lab)

Will the member take an intervention?

Angela Constance

No, because I am going to use my time wisely, and I do not want to be like James Kelly and nearly burst a blood vessel.

It is a shame that the committee’s approach has not fully permeated across the chamber.

In all my political life, I have never asked a unionist—whether a blue, red or yellow one—to ditch their beliefs and not to campaign for the union. I have never asked a unionist not to campaign for what they believe in, yet they have the audacity to ask me and others to do so. I may well be a rabid, paint-your-face-blue nat, but if I can focus on the day job, the budget and the business of the finance committee, and if the finance secretary can lead the way in good faith, extending the hand of friendship and co-operation in budget negotiations, what on earth is holding people back?

In that vein, I very much welcome the increased funding and flexibility for local government. I know that the local governance review is on-going and that it cuts across all of the public sector, as well as the community and voluntary sector. Increased autonomy for local government is the early fruit of that work and of the constructive challenge from the Greens. I hope that it is a new chapter in our public sector reform journey, because, in my view, one of the great missed opportunities for us as a small country was the failure of our predecessors to reform public services when public finances were comparatively good, pre-austerity. It will be much harder to continue our reform journey, but it is now more necessary than ever.

To focus on one example, the annual health resource budget has increased by 52 per cent—£4.8 billion—since 2006-07. That is good news indeed, but will we be able to increase it again by 52 per cent over the next decade? I do not know. Will we have to do so? I hear colleagues of all political persuasions, on the margins of committees and of parliamentary life, acknowledge the need for courage, conversation and a commitment to working together across the chamber in response to the challenges that we face in our collective future. That commitment across the chamber has yet to fully emerge, and perhaps the new all-year-round budget scrutiny will help with the process.

In the time that I have left, I will say that we should always have the courage to invest in the long term. Our investment in housing is a shining example of that. The £1.7 billion resource planning assumptions for local authorities to build for the future gives them confidence and continuity, and the record investment of £826 million for affordable housing is welcome, given that it is a crucial part of the child poverty delivery plan, provides economic stimulus and increases the tax take.

I hear Labour’s calls to increase child benefit by £5 a week. It is not a bad idea; it is just not the best idea. It would cost in the region of £250 million per annum, and it would lift between 10,000 and 15,000 children out of poverty.

The Deputy Presiding Officer (Linda Fabiani)

You must close.

Angela Constance

If we used the same resource differently, we could lift 40,000 children out of poverty.

15:33  



Dean Lockhart (Mid Scotland and Fife) (Con)

Each year, the SNP’s programme for government promises flagship policies to help Scotland’s struggling economy, but each year, when it comes to the budget, we see that the SNP fails to deliver on those promises. The 2016 programme for government announced the Scottish growth scheme, promising £0.5 billion of investment in the economy, but three years later we see from this budget that only 20 per cent of that money has been invested. In 2017, the SNP promised that a new publicly owned energy company would deliver lower energy costs, but two years later the budget allocates no funding for the establishment of that energy company.

The SNP’s track record of overpromising but underdelivering continued into the 2018 programme for government when it announced the establishment of a Scottish national investment bank and promised £2 billion of investment for enterprise development, but when it comes to delivering that in the budget, we see cuts to the budgets of the enterprise agencies. We see funding of £130 million for the bank, not the £2 billion that was promised, and we find out that more than 90 per cent of the bank’s funding is coming from the UK Treasury in the form of financial transactions money—money which Derek Mackay described as “a con” when it was announced.

The SNP might complain about financial transactions money, but we welcome the fact that the Scottish national investment bank is being funded by the UK Treasury. The budget contains many more examples of how increased funding from the UK Government is benefiting Scotland. The overall budget is up by £1 billion, spending on Scotland’s NHS is up by £600 million and the new £50 million town centre fund that Mr Mackay referred to is a straight pass-through of Barnett consequentials.

However, to understand the full extent of the UK Government’s support for Scotland’s public services, we need to look beyond the budget to the latest “Government Expenditure and Revenue Scotland” report numbers. The SNP’s sustainable growth commission’s report, “Scotland—the new case for optimism: A strategy for inter-generational economic renaissance”, quite rightly highlights on page 33 that

“the Government Expenditure and Revenue in Scotland (GERS) report provides a helpful starting point for ... analysis”

of Scotland’s public finances. We agree, and here is what the latest GERS report tells us about how Scotland’s public services are funded: public spending in Scotland for 2017-18 was £73.4 billion, but stand-alone tax revenues in Scotland were only £60 billion. In other words, after 11 years of SNP government, Scotland has a net fiscal deficit of £13.4 billion. That is the highest deficit between spending and tax revenues in Scotland since devolution.

It is also the highest union dividend that Scotland has ever seen. That financial boost that Scotland gets from being part of the UK is now equivalent to £1,900 per person in Scotland.

John Mason (Glasgow Shettleston) (SNP)

Does Dean Lockhart accept that the UK Government has some responsibility at least for the Scottish economy?

Dean Lockhart

The UK Government is responsible for monetary policy and right now interest rates are at an historic low—that is the support that is coming from the UK Government. If John Mason is trying to blame Scotland’s underperformance on the UK Government, why is the rest of the UK growing three times faster than Scotland is?

To put that deficit into context, it represents 7.9 per cent of Scotland’s GDP, which is higher than the deficit of every other country in Europe and compares to a UK-wide deficit of 1.9 per cent and an EU average of 1 per cent. Here is why that deficit matters: if the SNP gets its wish of an independent Scotland in Europe, in order to reduce Scotland’s deficit to the 3 per cent of GDP that is required by the EU stability and growth pact, the SNP will have to cut spending in Scotland by £8.3 billion. I therefore ask Mr Mackay where the spending cuts of £8.3 billion will come from if he gets his wish of independence. I will give way if the finance secretary wants to tell us where those cuts of £8.3 billion will come from.

Derek Mackay

Under independence we would grow our economy and it would be among the most successful economies in the world. In response, I ask Mr Lockhart why he is avoiding the most recent economic statistics that show record low unemployment, record high exports and sustained GDP growth. That is what this Government is delivering for Scotland’s economy.

Dean Lockhart

GDP numbers that were released yesterday show that Scotland is growing at just a third of the rate of the UK. This might come as news for Mr Mackay, but the SNP has had 11 years to grow Scotland’s economy.

The finance secretary did not say where the £8.3 billion of spending cuts would come from, so I will suggest an answer for him. Cuts of £8.3 billion are more than double the entire education budget, more than half of NHS spending in Scotland and 75 per cent of the entire local government budget. So there we have it: the real cost of the SNP’s obsession with independence is public spending cuts of a level never seen before in this country. As the SNP’s growth commission made clear, the financial and economic case for independence has never been weaker.

Turning to the budget, I say that it is now clearer than ever that Scotland needs a new direction in economic policy. The SFC is forecasting another five years of economic stagnation. After 11 years of SNP government, Scotland has become a low-growth, low-wage and low-productivity economy. However, it does not have to be that way, because Scotland’s long-term economic growth is 2 per cent. We, on this side of the chamber, believe that Scottish economic growth can return to that level, but only with the right economic policies in place. However, that will not happen with this budget. The increased taxes in the budget—the triple whammy of higher taxes that has just been agreed with the Greens—mean that, in the future, we will see increasing divergence from the rest of the UK in economic growth, tax revenues and spending on public services. That is why we cannot support the budget.

Patrick Harvie

Will the member give way?

The Deputy Presiding Officer

No, he is closing. In fact, he has closed.

15:39  



John Mason (Glasgow Shettleston) (SNP)

Today, we are dealing with the budget, and I think that there are certain principles that we need to focus on at the outset. I think that we are all agreed that we want good-quality public services and a reasonable and fair level of taxation, although the reality is that, across the chamber, we would disagree on the details of both policies.

Another principle is that we have to live within our means—that applies to each of us as individuals as well as to families, councils, businesses, Governments and Parliaments. Those who try to live beyond their means will inevitably get into trouble sooner or later. If we want more expenditure on a particular sector, we have to raise tax or cut spending elsewhere. That is where the Conservatives repeatedly disappoint me with their lack of financial or business understanding. The Conservatives appear to be the only party in the Parliament that is against tax and, by implication, against decent public services. However, they argue that we should cut tax and spend more on public services, which is, frankly, impossible.

Murdo Fraser

Will the member take an intervention?

John Mason

Once I finish this point.

I know that some of the Conservative MSPs are fairly intelligent—that might or might not include Mr Fraser—and must therefore understand that income must equal expenditure. I must therefore question their thinking when they suggest that expenditure can go up at the same time as tax goes down.

Murdo Fraser

I appreciate that Mr Mason might have written his speech in advance of the debate, but did he not just hear the intervention by Mr Mackay on my colleague Dean Lockhart? Mr Mackay said that the answer to that problem was to grow the economy. Is that not the answer that Mr Mason is looking for? Surely, if Mr Mackay can argue that, so can the SNP members.

