The next item of business is a debate on motion S4M-12857, in the name of Gavin Brown, on Scotland’s economy and finances.
14:40
The Scottish Conservatives want to have a focused and analytical debate on the subject, specifically on the issue of full fiscal autonomy and the likely effect of that on the economy and public finances of Scotland.
Since September, the Scottish Government has had a clear stance on the issue. It wants full fiscal autonomy as soon as possible. Mr Swinney said in the chamber three short weeks ago:
“I believe that Scotland should be fully responsible for raising and spending all its own resources.”—[Official Report, 11 March 2015; c 26.]
There are three reasons why we want to have this debate today. First, we do not think that anywhere near enough attention has been given to an issue that would represent a fundamental change to Scotland, and it could be a potential reality if the Scottish Government is in a position of influence in the coming months.
Secondly, a number of experts have suggested that we would be worse off under full fiscal autonomy—not just slightly worse off, but markedly worse off, with some frightening figures out there from independent experts. We have seen such figures from people who are against full fiscal autonomy—that is to be expected—but we have also seen them from people who are neutral as regards full fiscal autonomy. This morning, we saw them from somebody who is in favour of full fiscal autonomy but who has the maturity to accept and admit that there would be challenging times for Scotland, particularly in the short term, were we to go down that path. If only the Scottish Government was as open and candid as the person we heard this morning.
This is important, because the entire package is being sold by the Scottish Government and the Scottish National Party at this election as the only way to end austerity. They are not saying that we might be round about the same or that we might be slightly worse off. They are saying that we will be so much better off that there will be no requirement for any spending reductions whatsoever over the course of the next Parliament. They even have the audacity to suggest that the proposal would boost the revenues that are available for the Scottish Government to spend.
I wonder whether the member accepts the principle that the Scottish Government and the SNP want both more powers for Scotland and the best possible deal for Scotland, and that we are not going to argue for a deal that makes Scotland worse off.
I am not sure whether Mr Mason simply does not understand the arithmetic or whether that is actually an admission from Mr Mason, who is a straightforward character when it comes to debating, that we would actually be worse off in Scotland were we to go for full fiscal autonomy and therefore he is not going to argue for it. That is somewhat against what ministers on his front bench will argue today and have argued over the past weeks and months.
The third reason why we want this debate is that the Scottish Government has failed to publish any figures on the basic impact on our finances of full fiscal autonomy. It has been able to ignore some of the more challenging questions in the wider debates on the economy that we have had in the Parliament. Today, we want to debate the specific issue so that we can hear straight from the Deputy First Minister what those figures are. We implore him to publish the figures so that the people of Scotland can see in a transparent fashion what the impact would be.
Some people in this country may well want full fiscal autonomy even if it means that we are markedly worse off, and that is their right. However, many people will be voting on the judgment of whether we will be better or worse off. That is why the Scottish Government, as the Government in this country, has a duty to publish those figures so that people can make their own decisions.
I will look at what the experts have been saying. The Institute for Fiscal Studies, which has independent and highly regarded experts, has been pretty up front on the issue. The IFS has looked at the reduced oil revenues, due to a lower price, higher costs and tax breaks; it has also looked at what the fiscal position would be for Scotland and for the United Kingdom. We know through the “Government Expenditure and Revenue Scotland” figures that the UK had a fiscal deficit of 5.6 per cent in 2013-14 and that Scotland had a fiscal deficit of 8.1 per cent, which is a marked difference. However, the IFS projections suggest that the deficit for the UK would drop in 2014-15 to 5 per cent, and then down to 4 per cent in 2015-16. For Scotland, under full fiscal autonomy, the deficit would increase to 8.6 per cent for 2014-15 and stay at 8.6 per cent for the following year.
By the end of the 2015-16 financial year, we could have a position in which the UK had a falling deficit of 4 per cent but Scotland had a rising deficit of 8.6 per cent, or more than double the UK deficit. That would translate, as the IFS states, to a £7.6 billion gap that would have to be plugged by a measure such as decreasing spending. However, that would have to be over and above the trajectory of the UK Government for that as set out in the recent budget, so it would mean having every spending reduction set out by the UK and £7.6 billion on top of that. However, if the Scottish Government did not want to make £7.6 billion-worth of cuts, it would have to increase tax to a degree or increase borrowing to degree, but the most likely outcome would probably be a combination of all three.
Does the Scottish Government accept that figure of £7.6 billion? Every time the Scottish Government has been asked that question, as it was again today by Neil Bibby at portfolio question time, it has ignored it. Does the Scottish Government accept the figure of £7.6 billion or does it have an alternative figure? If it does, will it publish it? Will the Scottish Government tell this chamber and the people of Scotland what it believes the deficit figure to be?
Will the member take an intervention?
Perhaps we are about to get the answer to my question from Mr MacKenzie.
I wonder whether the IFS calculation that the member has laid out has taken into account the potential outcomes of the forthcoming UK election and how it has figured that into the calculation.
The IFS figure is based on the projections set out by the UK Government at the time of the March budget, so no—the IFS figure does not take into account what the make-up of the UK Government will be. It does not do so for the primary reason that even the IFS does not know at this stage who the UK Government will be after the general election, so of course it cannot take into account what may happen.
Will the member take an intervention?
Not at the moment, Mr Brodie.
We see from Fiscal Affairs Scotland, another expert group, figures for 2019-20. I have given members the likely figure for 2015-16, but I will fast forward to the end of this session of Parliament. According to Fiscal Affairs Scotland, the UK would have a positive fiscal balance of 0.3 per cent of gross domestic product, but if Scotland were to go through full fiscal autonomy it would have a fiscal deficit of 4.3 per cent. The UK would be in the second year of a small surplus of just over £7 billion, but Scotland would have a deficit of over £8 billion by the end of this session of Parliament. What would happen if we were to go for it and were then hit by another fiscal shock? That would be very difficult to cope with. I repeat that we would have to have £8 billion-worth of spending cuts on top of the ones that we are already going to have, or we will have tax increases or increased borrowing.
I do not claim that the Treasury, as part of the UK Government, is quite as independent as the IFS, but I invite the Scottish Government to challenge its figures on full fiscal autonomy. The Treasury has pointed out that there would be a deficit of £7.8 billion in the next financial year and that that would rise to £7.9 billion in 2018-19 and £8.4 billion in 2019-20, which is broadly in line with the estimates of others.
This morning, we heard from Jim McColl, who is a hugely respected businessman and member of the Council of Economic Advisers, who wants full fiscal autonomy. He accepts that there would be a gap. In response to the BBC, he said:
“There would be a gap if you were allocating all these revenues. Yes, there would be”.
That is a direct lift from the BBC website. That should be contrasted with the Scottish Government’s approach. In the same article, it said:
“Scotland already more than pays its own way”.
It did not say that Scotland pays its own way; it said:
“Scotland already more than pays its own way”.
If we look at last year’s and this year’s GERS figures, we see that that is not true.
Will the member take an intervention?
If we look at the projections for next year’s GERS figures, we see that that is not true. Not a single independent respected economist or forecaster on the planet says at this stage that we would more than pay our way in any of the financial years over the next session—unless that respected economist happens to be Chic Brodie, who wants me to give way.
A man of great thought.
Mr Brown goes on about the numbers. Can he explain why, under the country and regional analysis adjustments in 2012-13, which fed through to 2013-14, there was an upward revision of over £600 million in estimates of spending by Scotland, as referred to by Her Majesty’s Treasury, but the UK expenditure was cut by £1.9 billion? Why are we paying more and why have we paid more, and why does he claim that we are not doing so?
I am not quite sure whether that was Chic Brodie playing sudoku with a few numbers. It was probably nothing much more than that.
In all seriousness, the Scottish Government has thus far ducked the question, which is why we want this debate. It has not put forward its own figures and it has given very opaque answers. A couple of weeks ago, I asked John Swinney whether he accepted that we would be worse off in the short term. His answer, word for word, was:
“I have set out the fact that, by exercising responsibilities in accordance with the needs and priorities of the people of Scotland, we have the ability to achieve some of the improvements in economic performance that I have set out”.—[Official Report, 11 March 2015; c 27.]
That was his answer to a direct question. I hear Alex Johnstone ask what that means. I do not know whether it means yes or no.
The Scottish Government has not only ducked the question; it has published a document with a very partial analysis. If one were being cynical, one might say that that was a deliberately partial analysis of some of the effects. That is serious. Just a couple of weeks ago, the Scottish Government published “Benefits of Improved Economic Performance” and gave the scenario of what it called “Full Revenue Retention”. It concluded that its analysis demonstrates that our economy would be improved, our overall impact on the economy would be increased, and we could
“reinvest the proceeds from successful economic policies”.
The Scottish Government missed two critical factors. First, it showed potential upsides if there were greater productivity, greater business investment and a boost to exports. Crucially, it missed out how it would achieve any of those things. Its policies could easily fail, just as they could succeed. It is very easy to say what would happen if something happened; the Scottish Government did not demonstrate how.
Secondly, and more important, the Scottish Government looked at only one side of the profit and loss account. It looked at some potentially increased revenues that we might get if there were growth, but it ignored entirely the prospect that we would lose all the Barnett consequentials—the additional £1,200 per head that we currently get in public spending—as if that did not exist. The Scottish Government went to the trouble of producing a computer-generated equilibrium model over a 10-year time period for total factor productivity, but it completely and blatantly ignored the basic calculations on full fiscal autonomy.
That is a contrast with what happened two years ago, when the Scottish Government published “Scotland’s Balance Sheet”. In 2011-12, Scotland had a slightly lower deficit than the UK had, and John Swinney repeatedly said in the chamber and out there in public that, because we had a slightly lower deficit, that meant that we could have had higher spending and lower taxation in Scotland and still ended up with a lower deficit than the rest of the UK. If John Swinney was correct then—he said that dozens of times—that must mean by implication that, with the higher deficit in Scotland now and the projected increasing deficit, if we had full fiscal autonomy in Scotland, we could have lower public spending and higher taxation and still end up with a higher deficit than the UK.
We have pushed the Scottish Government to publish the figures so that members and the people of Scotland can look at the numbers transparently to see what the Scottish Government is actually planning for the people of Scotland.
I move,
That the Parliament notes that the Scottish Government seeks to achieve full fiscal autonomy for Scotland within the UK; notes that a number of experts predict a weaker fiscal position for Scotland should full fiscal autonomy be achieved and is concerned about the tighter fiscal challenge that could be faced; believes that a potential net fiscal deficit of over double that of the UK in 2015-16, as outlined by the Institute for Fiscal Studies, would be damaging for the Scottish economy; calls on the Scottish Government to arrange for publication of an update to the Outlook for Scotland’s Public Finances to take into account changes to the projected public finances since its original publication in May 2014 and to reflect the current Scottish Government policy of seeking full fiscal autonomy; believes that the update should be conducted and published by the Scottish Fiscal Commission, and calls on the Scottish Government to publish an updated oil and gas analytical bulletin as soon as possible.
14:55
Scotland requires the social and economic powers that are necessary to reflect the people of Scotland’s needs and preferences and to enable the people of Scotland to build on the strong economic foundations that we have and to tackle some of the long-standing issues and challenges that our society faces and which the UK system has so far failed to enable us to address. For example, there is persistent inequality in our society, and the efforts of the Scottish Government—and our predecessors—to tackle that issue, on which we had made progress for a number of years, are being halted by the UK Government’s policy choices, which are placing burdens on some of the poorest in our society.
That one example illustrates why we have to do something different. Mr Brown argued that we should continue with the status quo and do nothing to tackle or interrupt some of the deep-seated problems that trouble many of us in our society. However, the Scottish Government wants to do something about them; indeed, that was at the heart of our initiative around last September’s referendum. In the referendum’s aftermath, we are seeking an opportunity to shape a better future by obtaining the powers that would enable Scotland to build a stronger and more productive economy and deliver a level of economic performance that would mean that we could reinvest in the delivery of public services.
Will the cabinet secretary give way?