John Mason

What I heard Mr Lockhart say was that he wanted more money for Scottish Enterprise and that he wanted to cut tax at the same time. That is an example of what I am talking about, even though I had written what I am saying before he spoke.

Perhaps more realistic than the Conservatives, Labour members accept that taxes must rise to pay for improved public services. However, there are questions for them. How well thought out are their plans? Are they really arguing that, no matter how high income tax is raised above the UK level, there will be no displacement of high earners? Have their plans been examined and validated by any qualified body? I noted that Mr Kelly was calling for all parties to defeat the budget. Fair enough; that could certainly be done, if the Greens were not supporting it. However, what is Mr Kelly’s proposal for the next step after that? He will not negotiate with the SNP, so will he negotiate with the Conservatives about tax and services being cut? I presume not. Will he negotiate with the Scottish Government about the top rate and whether it should be, for example, 46, 47, 48 or 49 per cent? Are he and Labour open to real negotiations on real numbers, or does it suit their purposes better to vote against every SNP budget, no matter what it contains?

James Kelly

On the principle of fair taxation and fair funding, does Mr Mason think that it is fair that MSPs such as him will be awarded a tax cut if the budget passes while councils such as Glasgow City Council face millions of pounds of cuts?

John Mason

The problem is that the UK tax and national insurance system is fundamentally flawed. Why should a normal taxpayer be paying national insurance at 12 per cent but then pay only 2 per cent when they move into a higher tax bracket? That is something that Gordon Brown and Mr Kelly’s other colleagues could have fixed in the past, but they refused to go there and national insurance remains regressive, which causes a huge problem for us in a devolved Parliament.

Personally, I am sympathetic to higher tax rates at the top end, especially as national insurance contributions are regressive, as I said. However, we have to be careful with any move that would involve going from 46 per cent to 50 per cent or something like that.

No one in this place likes the constraints that we are under but, if we give more to local government, it means that money will be taken from somewhere else. Today, I noticed that Neil Findlay had lodged an amendment deploring that local government has not received more funding since 2013-14. Of course, that is partly because we have focused on the health service, but Mr Findlay omits to say in his amendment that he thinks that the health service has received too much.

I understand that the Liberal Democrats would not engage in serious dialogue on the budget without the prospect of independence being taken off the table. I think that we should be focusing on the budget today. Of course, we disagree on independence and many other subjects but, today, we are considering taxation and expenditure in the various sectors. There is no reason why parties that disagree on independence cannot negotiate on income tax rates or NHS expenditure. I wonder whether the Lib Dems just do not want to engage or take any responsibility for the budget, and whether an independence referendum is just an excuse to stand aloof. [Interruption.]

Mike Rumbles

Will the member take an intervention?

The Deputy Presiding Officer

Mr Mason is in his last minute.

John Mason

This Parliament was designed not to have a majority, which means that Opposition parties have the privilege of defeating the party of government from time to time. However, it also means that those parties have a responsibility to agree a budget. Sure, there has to be compromise on both sides, but I think that the Lib Dem position is particularly irresponsible.

I do not have long enough to say what I would like to about the arguments of the Greens. I am sympathetic to their wanting to move to a property tax or something like that, as long as the ability to pay is taken into account. I also agree with the principle of the Greens that local government should be more able to raise—and more responsible for raising—its own resources. At the same time, however, income and wealth are not spread equally throughout the country and there will always be a need for redistribution from those who can afford to pay more, and probably have less need, towards those who cannot afford to pay so much, and who are likely to have the greater need.

15:45  



Jenny Marra (North East Scotland) (Lab)

One of my concerns about today’s budget is that our spending in Scotland is not delivering the desired outcomes. Our public health record is getting worse, with rising numbers of people reporting mental health problems, alcoholism remaining stubbornly high, the highest level of drug deaths in Europe and the number of people who are obese increasing all the time.

On education, children’s attainment at school is a huge problem. It has been four years since any school in Dundee has seen a “very good” rating in a school inspection and it has been at least 10 years since any Dundee school has received an “excellent” rating in any of the categories in a school inspection. It could be longer, but Education Scotland does not make that information available. That is a result of this Government’s cuts, because those results cannot be unrelated to the issue of teachers coming out of schools as a result of SNP budgets.

On health, the Fraser of Allander institute said last autumn that health would soon account for half of all public spending in Scotland. The Auditor General reported last year that NHS Scotland was “not ... financially sustainable.” Those warnings have not received nearly enough attention in this chamber—I think that that is because of the current political crisis.

The Cabinet Secretary for Health and Sport (Jeane Freeman)

Will the member give way?

Jenny Marra

I will in a minute.

However, those warnings must be addressed, as they call into question the future existence of our health service. The Auditor General has told us that, if we continue to run it in the same way—with the same expectations, financial chaos, poor governance, top-heavy management structures, and disarray and confusion between health boards, integration joint boards, alcohol and drug partnerships, strategic planning partnerships and so on and so forth—the health service in Scotland will simply go bust.

We need to radically plan a new, modern health service that will guarantee that we can still deliver care free at the point of access for generations to come. That is what the new Cabinet Secretary for Health and Sport should be focused on and what all progressive energies must be spent on.

Jeane Freeman

Will Jenny Marra recognise that the Audit Scotland report was published before the medium-term financial framework, which—as I am sure she will recognise, if she has read it—deals with all those issues?

Will she also recognise that I have in the past in this chamber said that any time that Labour members want to come anywhere near me with a radical proposal, I will happily listen to it?

Jenny Marra

The cabinet secretary knows that I welcomed the medium-term financial framework; she heard me do so in this chamber. However, that does not deal with the spending that is on-going in the health service or the whole system, which is really creaking. I would be happy to meet her at any time on any of those issues and she knows that.

I will give a quick, stark example. We have doctor vacancies right across the country, but the UK Foundation Programme’s “Career Destinations Report 2017” told us that Scotland has the highest number of medical students who leave Scotland and the United Kingdom for jobs abroad in Australia and New Zealand. The cabinet secretary’s Government is paying handsomely to train doctors, but those doctors are spending less and less time working in the NHS. That is not good budgeting.

Let me turn from health to local government. COSLA has said that councils across Scotland face cuts of £319 million. Derek Mackay has dressed that up by giving some ring-fenced money for specific new work, but, with the other hand, he has taken away from some core budgets, which will not help the issue of schools and attainment that I mentioned earlier. It is a game of smoke and mirrors that has worked pretty well for the Scottish Government over the years—giving with one hand and taking away a lot more with the other.

The cabinet secretary knows that Dundee faces nearly £20 million-worth of cuts. Dundee City Council has not put out a lot of detail on those cuts yet, apart from 400 job losses. Having faced years of cuts, the council now finds itself considering compulsory redundancies, despite the fact that its own party, the SNP, has a policy of no compulsory redundancies in the public sector. When I asked the First Minister at First Minister’s questions whether she would stick by her policy in relation to Dundee City Council workers, she distanced herself from her own cuts and said that it was a matter for the council: workers in the ‘yes city’—as the SNP likes to call us—have been betrayed by their own First Minister.

Derek Mackay

Does Jenny Marra have the figure for the income tax rise that would be necessary to fund the commitment that James Kelly has tried to make for local government? Surely Jenny Marra, as articulate as she is, has done the numbers.

Jenny Marra

Derek Mackay knows as well as I do that politics is about priorities. He chooses to prioritise things such as the small business bonus and cannot get NHS finances in order. Labour’s priorities are local services and he knows that. He knows the situation in Dundee—he led the Michelin working group that arose from the 850 job losses. It was announced, just yesterday, that a further 90 jobs are to go at Tesco in Dundee. We know that 380 jobs will be lost when Her Majesty’s Revenue and Customs closes in 2022 and 1,300 jobs are to go at NHS Tayside. Now we hear that 400 council workers, under the SNP council, many of whom have voted faithfully for the cabinet secretary’s party, will lose their jobs.

Given the perilous state of the economy in Dundee, I ask Derek Mackay again whether he will go back to Dundee and find a better settlement for our council. He has announced £90 million today, but he knows that that will not mitigate the £20 million of planned cuts in Dundee. Four hundred jobs are at stake in a city that cannot take any more job losses. Those jobs are in his hands. Will he act?

15:52  



Keith Brown (Clackmannanshire and Dunblane) (SNP)

I am happy to support the general principles of the budget bill, including the general principle of investment in housing—£826 million for affordable homes, which includes a £70 million increase on this year’s funding. We have created more than 80,000 homes since 2007. In Clackmannanshire, there will be new council houses for the first time in 25 years—after years of Labour selling off council housing and not replacing it.

I am also pleased to support the general principle of raising attainment in schools, for which £180 million is being provided. That figure includes £120 million to be delivered directly to headteachers to close the gap.

Neil Findlay

Will the member take an intervention?

Keith Brown

No, I want to make some progress.

That will benefit Clackmannanshire by £3 million and Stirling by more than £1.5 million.

I also support the general principle of funding for the Stirling and Clackmannanshire city region deal. We all know how our area was short-changed by the Tories and let down by the two local Tory MPs, but the Scottish Government will commit £50.1 million to our local communities, including the Scottish international environment centre and the aquaculture hub in partnership with the University of Stirling, in my constituency.

I support the general principles, but I do not want to ignore the general and difficult context of the budget. First, if we listen to the comments of Bruce Crawford and the Finance and Constitution Committee, it seems to me that there are real issues for the Scottish Parliament to consider in relation to the fiscal framework and its on-going sustainability.

It also seems to me that, in what everyone must agree is a difficult time for public finances, there is an issue around how smaller councils cope with those difficulties. At COSLA, I have advocated for the consideration of a small council supplement to help those councils that cannot make economies of scale savings as easily as larger councils can.

The context of the budget includes the banking crisis and the failure of the Labour Party pre-2010. The Labour Party was also the first to bring us the bedroom tax—it was a Labour Party proposal. We also have the legacy of the Labour Party’s time in power, when the last words of the outgoing Government were “there is no money”.

Worse than that, particularly for our councils, is the legacy of the private finance initiatives: Labour splurged on the credit card for PFI. I will give members an idea of what that means in my local council areas—Clackmannanshire and Stirling. Out of Clackmannanshire Council’s £120 million budget, £9 million goes to PFI. Stirling Council spends £11.5 million on PFI, which is 14 per cent of the education budget. At the time, Labour was buying one school for the price of two, and that is causing problems for many of our councils today. The legacy has also caused huge problems for the Scottish Government, which must pay for buildings such as hospitals that Labour bought under PFI.

In addition to the huge pressures of the mess that the Labour Party left, we have what the Tories have done. The Tories have taken Labour’s mess and turned it into a £2 trillion national debt. They lost the pound’s AAA rating, which they said was totally defensible and guaranteed.

At the same time, the Tories have splurged on an austerity programme. They have missed all their targets through the Osborne years and up to now for public spending and reducing the deficit and the national debt. They have managed to have the austerity that has created all the hardship that we have seen and to ruin the economy at the same time. The Tories say that they will sort that with Brexit, which they are making a pretty bad job of. We are paying the price for the shambolic conduct of the economy by Labour and the Tories, which is causing so much of the problem.

As for Willie Rennie, I do not know whether he was lucky enough to hear, as I did, the comments yesterday by his Liberal Democrat former colleague Margaret Smith. She described his approach of saying to the SNP, “Stop going on about independence and we’ll talk to you about the budget,” as bizarre. Gordon Brewer added that the approach was like telling the Liberal Democrats to stop being Liberal Democrats for 18 months. However, that was unfair, because everyone knows that the Liberal Democrats have been neither liberal nor democrats for years. John Mason was exactly right to say that Willie Rennie was using a pretext to avoid doing anything constructive in relation to the budget.

Willie Rennie talked about elements of the budget that he would like to be changed—of course, he never took a single intervention in his speech. He had his chance to talk to the Government about those parts of the budget, but he chose instead to take a stupid gesture-politics approach, which is why he has had no input into the budget.

Neil Findlay

Will the member take an intervention?

Keith Brown

No.

The Deputy Presiding Officer

Mr Brown is in his last minute.

Keith Brown

I am in my last minute, otherwise I would have loved to take an intervention from Neil Findlay.

As ever, it is up to the SNP in government and across councils to sort out the mess. After the 2017 elections, I asked the Labour leader in my local area—Clackmannanshire—whether, given that the situation was difficult and the council is small, he wanted to join forces and see what could be done jointly to help the council. He said, “No—we’d rather create fireworks for you.” That was the Labour Party’s approach locally, and it is the Labour Party’s approach nationally. It has opted out of the process, so it is down to the SNP locally and nationally to sort out the mess.

I commend the details and the general principles of the budget as proposed by the cabinet secretary.

15:58  



Miles Briggs (Lothian) (Con)

This year, our Parliament will mark its 20th birthday. When the Parliament was reconvened, we as a nation spent £8 billion on our NHS; today, that figure stands at £14 billion—almost half the Scottish Government’s budget.

Derek Mackay

Will the member take an intervention?

Miles Briggs

Can I make progress first? I am not sure why the cabinet secretary wants to intervene straight away—he should calm down for a bit.

It is important to set the context for today’s budget. Thanks to UK Conservative Government decisions, the NHS in the UK will have £20 billion a year in additional funding. What does that mean for Scotland? This year alone, the Scottish Government will receive the biggest cash injection in the history of our NHS, which we should all celebrate. That will equate to £2 billion in additional spending for our NHS by 2023, as we as a nation look to improve our health and social care services across Scotland. That is yet another example of the benefit and strength of sharing our resources across our nations in the United Kingdom.

Derek Mackay

In that case, will Miles Briggs explain why he is to vote against spending the Barnett consequentials in the health service and against extending free personal care?

Miles Briggs

Let me educate the first—the deputy—[Interruption.] I mean the finance secretary, or whatever his title is today. It is my work with Amanda Kopel, after I was elected, on a member’s bill that forced this incompetent Government to extend free personal care.

On the issue of campaigning, perhaps the finance secretary would like to tell the chamber about the fact that he, George Adam and Mr Arthur are here only because they stood on a platform of saving the children’s ward at the Royal Alexandra hospital in Paisley. How is that campaign going for the finance secretary? He sold out his constituents on that as well.

We should not be pretending—

Tom Arthur (Renfrewshire South) (SNP)

On a point of order, Presiding Officer.

Miles Briggs

Here we go—a fit of rage.

Tom Arthur

The member has just lied in the chamber.

Members: Oh!

Tom Arthur

What he said was a blatant untruth. He will not be able to produce any evidence for it, because there is no evidence. If the word “lie” is felt to be unparliamentary, I am sure that my meaning, nonetheless, is clear.

The Deputy Presiding Officer

I understand that Mr Arthur is perhaps annoyed, but that particular word was not used.

Miles Briggs rose—

The Deputy Presiding Officer

I have not finished. I ask all members to take care in how they respond to the different issues.

Miles Briggs

We should not pretend that the SNP’s finances, including our health and social care service finances, are stable with this budget. The past year alone has seen major challenges for NHS boards. Indeed, the Scottish Government has had to write off £150 million of NHS board debt.

In the small print of this budget, it is clear that, yet again, SNP ministers are willing to short-change NHS boards. As it stands today, the Scottish Government budget is not fit for purpose; it continues to short-change NHS Lothian to the tune of £11.6 million.

Willie Rennie

Is Miles Briggs as concerned as I am to discover that the Greens’ deal with the SNP involves a cut of £50 million to the integration joint boards? Derek Mackay did not tell us about that. He should be clear about exactly what the deal means.

Miles Briggs

I absolutely agree. Already we are seeing in the small print of this budget where the money for the Greens’ deal will come from. How will Lothian’s two Green MSPs justify the cut for NHS Lothian?

Andy Wightman

To clarify for Mr Briggs and Mr Rennie, the £50 million will come from un-ring-fencing funds that were previously ring fenced. A number of councils in Scotland will shortly welcome that, because they asked for it. Much of that finance will be used to pay for social and personal care that, instead of being mandated for an integration joint board, will be used by councils in the ways that they see fit. Councils asked for—and we were clear in our budget negotiations that we need—less ring fencing.

Miles Briggs

That was a long history lesson. Nevertheless, it is a cut in funding for our social care services. Given that the member represents a city that is facing so much debt in social care, how will he justify his position to his voters? We will have to see.

Today, ministers in England have outlined how they are investing in a 10-year plan for our health service. I agree with what Jenny Marra said today. SNP ministers should look towards Audit Scotland’s outline of where we need to go with our health service. Every year, we have reports on the state of our NHS, and there is the review of health and social care integration, which point to the immediate action that is needed if we are going to fundamentally change our NHS and deliver for the long term. Over the past 12 years, SNP ministers have shown little progress on delivering that.

Kate Forbes

How can the member justify campaigning for something and then voting against funding it? I do not know.

Miles Briggs

I do not agree that this budget is fit for Scotland; that is why I will not support it. When I was elected, I said that I would bring forward a member’s bill, and I did that. After a long wait, the Scottish Government agreed to my request. We forced the Government to do it. Frank’s law is a perfect example of the positive difference that 31 Conservative MSPs have made in opposition. Just imagine the positive difference that we could make to our NHS with a Ruth Davidson-led Scottish Government.

This is not a budget for Scotland; it is a budget from a tired and stale SNP Government that has run out of ideas and is running out of vision for our country and our economy. Scotland can do better than this.

16:04  



Tom Arthur (Renfrewshire South) (SNP)

I am grateful for the opportunity to speak in the debate. The speech that we have just heard from Miles Briggs illustrates what is at the heart of the debate: the issue of whether one wants to engage in cheap politicking or to take responsibility in a Parliament of minorities.