If Mr Fraser allows me to make a bit of progress, I will give way in a second.
In considering those issues and making our case, I should point out that we accept the referendum’s outcome and that, as a result, our proposals are set within the UK’s fiscal framework. In other words, a fiscally autonomous Scotland would operate within the fiscal and macroeconomic framework of the UK, but we would be responsible for virtually all the taxes and spending on almost all the public services and the welfare system in Scotland. The benefits of such an approach are clear: it would enable us to build on the foundations that we have for a successful economy and to tackle some of the deep-seated issues that we face.
Scotland’s onshore output per head is similar to the UK average and, in the UK, ranks behind only that of London and the south-east; when our North Sea resources are included, Scotland’s output per head is more than £1,600 per person higher than the UK average. We also have a higher employment rate than any other country in the UK and, for the benefit of the historical analysis, I point out that in every one of the past 34 years, Scotland has generated more than the UK as a whole in tax revenue per person.
I cite those facts in order to tackle some of the issues that Mr Brown raised, because the implication of his speech is that Scotland is somehow incapable of building on those foundations to deliver a better outcome and a better future for the people of Scotland.
Will the cabinet secretary give way?
I will give way to Mr Brown, and I remember that I promised to give way to Mr Fraser, too.
I certainly do not think that we are incapable of doing what the cabinet secretary has suggested, but I do think that the Scottish Government should be candid and up front about the fact that, over the period of five-year projections that we have, things would be more challenging. We would not be able to increase public spending; instead, we would have to decrease it and tighten things even further. Surely the cabinet secretary should be up front about that.
That was not the inference that I took from Mr Brown’s speech. With the full policy levers of independence, we could improve on the performance that we have delivered. I will set out some of those benefits in a moment, but I will happily give way to Mr Fraser, if he wishes to intervene.
The question that I wished to ask the cabinet secretary is this: if he is right in his analysis and if he is right in saying that the Scottish Government is trying to create a stronger economy and reduce inequality, both of which are laudable objectives, can he explain how a £7.6 billion reduction per annum in the Scottish Government’s budget will assist that process?
I will come on to address how that will come about, but first I want to go through some of the implications of different responsibilities being exercised in Scotland since the Government came to power in 2007.
We have managed to increase the value of Scottish international exports by 40 per cent; business research and development spending has increased by 29 per cent; and the Scottish productivity rate has gone from being 6 per cent lower than the UK rate in 2007 to sitting at around the same level as UK productivity. I therefore dispute the dismal assessment that is put forward by those who say that we cannot possibly exercise distinctive responsibilities to create better economic performance. Despite everything that was said during the referendum campaign about no one wanting to invest in Scotland, we have been ranked the first or second most attractive part of the UK for inward investment in every year since 2006.
As well as enabling us to tailor economic policy to encourage investment in job creation, full fiscal autonomy would ensure that decisions about the level and composition of taxation and public spending in Scotland reflected the needs and preferences of the people and businesses of Scotland. That point is important, because fiscal autonomy would enable us to take a different course of action.
Mr Brown cited a variety of numbers, but all the analysis that he mentioned does not take into account the potential benefits of fiscal autonomy. He cited the Institute for Fiscal Studies, which said on 11 March:
“full fiscal autonomy would give more freedom to pursue different, and perhaps better fiscal policy, and to undertake the radical, politically challenging reforms that could generate additional growth. There are undoubtedly areas where existing UK policy could be improved upon.”
That rather makes my point for me. In a nutshell, that is what fiscal autonomy would give us an opportunity to do. It would enable us to take decisions that built on the economic record that I set out a moment ago to deliver a stronger economic performance.
The IFS also said that there would be a £7.6 billion gap. If we take the assumptions about the country’s economic performance that are made in the Government’s second paper, even using the best figures, £3.5 billion a year would be generated, whereas the gap is £7.6 billion. Where would we get the missing £4.1 billion from?
Jackie Baillie passes by the caveat that the IFS included, which is that the economy’s performance can be influenced as a consequence of exercising the responsibilities that we are talking about and having control of the levers that we seek.
Another point that I will make in response to Jackie Baillie relates to how fiscal autonomy will come about. Let us consider the process by which the Scottish Parliament has acquired additional fiscal responsibilities. The new taxes that have today come into operation in Scotland—land and buildings transactions tax and the landfill tax—were provided for in the Calman commission proposals, which were published in June 2009. They are now being implemented, a number of years later.
My point is not that that is the ideal timescale—I think that all of us would agree that it has taken too long to get us from the conception of those proposals to implementation—but that there is a period during which we must take steps to implement new arrangements and new mechanisms. If we look at the approach that is proposed to be taken on the Scottish rate of income tax, there is an unreserved acceptance that it is necessary to operate within the parameters of the UK fiscal framework.
I am grateful to the cabinet secretary for giving way for a second time. In his view, the correct timescale for independence was 18 months. In his view, what is the correct timescale for full fiscal autonomy?
You are in your final minute, cabinet secretary.
Thank you, Presiding Officer.
The timescale would inevitably be a product of negotiation with the UK Government. I can set out my view all I want, but I must accept the reality that full fiscal autonomy would take place only following negotiation with the UK. We have had to wrestle with issues to do with the fiscal framework just to take forward the Smith commission proposals—we have had to go through a process of negotiation to enable that to happen.
Gavin Brown has called for scrutiny of the issue, which he is perfectly within his rights to ask for. The people of Scotland will also want scrutiny of the Tory cuts programme—the £12 billion of welfare cuts, not reforms, that the Prime Minister wants to take forward. Let us have detail from Gavin Brown about those cuts, so that people will be able to judge on that on 7 May. From the Labour Party, we would like to hear—
The cabinet secretary will hear from the Labour Party.
Order, please. The cabinet secretary is closing. We must hear him.
We want to hear what the Labour Party will do to fulfil the charter for budget responsibility, which involves taking forward £30 billion-worth of cuts.
I look forward to hearing from those two parties on those matters and to understanding the choice that people will have before the election on 7 May, which is between austerity and cuts from the Labour and Conservative parties and investment in the economy from the Scottish National Party.
I move amendment S4M-12857.2, to leave out from “within the UK” to end and insert:
“; recognises that Scotland requires the social and economic powers necessary to reflect the needs and preferences of the people of Scotland; notes that being tied to the UK Government’s austerity plan and welfare cuts is having a disproportionate impact on the most vulnerable in society; believes in an alternative to this approach that would protect vital investment in public services and develop a fair and sustainable economy, and calls on the UK parties to set out in detail their plans for taxation and welfare ahead of the general election.”
15:05
This is another Wednesday, with another debate on full fiscal autonomy and the economy. Indeed, it is another debate brought by Opposition parties, not by the Government, on the Government’s flagship policy on Scotland raising all its own taxes to cover our spending.
The choice that voters in Scotland face at the general election is whether to retain the block grant and the Barnett formula, which shares with Scotland resources from across the United Kingdom, or whether to go for full fiscal autonomy within the United Kingdom. Let me put that into context and look at what that would mean for the people of Scotland.
We know that the 2013 revenue accounts for Scotland showed a black hole in the country’s finances of £4 billion—and that was before the dramatic slump in oil prices was taken into account. For 2014-15, the black hole is forecast to grow to £6 billion. Of course, with the recent OBR oil projections and the changes in the UK budget, the black hole is forecast to grow to a staggering £7.6 billion, as confirmed by the IFS, an organisation that SNP members have been keen to quote today. We would need to slash services or increase taxes by a huge amount to fill that gap. Let me look at what that would mean.
Will the member give way?
I will in a minute.
A gap of £7.6 billion is 60 per cent of our national health service budget; it is more than our entire schools budget; and it would completely wipe out state pensions for all Scotland’s older people. If that is not to happen, each and every one of us would face a tax bombshell of more than £1,400.
I will give way to John Mason, if he will tell me which the SNP will do: cut services or increase taxes?
I refer Jackie Baillie to the Smith commission, which said that neither the Scottish budget nor the UK budget should be any larger or smaller as a result of the transfer of powers or of tax. Does she not accept that that principle applies?
We are talking about full fiscal autonomy. The record will show that there was no answer from the SNP backbencher as to what the SNP would do to deal with the black hole.
Of course, there is the suggestion that we can somehow grow ourselves out of the situation, but that is just fantasy economics. The SNP had to fiddle the figures in its modelling to include assumptions about the block grant continuing, when we know that it would not. Even if we were to allow for such a gross distortion, there would still be a multibillion pound black hole at the heart of the Government’s budget—and that is using its own figures.
I used to think that John Swinney did not want to talk about the policy because he thought that it was somehow wrongheaded. After all, he is apparently the safe pair of hands in the SNP Government—the man who is all about fiscal rectitude; the man who does not take risks. Imagine my surprise—indeed, my astonishment—to find that John Swinney was the policy’s architect. He argued for it in Cabinet and he embraced it in the national conversation in 2009—it is his name on the tin.
The policy has been roundly criticised by independent experts. It is a policy that is all about economic risk. It will hurt the people of Scotland and destroy our NHS, our schools and our pensions. We should make no mistake: the policy builds on Tory austerity plans and gives the people of Scotland austerity max. My goodness—no wonder John Swinney does not want to talk about it and prefers instead to hurl insults at Opposition members. Attack is, of course, better than defence.
John Swinney especially does not want to talk about the policy this week, when we have discovered that the SNP and the Tories have signed up to the same austerity plans for 2015-16. There we have it—in the new financial year, the people of Scotland will continue to suffer Tory austerity even if they vote for the SNP.
We were used to seeing the Tories and the SNP voting together on the budget—they were joined at the hip—between 2007 and 2010 in the Scottish Parliament, but this is a new low. The SNP has agreed to follow to the letter Tory austerity plans for this year. If John Swinney is slightly confused, I refer him to the Scottish Government’s own website, which confirms the detail of that. In public, the SNP condemns the Tories for austerity; in private, the SNP fully agrees with the Tories and signs on the dotted line for continued austerity. What hypocrisy.
I genuinely do not understand the point that Jackie Baillie is making. I wonder whether she will explain it to us.
You are approaching your last minute, Ms Baillie.
I refer John Swinney to the Scottish Government’s summary document “Increasing Public Spending: Comparison of Policy Costings”, which is dated March 2015 and which sets out, under the heading “Alternative spending proposal”, zero additional spending for 2015-16. I refer him to the Scottish Government’s own website, which tells him that.
We are now in no doubt at all that a vote for the SNP is a vote for continuing Tory austerity. The truth is that the only party that is promising to end Tory austerity is the Labour Party—[Interruption.]
Order, please. Order. We must hear Ms Baillie finish.
Over the past few weeks, SNP members have demonstrated just how untrustworthy they are with figures. First, they deny the black hole at the heart of Scotland’s finances; then they fiddle the figures to make the position seem even better; and then they deny what the independent experts are saying and hide their plans for continued austerity. One thing is absolutely clear: honesty and transparency have been posted missing with this SNP Government.
Like others in the chamber, we believe that the SNP Government needs to publish an oil and gas analytical bulletin—one made a brief appearance prior to the referendum—and an updated outlook for Scotland’s public finances that takes account of the recent projections. It should publish both before May 2015 so that people can judge whether it has something to hide.
I move, amendment S4M-12857.1, to leave out from “that the Scottish Government” to end and insert:
“that the Scottish Government’s plans for full fiscal autonomy within the UK would have instant and damaging consequences for Scotland’s economy, with huge funding cuts to areas such as health, education and policing totalling £7.6 billion in additional cuts or tax rises, as confirmed by the Institute for Fiscal Studies; further notes that this would be on top of Conservative austerity plans and that the Scottish Government has set out its intention to adopt Conservative austerity plans in 2015-16; calls on the Scottish Government to publish an updated Outlook for Scotland’s Public Finances on the basis of full fiscal autonomy and an updated oil and gas analytical bulletin before the UK General Election in May 2015, and believes that the only way to avert a £7.6 billion deficit would be to reject full fiscal autonomy within the UK in favour of keeping the block grant and the Barnett formula.”