Miles Briggs raised the issue of ward 15 at the RAH. He uttered a falsehood in the chamber.

Miles Briggs

Will Mr Arthur give way?

Tom Arthur

No—I have had quite enough of Mr Briggs for one afternoon.

The Deputy Presiding Officer

I want to halt proceedings for a minute. This is not about a personal argument. Could you state your case, Mr Arthur, and be careful about your language during this political debate?

Tom Arthur

I certainly will. That case is very important, because it gets to the heart of matters. The universal clinical opinion was that the decision on ward 15 at the RAH was the correct decision. Was it a challenging one for politicians and service users? Yes, but it was the universal clinical decision, which was taken to benefit the people who use the hospital. Ultimately, as politicians, we have to make a judgment about whether to listen to the professionals and the experts—for whom I know that the Tories have contempt—or to engage in cheap politicking and scaremongering. I would much rather support a Government that takes responsible decisions.

We see the converse with Mr Briggs and his Conservative colleagues, who have an opportunity to vote for Frank’s law to extend free personal care but, instead of delivering it, choose to vote against it. Talk is cheap. It is clear that members of the Tory party are completely incapable of taking responsibility as parliamentarians and living up to the responsibilities that we have as MSPs and legislators in this place, which is why they will never be close to office in this country.

That is in stark contrast to the way in which the Greens have comported themselves in the budget negotiations. I will be honest: differences of opinion exist between me and my party and the Green Party, but the Greens have shown the maturity to engage in a constructive process. What is it that the SNP and the Green Party have in common, beyond independence? They are both parties that are not looking over their shoulders to their remote-control masters at Westminster. They are parties that will put the priorities of Scotland first. It is a shame that, as we celebrate the 20th anniversary of devolution, the Tories have reverted back to their hard-line unionist stance.

What a shame it is that the Liberal Democrats—key champions of this place—have allowed their unionism to trump their willingness to engage practically with the Government to bring forward budget proposals that would benefit all of our constituents. I gently caution the Liberal Democrats: the last time that they chose not to engage with the Scottish Government because of independence was following the election in 2007. As a consequence of that, they went from being ferried about in ministerial cars to being able to fit their entire group in the back of a taxi. I think that the people of Scotland will remember their actions today as showing, once again, their putting petty, party, ultra-unionist politics before serving their constituents and the people of Scotland.

As for the Labour Party—my goodness. I was hoping to address my comments to the head of the Labour Party, that being Alex Rowley, who is the only one in the party who seems to have a brain and a willingness to come forward and engage constructively. Have we seen that today? No. As has been described, we have had a never-ending list of requests and demands, but we have had no account of how the expense of that should be met. That is a shame, because I know from my one-on-one conversations with many members of the Labour Party that we share similar values—we want to see a progressive, more socially democratic Scotland.

Neil Findlay

Will the member give way?

Tom Arthur

I am sorry, Mr Findlay—I have far too much to say. I would be happy to give way any other time, but not this afternoon.

It is a crying shame that Labour is not willing to engage. [Interruption.] I respect the Labour Party—

The Deputy Presiding Officer

Mr Arthur, will you please sit down?

I just heard a word being used by Mr Findlay, a member of this Parliament, that I do not believe is appropriate to be used.

Neil Findlay

What about Mr Arthur’s language?

The Deputy Presiding Officer

Mr Findlay, I did not ask you to retort. All that I am saying is that I heard a word that, in my opinion, as Presiding Officer of this session, is not appropriate. It is for me to decide appropriateness.

Neil Findlay

What was the word?

The Deputy Presiding Officer

I think that you know what the word was, Mr Findlay, because you are the one who used it.

Neil Findlay

I do not know what word you are talking about.

The Deputy Presiding Officer

I do not accept that, Mr Findlay. I believe that you know exactly what you said. I would ask that if you have genuinely forgotten—

The Deputy First Minister and Cabinet Secretary for Education and Skills (John Swinney)

He knows exactly what he said.

The Deputy Presiding Officer

Mr Swinney, would you please be quiet?

Mr Findlay, if you are unaware of what word you used, you can ask your colleagues or you can check the Official Report when it is published. At the moment, you will have to accept my word about my feeling that it was inappropriate.

Neil Findlay

On a point of order, Presiding Officer.

The Deputy Presiding Officer

I am speaking at the moment. I ask that the temperature of this debate be lowered because it is becoming ridiculous.

Neil Findlay

On a point of order, Presiding Officer. If I used a word that was inappropriate, I withdraw that word, but I would hope that there would be a level of consistency in applying the rules in the Parliament. Mr Arthur accused people of lying and accused the Labour group of being people with no brains. I would have thought that those accusations are as serious as use of the word that I think you are saying that I might have used.

The Minister for Business, Fair Work and Skills (Jamie Hepburn)

Do you remember what word it was now?

The Deputy Presiding Officer

Mr Hepburn, and anyone else who is here, could I please ask for silence?

Mr Findlay, I have listened to what you have said. I dealt with the point that Mr Arthur made earlier. I have subsequently stopped proceedings to say that I would like a bit of respect shown on all sides; I reiterate that.

I would like to restart the debate now because it is an extremely important debate for everybody in here and for everyone who is listening in.

I believe that you have a minute left, Mr Arthur. Please resume.

Tom Arthur

Thank you, Presiding Officer. In a spirit of collegiate good will, I withdraw the term that I used, which I accept was inappropriate. However, I am disappointed at the Labour Party, because I know that in many areas we share a lot of common ground. I appreciate that the Labour Party is vigorously opposed to Scottish independence, just as I am passionately in favour of it, but that should not be a barrier.

I say to Mr Findlay and Mr Kelly that had there been substantial, substantive engagement with the Government, and afterwards the Labour Party had said, “Sorry, but we cannot find common ground and we cannot agree a joint budget,” I would have said, “Fair enough. I can respect that.” However, a concrete set of budget proposals has not been put forward. When the finance secretary challenged Mr Kelly to say what his tax rates would have to be to meet his spending demands, he was unable to do it. When he said that to Jenny Marra, she was unable to do it. If Mr Findlay is going to sum up for the Labour Party, I hope that he will set out exactly what his spending plans are and how much he believes the SFC would forecast that they would generate. If there is an unwillingness to do that, there is an unwillingness to take this process seriously. I conclude on that note.

16:12  



Neil Findlay (Lothian) (Lab)

I was a councillor in West Lothian for nine years and was immensely proud of the work that we did and the services that council workers delivered, supported by the progressive policy agenda that we pursued. In 2006, the council was named UK council of the year because we had delivered high-quality, efficient and value-for-money public services. The services were so well run, so efficient and such good value that since then, the council has had £92 million cut from its budget. This year, it will have another £4.7 million cut, give or take whatever Mr Mackay has just chipped in.

Derek Mackay

Will Neil Findlay take an intervention?

Neil Findlay

Yes, of course. Tell me what the new figure is.

Derek Mackay

I can tell Neil Findlay what he is going to say, because I have a copy of his speech. I do not know why he sent it to the Scottish ministers. [Laughter.] By the way, the figures in it are now all wrong.

Is the Convention of Scottish Local Authorities wrong to have welcomed the announcements that I made today in relation to local government, and would Neil Findlay care to change his speech? He could cut out the personal insults that are in it, too.

The Deputy Presiding Officer

I think that the cabinet secretary has got you there, Mr Findlay.

Neil Findlay

Members will know about my computing skills. This is certainly not the first time that I have shared information with many members across the chamber, and I absolutely assure them that it will not be the last, given those skills. I am afraid that Mr Mackay did not update us on the new figures.

Of course, such cuts are happening not just to West Lothian Council; they are happening to every council in the country and are affecting every single community. It is always the poorest, the low-paid and the most vulnerable people who are damaged. This year—before Mr Mackay got my speech—the City of Edinburgh Council said that it would have to make £41 million in cuts, so projects including the Pilton community health project are in real danger of closing because their grants have been withdrawn. What a state of affairs it is when a health project in one of the most needy communities in the country will have to shut because of Mr Mackay’s cuts.

Kezia Dugdale

I think that the closure of the Pilton community health project is one of the most dangerous and short-sighted things that I have seen in my history in the Scottish Parliament. I wonder whether the finance secretary knows that it supports women who are in abusive relationships and people who are living in temporary accommodation, and that, if the service shuts, we will have to pay 10 times what it would cost to keep the service open so that those people can piece their lives back together.

In the time for which Neil Findlay has been on his feet, we have heard from Adam McVey, the SNP leader of the City of Edinburgh Council. He agrees that Edinburgh no longer faces £41 million-worth of cuts. The figure is now £33 million. Does the finance secretary think that that is still a good deal for the citizens of this city?

Neil Findlay

So, there will be £33 million of cuts: the Pilton project will still be closed under the finance secretary’s proposals. I am sure that the member who is sitting beside him is absolutely delighted to hear that he will be voting today for that project to be cut. It is an absolute disgrace.

Midlothian, which is one of the smallest councils in the country, needs to cut by £4.1 million. Council officers have put forward a list of proposals, including cutting all school-crossing patrols and closing three libraries and three community centres.

In Moray, there will be £7.3 million of cuts. Almost the entire adult education service will go, class sizes are going up to 30, street cleaning is being reduced and charges are rising.

In Dundee, £18 million is being cut: 400 jobs are going, and community facilities are being closed. In Glasgow—which has some of the worst health and education inequalities in Europe—sports centres, community golf courses and swimming pools are closing, and seven libraries could close—

Derek Mackay

Will the member give way?

Neil Findlay

No, thank you.

In Glasgow and across the country, we have lost classroom assistants, class sizes are rising and nursery teachers are being removed from schools. In SNP Falkirk Council, schools are being told to cut their budgets, with a cut of half a million pounds at Larbert high school alone.

Mr Swinney is reading my speech. I hope that he is enjoying it.

John Swinney

I am.

Neil Findlay

Clackmannanshire Council is talking about closing schools and reducing the school week, which is something that Derek Mackay tried in Paisley 10 years ago when he was council leader there. I say this to Mr Mackay: well done. Ten years on, he is shortening the school week in Clackmannanshire. What a great legacy that is.

Alison Johnstone (Lothian) (Green)

Will the member give way?

Neil Findlay

No, thank you.

Education is supposed to be Nicola Sturgeon’s top priority. If that is how the Government treats its top priority, is it any wonder that services that are not a priority are under the threat of disappearing altogether? There was barely a mention of schools in Derek Mackay’s speech, although, as I have said, education is supposed to be the top priority.

Across the public services, but particularly in councils, the cupboard is bare. The cuts are not to the bone—they are through to the marrow. They are eating away at the glue that holds society together, because it is the lunch clubs, the youth work, the libraries, the community centres, the bin men, the cleaners and the nursery staff who help to civilise our society who are being attacked by a Scottish Government that has utter contempt for councillors and councils and instead wants to centralise and dictate what goes on.

Indeed, Mr Mackay has just dictated the level of council tax rates that Scotland’s councils can raise. Imagine the howls of abuse about power grabs that would come if any UK Government attempted to dictate policy in devolved areas, but that is what is being done week in and week out to Scotland’s councils.

Andy Wightman

Will the member give way?

Neil Findlay

No, thank you.

The Deputy Presiding Officer

Mr Findlay is just closing.

Neil Findlay

According to the Accounts Commission, the Scottish Government budget has fallen by 1.65 per cent, but it has passed on a 6.92 per cent cut to local government—and it has the cheek to say that the local government settlement is a fair settlement.

Finally, I ask Parliament to listen to this, which comes from the Greens’ website:

“Like last year, Greens will not vote for a budget that cuts local government funding.”

If there were no cuts last year, why are our councils on their knees, shedding jobs and closing services?

The Deputy Presiding Officer

You must close, please.

Neil Findlay

I agree with Patrick Harvie, who said at committee that the cuts are worse than those that happened under Thatcher. The difference is that, tonight, I will vote against Thatcherite cuts, while he and his party will vote for them.

The Deputy Presiding Officer

We have absolutely no spare time left, so can members’ speeches please come in under six minutes.

16:20  



Joan McAlpine (South Scotland) (SNP)

I congratulate the cabinet secretary and the Greens on reaching an agreement that will bring stability to all our public services at a time when there is total chaos elsewhere, particularly at Westminster. None of this is easy, because—of course—the value of Scotland’s block grant from Westminster has shrunk by £2 billion in real terms since 2010. The cut cannot be wished away, but it can be mitigated. That is what the public expects of its politicians. The budget is a lesson to the Opposition parties on what can be achieved with constructive engagement, because—as we have heard—the Green Party was the only party that came forward with a coherent plan to back up its demands.

I welcome the £187 million extra funding for local authorities. Labour members, in particular, will have questions to answer about why they voted against a budget that gives councils that additional funding. They will also have to explain why they voted against a budget that gives our NHS above-inflation increases—it will deliver almost £0.75 billion extra for health. Indeed, under the SNP since 2006-07, the annual health resource budget has increased by £4.8 billion, or 52.6 per cent.

In September, Labour said that the NHS needed to get the resources that it requires, particularly for NHS staff. The budget continues the commitment to lift the public sector pay cap, including a 3 per cent rise for those who earn less than £36,500 per year. How does Labour justify, or even explain, voting against that?

The Conservatives also claim to care about NHS funding. In setting out their budget priorities in October 2018, the Scottish Conservatives called for the Barnett consequentials from the UK Government to go direct to the NHS and social care in Scotland. However, the Barnett consequentials have been reduced by the UK Government by £55 million this year. Our budget takes the necessary steps to reinstate the £55 million in its entirety, but still the Tories will vote against it.

Miles Briggs

Can Joan McAlpine not find it in her heart to acknowledge that an additional £2 million of funding for the Scottish NHS is coming from the UK Government, or is it just all about grievance and division?

Joan McAlpine

The UK Government promised to pass on all the consequentials, but it reneged on that promise. The Scottish Conservatives asked the Scottish Government to deliver on the promise, and it has more than done so. Miles Briggs should be hanging his head in shame.

As we have already heard, Miles Briggs has campaigned consistently for Frank’s law. I also campaigned for it, but we now know that he is going to vote against Frank’s law when he votes against the budget. The Tories are also going to vote against the provision of 800 more general practitioners, which the budget will deliver over the next 10 years. It was only last autumn that Jackson Carlaw demanded more money for primary care. We are getting 800 more GPs, but the Tories are going to vote against the budget.

They are also going to vote against increases in the carers allowance, which is something else for which Miles Briggs has called. In Government, the SNP has already delivered the first two payments of the carers allowance supplement, and the budget allocates another £37 million to support it. I think that it was Miles Briggs who said that carers are “counting on” the benefit. The carers might be counting on it, but the Tories will vote against it.

On the other side of the chamber, Monica Lennon has been campaigning, as has my colleague, Gillian Martin, to extend sanitary provision for women and girls in schools, colleges and universities. The budget tackles period poverty, not just in education establishments, but across a range of settings in the public, third and private sectors. Therefore, if Monica Lennon votes against the budget, she will have voted against that extra funding to tackle period poverty.

I could name other Opposition members who have campaigned passionately and—I had always believed—sincerely for other worthy causes. Willie Rennie has articulated the case for more mental health spending for young people in particular, and has done so well and diligently. The budget will increase direct investment in mental health by £27 million, which will take overall funding for mental health to an incredible £1.1 billion. That includes specialist treatment for young people, an expanded distress intervention programme, and developing community services to support the mental wellbeing of five to 24-year-olds. If Willie Rennie votes against the budget, he will vote against delivering mental health services to those young people. Those are services that he has campaigned for so sincerely—or so we thought. He will also vote against an extra £500 million for the early years and childcare, for which he has also campaigned.

Michelle Ballantyne (South Scotland) (Con)

Will the member give way?

The Deputy Presiding Officer (Christine Grahame)

The member is in her last minute and will shortly be concluding.

Joan McAlpine

Willie Rennie has campaigned for that not just in this session of Parliament, but in the previous session. He must have campaigned well because I still remember some of the speeches that he made on the subject. However, he will be voting against money for early years provision.

I could go on, because the Labour, Tory and Liberal Democrat seats are populated by politicians who are about to ditch their principles and vote against everything that they have spent the past year campaigning for. The electorate will judge them on that. Those politicians should be grateful to the Government and the Greens for coming together to save their Opposition parties from the judgment of the electorate.

16:26  



Liz Smith (Mid Scotland and Fife) (Con)

Several members have spoken about why the context of this budget is crucial, and the convener of the Finance and Constitution Committee called on members to seek consensus on at least a few issues. I will come to his comment in just a minute. I hope that the finance secretary was listening as well, because he seemed to imply that it is the job of the Opposition parties to explain why his unpopular decisions have come about.

The finance secretary is absolutely right to challenge us and the other political parties to explain our policy commitments and, in the next few weeks, our own sums in relation to the budget. However, he has to be prepared to answer some key questions himself. In particular, what evidence can he possibly point to in disputing the fact that, following the chancellor’s announcements in October last year and the addition of an extra £950 million to the Scottish block grant thanks to Barnett consequentials, his own budget has gone up in real terms? That fact has been confirmed by the Scottish Parliament’s own statistical office and many business organisations. On what grounds can he continue to tell us that it is Westminster’s fault when his budget has gained more money as a result of Westminster actions?