We come to the open debate and speeches of six minutes, please.
15:12
When I read the Tory motion and the Labour amendment, it struck me that the Parliament can seldom have debated an amendment to a motion in which so many of the words were changed but so little of the substance was altered.
The Conservative motion and the Labour amendment are essentially the same. We heard in the opening speeches of both those better together allies that Scotland is too wee and too poor to manage its own affairs and that we should accept whatever macroeconomic policies and welfare provision Westminster decides to apply.
The only difference between the motion and the amendment is the tone. The Tory motion states that
“experts predict a weaker fiscal position for Scotland”,
while the Labour amendment talks of
“instant and damaging consequences for Scotland’s economy”.
It is easy to see which party drew the short straw and inherited project fear.
The relish with which Labour, the Tories and, to some extent, the Lib Dems scenario plan for bad news for Scotland is sad for those who represent the people of Scotland. They never cite other small nations that do very well even without the strong economic foundations that we have, so I was delighted to hear John Swinney outline the reality and our plans to make things better.
I understand that message coming from the Conservative Party, which is seen by voters across the UK as representing the interests of the rich and affluent, but it has increasingly come home to Scots over the past year that the electoral battle between Labour and the Conservatives is dragging Labour further towards the Tories.
The member mentions the electoral battle that is coming up. Does she not think that it is right and proper for the Scottish public to know the SNP’s statistics on the whole issue? As yet, they have not had any opportunity to find that information out.
If Labour and the Tories were honest in putting across the full detail of the Treasury paper, which did not take into account additional powers and so on, people would know better. What people in Scotland really want to know is the extent of the welfare cuts that are coming down the line from the Conservatives and are backed by Labour members when they trip through the lobbies to vote with them on austerity.
The banks failed on Labour’s watch. Labour reached for a solution and planned austerity, but what Labour is now accepting is that that makes the poorest in society pay for the mistakes of the wealthiest. As I said, the Tories are at least a bit more honest. They openly pursue that ideological agenda and champion that approach.
Seven years after the crash, the OBR has been forced to conclude that, of the major economies,
“The UK was the only country where the deficit has not been reduced by having revenue growing faster than national income.”
That is because the United Kingdom focused most on lower spending. All of that is the latest example of the cosy consensus that operates around Westminster—and Labour, if it is in government after May, will be happy to have its policies measured against targets put in place by George Osborne.
In relation to the SNP spending plans for this year, I have news for the finance spokesperson for Labour. We are in 2015-16. Budgets have to be agreed in advance, subject to available resources, and while unionist politicians agree that Scotland should get no more than pocket money from London we have to cut our cloth accordingly.
Will the member give way?
No thanks—I am in my last bit.
I keep hearing on the radio—from Labour, from the Tories and from the Lib Dems—that here in Scotland we need the security of the bigger partner—a security that other small nations that do perfectly well independently do not appear to need. It seems to be us here in Scotland who are uniquely incapable.
I will say one thing about that: a lot of people do not feel that security. It is not felt by the 145,000 households affected by this Government’s changes to incapacity benefit, as they lose about £2,000 each. That security is not felt by all the Scottish households that have seen their tax credits reduced this year. It is not felt by the more than 100,000 people who are losing, on average, £2,500 as disability living allowance is removed.
I think that people in Scotland want to do things differently. There is a growing body of opinion proving that we do not need simply to have a growing economy to fund our welfare provision, but that we need to squeeze inequality out of the system to provide a solid platform in order to grow the economy.
I believe that, once again, the Tories, the Lib Dems and Labour, having jointly signed up to all those cuts, are all swimming against the tide. We can do things differently. We should do things differently and better. I would like to see people across this chamber working together for the benefit of Scotland to do things better.
There are even some Labour MPs in England who have called for that. How sad it is that Labour in Scotland has not. I support John Swinney’s amendment.
15:18
Linda Fabiani, like other SNP members during the last few weeks and no doubt over the next five weeks, does not want to talk about full fiscal autonomy, so I shall come to that in a moment, as it is the main subject of the debate today.
Of course what the SNP does want to talk about, as we heard at the end of the cabinet secretary’s speech, is the alleged unity of Labour and the Conservatives in terms of cuts. The cabinet secretary must know that that is not the case. Ed Balls is saying in Scotland today that he rejects the “extreme and risky plans” of the Conservatives. He is not saying anything new, because in the debate that John Swinney and all his colleagues keep referring to, when there was a vote on the charter of budget responsibility, in his speech Ed Balls also rejected the chancellor’s “extreme and unbalanced plan”.
As the Institute for Fiscal Studies has pointed out, there is no agreement between Labour and the Conservatives on £30 billion in cuts. The Institute for Fiscal Studies makes clear that there is a £30 billion gap between the spending plans of Labour and the Conservatives. I am sure that the Conservatives will probably go round Scotland emphasising that, and I do not mind if they do, because we have to rebut the central SNP allegation of the campaign, which has been repeated over and over again and which no doubt will be again today, that somehow Labour is signed up for those cuts.
The reality is that, as I referred to in my question to the cabinet secretary earlier, our proposals are for fair tax increases across the UK, rather than increased borrowing for current expenditure. That does not mean that we do not want increased borrowing for capital expenditure, which is important, as I am sure the cabinet secretary would agree. However, on current expenditure, we have specific proposals, which I mentioned in my question earlier. They are for the top rate of tax, which we know about; the mansion tax, for more money for the health service; the bankers’ bonus tax, for the job and training guarantee; and the changes to pension tax relief for the highest-earning pensioners, for our various youth pledges.
Let us be absolutely clear that we can meet the fiscal mandate without the cuts, and we can do it over the next Parliament, because the economy will be growing over that period. Clearly, there might well be specific cuts in particular areas if money can be saved but, overall, there will not be the cuts that the SNP is talking about. We have to say that loud and clear every day during the next five weeks.
Will Mr Chisholm sign up to the First Minister’s proposal that the UK Government, after the next election, should agree to a 0.5 per cent year-on-year increase in departmental public spending as an alternative to austerity?
As Jim Eadie knows—this again undercuts the SNP’s central charge—the Institute for Fiscal Studies, which has rightly been much quoted in the debate, has made it clear that there is a much smaller gap between Labour and the SNP proposals than there is between the proposals of Labour and the Conservatives. I support Labour’s proposals, with the proviso that the gap between them and the SNP proposals is much smaller than the gap between Labour and the Conservatives, which Mr Eadie’s colleagues say does not exist.
In the second half of my speech, I will move on to full fiscal autonomy. Gavin Brown outlined what the Institute for Fiscal Studies said about that, the main point being that the projected deficit is 4 per cent this year for the UK and 8.6 per cent for Scotland. That gap is currently filled by UK expenditure and the Barnett formula, and in cash terms it is equivalent to £7.6 billion. Of course, the Scottish Government’s paper “Benefits of Improved Economic Performance” suggests that, in a best-case scenario, £3.5 billion of tax revenues could be accrued over 10 years, so the gap would still be there. We do not need to remind people about the absurd assumption in that paper that the Barnett formula would continue.
I have been looking carefully at the varying positions of SNP members on full fiscal autonomy over the past few weeks, and I will listen carefully to SNP speakers on that today. I listened very carefully to Nicola Sturgeon’s eloquent speech on Saturday—she is always eloquent—and the most interesting thing was that she mentioned independence four times, which was not surprising, but she did not mention full fiscal autonomy once. It is really interesting that she does not want to talk about it.
I listened carefully to what Nicola Sturgeon said on the radio yesterday and, when pressed on that, she seemed to say that it is not really anything that is going to happen any time soon and it can come in due course. Stewart Hosie tried to say that on television today when he was pushed by Andrew Neil. John Mason has the no-detriment idea, so perhaps he should try that out with his front-bench colleagues. I am not entirely sure what position John Swinney adopted today.
Anyway, the position is being reformulated. Basically, SNP members do not want to talk about the issue at all for the next five weeks, yet it is supposed to be the central plank of their UK general election manifesto, as no less a person than Alex Salmond announced a few weeks ago. The SNP is all over the place on full fiscal autonomy. Given that it has been presented as the SNP’s main demand, what would the SNP do if the UK Government actually offered it? It would say, “Not yet—we’ll have it in 10 years’ time.” Some Conservative back benchers in the UK Parliament are actually saying, “Give it to Scotland,” because they think that the UK could save money in that way.
Therefore, it is perfectly legitimate for Opposition parties to ask at least for clarity about that central SNP policy position over the next five weeks. If this debate achieves nothing else, could we please have that clarity so that we know what we are talking about before 7 May?
15:24
Gavin Brown’s motion and the Labour amendment are nothing other than a restatement of the same old arguments that we have heard from the Tories and their Labour friends for many years. Their central and only proposition is that we are too wee, too poor and too stupid to manage our own affairs.
The argument that we are too wee has long since been dismissed by reference to a great number of small countries that outperform us in every way in which performance can be measured. I reject absolutely the suggestion that we are too stupid. I am sure that Gavin Brown believes as I do that Scotland has people who are every bit as clever and talented as those throughout the rest of the UK.
I reject absolutely the proposition that we are too poor to embrace full fiscal autonomy successfully. Scotland is a wealthy country with significant oil reserves, a huge renewable energy potential, abundant natural resources and an educated and highly skilled work force.
If Mike MacKenzie is so confident of all those things, why can he not give us the numbers to back them up?
As the cabinet secretary has already outlined, the IFS predictions take no account of the significant opportunities that would arise if Scotland’s finances were in the capable hands of John Swinney instead of the incapable hands of George Osborne.
We have all the ingredients for success, and if Gavin Brown believes that we are too poor we have to ask him—and I hope that he will tell us the answer later—why he believes that that is the case, and why it can never change.
Will the member give way?
In a second or two.
We have to ask Gavin Brown why he is so complacent about his dismal prospectus.
I do not think that we are too poor at all, but according to the independent projects we would be poorer in each of the next five years of the UK Parliament. Mike MacKenzie’s party is saying that we would be better off and would have no need for any austerity; in that case, why does his party not publish the figures?
If Gavin Brown believes that that is correct, we have to ask him why, as a Tory who presumably does not believe in a dependency culture, he believes that we should be forever dependent on the rest of the UK.
We have to ask Gavin Brown why, as a Tory who presumably believes in self-sufficiency, we in Scotland should not be self-sufficient. We have to ask him why, as a unionist and a Tory, he does not agree that it would be better for Scotland and for the rest of the UK for Scotland to have the full powers to improve its economic performance; surely that is also better for Gavin Brown’s beloved UK.
I believe that Gavin Brown believes as I do that the Scottish Government has been following a wise economic course since 2007, because the data is unequivocal. The Scottish economy has begun to outperform the UK economy since 2007. I believe that Gavin Brown believes as I do that we have great opportunities to grow the Scottish economy, significantly increasing our productivity and therefore our competitiveness and fiscal performance.
Where we differ is in the fact that Gavin Brown believes that maintaining the union in its present form trumps all other considerations. Gavin Brown believes that maintaining an archaic system of Government should be our highest consideration and priority. He believes in a dismal economic philosophy that is based on the outdated idea that driving down real wages and creating a new class of working poor increases our competitiveness.
If that plan was working, George Osborne would have met his deficit reduction targets rather than missing each and every one of them. It is true that the UK is growing faster than some other economies, but it is growing from a lower base, and it is growing on the backs of increasing the numbers of the poor rather than by creating real prosperity. It is growing in a way that is failing to produce sufficient taxation to reduce the deficit properly.
There is another way—a more sustainable way—that the reduction of the deficit can be delivered over a slightly longer timeframe. The SNP economic plan has been endorsed by the National Institute of Economic and Social Research. It is a plan in which growth is delivered through investment in our people and in our infrastructure. It is a plan in which growth is delivered by fiscal stimulus and by investment directed to areas where we have comparative advantages. It is a plan to deliver higher wages and a prosperity that is shared by all of Scotland’s people. It is a fairer and, ultimately, a faster way to master our debt, so that we are the masters of our finances and not the victims of them, because money should always be our servant and it should never be our master.