Derek Mackay

I am more than happy to explain—again, as I have done at committee and in other places, and as is backed up by the Fraser of Allander institute—that we are passing on the Barnett consequentials. Offsetting the UK Government’s reductions in portfolios as they relate to the Barnett consequentials is what has led to the real-terms reductions in all portfolios excluding health. That explains how I can say what I have said. The fact is that, over a 10-year period, our budget for fiscal resource for day-to-day services has been reduced by £2 billion. I thank the member for the opportunity to make that point once again.

Liz Smith

I think that the cabinet secretary has just confirmed that his budget has actually gone up. Can he explain why he thinks that increasing the tax burden in Scotland will help economic growth and investment in the Scottish economy, which we so desperately need?

Derek Mackay

A fairer, more progressive tax system that invests in our economy is about a race to the top on quality of life, not a race to the bottom on tax. That has ensured that our economic indicators are all strong at this point.

Liz Smith

Has the cabinet secretary read what the Scottish Fiscal Commission has been saying to him?

Derek Mackay

Will the member give way?

Liz Smith

No. I am sorry, but I have already taken two interventions.

The Deputy Presiding Officer

I caution you that you cannot make up your time—remember that.

Liz Smith

I can make up my time?

The Deputy Presiding Officer

No, you cannot.

Liz Smith

That is all right. I think that I have probably made sufficient points already.

It is good to hear that local authorities will get back at least some of the cash that has been taken away in the past few years. When it comes to education, the cabinet secretary knows full well that local authorities of every political hue have had to take extremely tough decisions on such matters as shortening the school day, getting rid of their school crossing patrols, increasing fees for music tuition and making classroom assistants redundant. That is what has been happening across all our local authorities.

I want to ask the cabinet secretary about a specific issue in his agreement with the Greens, which seems to suggest that there will be greater autonomy for local government. As a Conservative, I do not see any particular problem with that in principle, but it raises an issue about the choices that local government will have to make. Will the Scottish Government’s flagship policy on childcare stay as it is or will local authorities have to make choices about it? That is a key point for parents.

Derek Mackay

The childcare policy stays as it is.

Liz Smith

I thank the cabinet secretary for the clarification. If there is, in effect, greater autonomy for local authorities, what will happen when they start to make decisions because they feel that, as a result of financial pressures, they cannot deliver some of the services that they have been told to deliver?

Derek Mackay

I am happy to answer that question as well.

The Deputy Presiding Officer

It is a proper debate, but Liz Smith is losing time.

Derek Mackay

I keep getting questions posed, and I am trying to answer them, Presiding Officer.

The Deputy Presiding Officer

Absolutely. I am not complaining; I am just reminding Liz Smith that there is no spare time. I have just used some up, too.

Liz Smith

I am happy to take the interventions. The points that I am asking about are crucial to parents and teachers across Scotland.

Derek Mackay

The policy is fully funded, and the money continues to be ring fenced as I have described. The commitments are also statutory. We will deliver the childcare policy. It is strange that the Tories will be voting against it tonight.

Liz Smith

I want to be absolutely clear about this. When it comes to the delivery of the policy, is the cabinet secretary, in effect, saying that the Scottish Government will deliver the 1,140 hours or is he now agreeing to allow local authorities to choose how they spend the money?

Derek Mackay

This is most interesting. I have said repeatedly that we have a childcare policy, we are going to deliver it, we are funding it and we are going to get on with it. It is only the Tories who are opposing it by not providing the means to pay for it in the budget this evening.

The Deputy Presiding Officer

Liz Smith, you have 20 seconds.

Liz Smith

I rest my case. I am not going to continue the debate. There is a fundamental point of principle here, and, in the months to come, the Government will have to provide a lot of answers on it.

The Deputy Presiding Officer

Willie Coffey is the last speaker in the open debate.

16:32  



Willie Coffey (Kilmarnock and Irvine Valley) (SNP)

Let us just say that it has been interesting to hear the various unionist positions on the budget—the priorities, the demands and even some of the bad-tempered whinges, moans and carps that have been thrown in, as usual.

We have to remember that we are arguing over the same cake and how to divide it up for the good of the people that we represent. If one party wants a bigger slice for its chosen priority, that means a smaller slice for somebody else. It is incumbent on parties, when demanding bigger slices, that they also set out who is to get the smaller portion; otherwise, the public will see through it.

Although there is no mechanism in Parliament to present an alternative budget for approval, surely it is possible to set out a range of costed spending plans, showing the public where that party might spend more. Those plans would also have to show what area would get less—because, as everyone in the Parliament knows, the budget has to balance.

The Scottish Government’s budget provides Scotland with a stability that is sadly lacking at Westminster, where the current Administration teeters on the brink of collapse on a near daily basis, unable to stick to the plan that it had last week or the week before.

As some of my colleagues noted, this budget provides a huge shot in the arm for the NHS and education and offers a real-terms increase to our councils in both revenue and capital. The news that the cabinet secretary can use additional consequentials to provide further help to local government is very welcome and means that my local council in East Ayrshire will receive an extra £2 million to £4 million on top of the proposed allocation. That means that the council will, at least, not need to cut the allocations in the budget that have already been proposed.

As has been mentioned by several members, the health and sport budget now stands at over £14 billion—nearly a third of the whole cake—with the NHS receiving £729 million more next year if the budget is approved. Communities and local government—which includes paying our teachers—will get nearly £12 billion. The finance portfolio, which mostly consists of NHS and teacher pensions, will get around £5 billion and the education and skills porfolio, which includes funding for the colleges, will get about £3.5 billion. I list those those four areas because they are pretty big slices of the cake and account for about £35 billion of the total £42 billion that is available.

The great news from the Scottish Government yesterday was that its proposed £100 million investment to support the Ayrshire growth deal is, at long last, being matched by the UK Government this morning. It will be interesting to see whether my Ayrshire Tory colleague John Scott will support the £100 million for Ayrshire or vote against it at the end of today.

All of that will be delivered with more than half of all Scots paying less income tax than the rest of the UK and 99 per cent paying the same tax as they paid last year or less.

For residents of East Ayrshire, the proposal of a share of around £5 billion of capital investment means another 300 new council houses and six new schools, which will be warmly welcomed in that part of the world.

With equality at the heart of the budget, in contrast to the policies that we see in the rest of the UK, we are doing our best to protect the poorest in our society, with £435 million of assistance being directed from Social Security Scotland to those who need it most. Those are just the first steps in the delivery of even more benefits to support people in our society as the Scottish Government looks to tackle inequality and reduce poverty. In my constituency, more than 1,500 carers benefited from the carers supplement, and that figure will only improve with the young carers grant that is provided for in the budget.

Lastly, on one of my areas of interest, the budget continues to support our superfast broadband project, with £600 million going into the programme despite the full responsibility lying with the Tory Government, which has put in a paltry £21 million. If we left it to the UK Government, it would be decades before we reached 100 per cent coverage.

The budget offers something for every person in Scotland, from the youngest to the oldest, including our teachers, NHS workers and patients; college staff, police and fire officers; our local government staff; our students; and those in work and those who are doing their best to find work. It encourages Scottish businesses to grow through the most competitive business rates environment in the UK. It protects our most vulnerable citizens as best we can from the worst actions of a Tory Government that is getting worse by the day. All of that will be put at risk if the budget is not approved.

The Scottish Government has listened to and incorporated many of the suggestions from Opposition members. No fewer than 16 of them asked for something, whether it was on Frank’s law, support for town centres or even more help for Ayrshire. Having got most, if not all, of their wishes in the budget, are they really going to vote against the things that they asked for?

We will know, in a few more minutes, whether they really are that irresponsible. I support the budget proposals that are in front of us today.

16:37  



Elaine Smith (Central Scotland) (Lab)

This is not a stand-alone budget. It builds on the cuts of past years, and it also must be viewed in the context of the fact that the SNP Government has been in power for 11 years. We need to look at that.

We are 11 years on, and satisfaction with ScotRail has hit a 15-year low, so clearly there is no prospect of granting Labour’s request for reduced fares for our constituents. Eleven years on, homelessness is on the rise and people are dying on our streets. Eleven years on, and Scotland’s colleges have 120,000 fewer students, which means that, in our constituencies, women returners and disabled people are losing their courses. Jenny Marra also outlined very well the problems in our health service.

Those are far from the only failures of the SNP Government. Right now, in 21st century Scotland, one in four children is living in poverty. Frankly, that is shocking. The SNP’s answer to that is to reduce child poverty by 2030, which will be more than 20 years since the SNP became the Government—although I doubt that it will still be the Government then.

Today, of course, we found out that the Government has met only four of the 15—[Interruption.] I think that the Government should want to listen to what its poverty advisor said. The Government has met only four of the poverty advisor’s 15 recommendations.

The SNP is the Government of a country in which food banks have become the norm. Children who are living in poverty need action now, and this Government has the power to implement Labour’s budget request and increase child benefit by £5 a week. The give me five campaign asked families what they would do with that £5 top-up, and one mum said:

“I have two kids, so £10 a week extra could allow us to buy fresh fruit and hopefully not rely on foodbanks so much”.

Derek Mackay

Will Elaine Smith take an intervention?

Elaine Smith

I usually would, but Derek Mackay has said that the Labour Party has not been engaging, when he knows fine well that James Kelly has met him on several occasions. He is not listening—he is not listening to Labour MSPs, trade unions, churches or poverty campaigners and he is not listening to councils, so I do not think that I will take an intervention.

Eleven years on, the SNP has the powers to mitigate the Dickensian Tory welfare policy. It could support Labour and use the budget to end the two-child cap and the repugnant rape clause, but it seems that that is not a priority. Eleven years on, life expectancy has dropped to the lowest in the UK for the first time in 35 years, with significant differences between local authority areas. There is a variation of more than 10 years between North Lanarkshire and parts of Perth and Kinross.

That brings me to the state of councils 11 years on from the SNP taking power. Neil Findlay and Kezia Dugdale made the point that it is not possible to deliver the services that our communities need with the continued reduction in year-on-year funding and a depleted workforce. It will not be possible to reduce poverty when the biggest employers in communities are being forced to shed their staff. Those job losses are undoubtedly the fault of the SNP Government. Households with the least need local government services the most.

As Jenny Marra suggested, spinning ring-fenced funding as an increase is really just a big con. SPICe confirmed at the first stage of the budget that the local government settlement is a real-terms decrease of £319 million, and we should remember that that is from the amount needed just to stand still. An increase in core funding of £90 million does not fill that gap. Eleven years on, preventing poverty and reducing its impact surely must mean properly investing in local government and not continuing to slash funding.

Derek Mackay told the Local Government and Communities Committee that every council has to make efficiencies, but there are no more efficiencies to be made. Joe Cullinane, the leader of North Ayrshire Council, has asked whether SNP-run Falkirk Council is instructing its headteachers to write to parents about the £5 million reduction in school budgets because that will mean a more efficient education for their children. Keith Brown mentioned Clackmannanshire. Joe Cullinane has also asked whether SNP-run Clackmannanshire Council is considering closing primary schools and reducing the high school week because that will be more efficient. If SNP-controlled Moray Council was more efficient, could it achieve a balanced budget?

This week, I met Labour councillors from North Lanarkshire to hear at first hand their deep concerns. They cannot sustain the services that communities need with this vicious year-on-year financial assault from the SNP Government, and the jam tomorrow deal with the Greens does nothing to change that.

Jim Logue, the leader of North Lanarkshire Council, said in a letter to MSPs:

“the revenue budget for North Lanarkshire—as with all local authorities—has been significantly reduced over the last eleven years. This has meant a shortfall of over £230m in funding over the last decade, which has had a devastating impact on the delivery of our ... services.”

That is £230 million. In response to Derek Mackay’s council tax announcement, Jim Logue tells us:

“a budget settlement that gives a tax cut to Government ministers whilst forcing councils to increase council tax on hardworking people across North Lanarkshire to pay for their services is not a fair deal”.

He goes on:

“the Scottish Government have quadrupled the austerity it has received from Westminster and we can all see the impact cuts have had on our crucial services”.

Eleven years on, the on-going cuts to councils are cuts to communities. It is worse than the Thatcher years, and the same old Tories want to make sure that the rich do not pay more tax.

To respond to Willie Coffey, Unison tells us:

“a different and better budget is possible ... by expanding the fiscal envelope”.

The Government needs to think again and bring back a budget that properly invests in communities and puts income in the pockets of families to tackle poverty. Scottish Labour will not support this cuts budget.

16:44  



Adam Tomkins (Glasgow) (Con)

The context in which the budget is set is that the Scottish Government’s budget is going up by more than £1 billion in cash terms this year. That translates into a real-terms increase of nearly 2 per cent and, as we heard earlier from Miles Briggs, it includes more than £2 billion of increased spending for the national health service in Scotland by 2023. That is the context in which the SNP seeks to pass yet another pay more, get less budget, ensuring that Scotland will remain the highest-taxed part of the United Kingdom.

The second context in which the budget is set is one of subdued growth. The SNP’s economy in Scotland lags behind UK economic growth and is forecast to do so every year not merely until the end of this parliamentary session but well into the middle of the next one. As Scottish Fiscal Commission growth forecasts for Scotland are going down, Office for Budget Responsibility growth forecasts for the rest of the United Kingdom are going up. That costs businesses, but it also costs the public services dear. Only this afternoon, we heard the cabinet secretary say that in an independent Scotland he would grow the economy to pay for the cuts that the European Union would impose on him, but he should be growing the Scottish economy now.

The third contextual element that needs to be understood to understand the budget is the SNP’s broken manifesto commitment not to increase income tax rates. Seeking election in 2016, Nicola Sturgeon said:

“We will freeze the basic rate of income tax throughout the next Parliament to protect those on low and middle incomes”

In the rest of the United Kingdom, everyone who earns up to £50,000 a year pays income tax at 20 per cent. By contrast, in the SNP’s Scotland, everyone who earns more than £25,000 will pay income tax at 21 per cent. That is a broken promise and the true foundations of this year’s budget are broken nationalist promises.

The choice that the finance secretary has made is not merely to persist with that but to extend the income tax gap between Scotland and the rest of the United Kingdom, which means that all those in Scotland who earn between £43,000 and £50,000 will face a marginal tax rate of 53 per cent. It means that public servants such as police sergeants, senior nurse managers and principal teachers will pay more tax in Scotland than their counterparts south of the border and, in some cases, will pay more than £1,500 a year more.

There is growing evidence that that is already causing tax flight—people who would otherwise come here to live and work are being put off because of the SNP’s tax hikes and people who are already here are seeking to leave to escape the SNP’s punitive tax rates. It is already costing the Scottish Government tax revenue—pay more, get less. We need a budget that increases the number of Scottish taxpayers, not one that puts them off coming here or drives them away.

A week ago, the Finance and Constitution Committee heard in evidence on the budget that, for every 20 new additional-rate taxpayers we attract to Scotland, the Scottish Government receives £1 million in additional tax receipts. Yet when challenged about that in the committee, the cabinet secretary could not identify a single Government policy designed to increase such jobs in the Scottish economy. It is higher wages that drive increased tax revenues, not tax hikes.

We come to today’s deal with the Greens. Once again, Mr Harvie has proved himself to be something of a cheap date and has sold out his own voters. He said that he would not vote for a budget that did not contain significant reform of local government finance, yet we see that kicked into the long grass today, and we are given yet another cross-party working group. As Mr Rennie said, Mr Harvie has settled to be the vice-convener of the car parking working group. That is the price of his deal on the budget today, and I wonder whether even that may be a little beyond his abilities. The Greens said that they would refuse to vote for a budget that cuts local authority resources—another Green promise betrayed.

Patrick Harvie

Will the member give way?

The Deputy Presiding Officer

Mr Harvie, he is not giving way.

Adam Tomkins

In introducing his deal with the Greens this afternoon, Mr Mackay said that his budget was one that would create certainty and stability, but the only certainty is that we will have ever-higher taxes for as long as the nationalist alliance between the SNP and the Green Party is allowed to dominate. He said that it would be a budget that would prepare our economy for the challenges of the future. No, it prepares our economy for the challenges of future tax rises with regard to tourism, hotel space, car parking, council tax and even the bag that we use to carry our shopping home in. Is it any wonder that the Federation of Small Businesses in Scotland has said this afternoon that the cabinet secretary’s deal with the Greens

“will erode the small business community’s trust in his administration ... Ministers repeatedly promised firms that they would not pave the way for tourism taxes without industry support. They’re breaking that promise today.”

We will be voting against the budget tonight. We will be voting against unnecessary tax rises, we will be voting against a budget that does nothing for growth or for business, and we will be voting against a budget that punishes Scotland’s hard-working families.

The Deputy Presiding Officer

I call Derek Mackay to close for the Government.

16:51  



Derek Mackay

It is fair to say that, on some days in the Parliament, we perhaps do not have the most fulsome of debates. It is also true to say that I do not always have early sight of Opposition speeches, but I thank Neil Findlay for early sight of his speech.

Neil Findlay

Will the minister take an intervention?

Derek Mackay

Not right now.

Neil Findlay

Go on.

Derek Mackay

Okay—if I must.

Neil Findlay

Given my IT skills, this one does not even make the top 10. However, I am in exalted company. As Bruce Crawford reminded me earlier, he has sent the entire programme for government to the whole Parliament in years gone past.

Derek Mackay

Neil Findlay has admitted that his IT skills are not very good; neither are his group’s budgeting skills, as we have seen in the course of the debate.

I thought that Angela Constance helped establish a calm tone for the budget debate. She explored how we can be constructive—for example, through the use of financial transactions money by credit unions. That is the kind of constructive suggestion that I can take away. She also talked about her affection for me, but I cannot say that I have felt the love from the entire chamber this afternoon. I am slightly resistant to Angela Constance’s charms, for reasons well understood by the chamber.