15:31
I am grateful for the opportunity to play a part in the debate. To some extent, it is depressing—although one should have anticipated it—that we have reaffirmed some of the arguments that we engaged in last autumn. No one on the Labour benches mentioned anything about Scotland being too wee or too poor; no one on these benches said anything about the history that led us to that well-known debate about full policy levers of independence, a phraseology that the cabinet secretary returned to today.
It is in that context that no one on the Government front benches mentioned full fiscal autonomy. It is the subject under discussion just now; it is important that we have clarity as to the impact that arises from full fiscal autonomy. However, to me, as a simple Scotsman, it looks suspiciously like independence, chapter 1, with Barnett apparently in there somehow but with the IFS showing signs that the shortfall in our budgets will be £7.6 billion in the coming years.
To that extent, it is frightening to think that a Government would take us forward with no clear idea of how much is coming from—
Is what the member said not just another way of saying that we are too poor?
Certainly not. If we were too poor, we would not have the lights switched on in the chamber today. We have money; it is about how we manage that money and where we anticipate the money will come from in the future. That £7.6 billion shortfall has an impact on and implications for public services.
Only today, the Scottish Police Federation has pointed to the fact that cutting £60 million from the Police Scotland budget has serious implications for policing on our streets. How much more impact does the loss of £7.6 billion from a total budget of somewhere in excess of £30 billion have on a whole range of areas including the NHS, education, roads, and all the other responsibilities that we accept here in Scotland?
Graeme Pearson said that it is about how we spend the money. Would he therefore agree with me that we would be better off if we scrapped Trident and saved the £100 billion that that will cost the economy?
I do not know how full fiscal autonomy has any impact on whether we run Trident or otherwise. I am sure that it is a good distraction from the main purpose of our argument today. However, the important matter that we must face is that the number of food banks in this country stands in excess of 345. The number of homeless persons is still at an unacceptable level, with 199 more children declared homeless than was the case this time last year.
Our attention should be dedicated to ensuring that that £30 billion-plus is better spent across Scotland and that we function in a way that ensures that our Government is effective in delivering the services that Scottish people want.
The cabinet secretary indicated that the benefit of his approach will be to enhance economic performance. I cannot join up the dots between the declaration that he makes in Parliament and how he will deliver the enhancement of economic performance.
There is then the illusion that there will be an increase in productivity. Again, that seems to be outwith the cabinet secretary’s influence and power. The enhancement of productivity across the private sector will be very much a matter for those industries that are based here, in the way in which they deliver on the services and exports that we require from them.
Is that not exactly the point? The Scottish Government seeks the power to stimulate our economy. That being the case, what is Labour’s proposition to accelerate growth specifically in Scotland?
I wish that I had enough time left. The minister knows fine well the game that is played in these debates. The reality is that we face the growing presence of zero-hours contracts. Labour has declared against such contracts. The reality is that there is too much part-time working and too many people in our nation exist on the margins of real living.
Labour has proposed that there should be an £8 an hour living wage—we are committed to that. Over the past year, we have encouraged the Government to declare that for its public contracts across Scotland. I am glad to see that, eventually, the Government has come forward and supported that proposal.
In short, I would like to hear more about what full fiscal autonomy really means and what the impact would be for Barnett and the total budget available in the years ahead should the cabinet secretary get his way.
15:37
It is a great pleasure to debate the economy once again—the third time in about a month. Clearly, the Opposition parties think that the economy is a strong point for them, yet all the evidence shows that that is not the case.
It is useful to look at past record as an important factor in the debate. I want to spend a minute or two looking at the past record of various parties. First, there are the Conservatives, who at Westminster, as Mike MacKenzie told us, have missed virtually all their targets on debt and so on. Sure, they may have controlled expenditure, but they have done so in a very harsh way that is not acceptable to most civilised people in Scotland. The Conservatives have a history of being cold hearted and often seem to forget that it is real people who suffer as a result of their impersonal economics.
Then we have Labour, which at Westminster oversaw a collapse of the UK economy. Some would argue that mismanaging the economy is a trademark of Labour Governments. However, in the past, if Labour was mismanaging the economy, it did so in a much nicer way than the Tories did. More recently, though, Labour lost that more caring approach as it sought to get votes from Tory middle England.
Of course, these days we are focused on resisting the harsh Conservative welfare reforms. However, we were resisting harsh welfare reforms during my time at Westminster, too—only those were harsh Labour welfare reforms.
Lest the Lib Dems feel left out of my recollections of the past, where do they stand these days? Before 2010, people thought that the Lib Dems were to the left of Labour and that they stood for democratic reform, such as the single transferable vote. Five years later, however, and after five years of the Lib Dems in government, we see no serious electoral reforms, and the Lib Dems have propped up a Tory Government that most of their supporters did not want.
By contrast, I would suggest that the SNP record in government has been extremely good. We have run a balanced budget, introduced more progressive taxation and protected the most vulnerable from the worst Westminster cuts. Just today, we have new bankruptcy laws in place. We have two new taxes in place and Revenue Scotland has been introduced today. I understand that the rail franchise projects have been given a very positive appraisal by Audit Scotland.
The records speak for themselves. In the 2011 election, I and others were elected under the slogan “Record, Team, Vision”. It clearly continues to be the case that this party and Government have the best record, the best team, and the best vision.
The member talks about balanced budgets, but is it not the case that, in the current financial year, his Government is unable to spend something like £150 million despite demanding more money now?
If the member looks at the percentages, he will see that that is exceptionally good—if he works to that level of accuracy with his monthly salary, he is doing very well.
I now change tack slightly to keep Malcolm Chisholm happy because he referred to no detriment. Labour and the Tories suggest that more powers might lead to Scotland being worse off. The no-detriment principle is a central factor in the transfer of further powers to the Scottish Parliament. It was agreed to by all parties as part of the Smith agreement, paragraph 95(3) of which says:
“(3) No detriment as a result of the decision to devolve further power: the Scottish and UK Governments’ budgets should be no larger or smaller simply as a result of the initial transfer of tax and/or spending powers, before considering how these are used.
(a) This means that the initial devolution and assignment of tax receipts should be accompanied by a reduction in the block grant equivalent to the revenue forgone by the UK Government.”
The opposite applies to spending powers.
From that, it is clear that the transfer of additional powers should be matched by a change to the block grant. Theoretically, if we take that far enough, if it happened to be a year in which Scotland subsidised the UK, we might have to pay compensation, but if it is a year in which the UK does better, it might have to pay us.
Does Mr Mason acknowledge that the Smith agreement is written in terms of a position in which taxes and revenues are shared between the UK Government and the Scottish Government, and that full fiscal autonomy could not be more different from what is described in the Smith agreement?
Full fiscal autonomy is a progression beyond that, but it can never be complete. We voted against independence. That was sad, in my opinion, but we voted to stay in the UK and be no better off. The no-detriment principle applies even if we are sharing to the extent that only VAT, defence and foreign affairs are excluded.
Theoretically, if Scotland was put at a net disadvantage after all the powers had been transferred, there is a commitment that the block grant would compensate. There is also the political issue that no Scottish Government or team would argue for powers that would leave us worse off. We would argue for powers that would leave us equally well off or better off through such things as high speed rail being brought right to Scotland.
That part is particularly straightforward as far as I am concerned. I suggest that it will become more complex post-devolution, but I will not go there today.
The Conservatives seem to suggest that the SNP might want more powers even if it meant that Scotland would be worse off, which is clearly nonsense and no one believes it.
We are debating the economy today. I hope that I have shown that, on our past record and as we look forward to the coming elections, it is only the SNP that can be trusted with such an important area of ordinary people’s lives.
15:43
I begin by congratulating the SNP. We have done very well. We are more than an hour into the debate and SNP members are still managing to avoid giving the impression that they even understand the question that was set in the opening speech.
We have heard a lot of rubbish. We have heard the accusation that we think that Scotland is too wee and too poor, which simply causes offence on this side of the chamber and should cause offence to large numbers of people in Scotland. We have heard the accusation that we have a bad record and the SNP chooses to rely on its record, which was achieved under the fiscal discipline that was imposed by the Westminster Government and for which I have praised John Swinney many times.
Jackie Baillie was disgraceful in the way in which she attacked John Swinney. She suggested that he had somehow committed himself to Tory austerity simply by putting forward a budget that included the requirement to balance the budget within which he works. I have praised John Swinney in the past and I will do so again. He is a man who has done a great job in making limited money go as far as it can in Scotland.
That is why I find it extraordinary that that same man, who has done so well for so long under such pressure, is now prepared to put his name behind the policy of full fiscal autonomy and is not taking up the opportunity that he has to give us the numbers.
The truth is that the SNP is trying to exercise blind faith against real judgment. We have asked for the numbers. We know that full fiscal autonomy is possible. We know that, if we were to come to an agreement, Scotland could take charge of its fiscal future, yet we are suggesting that, as far as we can see, and in the view of a number of fiscal experts, when the numbers are placed on the table and the calculations are made, there is a black hole at the centre of those calculations.
Will the member take an intervention?
No, I will not.
Today we have challenged the SNP to come up with an explanation for how that black hole would be filled. Time and again, we have taken interventions from people who, it might have been thought, could come with some numbers, but no—no numbers have been forthcoming.
Time and again, we have heard the cabinet secretary and members on his back benches say that, of course, we need the powers to address Scotland’s fiscal position. They seem only too willing to take the powers without taking the true fiscal responsibility.
I hear what John Swinney has to say. I understand that a Scottish Government with full fiscal autonomy would be able to change the way in which Scotland is run in the future. It would have the opportunity—if it did the right things—to stimulate growth. However, there is a massive blind assumption at the centre of that argument, which is that all that growth and all that additional revenue would be with us very early in the process. Those of us who have studied and understood government and its finances over the years realise that that simply would not be the case.
A Scottish Government with full fiscal autonomy would wish to make changes to stimulate growth, but there would be an up-front cost. I do not know what that up-front cost would be, and I do not know what the policies of that Government would be, but there would be an up-front cost. Money would have to be invested in order to achieve the returns. Not only is there an apparent black hole at the centre of Scotland’s finances; there is also the cost of that necessary investment.
We heard from John Swinney earlier that Scotland produces £1,600 more per person in revenue per year. I presume that that is overall productivity, or gross domestic product. Of course, that figure was based on a full geographical share of oil revenue, and we know that that oil revenue will be smaller over the next few years. John Swinney did not tell us how much of that £1,600 per person would have to be taken in tax in order to invest.
Last Thursday, we even heard the First Minister project that, in a few years’ time, Scotland’s total productivity or GDP could be up by £15 billion—I think that was the figure that she used. The irony is that more than half of that £15 billion in growth would be required to be taken in tax in order to begin to plug that black hole.
We are in a very lucky position. Scotland has a devolved Government but it has shared finances with the rest of the UK. That saves us from the impact of economic shocks such as the collapse in the oil price. As a result of that deal, we have a financial position that allows us to continue to have a national health service, to continue to have our welfare payments made, to continue to have pensions paid to our pensioners and to continue to have our young people educated.
However, the hole in our projections indicates that we could lose one or more of those things if we make an error at this time. The challenge to the iron chancellor of Scotland is this: prove that you are not the cowboy or the gambler who is willing to borrow for a stake in Scotland’s future. Prove that this is not a leap in the dark. Give us the numbers, and then we might start to believe you.
15:49
I will focus my comments on the amendment in the name of John Swinney, which I support.
Yet again, we are having an economy debate and another two and a half hours of talking down Scotland from the unionist parties. It is therefore important to ensure that some facts are highlighted in the debate. Scotland’s economic expansion in the past quarter means that there have been two years of uninterrupted growth, Scotland is outperforming the UK with higher employment and lower unemployment, youth unemployment has fallen to its lowest level in five years, and female employment has increased to its highest recorded level.
Those facts clearly show that measures from the SNP Scottish Government are helping the economy. Those measures give us the most competitive business rate in the UK, and investment of £11 billion in Scotland’s infrastructure for the three years from 2015-16. They will expand the level of funded childcare from 475 hours to 600 hours per annum, which helps people with young children to get back into the workplace, and they include the Scottish Government’s activities to work towards the provision of 30,000 new modern apprenticeships per annum by 2020.
Those measures are significant, but they are also limited. The powers of this Parliament are limited, as Alex Johnstone said just a few moments ago. I am sure that if we had more powers—being independent or having fiscal autonomy—a Scottish Government could do more.
Today’s debate is clearly focused on the Westminster election that is now under way. Obviously, Westminster policies have an effect upon all of us here in Scotland. Alex Johnstone talked about the “bad record”, so let us consider some of the bad record of Westminster in recent years. The level of UK net borrowing to 2014-15 has exceeded the June 2010 forecast by more than £50 billion. George Osborne predicted in 2010 that the UK would by 2014-15 be running a surplus of about £5 billion on the structured current budget; he now expects to run a deficit of £46 billion. In the most recent budget, only a couple of weeks ago, the Tory-Lib Dem UK Government committed to a further £30 billion of cuts by 2017-18, £12 billion of which is to come from welfare cuts.
The Tories and Lib Dems are not content that, in 2013-2014, they forced 71,428 people, of whom 22,000 were children, to food banks, or that women are bearing more than three quarters of the impact of tax and welfare changes, or that more than half of disabled people who claim disability living allowance will see their benefits cut by £1,000 per annum, or that the poorest 10 per cent of households are being hit the hardest, according to the Institute for Fiscal Studies. They want to inflict even more pain and misery on the households of Scotland.
Given that the SNP Government has committed to sticking to the Tory spending plans after the UK general election for the 2015-16 financial year, how would Mr McMillan tackle the issues that we need to tackle in Scotland, such as food banks, on which we cannot wait another year?
I will come on to the point about continuing austerity measures, because they are something that the Labour Party has certainly signed up to time and again. The day after the budget, Ed Balls, the shadow chancellor, said that he would not have changed anything in the budget.
The Child Poverty Action Group suggests that 100,000 more children will be pushed into poverty because of the Tory-Lib Dem plans, and that the poorest households will be worse off by £466 because of cuts in welfare. That figure is not mine—it comes from Her Majesty’s Treasury’s budget document itself. It is grim stuff; clearly the UK establishment is bad for people’s health. The IFS is questioning where the axe will fall next in the welfare budget and says that no more than £2 billion of the cuts has been highlighted, so it is asking about the remaining £10 billion of cuts, which are to be in place by 2017-18. Time is running out.
I make no bones about highlighting the Westminster attack on the poorest people in society, because Labour has backed the Tories all the way. I had intended to comment on an earlier intervention but, unfortunately, Malcolm Chisholm is no longer in the chamber.
Will Stuart McMillan take an intervention?
I have already taken an intervention.
Ed Balls gave the game away on the day after the budget, when he said in response to a question:
“there’s nothing I’m saying to you from yesterday I would reverse.”
There we have it. The Westminster parties—the Westminster elite, in fact—want Scotland to vote for business as usual. Being tied to the cuts that have already happened and those that are in the pipeline is a clear message to everyone who is on benefits or who is one of the working poor that they will be punished.
This is why Scotland needs more SNP MPs at Westminster—not to join the unionist establishment, but to help the people who need it most. If we do that to help Scots, we will also be able to help everyone across these islands. By sending more SNP MPs to Westminster, we might actually get the Smith proposals—and more—in order to help our constituents. Who knows? We might even provide a spine, which Labour sold a long time ago, to help to keep the Tories out of Downing Street.
Whether it is issue by issue or on the basis of confidence and supply, if Labour has a progressive conscience, it can do the correct thing for a change. However, the Westminster parties need to set out their detailed plans for welfare ahead of the election.
15:56
Jackie Baillie was right: it is passing strange that we are debating the core demand of the SNP short of independence not in Government time but in Opposition time—yet again. Indeed, not only is the SNP reluctant to debate full fiscal autonomy, it is nearly incapable of pronouncing the words and has to find contorted euphemisms. Today, it is
“social and economic powers necessary to reflect the needs and preferences of the people of Scotland”,
and Mr Brown gave us an even more egregious example from earlier on. Truly, full fiscal autonomy is the policy that dare not speak its name, and no wonder, because it would leave Scotland with a fiscal black hole of £7.6 billion—£1,400 for every person in Scotland. That is equivalent to a 15p increase on every tax band, and it would cause the loss of 138,000 jobs.
Every aspect of the public finances, from education to health and from police to security would be jeopardised by that cut, and the detrimental effect would be felt not just by users of public services: the investments that we need to make in skills, innovation and infrastructure to support and grow our economy would be damaged, too.
Economists and commentators know that the figures are true. Peter Jones, in The Scotsman, called full fiscal autonomy “insanity”. It is such a crazy idea that it is clear that John Mason cannot quite bring himself to believe that it is the policy of the party that he represents.
Will Iain Gray address the macroeconomic framework within which we operate as part of the UK? If he subscribes to the opinion that Scotland is incapable of standing on its own two feet financially, does he not shed some of the light of blame on the Westminster system within which we operate?
I will come to that point in a moment. Let us stick for a moment with the consequences of full fiscal autonomy. The First Minister knows that they are true, as well. When they were put to her yesterday on the radio, she did not deny them. She said, “Don’t worry—it won’t happen just now.” That is the St Augustine defence: “Lord, grant me full fiscal autonomy, but grant me it not yet.” Nobody in the chamber has ever said that Scotland is too wee, too poor or too stupid except for SNP members. Right there, on the radio yesterday, the First Minister said that Scotland is not yet quite ready for those powers.
It is not the timing that is wrong with full fiscal autonomy—it is the principle. Pooling and sharing of resources is the best way to manage our economy and our public finances. It is not just about oil, although pooling and sharing is the best way to manage that kind of volatility, and it is not about the status quo. For Labour, it is also about a mansion tax, redistributing wealth across the UK, sharing in a 50p tax rate on 300,000 taxpayers and not just on 15,000, and taxing bankers’ bonuses in the City of London and not just the city of Edinburgh. Pooling and sharing will not only avoid the extra autonomy of fiscal autonomy, but will fund extra nurses, extra grants for students and extra resources to close the attainment gap in our schools.
Then, there is the other defence of fiscal autonomy: the “magic growth” defence. New powers will suddenly see productivity boom, exports surge and the population grow, and the economy will surge like an Asian tiger to levels that have never been seen in western Europe. As evidence for that, the cabinet secretary offered us the progress that has been made in recent years, but that progress is exactly the success of devolution: using the stability and additional resources that are made available by the very pooling and sharing of resources that the cabinet secretary seeks to dismantle.
The SNP has now managed to reduce the only clear economic policy that it had—a big corporation tax cut for big businesses—to ambiguity, with the First Minister spinning that she has dropped the policy and the cabinet secretary saying that he has not. How ironic it is, then, that the Government amendment asks for everyone else to lay out economic plans.
However, Labour is doing just that. The cabinet secretary knows that, because he has been borrowing our plans. For months we have been committed to a 50p tax rate. “No way”, said Alex Salmond, and “Read my lips: no tax rises.” Then last weekend, up pops Mr Swinney to announce a 50p tax rate. Today, Labour announced the policy that after 12 weeks in work no one can be forced to work on a zero-hours contract, which is a move towards a fairer country in which everyone shares in economic growth. I look forward to the imminent announcement by the SNP that that was always its policy and that it had just not mentioned it to us.
As for welfare, I heard the cabinet secretary say that he should be judged by his actions. The little bit of welfare that has been devolved in recent years—much more will come under the Smith commission recommendations—has seen 80 per cent of cash benefits replaced by vouchers and payment in kind. That is a harsh welfare reform and an SNP welfare reform. Is that the SNP’s plan?
We know what the policy of the SNP is, even if it will not talk about it. The SNP cannot admit it, because it knows that it would be a disaster.
16:02
I welcome today’s debate and its recognition that we seek full fiscal autonomy. I will focus on and demolish some of the shibboleths and foundations that are proposed in the motion. I said last week that the UK forecasts of tax receipts in Scotland by the Office for Budget Responsibility, which were fed into the Treasury and reflected in our funding by the UK, were nonsense. The OBR forecasts are the basis of not only the Treasury forecasts, but of those of some experts.
Members should listen to this: the current OBR report, which I looked at yesterday, says that its March 2012 report said that
“It is not possible to replicate in full the methodology we use to produce our UK-wide forecasts”
for Scottish tax receipts. Remember that those forecasts are also used by the experts. The March 2012 report said that
“the ... data that we would need to produce a Scottish macroeconomic forecast ... is generally not available”.
What did the OBR say yesterday? It said, “That remains the case.”
Despite that admission, the OBR of course continues to opine on oil and gas revenues showing a decline—despite the Brent crude barrel price today having risen by 11 per cent since its low earlier this year, and despite a commodities futures projection increase of 30 to 40 per cent by the middle of 2016. In fact, the Economy Forecast Agency predicts a 100 per cent rise, and the bookies are never wrong.
On the OBR, why would we leave our fiscal determination and negotiation of meaningful full fiscal autonomy to that incompetent organisation, with its inability to forecast? Its narrowness of forecasting leaves other experts to come up with misplaced scenarios of impending economic doom that are built on a halfway house of partial Scottish Government receipts and the Barnett formula, but we are supposed to negotiate with it on full fiscal autonomy.
I will quote again what I quoted last week from Lord Barnett, especially for the benefit of Lewis Macdonald, who misquoted me. Lord Barnett himself said that in the event of Scotland getting more tax powers, retaining the Barnett formula would be “a terrible mistake.” That, of course, was then reflected in Jack McConnell’s prediction that new tax powers coming to Holyrood would diminish the Barnett formula.
Will Chic Brodie take an intervention?
No.
Do we believe that those people at least did not know the ultimate destination? Of course they did. However, we are where we are.
In invoking financial experts and their forecasts on the back of the OBR, I would prefer to listen, as I did this morning, to Jim McColl, who laid out his rationale for full fiscal autonomy on “Good Morning Scotland”. That timescale can and will be determined only after the discussion that we would need to have with the Treasury, of course.
Will Chic Brodie give way?
No.
In respecting where we are, I must ask Gavin Brown and the Tories to accept that Scotland is not an economic basket case and that commentary of that sort would be best dealt with by looking at performance over a period of time, and not just at one moment.
Will Chic Brodie take an intervention?
No.
Over the past five years, excluding North Sea revenues as a percentage of GDP, Scotland has consistently had a higher revenue to GDP percentage than the rest of the UK. That is why the First Minister illustrated quite clearly and with confidence that growing the onshore economy by £15 billion by 2020 is very relevant. As the Deputy First Minister said, our tax receipts over the past 40 years have been higher than those of the rest of the UK. Therefore, we cannot look at just a one-off scenario in which, for example, in 2014, operating costs in the oil and gas industry grew by 11 per cent—we all know why—and capital investment increased by 12 per cent, which reduced company tax liabilities. Of course, that will have a beneficial effect on future income.
Because of UK Government policy, there are other aspects to consider—in particular, changes in national insurance. I mentioned earlier the allocation of indefinable expenditure through the “Country and regional analysis: 2014”. Over the past five years, Scotland has been allocated £730 million for nuclear decommissioning, and it was allocated £263 million for the Olympics. Would not it be better if we decided our own revenue and expenditure? We have to be in a position in which we increase investment, innovation, exports and growth.
We have already shown the impact of non-North Sea oil activity on the base performance of Scotland. In the Economy, Energy and Tourism Committee’s inquiry on exports and internationalisation, we showed how vital the impact of that is on our economy and its performance. The Government’s strategy is to increase exports by 50 per cent from 2010 to 2017. Over the first three years of that period we have, in fact, already increased exports by 20 per cent.