For this minority Government—that was a slow-burning joke, by the way. [Laughter.] For this minority Government, it is important for our country to find the necessary compromise to provide stability, certainty, economic stimulus and, importantly, sustainability of public services. Given the challenges that we face, if there was ever a time for this Parliament to be responsible, it is surely tonight, for the sake of public services in this country.

James Kelly

The cabinet secretary mentioned sustainability of public services. We started the afternoon with a £319 million cut to local council budgets. The minister then announced £90 million in direct funding, but that still leaves a massive black hole of more than £200 million that councils will have to have to fill. Surely that is punishing local communities.

Derek Mackay

In the draft budget, I proposed a real-terms increase for local government. The decisions that I am taking today enhance that offer to local government. It is no wonder that COSLA spokespeople are right now welcoming the Scottish Government’s movement on the deal for local government.

We are investing in the economy, education and the environment. I heard the Conservatives talk about broken promises. The biggest financial challenge that we face right now and the biggest challenge to our public services and to our people is, of course, Brexit. Brexit has been brought upon Scotland by the party that said that people had to vote no in the Scottish independence referendum in order to keep Scotland in Europe. Now we are being dragged out of Europe against our will in the most reckless fashion possible. I will take no lectures from the Conservatives on economic management.

Patrick Harvie

One of Mr Tomkins’s concerns is tax flight. Even if local councils use their full capacity to increase council tax, it will still be significantly lower in Scotland than it is in England. Are we facing the prospect of a potential tax flight from England to Scotland?

Derek Mackay

We would, of course, welcome people from across the United Kingdom coming to Scotland; it is the Tories who are hostile to migration to Scotland, not the other parties in the chamber.

It is true to say that council tax will be lower in Scotland than it is in England and that the rises will be lower than they are in England. We are taking reasonable decisions to empower local authorities, in a fashion that I have heard people from across the chamber talk about for some time.

The economic indicators in Scotland right now are good. They are subdued only because of the uncertainty that is caused by Brexit. We have had seven consecutive quarters of GDP growth, and, in some of those quarters, that growth has outperformed UK GDP growth. We have record low unemployment, at 3.6 per cent; record amounts of foreign direct investment, second only to London and the south-east of England; and soaring exports. All of that is threatened by Brexit and mismanagement at the hands of the Conservatives.

This budget proposes to invest £42.5 billion in the services, infrastructure, welfare and social security of Scotland. It will deliver record sums for the national health service, a real-terms increase for education and more support for local government—it will be the third consecutive year, since I became finance secretary, of a higher-than-real-terms increase for local government. It will deliver record investment in housing, more investment in transport and support for our emergency services. To oppose the budget is not just to oppose the extra £2 billion that we are spending; it is to imperil the ability to raise the necessary revenue of tens of billions of pounds—it imperils the £42.5 billion of the Scottish budget.

The Tories have lectured me. I think that it was Murdo Fraser who made a point about who owns Scotland. That tells us everything that we need to know about why the Tories oppose our progressive and fair tax policies. Tax cuts for the richest and hammering the most vulnerable in our society—that is not the path that we will follow. Under our progressive regime, income tax in Scotland will be fair and progressive, and Scotland will continue to be the lowest-taxed part of the United Kingdom. If we had followed the Tories’ tax policies, we would be cutting public services to the tune of £500 million.

I listened to the Labour Party members—I was looking forward to the speech from Alex Rowley, who I knew was on the Labour speakers list. However, when he put forward an idea about how we might fund local government, he was told by the Labour Party to—and I quote—“shut up”, because he had no authority to negotiate with me; he is not even allowed to speak in the chamber any more on behalf of the Labour Party. That is what happens when someone in the Labour Party in the Parliament has a good idea.

I asked the Labour Party what its figure for paying for its spending commitments was, and it did not give me an alternative budget. I was promised a shambles, and it overdelivered in that regard. The actual figure for what would need to be raised to pay for Labour’s commitments represents a 6 per cent increase in the higher rate. That is a choice, but the Labour Party should be honest with people about what it is proposing when it puts proposals to them.

I have been criticised for doing a deal with the Greens. I would rather do a deal with the Greens any day than with the Democratic Unionist Party, which is backing the Tories in the House of Commons.

On behalf of the Liberal Democrats, Alex Cole-Hamilton said in The Scotsman:

“We’ve made clear to the SNP that we want a budget that focuses on education, mental health and local government funding.”

We have delivered on education, mental health and local government funding, but the problem is that I did not dress it up in the union flag, so the Liberals will vote against the budget tonight.

The budget delivers support for the most vulnerable in our society, stimulation for our economy and a competitive business rates regime, and it safeguards Scotland’s public services. I have held the rates on income tax and business tax. We are empowering local government. Some Tories said that Theresa May had more chance of getting her deal through Westminster and the European Union than I had of getting a budget through the Parliament. Tonight, we will succeed in the first vote, the first time, delivering for Scotland, against the meagre, ineffective, reckless and irresponsible Opposition that we face.

The budget has been months of hard work. Surely, Parliament should now move forward and deliver a budget that works for Scotland, that protects us in the face of austerity and Brexit by accident, and that contains a clear economic plan to support our country and accelerate economic growth.

This is a good budget for Scotland, and I have great pleasure in recommending it to Parliament tonight.

Vote at Stage 1

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Vote at Stage 1 transcript

The Presiding Officer (Ken Macintosh)

The first question is, that amendment S5M-15625.1, in the name of Murdo Fraser, which seeks to amend motion S5M-15625, in the name of Derek Mackay, on the Budget (Scotland) (No 3) Bill, be agreed to. Are we agreed?

Members: No.

The Presiding Officer

There will be a division.

For

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

Against

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

The Presiding Officer

The result of the division is: For 30, Against 96, Abstentions 0.

Amendment disagreed to.

The Presiding Officer

The final question is, that motion S5M-15625, in the name of Derek Mackay, on the Budget (Scotland) (No 3) Bill, be agreed to. Are we agreed?

Members: No.

The Presiding Officer

There will be a division.

For

Yousaf, Humza (Glasgow Pollok) (SNP)
Wightman, Andy (Lothian) (Green)
White, Sandra (Glasgow Kelvin) (SNP)
Wheelhouse, Paul (South Scotland) (SNP)
Watt, Maureen (Aberdeen South and North Kincardine) (SNP)
Torrance, David (Kirkcaldy) (SNP)
Todd, Maree (Highlands and Islands) (SNP)
Swinney, John (Perthshire North) (SNP)
Sturgeon, Nicola (Glasgow Southside) (SNP)
Stewart, Kevin (Aberdeen Central) (SNP)
Stevenson, Stewart (Banffshire and Buchan Coast) (SNP)
Somerville, Shirley-Anne (Dunfermline) (SNP)
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)
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)
Harvie, Patrick (Glasgow) (Green)
Harper, Emma (South Scotland) (SNP)
Greer, Ross (West Scotland) (Green)
Grahame, Christine (Midlothian South, Tweeddale and Lauderdale) (SNP)
Gougeon, Mairi (Angus North and Mearns) (SNP)
Gilruth, Jenny (Mid Fife and Glenrothes) (SNP)
Gibson, Kenneth (Cunninghame North) (SNP)
Freeman, Jeane (Carrick, Cumnock and Doon Valley) (SNP)
Forbes, Kate (Skye, Lochaber and Badenoch) (SNP)
FitzPatrick, Joe (Dundee City West) (SNP)
Finnie, John (Highlands and Islands) (Green)
Fabiani, Linda (East Kilbride) (SNP)
Ewing, Fergus (Inverness and Nairn) (SNP)
Ewing, Annabelle (Cowdenbeath) (SNP)
Dornan, James (Glasgow Cathcart) (SNP)
Doris, Bob (Glasgow Maryhill and Springburn) (SNP)
Dey, Graeme (Angus South) (SNP)
Denham, Ash (Edinburgh Eastern) (SNP)
Cunningham, Roseanna (Perthshire South and Kinross-shire) (SNP)
Crawford, Bruce (Stirling) (SNP)
Constance, Angela (Almond Valley) (SNP)
Coffey, Willie (Kilmarnock and Irvine Valley) (SNP)
Campbell, Aileen (Clydesdale) (SNP)
Brown, Keith (Clackmannanshire and Dunblane) (SNP)
Beattie, Colin (Midlothian North and Musselburgh) (SNP)
Arthur, Tom (Renfrewshire South) (SNP)
Allan, 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)

Abstentions

McDonald, Mark (Aberdeen Donside) (Ind)

The Presiding Officer

The result of the division is: For 67, Against 58, Abstentions 1.

Motion agreed to,

That the Parliament agrees to the general principles of the Budget (Scotland) (No 3) Bill.

Meeting closed at 17:02.  



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:

Video Thumbnail Preview PNG

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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