We can compare where we are with the position with the Smith recommendations and with full financial powers, and look at the office of the chief economic adviser report. Under the Smith recommendations, the impact of exports would increase GDP by 2.7 per cent, employment by 67,000 and tax revenues by £1.6 billion. With full financial powers, GDP would rise 3 per cent, employment would rise by 81,000 and tax revenues would rise by £1.7 billion. The same or similar comparisons would apply to the impact on further capital investment and improved productivity. There would be all of that and more without the beneficial impact of oil and gas in the North Sea, not to mention off the west coast and the Western Isles.
We have to ensure that we try to complete the journey on full fiscal autonomy as soon as we can, so that we can fully determine the economic destiny of our country.
16:08
Presiding Officer, thank you for allowing me to participate in the debate. I apologise to members, including Gavin Brown, for not being able to be here for the start of it. I was in Turnberry—I never thought that I would go to Trump Turnberry—to take part in the Scottish Police Federation conference. Unfortunately, the transport secretary’s road works delayed me on the way back up. I do not know whether he is here to apologise for that; nevertheless, I apologise to members for being late.
The motion is simple. Gavin Brown has made a simple request and posed a simple question. In all the debate about full fiscal autonomy, the finances of our country, economic growth and all the other matters, there is really just a simple question: can we have the publication of a document?
That is all that we are asking for—we are not making any judgments—and I think that SNP members could support Gavin Brown’s simple request. So far, however—and I have been listening carefully—not one single SNP member has indicated that it might be quite a good idea for us to know what the SNP’s plans are for the “Oil and Gas Analytical Bulletin”.
We just want an updated document. However, the SNP says, “We don’t have all the information, the situation is unpredictable and we couldn’t possibly publish these things.” Thank goodness it is just an academic exercise; thank goodness we do not have an independent country; and thank goodness people decided not to vote yes last year, because neither the chamber nor the people of Scotland would be satisfied with such an excuse. They would want a bit more information to assure them that their independent Government knew what it was doing and what the projections for oil revenues were.
That proves the point that we made during last year’s referendum campaign. The resource is unpredictable and volatile; it is reducing over time; and it is difficult to make predictions about it. I would regard basing a country’s finances and economy on such a volatile, unpredictable and reducing resource as political folly, and I would not support such a move. Indeed, I think that that is why people in Scotland rejected the idea.
Perhaps the SNP’s failure to publish an updated oil and gas bulletin proves the point that we made last year—that the resource is unpredictable, uncertain and reducing over time. The SNP is too embarrassed to publish the document—that is how the debate should be summed up, and I am sure that Gavin Brown will reflect on that point when he sums up.
I point out that, although I question the plans of Labour-run Fife Council, I am not in favour of abolishing Fife. In criticising the plans of any UK Government, I make it clear that I am not in favour of criticising or abolishing the United Kingdom—and the same goes for the European Union. As a result, when I question the plans of the SNP Scottish Government, I am not saying that Scotland should be abolished or questioning its existence. All that I am doing is my duty as a member of the Scottish Parliament to question the Government’s plans, and to suggest otherwise is an insulting, tired and false position. The SNP needs to reflect on its tired, old rhetoric.
I was pleased that Mr Swinney recognised that in the budget the UK Government met the ambitions for the oil industry with the changes to the investment allowance, the supplementary charge and the petroleum revenue tax and with various tax-reduction measures to incentivise investment in the North Sea. I listened to Mr Swinney on the radio and, to his credit, he found it difficult to fault anything in the UK Government’s plans. Those measures will cost the UK Treasury £1.3 billion, but they will return £4 billion of investment from the industry, resulting in 0.1 per cent of GDP for the UK. We have been able to do that within the framework of the UK, and not one penny has been cut from the Scottish Government’s budget as a result of those measures.
Had we been independent, we would certainly have had to pay the price to get investment and growth back into the oil industry. Thank goodness we did not make that decision last year; if we had, we would not have had the flexibility and agility as part of the UK to do different things to get the oil industry moving again.
Jackie Baillie told us about the reality of the £7.6 billion of cuts that would be required—the independent Institute for Fiscal Studies has made that very clear, too. What we are not hearing any more with the publication of the GERS figures is the claim, set out in the SNP’s favourite leaflet, that Scotland pays 9.6 per cent of the UK’s taxes while getting 9.3 per cent of the UK’s spend. I see that the 9.6 per cent has dropped to 8.6 per cent, but the 9.3 per cent has stayed exactly the same. I do not know whether the SNP will produce new figures in new leaflets—
It is still using the old figures.
Mr Johnstone is absolutely right. The reality is that, even though the tax take from Scotland has fallen, not one penny of the Scottish Government’s budget has been cut. That is the benefit of the pooling and sharing of resources across the UK.
The SNP says that this is all about the potential that we could have and that, if we had the economic levers, we could change everything. The one big economic lever that the SNP never stopped talking about during the referendum was corporation tax, but in not one of the many debates about the economy that we have had over the past few weeks has the SNP mentioned corporation tax. Perhaps that is because it has ditched its proposal, or perhaps it is because the UK Government’s plan created eight times as many jobs as the SNP’s corporation tax proposal would have done, in a quarter of the time of that proposal.
The reality is that the SNP has no ideas and no plans. The party is bankrupt and it is time that its members shut up about full fiscal autonomy.
16:15
I will pass on to the transport minister the fact that the road works that he put in place were not as effective as we might have hoped they would be.
Here we are again—it is another afternoon of depressing familiarity, as we discuss the Opposition parties’ interpretation of our nation’s financial sustainability. I am a fan of post-apocalyptic fiction as a genre, but only when it is well written and well delivered. Sadly, Mr Brown’s entry into the genre did not quite stand up to either of those tests.
However, let me play devil’s advocate—it is always fun to do so—and take Mr Brown’s arguments at face value. He is a fully paid-up member of the UK fan club and believes that the UK system serves Scotland well. I questioned how well the UK system serves Scotland when I intervened on Mr Gray, but I did not catch the response that he said he would give later in his speech; perhaps he made a subtle reference that I missed.
If we accept at face value the prognosis of the economic situation as laid out by Mr Brown and so enthusiastically lapped up by Labour members, what does that say about the macroeconomic framework in which Scotland has operated over many years and in which it will continue to operate under Mr Brown’s proposals and about the effect that that has had on the country’s economic circumstances? If we take Mr Brown at his word and accept that Scotland’s economy could not sustain full fiscal autonomy, surely that must be a damning commentary on the macroeconomic framework in which Scotland has operated. If his arguments are taken at face value, the conclusion that we must draw is that the UK is not serving Scotland well and that it is holding Scotland’s economy back from performing to its full capabilities.
Mr Gray—who I see has had to leave the chamber—asserted that no one on the unionist side has said that Scotland is too wee or too poor. I am sorry to say so, but the implication of what the UK parties are saying is exactly that—that Scotland as a nation is too poor. That is the implication of the arguments that Mr Gray and those with whom his party occasionally fraternises continue to propagate—[Interruption.] I hear the cabinet secretary saying that they fraternise frequently. It is becoming ever more difficult to tell the two parties apart.
The argument about pooling and sharing is put forward repeatedly. The way in which it was articulated by Mr Gray, who spoke about spending in Scotland money that is raised in London, was entirely designed to perpetuate the notion that we as a nation are subsidised and that we require other parts of the UK to subsidise Scotland. That is the direct implication of how he made his argument. The phoney war that has been going on between Mr Murphy and Diane Abbott and others in the London Labour party has been entirely about perpetuating the myth that Scotland is a subsidised nation. I thought that we had moved beyond that as a result of the referendum campaign, but it seems that the unionist parties have gone back to playing the same old songs.
What is the member’s primary objection to John Swinney publishing the projections for full fiscal autonomy?
As Mr Brown may be aware, we have been consistently explicit about our belief that Scotland should have full control of its resources as an independent nation. We laid out the implications of that clearly in the white paper and during the referendum debate. Subsequently, we have made it clear that, in the framework of the UK, Scotland should have the opportunity to exercise fiscal autonomy.
I see that Murdo Fraser is sitting next to Mr Brown—at least I think he is; it is sometimes difficult to tell from the back of the chamber. Mr Fraser used to be an enthusiastic advocate of Scotland having fiscal autonomy. Indeed, he made many speeches to that effect. I am not sure what has made him change his mind; I am sure that he will be happy to share that with us. Furthermore, Willie Rennie—a man who believes in federalism and, I presume, in regions of the United Kingdom having financial accountability and autonomy in that context—seems also to disagree with the position that he previously sincerely held.
Iain Gray told us that the SNP has not put forward an economic plan. Perhaps he has been asleep for the past couple of weeks, because we have charted a clear plan to tackle the austerity agenda. We believe that that alternative agenda should be pursued.
The IFS, which has been quoted liberally in the debate, has stated that the Labour Party could sign up to our alternative agenda and still meet its proposals for deficit reduction. There is nothing to stop it doing so.
It is clear that we want Scotland as a nation to achieve its full potential. For that to happen, we must have control of all the powers that would enable us to do that. We recognise and respect the referendum results and we recognise that we must operate in the United Kingdom framework. However, within that framework, we will never apologise for seeking the full extent of powers to realise Scotland’s full potential.
16:21
It has been disappointing how some SNP members have chosen to talk down Scotland. When we are trying to have a serious discussion about important issues for Scotland’s future, it is ridiculous for Mike MacKenzie to suggest that Scotland is too wee, too stupid and too poor and for Mark McDonald to talk about the unionists’ position. As a proud Scot, I am very clear that I have all my life supported home rule for Scotland. I am not on the unionists’ side; I am on Scotland’s side. It is insulting to be attacked in such a way every time we try to ask serious questions.
I support Jackie Baillie’s amendment. To pick up on Willie Rennie’s point, her amendment
“calls on the Scottish Government to publish an updated Outlook for Scotland’s Public Finances on the basis of full fiscal autonomy and an updated oil and gas analytical bulletin before the UK General Election”.
If the Scottish Government is saying that it will not publish those documents, it should at least have the good grace to explain why.
The issue is so important. John Swinney talked about the £12 billion of welfare cuts that are to come and the damaging impact that they would have on Scotland. I agree entirely. I have no doubt that we would stand shoulder to shoulder to oppose such an approach to the economy. In last week’s debate, I think that we agreed that there is nothing to celebrate in relation to where the economy is now. I was reminded of an editorial that I read in The Herald in July 2014, which said:
“The recovery has been a long time coming, longer than was necessary, and has some significant weaknesses. Conservative Party plans to gouge another £12 billion out of social security do not bode well.
Frances O’Grady, general secretary of the TUC”—
the Trades Union Congress—
“makes a fair point when she says that economic growth is driven by low pay and low productivity.”
The election is as important for my constituents as it is for constituents across Scotland, because we know that the future will look pretty bleak if we are to have more failed austerity and billions of pounds-worth of welfare cuts. It is therefore legitimate, if there are concerns about full fiscal autonomy and if it is the view—a view that a lot of independent economic experts have expressed—that we would face a further deficit of £7.6 billion, for any member of this Parliament to get to their feet and ask questions. That is all that we are doing.
I have a lot of time for Alex Rowley and the arguments that he makes. He mentions that he wants a reversal of some of the austerity cuts that are taking place. Does he support the proposal for a 0.5 per cent increase per annum in public expenditure, which would meet Labour’s deficit reduction targets but would allow us to take an alternative approach to the austerity agenda that is being promoted?
I support the proposal to abolish the bedroom tax and use the £175 million in funding that is being used to mitigate its effect to create an anti-poverty fund in Scotland. The Scottish Parliament lacks a clear anti-poverty strategy coming from the Scottish Government, and we need that.
I am in favour of abolishing the UK Government’s targets for benefit sanctions. I visited a food bank in Cowdenbeath yesterday, and I praise the work of the Trussell Trust and all the volunteers. However, we must find a way to tackle the underlying problems of poverty so that we can abolish food banks once and for all.
Earlier in his speech, the member called for a Scottish Government analysis of a fiscal position that, as Mr Swinney explained quite reasonably, would not come about for some years—although I hope that it would be sooner than six years. Given that Gordon Brown did not see the credit crunch coming until it happened, I wonder whether the Tories and the Labour Party—
Come to the point, please.
—have some kind of crystal ball that allows them to predict the future with that degree of precision. Perhaps—
That is enough. Mr Rowley, I will give you an extra minute.
It was a good thing that Gordon Brown was in power when the credit crunch came, because he was able immediately to take the necessary steps to see us through that, as history shows.
It has been suggested—including by Gavin Brown in moving his motion today—that full fiscal autonomy will mean fundamental change for Scotland and a £7.6 billion deficit. Indeed, he went further and said that the deficit would rise year on year to almost £9 billion, not in five years’ time but in three years’ time. What would that mean? It would mean massive cuts to public services in Scotland and massive cuts in the economic programme to get Scotland moving forward.
You must draw to a close now, please.
If there are serious questions to be answered, it is surely the right of every member of the Parliament to ask the Government to answer those questions, and that is all that we are doing today.
16:28
Sometimes, I just shake my head. It is obvious from the speeches by the unionist parties that there is a general election just around the corner. I sometimes think that they protest too much.
That is scandalous.
Even from a sedentary position, they protest too much.
Alex Rowley said that members have every right to question, and they do have every right to do that, regardless of what political party they belong to and whether they are unionists or otherwise, but so do back benchers from the Government’s party. I have a right to ask questions of the Labour Party, such as why, during the referendum, it phoned old-age pensioners and sent them letters telling them that they would not get their pensions in an independent Scotland. I have a right to get a reply about that. I also have a right to get a reply for the many people in my constituency who are of Polish and other origins who were told by the Labour Party and others, via phone calls, that they would be deported if they turned up to vote in the referendum.
I did not want to go down that road again, but the unionist parties are getting together again to talk Scotland down, just as they did during the referendum. I did not want to have to repeat that, but that is what they are doing constantly to frighten people. They frightened people during the referendum and they are frightening them once again. I honestly do not understand that psyche, and the Scottish people do not understand it either. When the Scottish people look at them, those parties will pay the price not just for what they did during the referendum but for what they are trying to do now. When they tell people in their own country that they are not genetically programmed to think politically, there is something sadly wrong not with the people of this country but with the political parties that say that.
Sandra White is a master of digression. Is she in favour of publishing the oil and gas bulletin?
That will happen and I am in favour of it. However, it is quite funny that Mr Rennie did not put forward his policies. That shows that Scotland puts more money into the Westminster Treasury than we get back out. When is he going to produce his policies? When is he going to tell the Scottish people the truth: that we are not too poor? We do not need the lies that he tells—I am sorry, Presiding Officer; I should not have said that. We do not need the untruths that were told during the referendum—
You might wish also to confine yourself to the terms of the motion and the amendment, please.
Yes—I would have liked that to happen to some other people, but never mind, Presiding Officer; I take that on board.
It was never my intention to start my speech off like this, but I cannot sit and listen to the unionist parties constantly saying that Scotland needs the United Kingdom to survive. We can survive perfectly well on our own, as I am sure they will find out on 7 May this year.
I want to go back to what the motion says. Let us look at some of the key points about full responsibility, fiscal autonomy or whatever we want to call it. With full responsibility, Scotland’s resources would be given to the Scottish Parliament. We would then be able to respond to the challenges and the austerity measures that are coming from Westminster—and, although it may deny it, the Labour Party supports the austerity measures that the Tory party has put forward. Let us put that one to rest—it supports them. Billions of pounds of cuts will come to the Scottish people regardless of whether it is the Labour Party or the Tory party that is in power in Westminster.
I want to put forward some of the arguments that we put forward at various meetings. If we had full responsibility over taxes, welfare and so on, we could look at the economy and jobs; we could create more jobs for the Scottish people; and we could protect their rights in the workplace, which we asked the Smith commission to deliver, although it did not.
Another issue that we have to look at is the so-called vow that the people of this country were promised by all three unionist party leaders. They did not get that vow delivered. That is something else that those parties have to answer to the Scottish people for.
We could also look at equality. It cannot be right that the people with the most money get the most. We have to look after our vulnerable people. Everybody should be treated the same. Not a lot of people have mentioned that issue today.
If the Scottish Government held the power, there would be a positive impact on GDP, and employment and tax revenues would be significantly increased. The Smith report set out steps to improve the economy. However, do those plans really benefit Scotland? They could benefit Westminster more than they do Scotland.
The report talks about plans to create 11,000 jobs in Scotland, and the estimated revenue from them would be £400 million. That sounds really good. The money, however, would not come to Revenue Scotland; it would go to Westminster.
If we want to have control over those issues and to create employment and a fair society, we have to have the power over revenues and the economy.
I see the Presiding Officer nodding at me. I have only a couple of seconds to finish.
We need to have the powers over welfare as well. As Alex Rowley said, there are people going to food banks in what is a rich country—I am talking about not just Scotland but Britain. There are more and more food banks, and there are people on the streets, as has been said before, who are homeless. Why is that? If we have control over our economy, we can do things differently, for the benefit of the Scottish people.
We now move to the closing speeches.
16:29
Here we are again, with another debate on the economy and on the choices facing Scotland, and another opportunity for SNP ministers to spell out the implications of their flagship policy of full fiscal autonomy. It is another chance for the Scottish Government to tell voters just what they will get if they vote SNP. However, what is most striking is how little ministers have had to say on full fiscal autonomy.
John Swinney’s amendment fails to use those words at all. Instead, as Iain Gray pointed out, it says:
“Scotland requires the social and economic powers necessary to reflect the needs and preferences of the people of Scotland”.
In other words, it says that Scotland needs the powers that Scotland needs in order to meet the needs of Scotland. A polite way of describing that would be to say that it is a tautology, but it might be more like it to say that it is stringing words together that mean nothing in order to avoid saying anything. At 3 o’clock this afternoon, John Swinney was challenged by Jackie Baillie to say how he proposed to fill the funding gap of £7.6 billion a year after the abolition of Barnett. He sat down six minutes later, having offered absolutely no detailed explanation of how Barnett formula funding could be replaced overnight.
John Swinney was also challenged about when the SNP wants to achieve full fiscal autonomy by, and he said that that would have to be negotiated with somebody else. Perhaps he can now tell us his negotiating position. When would he like to achieve full fiscal autonomy by? Perhaps he does not want to tell us. Perhaps he agrees with Mike MacKenzie that full fiscal autonomy should not happen any time before 2021. When the SNP was challenged on its support for Tory spending plans in the new financial year, Linda Fabiani said that that is all right, because it is too late to do anything about it. What a contrast with Labour’s position, confirmed by Ed Balls in Glasgow today, that if we win in May, he will use his first budget to begin to end Tory austerity, with £800 million of extra spending in Scotland, which will be brought in as early as possible. If only we could have something as clear and straightforward from the SNP.
For example, the SNP could say that it would support that Labour budget if it had the opportunity to do so. After all, at the weekend, John Swinney said that the SNP would support Labour’s policy of a 50p top rate of tax after all. Perhaps there are more U-turns to come and more areas on which the SNP will come round to supporting Labour’s plans. However, if so, it has a lot of catching up to do. Perhaps, like Mark McDonald, the SNP regards any proposals to raise taxes in London to pay for services in Scotland as a cunning ploy to promote Scottish dependency on England. That is surely a revealing insight into the peculiar world that some members of the SNP inhabit.
Does the member believe that Scotland is or requires to be subsidised?
I know, and I hope that Mr McDonald knows and understands, that the Barnett formula provides additional public spending per head in Scotland and has done so for many years. I know that the funding gap that has been created now is growing and growing and that the SNP has brought forward no proposals to fill it.
If SNP ministers do not want to talk about full fiscal autonomy or scrapping the Barnett formula, they can always get others to do it for them. Last week, we heard from SNP backbenchers that full fiscal autonomy does not matter much because, after all, it will not happen tomorrow. Today, when SNP deputy leader Stewart Hosie was asked by Andrew Neil about the same issue, his answers were revealing. He said:
“I think that would be impossible to do within the year”.
He said:
“we are not at the position where we are talking about that today”.
He also said:
“So the timeframe even if it’s two, two and a half years, it sounds fine but we’re talking into the future, you wouldn’t do something like that in two or three weeks”.
Then up pops Jim McColl on today’s “Good Morning Scotland” to offer his version of full fiscal autonomy. As has been said, he acknowledged the funding gap, but his answer to the Barnett formula question and the black hole created by full fiscal autonomy is simply to borrow the billions of pounds that are required to make up the difference, with the Scottish Government getting to keep all the taxes that are raised in Scotland and the block grant from the UK Government at the same time. That is surely a risk to Scotland’s public services, now and in the longer term. It is still uncosted and still fuelled by wishful thinking, but it is the nearest thing yet to an explanation of what the SNP leadership is really trying to achieve from this election campaign. Perhaps if SNP ministers endorse the McColl version of full fiscal autonomy, they can tell us how much they want the Scottish Government to borrow to pay for it and at what on-going cost.
Ministers really need to address those issues. They need to be open with voters and tell them that full fiscal autonomy actually means scrapping the Barnett formula, which supports Scotland’s public services. They need to acknowledge that a black hole of £7.6 billion must mean real cuts in public services, either to address the deficit now or to pay back the borrowing if the pain is put off until later. They also need to be open with voters that they have no ambition to add a single penny to Tory spending plans for the new financial year.
The nearer we get to polling day, the harder it will become for Mr Swinney and his colleagues to disguise the consequences of their policies.
Will the member give way?
The member is in his last minute.
The more voters know about those consequences, the more they will choose real change by voting Labour.
16:40
Even by the standards of Jackie Baillie’s contorted arguments, the argument that she advanced today—that, by setting a budget within the financial limit, as we are required to do, the Scottish Government is somehow surrendering control over our ability to set a budget—was quite ludicrous. In fact, I did not follow the argument until Alex Johnstone explained it for me, and it is some day indeed when it takes Alex Johnstone to explain Jackie Baillie’s contorted arguments to me.
The public in Scotland would be really quite surprised if I did not set a budget within the limits that are prescribed under the existing financial framework of the United Kingdom. After all, that would somewhat injure my reputation for financial stewardship in the eyes of Alex Johnstone, which has been very precious to me over the years.
The argument from Jackie Baillie was, frankly, one of the most ridiculous arguments that I have heard her peddle in this Parliament in many years.
I want to say a little about Malcolm Chisholm’s challenge to me regarding the process of fiscal consolidation. There are three facts on which I think he and I should be able to agree. Point 1 is that the Labour Party has signed up to the charter for budget responsibility, for which the Conservatives also voted. Point 2 is that the charter requires £30 billion of fiscal tightening in 2016-17 and 2017-18, so the Labour Party—along with the Conservatives—has signed up to £30 billion-worth of fiscal consolidation over those two financial years.
Point 3, on which I hope Malcolm Chisholm and I can agree, is that the proceeds of the mansion tax, the 50p tax rate, the bank levy, the bankers’ bonus tax, the changes to pensioners’ tax relief and the tobacco levy will between them generate less than £10 billion over 2016-17 and 2017-18. That leaves £20 billion of fiscal tightening that is yet to be identified by the glorious Labour Party.
There we have it: there is the black hole—the bombshell at the heart of the Labour Party’s fiscal policies. We have not heard much about all that today.
I simply say to Malcolm Chisholm that it is necessary for the Labour Party to stop saying to people that somehow it is doing anything other than perpetuating, in this forthcoming United Kingdom general election campaign, a continuation of its happy better together alliance with the Conservatives to take £30 billion out of public expenditure as a consequence of its decisions.
Will the cabinet secretary give way?
Will the cabinet secretary give way?
I had better give way to Malcolm Chisholm because I have just mentioned him.
Forgive me for saying so, but I notice that John Swinney is still reluctant to talk about full fiscal autonomy. If he listened to the full first half of my speech, he will know that I dealt with all the issues that he mentioned. The simple summary is that the Labour Party is not signed up to the Conservative Party’s cuts. The IFS has pointed to the £30 billion gap between Labour spending plans and Conservative spending plans.
I think that Mr Chisholm was in the chamber when I spoke about fiscal autonomy earlier today; I will come on to say more about it.
Mr Chisholm cannot escape the three facts that I have put on the record. The first two facts align the Labour Party with the Conservative’s spending—and spending reduction—plans, and the third demonstrates that the Labour Party has still to set out where £20 billion-worth of fiscal tightening is to come from. That is a very significant issue.
Willie Rennie commented on the oil and gas tax changes, and he fairly recorded the fact that I publicly encouraged before the budget, and welcomed after it, the changes to taxation that the UK Government has made. However, I gently point out that one of the changes to taxation was to remove the supplementary charge increases that the chancellor put in place in 2011. It cannot, by any stretch of the imagination, be described as an example of sensible stewardship of North Sea oil and gas revenues that those were applied in the first place.
Mr Rennie made the point that those measures cost £1.3 billion and that that is a huge sum of money that only the United Kingdom could afford. However, to give one example, in 2011-12, North Sea oil and gas revenues increased by £2.5 billion. In one year, revenues went up by £2.5 billion, but Mr Rennie is making a big thing about the £1.3 billion capped cost of the oil and gas tax changes.
In the same year that the oil and gas revenues went up by £2.5 billion, the Scottish Government’s budget was cut by £900 million. My point in putting that information on the record is to illustrate that there are years of financial strength in which Scotland has contributed significantly but in which we have had to face cuts, despite the strong financial contribution that we have made to the UK Treasury.
If Mr Swinney is so confident, why does he not just publish the bulletin? All that we are asking for is that he should just publish it.
The Government has said that it will publish the bulletin once we have completed all the analysis that is required. That is the answer—we have said it, and it is not some great revelation; it is something that the First Minister has told Parliament on countless occasions.
Mr Rennie also claimed that Scottish tax revenues had collapsed and were projected to collapse. None of the data that I have in front of me about the performance of Scottish taxes from 2013-14 into 2014-15 shows anything other than a growth in taxes in Scotland, so I do not know what point Mr Rennie was making in that respect.
The heart of the debate is about how we obtain the economic powers that enable us to strengthen and improve Scotland’s economic performance. That is what the debate is about. We have demonstrated—I did so in my opening speech—a number of examples where, by exercising our devolved responsibilities, we have increased exports, improved research and development spending and improved Scottish productivity, which moved from 6 per cent lower than the UK to almost the same level as the UK.
By having distinctive and different policy levers in Scotland, we can deliver better outcomes and better performance. The Scottish Government’s proposition is that we could do that to a greater extent with a fuller range of powers and responsibilities.
I am grateful to Mr Swinney for giving way. He has published a partial analysis. Will he commit today in the chamber to the Scottish Government publishing a full analysis of the full fiscal autonomy projections?
I have said that we will publish the oil and gas bulletin, which is exactly what Mr Rennie asked us to do. That is what the First Minister has made clear.
Let me make a final point about the nature of the analysis that we are talking about in the debate that we are having. I used this quotation earlier: the Institute for Fiscal Studies has indicated that
“full fiscal autonomy would give ... freedom to pursue different, and perhaps better fiscal policy, and to undertake the radical, politically challenging reforms that could generate additional growth. There are undoubtedly areas where existing UK policy could be improved upon.”
None of the miserable analysis provided by the Liberal party or the Labour Party—
Will the member give way?
No, I think that I have to draw my remarks to a close.
You can give way if you wish to.
In that case, of course.
I thank the cabinet secretary for taking an intervention. He is keen to quote the IFS. Does he therefore also understand that the IFS is saying that the cost of full fiscal autonomy this year is £7.6 billion? It is £7.6 billion. Does he agree with that figure—yes or no?
There are two points that Jackie Baillie has to take into account. The first is that, in 2015-16, Scotland will not have fiscal autonomy. That is the reality of the situation. The second is that the IFS analysis is predicated on making absolutely no judgment other than that if we have wider financial levers at our disposal, we can deliver better economic performance. I am prepared to rest my case on the talent and the capability of the people of Scotland to do better than the miserable unionist bunch has ever done at running our economy.
16:49
I need to start with a confession. This is for the benefit of Mark McDonald. In 1998 I co-authored, along with Michael Fry and Peter Smaill, a pamphlet for the Tuesday Club called “Full Fiscal Freedom for the Scottish Parliament”. It was written long before this Parliament was even constituted. It was written so long ago that I cannot even remember how much pink champagne we drank in the process of writing it—although, knowing Michael Fry, it was probably quite a lot.
I came to the conclusion many years ago that full fiscal autonomy is not the best way for Scotland to go. That is for two reasons. First, the version of full fiscal autonomy proposed by the SNP—which, as far as I know, is that all tax revenues are collected by this Parliament, we fund all spending in Scotland and we pay a sum to Westminster for some minor reserved items that the SNP wishes to see, such as defence and foreign affairs—simply does not exist as a model anywhere on the planet. The closest example is the Basque Country in Spain but, even there, there is an element of control of tax levels from Madrid.
There is a very good reason why there is no precedent, which is that such a system is simply unworkable. In any constitutional arrangement, in any country, there should be a sharing and pooling of resource. Iain Gray made that point earlier. The stronger parts of the country can help the weaker and, in bad times, the richer areas can help the poorer. That concept of pooling and sharing resource underpins the financial arrangements in devolved and federal countries across the world.
That is why there are bodies such as the Australian grants commission, which operates within a federal system to reallocate resources from the richer areas to the poorer. There is no federal country in the world that operates full fiscal autonomy as proposed by the SNP. It is not a workable proposition; it is simply a route to independence by a different name.
There is a second reason why full fiscal autonomy makes no sense, which is because of the fiscal gap that would be created. The analysis from the Institute for Fiscal Studies shows that that would be £7.6 billion by 2015-16—a gap that would need to be filled by borrowing, tax increases, cuts in spending or a combination of all three.
We have heard nothing from the SNP, in the past two hours and 20 minutes, about how that gap would be filled. I exempt from that only John Mason, who at least made a brave attempt to explain it—and it was brave—by claiming that we could have full fiscal autonomy but also keep the Barnett formula. That is arguing for two opposite outcomes at once. Mr Mason, it is called full fiscal autonomy for a reason. The clue is in the word “full”. Believe me, I know what it means. I once wrote a pamphlet about it.
As set out in Gavin Brown’s motion, there is no doubt that full fiscal autonomy would be immensely damaging for the Scottish economy. What we are calling for today, as Willie Rennie confirmed, is simply a set of modest proposals. All that we are asking is for the Scottish Government to update its projections for the public finances to reflect its current policy. We are asking it to publish an updated oil and gas analytical bulletin and that the Scottish Fiscal Commission—supposedly a body independent of government—does the necessary work.
Does the member share my disappointment that we are almost at the end of a debate entitled “Scotland’s economy and finances”, and we have not heard one positive thing from the UK party about Scotland’s economy or what its hopes and plans for that, and improving it, might be.
The UK economy is projected to be the fastest-growing economy in the western world in the years to come. What could be more positive than that? The member wants to take us away from that.
I am disappointed that the SNP and Mr Swinney reject our modest calls this afternoon. The SNP will be standing candidates for election in just five weeks’ time on a platform of supporting full fiscal autonomy. Surely the people have a right to know what that means. Why is the Scottish Government so reticent about publishing the detail of its policy? One would think that it would be keen to publish it so that people can be well informed, yet it seems strangely reluctant to talk about its consequences.
The SNP’s proposition seems to be that we can grow our way out of the fiscal deficit by growing our economy faster—even faster than the UK economy is projected to grow over the coming years. That will be some growth. If it wants to do that, though, it would help if it set out exactly what policies it intends to follow to deliver that dramatic level of economic growth.
Until a few weeks ago, the flagship SNP policy was clear. The way to grow the economy, the SNP told us, was to attract more large companies to invest in Scotland, and the way to do that was to cut corporation tax by three pence in the pound. I remember all the debates I had with Mr Swinney and others throughout the referendum campaign in which that policy was paraded as the panacea to all our economic ills. Now, of course, it has been quietly shelved. Under the stewardship of Nicola Sturgeon, there will be no more sweeteners for large multinational companies. Amazon and Google will have to take their corporate headquarters elsewhere.
What will replace that measure? What is being proposed to deliver such a miraculous level of economic growth? How will we raise the extra money to fill the £7.6 billion fiscal gap? We are still on tenterhooks awaiting that announcement. When I intervened on Mr Swinney earlier, he promised to come back and tell me how he will fill that gap and we are still waiting.
It is no wonder that the SNP does not want to talk about the policy. Malcolm Chisholm was right: in this weekend’s conference speech from Nicola Sturgeon, there was no mention of full fiscal autonomy. She did not get off the hook when she was on “Good Morning Scotland” yesterday. She said that she
“would want to see Scotland moving to a position of fiscal autonomy. That’s not gonnae happen overnight. That will happen over a period of time.”
We can picture the protest marches and the massed ranks of the SNP going down Whitehall with their placards: “What do we want?” “Full fiscal autonomy.” “When do we want it?” “Not now.” If Mike MacKenzie is there, it will be: “When do we want it?” “In six years’ time.” That will not capture the public imagination. The SNP told us that we could be a fully independent country in 18 months, but it will take six long years to deliver fiscal autonomy.
The fact is that the SNP is all over the place on this issue. How do we know that it is in trouble? At one point this afternoon, Mr Swinney had to be bolstered on the front bench by no fewer than four ministerial colleagues. I have never seen a situation in the chamber when there were more people on the SNP front bench than there were back benchers behind the cabinet secretary. It is just as well that they were not all asked to make a speech in the debate because we would probably have heard five different contributions. It shows just how weak Mr Swinney’s position is on this particular issue.
If the Government thinks that its position is so strong, why does it not publish its analysis and show the effect of full fiscal autonomy on the Scottish economy and public finances? It will not even let its placemen in the Scottish Fiscal Commission do the necessary work because it recognises the negative impact of full fiscal autonomy. The Government does not want to talk about this policy.
Will the member give way?
I give way to Mr McDonald.
I thank the member for giving way. At least one of us has managed to leave the university debating society behind. [Interruption.]
Order. Let us hear Mr McDonald.
If Mr Fraser’s prognosis for the Scottish economy is correct, perhaps he can advise whether he considers that the UK macroeconomic framework has been good or bad for Scotland.
I only heard part of that, such was the hilarity around me at Mr McDonald’s contribution. He cannot deny that, under a Conservative Government, the UK economy is growing strongly, Scotland has benefited from that growth and we should not put that at risk.
We have an election coming up on 7 May. Despite all the manoeuvring, back-pedalling and shilly-shallying on this issue, a vote for SNP candidates in that election is a vote for full fiscal autonomy and a vote to create a black hole in the public finances of £7.6 billion per annum. We know that the SNP will not do a deal with the Conservatives and that it is only interested in propping up a Miliband Government, with a Labour leader who is so weak that he will have to give in to the SNP’s every demand to get the key to Downing Street. That would be a disaster for Britain, and an even greater disaster for Scotland.
Only the Conservatives have the strength to stand up against the combined forces of Labour and the SNP and the danger that they present to Scottish public finances and Scottish taxpayers.
The proposals in Gavin Brown’s motion are modest and reasonable. Who could be more modest and reasonable than Mr Brown? Our motion does not condemn full fiscal autonomy and it does not denounce its advocates. We call for something simple: the publication of some research. During the debate this afternoon, not one SNP speaker addressed the key point in Gavin Brown’s motion. Not one argument was heard against publication of the requested information. Even now, in the closing seconds of my speech, I appeal to the good grace of all the reasonable people on the SNP back benches to give the Scottish people the information that they need: what are you afraid of?
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